CORPORATE

CORPORATE LAW
LAW
Week
Week22&
&33

Scope
Scopeof
ofCorporate
CorporateLaw
Law
By
Muhammad Naveed Chohan

COMSATS LACASTER Dual Degree Programme

Monday, October 17, 2016

Outline

Introduction to Corporate Law

Meaning and Distinctive Features of the Company
History of the Company
Object and Division of the Company
Difference Between the Company and Other
Organisations
Classification of the Companies
Company Law and the Jurisdiction of the Courts

Monday, October 17, 2016

Introduction to Corporate Law

What is Corporate Law?
Corporate law is the study of how
shareholders, directors, employees, creditors and other
stakeholders such as consumers, the community and
environment interact with one another under the internal rules
of the company

Monday, October 17, 2016

Introduction to Corporate Law

Meaning of Word Company
Derived from a Latin word
PANIS

In English means BREAD

Monday, October 17, 2016

Introduction to Company Law

What is meant by Company/Joint Stock Company?
Joint stock company is an artificial person, recognised by law, with
a distinctive name, a common seal, a common capital,
comprising transferable shares, carrying limited liability having
a perpetual succession
Company means a company formed and registered under this
ordinance or an existing company
Section 2(1) (7) of Companies Ordinance, 1984

Existing company means a company formed and registered under

any previous Companies Act
Section 2(1) (5) of Companies Ordinance, 1984
Monday, October 17, 2016

Introduction to Company Law

What is meant by Company/Joint Stock Company?
A company is an association of many persons who contribute
money or money worth to a common stock and employ it for
some common purpose
Lord Justice Lindley

Monday, October 17, 2016

Introduction to Company Law

Distinctive Features of a Company/ Joint Stock Company:

Artificial Person
Recognized by Law
Distinctive Name
Common Seal
Transferable Shares
Limited Liability
Perpetual Succession

Monday, October 17, 2016

History of Company Law

An Overview of History:

From 11th to 16th Century : Earlier Forms

Merchant Guilds (Commenda and Societas) in Islam Sharikah and Mudarabah
Liability of worker Unlimited in Commenda while Limited in case of
Sharikah
Liability of investor limited in Commenda and lost in case of total loss
Socialites became Partnership in modern form while Limited Liability
Partnership Commenda
From the 16th Century to 1825: Royal Chartres
In 16th century rise of and granted charters to companies by Tudor monarchs
In 17th century companies started on behalf of merchants
Rise of Joint Stock Company
Not fixed capital and development of fixed capital in the form of shares
Property belongs to company operated through board of directors
Incorporation through Royal Charters and Act of Parliament

Monday, October 17, 2016

History of Company Law

An Overview of History:

1720: Fear of Companies

In preview Rise of South Sea Company and Collapse of the company
Passed Bubble Act by Parliament in 1720
Curtailed the Use of Joint Stock company due to fraud and Collapse

Unincorporated Associations
Formation of Partnerships
Deed of settlement
Transferable Shares and Limited Liability
Large Partnership formed
1825 1855: Repeal of the Bubble Act and Creation of Limited Liability
Modern company rise in 1825 due to repeal of Bubble Act
Capital responsibility and sue in its own name
Monday, October 17, 2016

History of Company Law

An Overview of History:

The Joint Stock Companies Act, 1844

Prohibited large unincorporated companies
Withheld the admission of limited liability by Limited Liability Act 1855
First Indian companies Act 1850
Another Act in 1857 and privilege of limited liability
Later Developments 1856 to 1910
The Companies Act 1862 to bear short title Companies Act
First Modal Articles appeared as Table A in the 1st Schedule
Recast in the Companies Act of India
Amendments in 1891 and 1895
In England new law in 1908 in consolidated form followed by 18 amendments
Introduction of Private Company
In India new law passed in 1910
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History of Company Law

An Overview of History:

The Companies Act, 1913 till the Present

The Companies Act 1913 followed by The Companies (Foreign Interest) Act,
1908
The Companies Amendment Act ,1930
The Securities and Exchange Ordinance, 1969
The Companies (Managing Agency and Election of Directors) Order, 1972
Companies (Shifting of Registered Office) Ordinance, 1972
The Companies Ordinance, 1984 repealed all previous laws except Securities
and Exchange Ordinance 1969
Single Member Companies Law in 203
Upcoming new company law

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Object and Division of C. L.

Object of Company Law in the Shape of Companies Ordinance 1984:

Consolidation and amendment of law

Healthy growth of corporate entities
Fix minimum standards of Integrity and promotion of management
Prevent misconduct and malpractices
Protections of shareholders
Enforce proper duties
Require discloser of information
Adjustments of rights
Empower government

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Object and Division of C. L.

The Functions of Company Law:

Enabling Environment for Economic Growth and promote Social Policies

Minimum standards of Control
Regulatory Guidelines to Minimise Risks
Require Disclosers in Public Companies
Appointment of Professional Managers and work for Companys Interest
Framework of Winding Up and Protection of Interests

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Object and Division of C. L.

Division of Company Law:

Winding Up

Restructuring

Management and
Administration

Borrowing and
Charges

Membership

Allotment of shares
and Share Capital

Incorporation

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Monday, October 17, 2016

Kinds of Companies
On the Basis
of
Incorporation

Statutory Company
Charted Company
Registered Company
Listed Company

Monday, October 17, 2016

On the Basis
of Liability

Company Limited by
Shares
Company Limited by
Guarantee
Unlimited Company
Association not for
Profit

On he Basis
of Number of
Members

On the Basis
of Ownership

Public Company
Private Company
Single Member Company
Holding Company
Subsidiary Company
Associated Company
Foreign Company

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Kinds of Companies
On the Basis of Incorporation:
When the company is registered that process is called incorporation of the company

1.

Chartered Company:
Chartered granted by Crown
For example East India Co. , Bank of England
Business of the company is explained by Charter

2.

Statutory Company:
Formed by Special Act or under Order of head of state
For the utilities of public
Purpose is to provide services and not to earn profit
These companies do not have memorandum and articles
For example SBP,ADBP, PR, PIA, WAPDA etc.
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Kinds of Companies
On the Basis of Incorporation:
When the company is registered that process is called incorporation of the company

3.

Registered Company:
Formed under Companies Ordinance ,1984
Formed under earlier previous Acts
Most popular mode of incorporation
Memorandum and Articles of Association
Get powers from law

3.

Listed Companies:
Securities are listed
Allowed to trade in stock exchange
Preparation of quarter accounts ONE MONTH BEFORE (U/S 245)
Filing of copies of accounts to commission and to stock exchange (U/S 245)
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Kinds of Companies
On the Basis of Liability:
Defines the liability of members or company as a whole

1.

Company Limited by Shares: (U/S 15)

Members limited up to the nominal value of the share purchased by them
Paid full nominal value of share hold by him his liability is nil

2.

Company Limited by Guarantee: (U/S 15)

Limited liability of the members
Each member undertake to pay in the event of winding up of the company
Kinds:
(a) Company Limited by Guarantee and having a share capital
(b) Company Limited by Guarantee and not having share capital
For example Karachi Stock Exchange (KSE), Lahore Stock Exchange
(LSE) ..

Monday, October 17, 2016

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Kinds of Companies
On the Basis of Liability:
Defines the liability of members or company as a whole

3.

Unlimited Company: (U/S 15)

Liability of the members in the company is unlimited
Show purpose of the registration
No existence in present

Monday, October 17, 2016

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Kinds of Companies
Association not for profit:

Purpose not to earn profit

Under section 42 these companies are registerd
Not add the words Ltd. or (Pvt.) Ltd. or Guarantee Ltd
Condition of the Association not for Profit:

o
o

Promotion of useful object

Profits applies their objects
Not pay dividend
Condition binding on association
Condition includes in documents
Licence is granted by Federal government
Insert in MOA and AOA regulations of Federal government
Advantages:
Application for Licence:

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Kinds of Companies
On the Basis of Number of Members:
1.

Single Member Company:

Single member is shareholder
At least one director
Also required to have one director
Companies add SMC at the end of the name

2.

Private Company:
At least 2 persons
Not exceed 50
Articles of association restrict transfer of shares
Shares are not offered to general public
Companies add (Pvt.) Ltd at the end of the name
Privileges of private company..............
Loss of Privileges..............

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Kinds of Companies
On the Basis of Number of Members:
3.

Public Company:
Public company means a company not a private company
At least 3 persons
Maximum unlimited shareholders
Shares can be transferred from one person to other it means to general public
Companies add the word Ltd. at the end of the name

Monday, October 17, 2016

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Kinds of Companies
On the Basis of Ownership:
1.

Holding Company:
Hold 50% shares of other company
Control over the board of directors
Advantages of holding company..............

2.

Subsidiary Company:
Other company hold 50% of its shares
Other Company has control over the board of directors

3.

Associated Company:
Not a subsidiary company but works in close connection
It is also called associated undertaking

4.

Foreign Company:
Incorporated outside the Pakistan and carries business in Pakistan
Monday, October 17, 2016

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Jurisdiction of Courts under C/L

What is Company Court?
Company court means a court having jurisdiction under
Companies Ordinance, 1984
Section 2(11) of Companies Ordinance, 1984

Jurisdiction: (U/S 7 and 8)

High Court (H.C Benches will be constituted by Chief Justice of High Court)
Federal government can authorize civil courts to deal with corporate matters
Jurisdiction of civil court and registered office of the company
Longest period of registered office and territorial jurisdiction of civil court

Monday, October 17, 2016

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Jurisdiction of Courts under C/L

Proceedings of Company Court: (U/S 9)

Judgment within 90 days

Day to day hearing of case
Reason of delay in proceedings
No adjournment more than the 14 days and 30 days in proceedings
Court follow summary proceedings

Appeal: (U/S 10)

Order of company court Paid up capital more than one (1) million
Supreme Court
Order of company court Paid up capital less than one (1) million if SC
allow it than
Order of company court No Paid up capital if SC allow it than
Disposing of Appeal in 90 days
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Jurisdiction of Courts under C/L

Power of Commission to Initiate Action Against Managmet in the
Court: (U/S 271 of CO 1984)
Company Defrauds its Creditors, Members and Unlawful Activity
Promoter or Management guilty of fraud, misfeasance,, breach of trust or other
misconduct
Companys affairs Deprive Shareholders
Expected information not Given
Allotment of Shares without adequate consideration
Sound business practices were not followed
Financial position endangered insolvency

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Jurisdiction of Courts under C/L

Order of the Court when Commission Applies: (U/S 271 of CO 1984)
Remove any Director, CEO, Managing Agent or any other officer
Direct changes in the Accounting Policies
Direct Company to Call Meeting for Remedial Action
Annulled any Contract

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End of Week # 2&3 Lecture Presentation

Thanks for Patience

Monday, October 17, 2016

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