Company Introduction, Types, Registration Flashcards
What is company?
Company means an organisation which is registered under company law.
What is company law?
Company law includes:
•Repealed companies act 1913
•Repealed companies ordinance 1984 and 2016
•Companies act 2017
Features of a company? Write names only 7?
•Company is an artificial legal person
•Separation of ownership from management
•Shares and share capital
•Limited liability of members/shareholders
•Legal obligations
•Liability to pay tax
•Perpetual succession(or perpetual existence)
Company is an artificial legal person?
Company is considered by law as artificial person having separate legal status from its owners this concept is called “doctrine of corporate personality”
Consequences of separate legal status?
• A company can contract in its own name.
•A company owns its assets and is fully liable to pay its debts
•Liability of members is limited
•Separation of ownership from membership
•Transfer of ownership and perpetual succession
Separation of ownership from membership?
In a company persons who manage the business(called directors) are usually different from persons who own the business(called members or shareholders)
Share and share capital?
Total investment in a company(called share capital) is subdivided into various smaller parts(called shares).
Each share has a face/nominal value.
If a person invests in a company,company issues him shares of equivalent amount as proof of his investment.
Characteristics of shares?
Share has some rights(right to receive dividend,right to attend general meeting,voting rights)
Shares are transferable.Shareholders can transfer some or all of their shares to another person(through sale,gift and inheritance)
Limited liability of members/shareholders?
Liability of members is
*limited up to unpaid amount on face value of share(in case of co limited by shares)
*limited up to the amount each member guarantees to contribute at time of winding up of co (in case of co limited by guarantee
*word “limited” is added at the end of name of a co to warn creditors that liability of members is limited
Legal obligations?
1..if a company breaks law or agreement, it is co itself which is liable
2..directories and officers of company are not liable unless they exceed their power
Liability to pay tax?
A co is liable to pay tax on its income/profits
Perpetual succession or perpetual existence?
*its means co,being an artificial/legal person does not die.it continues even if its owners change or die (as opposed to partnership)
*a company is created by a process of law and is wound up by a process of law
Law and governance of a company?
A company is governed by following laws
1.comapnies act,2017 (this is the law relating to creation and operation of companies)
2.memorandum of association (this is constitutional document which focuses on external stakeholders)
3.articles of association ( these are by-laws which focuses on internal affairs of a company)
What is body corporate/corporation?
Foreign company?
