rbrc w shop 1(corp framework)

8/3/2019 RBRC W Shop 1(Corp Framework)

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RBRC

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RIPHAH INTERNATIONALUNIVERSITY

Corporate FrameworkWorkshop Organized byRiphah Business Resource Centre


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OBJECTIVES OF THE WORKSHOP To understand different types of trading entities; To review the emergence of corporate business; To learn the difference between Partnership and

Company; To study various types of corporations; To comprehend the framework of joint stock company; To appreciate various aspects of Code of Corporate

Governance; To know the salient provisions of Companies Ordinance.


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TRADING ENTITIES

1. SOLE PROPRIETOR An individual who is in

business on his own account.

2. PARTNERSHIP The relation which subsists

between persons carrying on a business in

common with a view of profit.


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TRADING ENTITIES

3. LIMITED COMPANY A Company the liability of

whose members is limited and is formed by

registration under the Company Law.

4. LIMITED PARTNERSHIP A partnership having

limited partners i.e., sleeping partners whose

liability in the event of the partnerships

insolvency is limited to the amount that such

partners has agreed to contribute.


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TRADING ENTITIES (Contd..)

5. LIMITED LIABILITY PARTNERSHIP A body

corporate the liability of whose members is limited

and formed by registration under the Limited

Partnership Act (UK)


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EMERGENCE OF CORPORATE BUSINESS1. Historically, merchants and businessmen always used

to trade either on their own account or in partnership ifthey wished to spread the risk.

2. In case of failed business, the bankrupttrader/partners used to face several legal and socialconsequences. Consequently, only a few bold orwealthy persons would venture into business.

CORPORATE FRAMEWORK


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EARLY CORPORATIONS - Contd

Creditors collectively bear the risk ofcompanys insolvency and entrepreneur isabsolved of responsibility. As entrepreneur bears little risk himself, hemay be tempted to act fraudulently. CONSEQUENCE Need for regulatory legalframework and regulatory body.

DRAWBACKS OF LIMITED LIABILITY


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CORPORATE FRAMEWORK

1. Corporation Sole2. Statutory Corporations3. Joint Stock Companies

CORPORATIONS


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EFFECTS OF INCORPORATIONIncorporation gives the company a proper legal status.There are two main consequences of incorporation. PERPETUAL SUCCESSION The Company once formed

will continue till it is wound up under a process of law.Any change in the members does not effect theexistence of the Company.

LIMITED LIABILITY A limited companys membersenjoy limited liability i.e. as long as they have paid fortheir shares, they will be under no further personalliability in case of winding up.


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CONSEQUENCES OF LIMITED LIABILITY The Company may sue and be sued in its

own name. The Company may own property in its own

name. The Company enjoys greater flexibility in

raising of capital. Ownership and management may be

separated.


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CONSEQUENCES OF LIMITED LIABILITY

Once the Company is formed, it is subject tothe rules of the Company Law. The Company will/may have a COMMON

SEAL, which it uses in the execution ofdeeds.

(COMMON SEAL A device used for makingan impression mark upon a document so asto authenticate it).


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THE CORPORATE VEIL

The distinct feature of the registered companyis that it has its own legal existence,

separate from those who own it, who

manage it and those who are employed by

it. (The concept is often referred to as the

corporate veil) Salomon v A Salomon &

Company Ltd- 1897


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LIFTING OF THE CORPORATE VEIL

The Courts May lift the corporate veil where thecompany is:

Group of companies Owned by the enemy

A sham or a party to fraud Incorporate for unlawful purpose Violating specific provisions of the Law. Regarded as an agent of another company


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COMPANY VS PARTNERSHIPSNO. COMPANY PARTNERSHIP1. It is a legal entity. It is not a legal entity.

2. Liability ofshareholders is limitedto the nominal value ofthe shares held.

Every partner is jointly andseverally liable for all debts ofthe firm.3. A shareholder has nopowers to bind thecompany or the othershareholders.

A partner can bind the firmand his co partners as long ashe acts within the ordinaryscope of the business.4. A shareholder has noright to take part in theManagement of theCompany.

All partners are entitle to takepart in the management ofthe business of the firm.


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COMPANY VS PARTNERSHIP (Contd.)SNO

.COMPANY PARTNERSHIP

5. A shareholder has no rightto inspect the books exceptto the extent allowed by theArticles and/or CompaniesOrdinance.

All partners have accessto the books.

6. Company is bound by itsmemorandum and articlesof association which canonly be altered by laws.

Partnership is governedby partnership deed(agreement) which canbe altered at any time bymutual consent of thepartners.7. Company must get itsaccounts audited. There is no statutoryprovision for audit inpartnership act.


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COMPANY VS PARTNERSHIP (Contd)SNO

.COMPANY PARTNERSHIP

8. Company can only bebrought to an end by(1) Dissolution by theCourt (2) Winding upunder legal process(3) Name struck off byregistrar.

A partnership can bebrought to an end by anagreement at anytime.

9. Company has perpetualexistence which is notaffected by change ordeath of member (s).

Death or retirement of apartner dissolves thepartnership in theagreement of to thecontrary.

10. A shareholder can contractwith the Company. A partner can not makeany contract with his firm.


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TYPES OF COMPANIES Limited Liability Companies

- Company Limited By Shares- Public Limited Company

- Listed Company

- Non-listed Company- Private Limited Company

- Company Limited By Guarantee

Unlimited Companies


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CORPORATE FRAMEWORKJOINT STOCKCOMPANIESLIMITED

LIMITED BYSHARES LIMITED BYGURANTEE

PRIVATE ASSOCIATIONUNDER SEC. 42NOT HAVINGSHARES

PRIVATESECTOR

PUBLIC

PUBLICSECTOR PRIVATESECTOR

COMPANYUNDERSECTION 43

PUBLICSECTOR

NON-LISTEDISTED


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CORPORATE FRAMEWORKPUBLIC LTD COMPANY VS PRIVATE LTD COMPANYSNO. PUBLIC LTD. COMPANY PRIVATE LTD. COMPANY1. Can invite subscriptionfrom public. Can not invite subscriptionfrom public.2. No restriction ontransfer of shares. Transfer of shares isrestricted.3. Should have at least 3members. Should have at least twomembers.4. No restriction on upperlimit of members. Members can not exceed 50(employee members notcounted)


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CORPORATE FRAMEWORKPUBLIC LTD COMPANY VS PRIVATE LTD COMPANY

SNO. PUBLIC LTD. COMPANY PRIVATE LTD. COMPANY5. Must have a certificate ofcommencement ofbusiness.

Can commence businessimmediately on incorporation.6. Must raise minimumsubscription beforeobtaining certificate ofcommencement ofbusiness.

There is no such requirement.

7. Must file Prospectus orStatement in lieu of theProspectus for obtainingcertificate ofcommencement ofbusiness.

There is no such requirement.


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CORPORATE FRAMEWORKPUBLIC LTD COMPANY VS PRIVATE LTD COMPANYSNO. PUBLIC LTD. COMPANY PRIVATE LTD. COMPANY

8. Required to file accounts,appoint auditors ofspecific qualifications,restriction on investmentin associated companies,restriction on chiefexecutive doingcompetitive business.

No such restrictions apply.

9. Beneficial ownership oflisted companies iscontrolled and reported.

No reporting of beneficialownership required.

10. Must hold statutorystatement afterincorporation.No required to hold.


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INCORPORATION OF A COMPANY

Promoters Memorandum of Association Articles of Association

Registration by Registrar of Companies Certificate of Incorporation Certificate of Commencement of Business


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MEMORANDUM OF ASSOCIATION

The Name Clause The Registered Office Clause The Object Clause The Limited Liability Clause The Share Capital Clause (if applicable) The Public Limited Clause (if applicable)


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ARTICLES OF ASSOCIATION

1.REGISTERED OFFICE2. SHARES Authorized Share capital No partly paid shares to be

issued Issue of shares at Premiumand Discount Allotment of shares Joint Shareholders Transfer of Shares


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ARTICLES OF ASSOCIATION (Contd.)

3. ALTERATION OF CAPITAL By special resolution4. GENERAL MEETING

Statutory General Meeting Annual General Meeting Extra Ordinary General Meeting


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5. DIRECTORS Directors to be elected Number of Directors Government Director Period of Officer of electedDirectors Removal of Director Qualification of Directors


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6. CHIEF EXECUTIVE7. SECRETARY8. COMPANY SEAL9. DIVIDENDS AND RESERVES10. ACCOUNTS11. CAPITALISATION OF PROFITS12. AUDIT


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Important Corporate Concepts

Authorized Share Capital Paid up Share Capital Bonus Shares Right Shares Dividend Subsidiary Company Associate Company Resolutions- Ordinary/ Special


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THANK YOUPresented byKhurram Khan

Director- RBRC


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HISTORY OF CORPORATE LAWS IN PAKISTAN

1. Healthy Growth of the Corporate Enterprises2. Protection of Investors and Creditors3. Promotion of Investment4. Development of Economy

CORPORATE FRAMEWORK

OBJECTIVES


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LAW COMPANIES ACTS, 1913 - REGISTRAR JOINT

STOCK COMPANIES COMPANIES CAPITAL ISSUE - CONTROLLER OF

ACT, 1947 CAPITAL ISSUE COMPANIES ORDINANCE, 1984 - CORPORATE LAW

AUTHORITY COMPANIES - CORPORATE LAW

(ISSUE OF CAPITAL)RULES, 1996 AUTHORITY

HISTORY OF CORPORATE LAWS IN PAKISTAN (Contd)REGULATOR


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HISTORY OF CORPORATE LAWS IN PAKISTAN

LAW REGULATOR CENTRAL DEPOSITORIES - CORPORATE LAW

ACT, 1997 AUTHORITY COMMISSION ACT, 1997 - SECP COMPANIES (AMENDMENTS) - SECP

ORDINANCE, 1984

rbrc w shop 1(corp framework)

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