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Corporate Laws > Lecture 13 > Flashcards

Lecture 13 Flashcards

1
Q

How can a public company issue shares to its employees?

A

A public company may issue shares to employees if the articles of association of the company expressly provides and authorizes the offer of scheme.
2. committee
3. Board resolution
4. special resolution

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2
Q

What are the responsibilities of the board regarding the employee share option scheme?

A

The board shall form a compensation committee for administration and superintendence of the scheme provided that the chairman of the compensation committee of listed company shall be an independent director.
1. The board shall consider and resolve to offer the scheme
and the above decision of the board shall provide information required under regulation 5 subregulation 1 clause ii subclause a
2. The offer of the scheme is authorized by a special resolution

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3
Q

What information is needed regarding employee share option scheme under regulation 5 sub regulation 1 clause ii subclause a to f?

A

the proposal of the board clearly state the following
1. proposal of the board to issue shares without right offer is subject to approval of the shareholders and the commission
2. quantum of the issue both in terms of number of shares and percentage of paid up capital before and after the issue
3. issue price per share and justification of the same
4. consideration against which the shares are proposed to be issued i.e cash or other than cash
5. name of the person, their bried profile, existing shareholding,
6. purpose of the issue
further the agenda of EOGM should provide details of any litigation or proceedings in the context of current or previous ESOS along with the management stance

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4
Q

What are the additional requirements if the employee share option scheme is extended to the employees of the subsidiary or the holding company?

A

Separate special resolution shall be required

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5
Q

What are the additional requirements if the employee share option scheme is granted to employees and shares offered are equal to or greater than 1 % of the issued share capital?

A

Separate special resolution shall be required

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6
Q

What are the additional requirements if the employee share option scheme is granted to employees and shares offered are equal to or greater than 1 % of the issued share capital?

A

Separate special resolution shall be required

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7
Q

Within what timeframe the ESOS should be announced ?

A

within 6 months of passing of special resolution otherwise fresh resolution would be required

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8
Q

What are the additional requirements if the shares are issued at discount in a ESOS?

A

the company shall also obtain the approval of the shareholders and the commission under section 82 of the Act

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9
Q

What are the special reservations regarding the meeting in which allocation of options of executive directors and employees is to be discussed?

A

the company and the compensation committe shall ensure that its executive directors and the employees in the senior mangement shall not participate in the deliberation or discussion of their own allocation of options unnder the scheme

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10
Q

What if the company want to change the terms of the share option scheme after its announcement ?

A

a company shall would need a special resolution in a general meeting to vary the terms of a scheme in any manner which may be detrimental to the interests of its employees

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11
Q

What is the minimum gap between the grant of an option and vesting of the option?

A

there shall be a minimum period of 1 year between the grant of an option and vesting of the option

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12
Q

What happens to ESOS in case or merger or acquisition of the company granting such options?

A

In that case the period during which the options granted by the merging or amalgamating company were held by the him shall be adjusted against the minimum vesting period required under the regulations

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13
Q

How long can be a lockin period for the shares issued pursuant to an exercise of an option under ESOS?

A

A company shall have the freedom to specify the lock-in period for the shares issued pursuant to an exercise of an option

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14
Q

Have the employee right to receive dividend or to vote in respect of the options granted to him?

A

no
an employee shall not have the right to receive the dividend or to vote or to be entitled to rights of the members in respect of the options granted to him till the shares are issued to such employee on exercise of the option

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15
Q

What is the treatment in case of failure of exercise of options by the employee under ESOS?

A

The options granted shall lapse and and such lapsed options may be granted to other employees within a period of 30days from the date of lapse

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16
Q

Are the options granted under ESOS transferable?

A

Yes the options may be transferred but only to an entitled employee of the company

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17
Q

What happens to the options under ESOS in case of death of employee?

A

all the options granted to him till the date of his death shall vest in his legal heirs or nominees

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18
Q

What happens to the options under the ESOS in case of permanent incapacitation of an employee during employment?

A

all the options granted to him as on the date of permanent incapacitation shall vest in him on that day

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19
Q

What happens to the options under ESOS in case of resignation or termination of an employee?

A

Vested
all the options not vested as on that day shall expire
Not vested
subject to the terms and conditions of the scheme is entitled to retain the vested options

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20
Q

Can a charge / mortgage or pledge be created against the options granted under ESOS?

A

no

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21
Q

at what limit the entitlement pool is capped at in case of ESOS?

A

in case of a listed company entitlement pool is capped 10% of the enhanced paid capital of the company in a year and 25% of the enhanced paid up capital of the company at any point in time

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22
Q

Who determines the entitlement pool in an of ESOS?

A

it is determined by the compensation committee and approved by the shareholders through special resolution

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23
Q

To whom shall the company file the notice of increase in share capital?

A

Registrar

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24
Q

What are the requirements if the company is going for an IPO and already has a ESOS?

A

if any options granted to employees in pursuance of an ESOS are outstanding at the time of initial public offer the offering document shall disclose the number o outstanding options, exercise price, exercise period and impact on the shareholding of the members in case all the outstanding options are exercised

25
Q

Can a company issue share capital through private placement?

A

yes, but subject to certain conditions

26
Q

What approvals need to be obtained in case the company is going for private placement?

A

the company shall obtain approvals under section 86 of the ordinance

27
Q

What is the number limit of persons to whom shares can be offered under private placement? and what is the exception?

A

the offer or invitation to subscribe to shares shall not be made to more than fifty persons
exception
the above restrictions shall not apply to shares offered to qualified intitutional buyers and employees of the company under an EFOF

28
Q

What is the requirement regarding advertisement in case of private placement?

A

the company shall not release any public advertisement or utilize any media, marketing or distribution channels and agents to inform the public at large about such offer

29
Q

How many times can a company make private placements within financial a year?

A

not more than 2

30
Q

What onformation should be included in the information memorandum in case of private placement?

A

Minimum information as specified in schedule 1

31
Q

What is the requirement related to the proceeds in result of issue of capital through private placement?

A

the company shall ensure that the proceeds of the issue are utilized in the form and manner as disclosed in the information memorandum

32
Q

What means can be used for the payable against the shares offered under private placement?

A

through cheque or demand draft or other banking channels but not by cash

33
Q

Can a company issue debt securities through private placement?

A

yes, but subject to certain conditions and it shall be according to the provisions of section 66 of the ordinance

34
Q

Within what time frame a company is required to hold a statutory meeting ?

A

for every public company within 180 days from the time of incorporation or from the day when the company is entitled to commence business

35
Q

In which case there is no need to hold a statutory meeting?

A

in case where the annual general meeting is held before the statutory meeting then there is no need to hold a statutory meeting

36
Q

When should the notice of the statutory meeting be sent to the members?

A

at least 21 days before the date fixed for the meeting along with a copy of the statutory report

37
Q

How shall the number of shares be mentioned in the statutory report?

A

the statutory report shall state the total number of shares allotted, distinguishing shares allotted other than cash and stating the consideration for which they have been allotted

38
Q

What is the requirement related to shares alloted other than disclosing the shares issued?

A

The total amount of the cash received by the company in respect of the shares alloted

39
Q

What is tgr requirements regarding the receipts and payments made by the company in the statutory report?

A

From date of incorporation to uoto 15 days before fhe date of report
An abstract of the receipts of the company and of thr payment made by the company exhibiting under distinctive headings the receipts from shares and debentures and other sources, the payments made and particulars concerning the balance remaining in hand and an account of preliminary expenses of the company showing separately any commissions or discounts paid or to be paid on the issue or sale of shares and debentures

40
Q

What is the requirement related to the disclosure of specific persons/executives in the statutory report?

A

The names addresses and occupations of the directors, chief executive, secretary, auditors and legal advisors of the company amd the changes, if any, which have occured sinve the date of incorporation

41
Q

What are the requirements related to contract modifications in the statutory report?

A

The particulars of any contract the modification of which is to be submitted to the meetinb for its approval together with the particulars of the modification or proposed modification

42
Q

WHat matters can be discussed at the statutory meeting?

A

the members of the company shall have the liberty to discuss any matters related to the formation of the company or arising out of the statutory report, whether previous notice is given or not but no resolution of which the notice has not been given in accordance with the articles may be passed.

43
Q

Can a statutory meeting be adjourned?

A

yes the meeting may adjourn from time to time and at any adjourned meeting any resolution of which notice has been given in accordance with the articles wither before or after the original meeting may be passed and an adjourned meeting shall have same powers as an original meeting.

44
Q

What are the exceptions to the requirements related to the statutory meeting ? i.e which companies are allowed not to comply with the requirements?

A

a public company which converts itself from a private company within 1 yr of its incorporation

45
Q

What are the penalties in case of contravention with the provisions of regulations regarding the statutory meeting?

A

in case of a listed company-penalty of level 2 on the standard scale
in case of any other company-penalty of level 1 n the standard scale

46
Q

What is the time period for holding an annual general meeting? and what is the exception to the rule?

A

Every company shall hold an annual general meeting within 16 months from the date of incorporation and thereafter once in every calender year within a period of 120 days following the close of a financial year.
exception:
in case of a listed company the commission and in any other case, the registrar may for a special reason extend the time not exceeding 30 days

47
Q

Where should the annual general meeting be held?

A

the annual general meeting in case of a listed company shall be held in the town in which the registered office of the company is situated or in a nearest city

48
Q

What are the requirements related to video link in case of AGM?

A

at leas 7 days prior to the date of meeting on the demand of members residing in a city who hold at least 10 % of the paid up capital or such other percentage as may be specified, a listed company must provide the facility of video link to such members

49
Q

What is the time limit for sending the notice of the AGM? and what are the additional requirements in case of a listed company ?

A

at least 21 days before the date of meeting
In case of a listed company it shall also be sent to the commission and PSX and shall also be published in English and urdu languages at least in one issue of a daily newspaper of respective language having nationwide circulation

50
Q

What are the exceptions related to the regulations regarding the AGM?

A

Nothing in this section shall apply to a single member company

51
Q

What is the penalty in case of contravention to the requirements of the section relating to AGM?

A

in case of a listed company a penalty of level 2 on the standard scale
in case of any other company - penalty of level 1 on the standard scale

52
Q

When should a company call an extra ordinary general meeting?

A

the board may call an extra ordinary general meeting of the company to consider any matters that require the approval of the company in a general meeting

53
Q

Who can call an EOGM?

A
  1. the board to discuss matters
  2. members by requisition

in case of company having share capital - representing not less than 10 percent of the voting power as on the deposit of requisition
In case of company not having share capital - not less than 1/10th of the members

54
Q

What shall the requisition for the EOGM state?

A

the requisition shall state the objectives of the meeting be signed by the requisitionists and deposited at the registered office of the company

55
Q

What if meeting is not called after the submission of requisition of EOGM?

A

if the board do not proceed within 21 days from the date of the requisition being so deposited to cause a meeting to be called the requsiistions may themselves call the meeting but in either case any meeting so called shall be held within 90 days from the deposit of the requisition

56
Q

What is the requirement related to the expenses borne by the requisitions in calling a meeting?

A

Shall be reimbursed to the requisitionists by the company and the sum shall be deducted from any fee or remuneration payable to such of the directors who were in default in calling the meeting

57
Q

What is the time limit within which the notice for an EOGM shall be served?

A

at least 21 days before the date of the meeting
provided that in case of non listed company if all the members entitled to attend the meeting and vote agree it can be called on a shorter notice

58
Q

What are the penalties for non compliance with the requirements of regulation related to EOGM?

A

in case of listed company - penalty of level 2 on standard scale
in case of other than listed company - penalty of level 1 on the standard scale

59
Q

WHich businesses fall under the category of ordinary business in case of an AGM?

A
  1. the consideration of financial statements and the reports of the board and auditors
  2. the declaration of any dividend
  3. the election and appointment of directors in place of those retirung and
  4. the appointment of auditors and fixation of their remuneration

Corporate Laws (14 decks)

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