Chapter 5-7 J.S.C Flashcards
Define Joint Stock Company
“I is an incorporated association enjoys the advantage of having a large number of members who contribute money to a common pool for running large undertakings. The interest or share of each member can be purchased, sold and transferred without the consent of other members”
(Companies Ordinance 1984)
State any five properties of a joint stock company
(i) Separate legal entity
Common seal
Number of members
Large scale production
Determination of objects
Financial Resources
Distribution of profit
Change in business
Use of word limited
Maganement
Borrowing
Easy mode of investment
Purchase and sale of property
Payment of taxes
Low cost of production
Government control
(il) Democratic style
(ili) Long life/durable
iv) Limited liability
(v) Easy transfer of shares
State any five advantages of a joint stock company.
(i) Larger capital
Expansion of business.
Growth of investment.
(i) Limited liability
ili) Experts services
Increase in govt’s income
iv) Long life/durable
Less chance of corruption
Low cost of production
Public confidence
Beneficial advice
Democratic set up
Sound credit ability
Easy to seperate
Better management
Long period projects
Variety In investment
Higher profits
Risky business
Employment opportunities
Write down any five disadvantages of a joint stock company.
(i) Monopoly
Nepotism
il) Late decisions
Change in objectives
Labour dispute s
Lack of team spirit
Unnecessary expenditures
Complicated procedures
Speculations
Laxk of responsibility
Lack of freedom
Exploitation
Fraud in distribution of dividend
Centralization of powers
(i) Difficulty in formation
Difference of opinions
Minority rights
iv) Lack of secrecy
Personal satisfaction
(v) Double taxation
What is meant by the separate legal entity of a company.
Joint stock company is an artificial person and has separate legal entity. In this capacity, the company can sue or enter into agreement with other parties.
What is meant by the common seal of a joint stock company.
A joint stock company cannot sign itself. A common seal with the name of the company is used as the substitute of its signature.
Explain the organizational structure of a joint stock company.
The management of the company is entrusted to the board of directors elected by the shareholders, Shareholders are not allowed to participate directly in the affairs of management.
What is meant by democratic style or set up in a joint stock company.
The company has democratic set up because shareholders of the company elect the directors by using their voting rights to run the business. Moreover, all the business policies are implemented according to the
decision of majority.
How does a joint stock company provide different investment opportunities.
The company issues ordinary and preferred shares to those investors who want to share the profit or loss of the business and issues debentures to those investors who want to receive interest at fixed rate.
State the number of shareholders in a joint stock
In case of a multi-members private limited company minimum number of members should be two and maximum fifty whilst in a listed public limited company minimum members should be seven but there is no limit on maximum number of members.
From where a joint stock company obtains capital for starting business.
A joint stock company mobilizes a large portion of its capital by issuing shares. For this purpose a public company can issue its prospectus to general public whilst private company cannot issue the shares to general public.
What is meant
by limited liability of the
shareholders in a joint stock company.
In joint stock company, the liability of the shareholders is limited to the extent of shares purchased by them. It means the private property of shareholders cannot be used for the loss of company.
State the definition of a listed public company.
In this company, minimum number of members may be seven but there is no restriction for maximum.
The word limited is used after the name.
Shares of the company can easily be sold and transferred
The liability of the shareholders is limited to the value of shares purchased.
It is essential for the company to issue prospectus.
The audit of company’s accounts is compulsory every year.
It is necessary for the company to call statutory meeting within three to six months of its commencement.
The minimum number of promoters is seven.
For example PTCL and SNGPL etc,
Define a multi-members private Itd. company.
In this company, minimum number of members is two and maximum is fifty.
The company uses the word “Private” with its name.
Minimum number of directors is two.
The shares of the company are not transferable.
The liability of the shareholders is limited.
It is not essential for the company to issue prospectus.
The audit of the company is not compulsory.
This company can start its business after getting the certificate of incorporation.
There is no restriction on the company to call statutory meeting.
Minimum number of promoters is two.
For example, Tapal (Pvt.) Ltd. and HKB (Pvt.) Ltd.
etc.
What are the stages involved in the formation of a joint stock company.
Formation of Joint Stock Company
Promotion
Incorporation
Capital Subscription
Stage
Stage
Stage
Certificate of Commencement
Define the memorandum of association of a company.
It is a document, which determines the rights, powers and objects of company.
MOA is the most important legal document, which must be submitted to the registrar before the establishment of company. This document is a sort of contract between the company and other persons outside the company like bankers and creditors etc., which explains the legal position of company. No change can be made in memorandum without the prior permission of court.
Note: Normally Memorandum is prepared by specialists / experts or promoters.
If the company works on a line, which is not given in Memorandum then it will be considered as illegal. The memorandum should be printed and divided into different paragraphs. Each paragraph should be numbered and signed by its promoters.
Contents
Name clause
Head office
Capital clause
Object clause
Liability clause
Association clause
Alteration.
Define articles of association of a company.
It is second important document of the company, which includes the rules and regulations necessary to run the company and to govern the internal organization. “Articles” are responsible for the good conduct of whole management.
This document never includes any such rule or regulation, which is against the memorandum. When a company does not dísclose its rules and regulations then a model called Table ‘A’ comprised of 85 clauses contained in Companies Ordinance 1984 is considered as articles of the company.
CONTENTS
1. Capital and its division into shares.
2. Different types of shares.
3. Value of shares and their transfer.
4. Method for the change in capital.
5. Rights of shareholders.
6. Conversion of shares into stock.
7. Name and number of directors.
8. Powers and duties of directors.
9. Methods to call the meetings.
10. Voting powers of shareholders.
11. Appointment of directors.
12. Accounts and their audit.
13. Appointment of auditors, their rights and duties.
14. Distribution of profit and reserve capital.
15. Directors’ meeting.
16. Method of selling shares.
17. Seal of company.
18. Right, duties and remuneration of managing agents.
Define prospectus of a company.
This document is advertised for raising the capital. In this the general public is invited to purchase the shares.
An attested copy of prospectus should be submitted to registrar’s office. It also contains the date of issue.
- All points of memorandum.
- Name and address of company. Directors and auditors.
- Conditions on which the shares to be issued.
- Rights of shareholders attached to shares.
- Estimated preliminary expenses.
- Detail of property purchased by the company.
- Balance sheet of company.
- Amount payable on application.
- Any restriction on the transfer of shares.
- Minimum Subscription on which the directors may allot the shares.
- Name of underwriters and their commission.
- Duties and remuneration of Directors.
- Business contracts.
- Dividend ratio on different kinds of shares.
- Kinds of shares.
- Sale of shares (at par, discount or premium)
State the kinds of company’s capital.
i) Authorized capital
ii) Issued capital
iii) Subscribed capital
iv) Called up capital
(v)Uncalled capital
(vi) Paid up capital (vii) Unpaid capital
(vili) Advance paid up capital (ix) Unissued capital
(x) Reserve capital
Explain the preference shares of a joint stock company.
These are the shares whose holders have preferential rights in respect of the payment of dividend and repayment of capital in the event of winding up.
Preference Shares:
These are the shares whose holders have preferential rights in respect of the payment of dividend and repayment of capital in the event of winding up. The rate of dividend on these shares is fixed. There are further two types of preference shares.
(a) Cumulative Preference Shares:
If the profit of company is not enough to pay dividend on any kind of shares at the end of financial year then the right of dividend on these shares accumulates until all arrears of unpaid dividend have been paid.
(b) Non-Cumulative Preference Shares:
Non-cumulative preference shares are the shares on which if dividend is not paid out of current year’s profit in any year then it is never paid.
Kinds of Shares (Simple Explanation)
Companies issue shares to raise money, and shareholders get a part of the company’s profit as dividends. There are different types of shares based on how dividends are paid and rights given to shareholders.
- Preference Shares
• Shareholders with preference shares get dividends before ordinary shareholders.
• If the company shuts down, they also get their investment back before others.
• The dividend on these shares is fixed, meaning it does not change with company profit.
Types of Preference Shares:
(a) Cumulative Preference Shares
• If the company cannot pay a dividend in one year, the unpaid dividend is carried forward to future years.
• The company must pay all pending dividends when it has enough profit.
(b) Non-Cumulative Preference Shares
• If the company does not pay a dividend in one year, that dividend is lost forever.
• The company is not required to pay for past unpaid years.
- Ordinary Shares (Common Shares)
• These are regular shares bought by most investors.
• The dividend is not fixed and depends on how much profit the company makes.
• If the company does well, shareholders get higher dividends. If it does badly, they may get no dividend at all.
• In case of company closure, these shareholders get paid last, after all debts and preference shares are settled. - Deferred Shares (Founder’s Shares)
• These shares are given to company founders or promoters (the people who started the company).
• They only receive dividends after preference and ordinary shareholders have been paid.
• These shares usually hold more voting power, giving founders control over company decisions.
Easy Example to Understand:
Imagine a company makes a profit and decides to give dividends. Here’s how the payments will be made:
1. Preference shareholders get paid first, with their fixed amount (e.g., $5 per share).
2. Ordinary shareholders get paid next, but their amount depends on profits (e.g., if the profit is high, they may get $10 per share; if it’s low, they may get only $2 or nothing at all).
3. Deferred shareholders (company founders) get paid last, only if money is left after others.
Let me know if you need further clarification!
Define cumulative preference shares.
If the profit of company is not enough to pay dividend on any kind of shares then the right of dividend on these shares accumulates until all arrears of unpaid dividend have been paid.
Cumulative Preference Shares
• If the company cannot pay a dividend in one year, the unpaid dividend is carried forward to future years.
• The company must pay all pending dividends when it has enough profit.
Define non-cumulative preference shares.
The holders of these shares are entitled to a fixed rate of dividend out of current year’s profit, but if dividend is not paid on these shares in any year then it is never paid.
Define the ordinary shares.
The shares on which the dividend is paid out of profit earned by the company after the payment of dividend on preference shares.
Kinds of Shares (Simple Explanation)
- Ordinary Shares (Common Shares)
• These are regular shares bought by most investors.
• The dividend is not fixed and depends on how much profit the company makes.
• If the company does well, shareholders get higher dividends. If it does badly, they may get no dividend at all.
• In case of company closure, these shareholders get paid last, after all debts and preference shares are settled. - Deferred Shares (Founder’s Shares)
• These shares are given to company founders or promoters (the people who started the company).
• They only receive dividends after preference and ordinary shareholders have been paid.
• These shares usually hold more voting power, giving founders control over company decisions.
Easy Example to Understand:
Imagine a company makes a profit and decides to give dividends. Here’s how the payments will be made:
1. Preference shareholders get paid first, with their fixed amount (e.g., $5 per share).
2. Ordinary shareholders get paid next, but their amount depends on profits (e.g., if the profit is high, they may get $10 per share; if it’s low, they may get only $2 or nothing at all).
3. Deferred shareholders (company founders) get paid last, only if money is left after others.
Let me know if you need further clarification!
Define deferred shares.
The shares issued to promoters of the company are called “Deferred or Founders Shares”. The dividend on these shares is paid after the payment of dividend on all other kinds of shares.
Kinds of Shares (Simple Explanation)
Companies issue shares to raise money, and shareholders get a part of the company’s profit as dividends. There are different types of shares based on how dividends are paid and rights given to shareholders.
- Deferred Shares (Founder’s Shares)
• These shares are given to company founders or promoters (the people who started the company).
• They only receive dividends after preference and ordinary shareholders have been paid.
• These shares usually hold more voting power, giving founders control over company decisions.
Easy Example to Understand:
Imagine a company makes a profit and decides to give dividends. Here’s how the payments will be made:
1. Preference shareholders get paid first, with their fixed amount (e.g., $5 per share).
2. Ordinary shareholders get paid next, but their amount depends on profits (e.g., if the profit is high, they may get $10 per share; if it’s low, they may get only $2 or nothing at all).
3. Deferred shareholders (company founders) get paid last, only if money is left after others.
Let me know if you need further clarification!
Explain the terms for the issuance of shares.
(i) Atpar (ii) At premium (iii) At discount
What is the meant by statement in lieu of
prospectus.
If the company is not in a position to submit prospectus at the time of registration, then another statement containing all necessary information is sent to registrar’s office. This statement is known as “Statement in Lieu of Prospectus”.
State the difference between the shareholder and debentureholder.
Shareholder:
The people who provide finance to company by purchasing shares are called shareholders.
Debentureholder:
The people to whom company issues debentures as a security of loan are called debentureholders.
1. Shareholders: Individuals or entities that own shares (stocks) in a company. They are partial owners and receive dividends based on company profits. 2. Debenture Holders: Individuals or entities that lend money to a company by purchasing debentures. They are creditors of the company and receive fixed interest, regardless of profit.
Debentures vs. Shareholders
1. Ownership:
• Shareholders own a part of the company.
• Debenture holders are lenders to the company.
2. Returns:
• Shareholders get dividends (profit share).
• Debenture holders get fixed interest.
3. Risk:
• Shareholders take more risk because their returns depend on company profits.
• Debenture holders have lower risk since they get fixed interest, even if the company makes no profit.
4. Control:
• Shareholders have voting rights and can help make company decisions.
• Debenture holders have no voting rights.
5. Repayment:
• Shares are not repaid; shareholders stay with the company unless they sell their shares.
• Debentures must be repaid after a certain period.
In short, shareholders are owners, while debenture holders are creditors (people who lend money to the company).
What is meant by authorised capital of the company.
It is the total amount of capital which a company is authorized to raise to general public.
Define the reserve capital of company.
Reserve capital is that part of uncalled capital which the company has decided by special resolution shall not be called up unless there is particular event or the company being wound up.
Define dividend.
Dividend is a distribution of earning made to shareholders by the company in proportion to the number of shares owned.
KINDS OF DIVIDEND
The most common kinds of dividend are as under.
Kinds of Dividend
- Proposed Dividend
> Interim Dividend
Final Dividend
Proposed Dividend:
The dividend announced by the company to the sharcholders at the end of year on the basis of current year’s profit or earing of the company.
Interim Dividend:
A dividend paid by the company to the shareholders during the course of its financial year. Normal practice is for 3. soropany to pay one interim dividend about half way through the yeur, However ya company may pay several interm
dividends
Final Dividend:
Ths diwidend paid by the company to the shureholder after the payment of interim dividend or dividends al the end of the year.
Define interim dividend.
A dividend paid by the company to the shareholders during the course/before the end of its financial year if it expects to earn huge profit.
What is a Dividend?
A dividend is the portion of a company’s profit that is distributed to its shareholders. It is a reward for investing in the company and is usually paid in cash or additional shares. Companies pay dividends to keep investors interested and share their financial success.
Kinds of Dividends
1. Proposed Dividend
• A dividend that the company plans to pay at the end of the financial year.
• It is based on the company’s annual profit and must be approved by shareholders before payment.
2. Interim Dividend
• A dividend paid before the financial year ends.
• Usually given in the middle of the year when the company has made good profits.
• A company may pay multiple interim dividends.
3. Final Dividend
• Declared after the financial year ends, once the company has calculated its full-year profit.
• It is usually higher than the interim dividend.
• Paid only after interim dividends, if any, have been distributed.
Example:
• A company makes a total profit of $1 million in a year.
• In June, they pay an interim dividend of $100,000.
• At the end of the year, they declare a final dividend of $300,000.
• The remaining profit is reinvested in the company.
This system helps companies manage profits while rewarding shareholders throughout the year.
What is meant by debenture.
Capital source of company.
The document, which a company issues as receipt of the borrowed amount to the lender, is known as Debenture.
Debentures holders help company raise their capital without giving away owner ship. They are assured fixed rate of interest.
Kinds.
Simple
Mortgage
Registered
Bearer
Redeemable
Irredeemable
Convertible
What is issuance of shares at premium.
Issuance of shares at premium means that the shares are being issued at a higher price than the face value of shares.
What is meant by subscribed capital.
Subscribed capital is that portion of the issued capital, which has been subscribed or taken up by the public through shares.
What do you mean by issued capital.
It is that part of authorized capital, which has been issued or offered to public for subscription.
Q.25 What is meant by Registered Company.
According to incorporation.
(i) Registered Company is formed under company’s ordinance 1984. It also includes an existing company defined in Sec 2(15).
(ii) These companies are allowed to do various industrial, agricultural and trading businesses. e.g., Subhan Textile Mill etc.
The rules regarding company’s formation, management and winding up are stated in Companies Ordinance.
(e.g) Adam Ji Industries, Wazir Ali Industries and Subhan Textile Mill etc.
Q.26 What is meant by Statutory Company.
According to incorporation.
These companies are formed by the order of
- president or by the special act of parliament.
The main purpose of these companies is the welfare of public and profit is not so important.
It is not essential for these companies to use word
“limited”
These companies have monopoly in their respective fields.
口
The liability of shareholders is limited to the value of shares purchased.
(c.g) State Bank of Pakistan, Zarai Taragiati Bank Limited and WAPDA etc.
Q.27 Define Share.
The total authorized capital of a company is divided into small units and each unit is individually called “Share”.
Kinds.
KINDS OF SHARES
(1) Preference Shares:
These are the shares whose holders have preferential rights in respect of the payment of dividend and repayment of capital in the event of winding up. The rate of dividend on these shares is fixed. There are further two types of preference shares,
(a) Cumulative Preference Shares:
If the profit of company is not enough to pay dividend on any kind of shares at the end of financial year then the right of dividend on these shares accumulates until all arrears of unpaid dividend have been paid.
(b) Non-Cumulative Preference Shares:
Non-cumulative preference shares are the shares on which if dividend is not paid out of current year’s profit in any year then it is never paid. (il)
Ordinary Shares:
Ordinary shares are the shares on which dividend is not paid at fixed rate. Ordinary shareholders receive the dividend proportionally out of profit eamed by the company after the payment of fixed dividend on preference shares.
(lil) Deferred Shares:
The shares issued to promoters of the company are called “Deferred or Founders Shares”. The dividend on these shares is pard after the payment of dividend on all other kinds of shares
Kinds of Shares (Simple Explanation)
Companies issue shares to raise money, and shareholders get a part of the company’s profit as dividends. There are different types of shares based on how dividends are paid and rights given to shareholders.
- Preference Shares
• Shareholders with preference shares get dividends before ordinary shareholders.
• If the company shuts down, they also get their investment back before others.
• The dividend on these shares is fixed, meaning it does not change with company profit.
Types of Preference Shares:
(a) Cumulative Preference Shares
• If the company cannot pay a dividend in one year, the unpaid dividend is carried forward to future years.
• The company must pay all pending dividends when it has enough profit.
(b) Non-Cumulative Preference Shares
• If the company does not pay a dividend in one year, that dividend is lost forever.
• The company is not required to pay for past unpaid years.
- Ordinary Shares (Common Shares)
• These are regular shares bought by most investors.
• The dividend is not fixed and depends on how much profit the company makes.
• If the company does well, shareholders get higher dividends. If it does badly, they may get no dividend at all.
• In case of company closure, these shareholders get paid last, after all debts and preference shares are settled. - Deferred Shares (Founder’s Shares)
• These shares are given to company founders or promoters (the people who started the company).
• They only receive dividends after preference and ordinary shareholders have been paid.
• These shares usually hold more voting power, giving founders control over company decisions.
Easy Example to Understand:
Imagine a company makes a profit and decides to give dividends. Here’s how the payments will be made:
1. Preference shareholders get paid first, with their fixed amount (e.g., $5 per share).
2. Ordinary shareholders get paid next, but their amount depends on profits (e.g., if the profit is high, they may get $10 per share; if it’s low, they may get only $2 or nothing at all).
3. Deferred shareholders (company founders) get paid last, only if money is left after others.
Let me know if you need further clarification!
What is meant by Modarba.
Modarba is formed under Modarba ordinance 1980. In Modarba one party contributes capital (known as Rab ul Mal) and other party participates with his skills (known as Modarib). e.g., NBP Modarba etc.
This company is formed under Modaraba Companies Ordinance 1980 (Applicable w.e.f 26-
06-1980).
In this company, one party contributes capital whereas other party participates with his skill and expenience.
• The contributor of capital is called “Rab-ul-Mal” and the person who manages the business affairs is called “Modarib”
• The certificates of Modaraba company are
transferable.
• A Modaraba company may be for definite ot indefinite period of time.
• The Modaraba may be multipurpose or specific.
For example, NBP Modarba and ABL Modaraba etc
What is meant by Holding company.
(i) It is a company which holds more than 50% shares of another company.
(ii). The company may have the powers to appoint more than 50% of directors of another company. e.g., Nishat Mills limited is the holding company of Nishat power limited etc.
What is meant by Charter Company.
These companies are formed by the royal order or charter.
The word “limited” is not used with the name of company.
The management of company is run according to the provisions of charter.
The members are not liable for the debts of company.
(e.g) Chartered Bank of England, Royal Bank of Scotland and East India Company etc.
31 What is meant by Single member Company.
The securities and exchange Commision of Pakistan (SECP) introduced the concept of Single Member Company (SMC) throught amended Ordinance 2002 (SMC Rules 2003) in Pakistan Companies Ordinance 1984. The objective of the concept of single member company is to provide an opportunity to single or sole owner to enjoy the benefits of limited liability.
The main characteristics of SMC are as under.
• There is only one member or shareholder in this
сотралу.
The company uses the words (S.M.C. Private Lid.] after its name.
The sole or single member is responsible for the
management of the company.
• The shares of the company are non-transferable.
The lability of the owner of company is limited,
The issuance of prospectus is not necessary for the company.
The company has a separate legal entity apart from its members.
The business life of company is long or durable because the heirs of single or sole owner can continue the business in case of his death.
The promoter of SMC is its single owner.
For example, Pearl Consultancy (SMC Private Limited), Islamabad etc.
Write down the name of important documents of
company.
There are three important documents of a company: (i)
Memorandum of association.
(ii) Articles of association. (iti) Prospectus.
LONG 1. Define JSC and discuss its characteristics
i) Separate legal entity
Common seal
Number of members
Large scale production
Determination of objects
Financial Resources
Distribution of profit
Change in business
Use of word limited
Maganement
Borrowing
Easy mode of investment
Purchase and sale of property
Payment of taxes
Low cost of production
Government control
(il) Democratic style
(ili) Long life/durable
iv) Limited liability
(v) Easy transfer of shares
Long. 1. Advantages and disadvantages of JSC
Larger capital
Expansion of business.
Growth of investment.
(i) Limited liability
ili) Experts services
Increase in govt’s income
iv) Long life/durable
Less chance of corruption
Low cost of production
Public confidence
Beneficial advice
Democratic set up
Sound credit ability
Easy to seperate
Better management
Long period projects
Variety In investment
Higher profits
Risky business
Employment opportunities
Disadvantages
Monopoly
Nepotism
il) Late decisions
Change in objectives
Labour dispute s
Lack of team spirit
Unnecessary expenditures
Complicated procedures
Speculations
Laxk of responsibility
Lack of freedom
Exploitation
Fraud in distribution of dividend
Centralization of powers
(i) Difficulty in formation
Difference of opinions
Minority rights
iv) Lack of secrecy
Personal satisfaction
(v) Double taxation
Long 1. Comparison. Sole trader ship. Partnership. JSC
Definition
Formation
Reason to formation
Formation expenses
Registration
Minimum members
Maximum members
Legal entity
Management
Capital volume
Withdrawal of capital
Change in capital
Change in business
Liability
Durability
Audit
Agent
Payment of debt
Trade agreement
List of stock exchange
Dissolution.
Long. 2. Discuss various kinds of company
- According to incorporation
Charter
Statutory
Registered
- According to ownership
Public
Private
Holding
Govt
Subsidiary
- According to liability
Limited by shares
Limited by guarantee
Unlimited company
- Modarba company
- According to nationality
Pakistani company
Foreign company
Long. 2. Formation of company
Long. 2. Sources of company’s capital
Long 2. Kinds of company’s capital
Long 2. Note on the following
MOA
AOA
PROSPECTUS
KINDS OF SHARES
KINDS OF DEBENTURES
Long 2. Distinguish btw:
MOA AND AOA
DEBENTURES AND SHAREHOLDERS
PUBLIC AND PRIVATE COMPANY
What is meant by a director of company.
Who can select the directors of company.
The shareholders whe are the owners of the company do not participate in the affairs of management directly, but they elect their representatiyes to run the business.
These elected representatives are called “Directors of the company” and elected directors are collectively known as “Board of Directors”
i) By Promoters
(ii) By Subscribers
(ili) By Shareholders
(iv) By Directors
(v) By Creditors
What are the duties of company’s director.
Ans.
(i)
Directors make the arrangements to conduct the company’s meetings.
(ii)They should prevent the misuse of capital. (
iii) They keep check to stop the wrong payments. (iv) The directors should frame and implement the
policies of business.
(v) They submit the various reports to registrar.
How many number of directors are in a company.
According to section 174 of Companies Ordinance 1984, a multi-members private company shall not have less than two directors and a listed public company shall not have less than seven directors.
What is meant by the statutory meeting and explain its main objectives.
Statutory meeting is the first meeting of the company’s shareholders. The object of the statutory meeting is to inform the shareholders about the affairs of the company. At least 21 days before, a notice is issued by the secretary of company to all shareholders.
OBJECTS
The detail about the formation of company.
To provide exact information regarding the affairs of company.
iii) To win the confidence of shareholders of the
company.
What is resolution and give its kinds.
Ans.
The formal expression of opinion or desire of any meeting or assembly obtained by the majority votes of members is called “Resolution”. There are two parts of resolution, first part explains the causes of resolution where as second part explains the decided matters of the meeting.
KINDS OF RESOLUTION
There are following three kinds of resolution.
( Ordinary resolution. (ii) Special resolution. (iii) Extraordinary resolution.
Q.7
What is meant by extra ordinary meeting and its objectives.
What methods can be used to wind up a company.
According to section 159 of companies ordinance 1984, all general meetings other than the statutory meeting and annual general meeting are called extra-ordinary general meetings. These meetings are to be called in following circumstances.
• To solve important issues.
• To issue debenture.
• To alter company’s capital.
i By court
(ii) Voluntary winding up
(im) Under the supervision of court.
What are the contents of statutory report.
Statutory report provides the following information:
(1) Total number of allotted shares.
(ii) Cash received in respect of allotted shares. (iii) Names and addresses of directors, auditors,
managers and secretaries etc.
What is meant by company’s meeting and gives its
types.
When the members of the company, gather at certain time and place to discuss the business and managing affairs it is called meeting of the company.
(TYPES)
(i)
Directors meeting.
(il)
Shareholders meeting.
•
Annual general meeting
•
Extra ordinary meeting
• Statutory meeting
Which people cannot become the directors of
company.
(i) a minor;
(ii) person of unsound mind;
(i) a fence invonvicted by a court of law for an offence involving moral turpitude;
(iv)
a person who does not give written declaration of becoming director.
(v)
a person who is not a member of the company.
Explain the steps involved in the winding up of company by the consent of creditors.
Ans.
The method of creditor’s voluntary winding up for joint stock company is given below.
(a) Statutory declaration
(b) General meeting
c) Creditor’s meeting
(d) Statement of company’s affairs
(e) Intimation to registrar
(t) Appointment of liquidator
(g) Inspection committee
(h) Duties of the liquidators
(i) Final meeting
Q.13 What is meant by special resolution.
The resolution which is passed by ¾ three fourth majority of the shareholders is called special resolution.
A 21 days notice along with a copy of resolution must be sent to each member.
Define statutory report of company.
Statutory report provides the following information:
(i) Total number of Allotted shares.
(ii) Total amount of cash received in respect of the
allotted shares
(iii) Detail of company’s receipts and payments.
iv) The names & addresses of the directors, chief
executive, secretary, auditors etc.
(v) Particulars of any business contract etc.
What is an ordinary resolution.
A resolution which is passed by the simple majority of members in any kind of general meeting of the company. For this resolution a 21 days notice must be sent to each member.
Long. Discuss the procedure regarding the appointment, qualification and disqualification of company’s directors.
Long. Write a note on the powers and duties of directors.
Long. Define company’s meeting and explain its kinds.
Long. What do you know about the resolution and its kinds.
Long. Discuss the various methods of winding up of the joint stock company.
