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CAF 07: Company Law by M. Asif [Spring 2024] Premium Course > Chapter 2 Memorandum and Articles > Flashcards

Chapter 2 Memorandum and Articles Flashcards

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1
Q

List down clauses of Memorandum of Association of a Company?

[Chapter 2]

A
  1. Name Clause
  2. Registered Office Clause (or Place clause)
  3. Principal Line of Business Clause
  4. Liability Clause
  5. Authorized Capital Clause (for companies limited by share, or limited by guarantee having share capital)
  6. Undertaking or Subscription Clause
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2
Q

Which information is included in Name Clause of Memorandum?

[Chapter 2]

A

This clause contains the name of the company, including words “Limited” or “(Private) Limited” or “(Guarantee) Limited” or “(Unlimited)” or “(SMC–Private)” as appropriate.

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3
Q

Which information is included in Registered Office Clause of Memorandum?

[Chapter 2]

A

This clause shall state:

  • Province (e.g. Sindh) or
  • part of Pakistan not forming part of a province (e.g. Islamabad)

, in which registered office of the company is to be situated.

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4
Q

Which information is included in Principal Line of Business Clause of Memorandum?

[Chapter 2]

A

This clause shall state company’s principal line of business.

  • A company can engage in any business activity except those which are prohibited, or restricted.
  • It shall always match with the name of the company. However, existing companies shall continue with their existing memorandum.
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5
Q

Which information is included in Liability Clause of Memorandum?

[Chapter 2]

A
  • This clause shall state liabilities of members i.e. whether the liability of members is limited by shares, limited by guarantee, or unlimited.
  • In case of company limited by guarantee, this clause shall also state extent of liability of each member which he agrees to contribute at time of winding up.
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6
Q

Which information is included in Authorized Capital Clause of Memorandum?

[Chapter 2]

A
  • If a company has a share capital, this clause shall state maximum amount of share capital which can be issued.
  • This clause shall also state division of authorized share capital into shares of fixed nominal value.
  • In the same clause, every subscriber shall agree to take atleast one share. Each subscriber writes opposite to his name total number of shares he has agreed to take.
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7
Q

Which information is included in Undertaking or Subscription Clause of Memorandum?

[Chapter 2]

A
  • The company shall add an undertaking as may be specified by the SECP.
  • All subscribers also undertake to form company, to comply with clauses of memorandum, and to take shares in the company.
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8
Q

What are the requirements regarding Printing and Signature of Memorandum (and Articles)?

[Chapter 2]

A

Printing:
Memorandum shall be in printed form, divided into sequentially numbered paragraphs, and shall be dated.

Signature:
Subscribers shall sign the articles, and shall include their names, occupation, nationality, residential addresses and such other particulars as may be prescribed.

A witness shall attest the signature, and shall mention his particulars similarly.

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9
Q

Is a company required to include powers to borrow in its Memorandum or Articles?

[Chapter 2]

A

No.

Memorandum and Articles of a company are deemed to include power to borrow money, and to issue other securities not based on interest.

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10
Q

What are different names with which a company cannot be registered?

[Chapter 2]

A

A company shall NOT be registered with a name which:

  1. is identical or closely resembles with an existing company.
  2. is inappropriate, undesirable or deceptive
  3. is selected to exploit or offend religious feelings of people.
  4. contains words which are prohibited, or restricted by Commission.
  5. Any other ground as may be specified.
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11
Q

What are different names for which a company is required to obtain prior approval of Commission?

[Chapter 2]

A

Approval of commission is required if proposed name of company contains words suggesting:

  • Patronage with Head of State.
  • Connection with Federal Govt. or Provincial Govt. or any department
  • Connection with corporation set up by or under any Federal or Provincial law.
  • Patronage or Connection with Foreign Govt. or international organization.
  • Establishing a modaraba management company or to float a modaraba.
  • Any other business requiring a license from Govt.
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12
Q

What is the process of rectification of name of a company by Registrar?

[Chapter 2]

A
  • Registrar gives opportunity of hearing to company.
  • Registrar issues orders to company to rectify its name.
  • Company has to rectify name within 30 days of the order.

If company does not rectify its name, Registrar may himself select new name of company and shall issue new certificate of incorporation.

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13
Q

What is the process of change of name of a company by Company?

[Chapter 2]

A
  • Company shall pass reserve name with Registrar.
  • Company shall pass a Special Resolution.
  • Company shall apply to Registrar (alongwith copy of special resolution and altered memorandum).
  • If approved, Registrar shall enter the name and shall issue new certificate of incorporation with new name.
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14
Q

Which type of changes in name do not require approval form Registrar?

[Chapter 2]

A

Approval of Registrar is not required if change is only the addition or deletion of words ‘(Private)’ or (SMC-Private) or (Limited) or (Guarantee Limited) or (Unlimited).

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15
Q

What is the requirement to comply by a company after change of its name?

[Chapter 2]

A

Company shall continue to mention its old name alongwith new name for 90 days:

  • outside of every office or place of business
  • on every document or notice of the company.
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16
Q

What is the effect of change of name on rights and liabilities of a company?

[Chapter 2]

A

The change of name shall NOT affect:

  • any rights or liabilities of the company, or
  • any legal proceedings by or against the company.
17
Q

What are the places/documents on which a company is required to display its name?

[Chapter 2]

A
  1. Outside registered office, and every office or place of business.
  2. On seal of the company,
  3. On all official documents or notices of the company.
18
Q

When and to whom a company is required to notify address of its Registered Office?

[Chapter 2]

A
  • To Registrar within 30 days of incorporation.
  • To Registrar within 15 days of change of Registered Office.
19
Q

As per Companies Act, what are different types of changes in Registered Office?

[Chapter 2]

A

A company can change its registered office:

  1. From one place to another (within the same city).
  2. From one city to another (within same province).
  3. From one province to another.
20
Q

What is the procedure to change Registered Office within same city?

[Chapter 2]

A
  1. Company shall pass Board Resolution.
  2. Company shall notify Registrar within 15 days.
21
Q

What is the procedure to change Registered Office to different city (but within same province)?

[Chapter 2]

A
  1. Company shall pass Board Resolution.
  2. Company shall pass Special Resolution.
  3. Company shall notify Registrar within 15 days.
  4. Physical record transferred to new registrar (if shifted to another registrar).
22
Q

What is the procedure to change Registered Office to different province (i.e. change in Registered Office Clause)?

[Chapter 2]

A
  1. Board Resolution.
  2. Special Resolution.
  3. Application with Commission to obtain confirmation.
  4. A copy of the order to Company and Registrar within 07 days of the order.
  5. Company files order with Registrar within 30 days (or extended period, if allowed by Commission).
  6. Registrar shall register, and shall issue a certificate.
  7. Physical record shall also be transferred.
23
Q

What is meant by “Principal line of business”?

[Chapter 2]

A

Principal line of business means the business in which company’s:

  • substantial assets are held (or likely to be held), or
  • substantial revenue is earned (or likely to be earned)

, whichever is higher.”

24
Q

What is the process to change “Principal line of business” by a company?

[Chapter 2]

A
  1. Company shall pass Special Resolution in general meeting.
  2. Within 30 days, company shall file amended memorandum to registrar.
  3. Registrar shall register the alteration. If change is not in line with name, Registrar may order the company to change the name also.

Approval from Commission is NOT required to change principal line of business clause (unless new business is subject to licence, registration, or approval).

25
Q

What is meant by “Articles of Association”:

[Chapter 2]

A

Articles contain rules and regulations on internal affairs of the company.

26
Q

Which type of information (or contents) is included in Articles of Association?

[Chapter 2]

A

It includes rules and regulations regarding:

  1. Business
  2. Transfer/Transmission of shares, and its Form
  3. Alteration of capital.
  4. Voting and other rights attached to different classes of shares, and other securities.
  5. Notices and Proceedings of General meetings.
  6. Manners of Voting of members.
  7. Proxy Instrument.
  8. Number of directors, their powers and duties.
  9. Proceedings of directors’ meeting.
  10. Disqualification of directors and filling of vacancies.
  11. Minute books.
  12. Dividend, and Reserves.
  13. Accounts.
  14. The seal.
  15. Indemnity.
  16. Winding up.
27
Q

Companies Act overrides Articles. Give two examples to support this statement?

[Chapter 2]

A

Example 1:
Companies Act requires that minimum number of directors of an unlisted company will be three. A company can write in articles to have atleast 05 directors, but cannot write to have atleast 02 directors.

Example 2:
Companies Act states situations for disqualification of a director. Articles may impose additional situations for disqualification but cannot reduce them.

28
Q

Which types of companies are required to register their Articles of Association?

[Chapter 2]

A
  1. A company limited by guarantee and
  2. An unlimited company
29
Q
  • *How Table A applies on a company limited by shares:
    (a) If it does not register its Articles.
    (b) If it register its Articles.**

[Chapter 2]

A
  • If Articles are not registered, Table A (in Companies Act, 2017) applies on company as its Articles, or
  • If Articles are registered, Table A shall still apply if Articles do not discuss a content mentioned in Table A.
30
Q

What is the procedure for alteration of Articles of Association of a Company?

[Chapter 2]

A
  1. Company shall pass Special Resolution to alter the articles.
  2. If such alteration affects substantive rights or liabilities of members (or a class of members), such alteration shall be valid only if 3/4th majority of affected members also vote for such alteration (either personally or through proxy).
  3. Within 30 days of the resolution, Company shall file with Registrar a copy of altered articles of association.
  4. Registrar shall register the same.
31
Q

Who can get copy of Memorandum/Articles of a company?

[Chapter 2]

A

Only a member of the company can get copy of memorandum/articles, after paying prescribed fee. Company shall supply it to members within 14 days.

32
Q

Can liability of a member be increased by alteration in memorandum/articles?

[Chapter 2]

A

Not, unless:

  • member agrees in writing
  • either before or after the alteration is made.
33
Q

Commission has made available Memorandum and Articles of various types of companies in different Tables of First Schedule. Which table relates to which type of company?

[Chapter 2]

A

Type of Company

Relevant Table of First Schedule

Company Limited by Shares

Table A (for Articles) and

Table B (for Memorandum)

Company Limited by Guarantee, not having share capital

Table C

Company Limited by Guarantee, having share capital

Table D

Unlimited Company

Table E

Association not for profit

Table F

CAF 07: Company Law by M. Asif [Spring 2024] Premium Course (2 decks)

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