2 classification of company
TRANSCRIPT
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2 COMPANY LAWCLASSIFICATION OF COMPANIES
• By Virtue Of Legal Forum:• It is also called on the basis of incorporation. There
are four kinds of such companies.
• Chartered Company……• Company created by charter of the King.• The East India Company. • The Crown can cancel the charter and close the
company. • Such companies do not exist in Pakistan.
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Classification Of Companies By Virtue Of Legal Forum
• Statutory Company…….• This Company is formed by the special Act of
Parliament or by order of the head of State.• SBP, • NADRA, • WAPDA, • Pakistan Railways are the examples of this type of
company.
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• Such companies do not have memorandum and articles of association.
• These enjoy special powers.
• Alteration in the powers of such companies can be made by the Parliament.
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Classification Of Companies By Virtue Of Legal Forum
• Government Company…….• It is one in which not less than
51% of paid up share capital is held by the Central Government or by any Provincial Government.
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Classification Of Companies By Virtue Of Legal Forum
• Registered Company……..These are formed under
• The Companies Ordinance, 1984 • Or under the Companies Act passed earlier to this.• • Such companies come into existence only when
these are registered under the Ordinance.
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• Such companies get their powers
– from The Companies’ Ordinance 1984 and – from The memorandum of association.
• This is the most popular mode of incorporating a company.
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Classification On The Basis Of Liabilities
• There are four kinds of such companies.
• Company Limited By Shares……
• It is company, which keeps the • liabilities of its members, limited • up to the nominal value of shares purchased by
them.
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• Such companies • Must use the word limited at the end of their
names • So that the public can understand that the
liability of the member if limited.
• These are formed for earning profit.
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Classification On The Basis Of Liabilities
• Company Limited By Guarantee…….
• In such companies the liabilities of members is limited
• To the amount each of them has under taken to pay• • In the event of winding up of the company.
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• This type can further be divided into two types.
– Company Limited By Guarantee, having a share capital
– Company Limited By Guarantee, and not having a share capital
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• The Karachi Stock Exchange (Guarantee) Limited,• • Lahore Stock Exchange (Guarantee) Limited, And
• Islamabad Stock Exchange (Guarantee) Limited
• Are examples of companies limited by guarantee
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Classification On The Basis Of Liabilities
• Unlimited Company…….
• If the liability of the members is unlimited, the company is called unlimited company.
• If the company has a share capital,• It shall state the amount of share capital with which
the company purposes to be registered.
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• If the company has not a share capital,
• Shall state the number of members with which the company purposes to be registered.
• • This may be either public company or a
private company.
• Such companies are rare these days.
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Classification On The Basis Of Liabilities• Association Not For Profit…….• Generally the companies are formed for earning profit.
• Some associations are made not for the purpose of earning profit.
• However, under section 42, “Association not for profit” can be registered as a company with limited liabilities.
• Such as association does not add the word ‘limited’ or ‘privet limited’ or ‘guarantee limited’ to their names
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Classification On The Basis Of Composition Of Share Holding
• These may be of following four kinds.
• Holding Company……..• It means a company or a body corporate, • Which holds (directly or indirectly), more than 50% • The voting securities of a company or
• Has a power to elect and appoint more than 50% of directors of each company.
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Classification On The Basis Of Composition Of Share Holding ….
• Subsidiary Company……..• It means a company or a body corporate, • whose more than 50% voting securities • are held/controlled directly or indirectly
by some other company • Has a power to elect and appoint more
than 50% of directors of each company.
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Classification On The Basis Of Composition Of Share Holding
• Associated Company……• A company whose 20% or more
shares (up to 50%) are held by another company shall be considered as an associated company of that company.
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Classification On The Basis Of Composition Of Share Holding
• One Man Company…….
• Where one man holds practically the entire share capital of the company
• and he takes a few other members who are no more than dummies nominees of the former.
• This is done to fulfill the statutory requirement of at least seven members (now 3 under the Companies’ Amendment Ordinance, 2002) in case of public company
• and two (now one under the Companies’ Amendment Ordinance, 2002) in case of private company.
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Classification On The Basis Of Number Of Members:
• On the basis of number of members, the following are two types of company.
• Private Company…….• Private Company is a company, which has the
following characteristics. • At least one member• Number of members must not exceed 50.• Restriction on transfer of shares• Cannot invite to the public to purchase its shares
and debentures
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Classification On The Basis Of Number Of Members (cont…
• Public Company……..• Public company means a company which is not a
private company. • This means that it may invite the general public to
subscribe for any shares, or debentures of the company.
• The limit of maximum of 50 members as applicable to a private company, does not apply to a public company.
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Classification On The Basis Of Number Of Members (cont…
• The minimum number, of members required to form a public company is three.
• At the same time the articles must not contain a clause for restricting the right of members to transfer their shares.
• These are freely transferable.• • It should also be noted that public company must add
the word ‘Limited’ at the end of its name