BBA:

401:
COMPANYLAW

LECTUREONE

COMPANY
Companyl
awi
sthesetofl
awst
hatcont
rol
howbusi
nessesar
efor
medandmanaged

1.
1Def
ini
ti
onofacompany

AcompanyorCor
por
ati
oni
sar
ti
fi
cial
orl
egal
per
sont
hathasasepar
atel
egal
exi
stence
f
rom i
tsowner
s.Theowner
soft
hecompanyar
eknownasmember
sorshar
ehol
der
s.
I
tsl
egalst
atusgi
vesacompanyt
hesamer
ight
sasanat
uralper
sonwhi
chmeanst
hat
acompanycani
ncurdebt
,sueandbesued.Compani
esar
emanagedbycompany
of
fi
cer
swhoar
ecal
l
eddi
rect
orsandcompanysecr
etar
ies.

1.
2Char
act
eri
sti
csofaCompany

Acompanyasanent
it
yhasmanydi
sti
nctf
eat
ureswhi
cht
oget
hermakei
tauni
que
or
gani
zat
ion.Theessent
ial
char
act
eri
sti
csofacompanyar
efol
l
owi
ng:

i
.Separ
ateLegal
Ent
it
y

Thecompanyi
sdi
sti
nctanddi
ff
erentf
rom i
tsmember
sinl
aw.I
thasi
tsownsealand
i
tsownname,i
tsasset
sandl
i
abi
l
iti
esar
esepar
ateanddi
sti
nctf
rom t
hoseofi
ts
member
s.I
tiscapabl
eofowni
ng pr
oper
ty,i
ncur
ri
ng debt
,and bor
rowi
ng money
,
empl
oyi
ngpeopl
e,hav
ingabankaccount
,ent
eri
ngi
ntocont
ract
sandsui
ngandbei
ng
suedsepar
atel
y.

i
i
.Li
mit
edLi
abi
l
ity

Thel
i
abi
l
ityoft
hemember
soft
hecompanyi
sli
mit
edt
ocont
ri
but
iont
otheasset
sof
t
hecompanyupt
othef
acev
alueofshar
eshel
dbyhi
m.Amemberi
sli
abl
etopayonl
y
t
heuncal
l
edmoney(
shar
esmoneywhi
char
enotpai
d)dueonshar
eshel
dbyhi
m.I
fthe
asset
soft
hef
ir
m ar
enotsuf
fi
cientt
opayt
hel
i
abi
l
iti
esoft
hef
ir
m,t
hecr
edi
tor
scan
f
orcet
hepar
tner
stomakegoodt
hedef
ici
tfr
om t
hei
rper
sonal
asset
s.

1
i
i
i.Per
pet
ual
Successi
on(
Notaf
fect
edbychange,
deat
horbankr
uptofi
tsmember
s)

Acompanydoesnotceaset
oexi
stunl
essi
tisspeci
fi
cal
l
ywounduport
het
askf
or
whi
chi
twasf
ormedhasbeencompl
eted.Member
shi
pofacompanymaykeepon
changi
ngf
rom t
imet
oti
mebutt
hatdoesnotaf
fectl
i
feoft
hecompany
.Insol
vencyor
Deat
hofmemberdoesnotaf
fectt
heexi
stenceoft
hecompany
.

i
v.Separ
atePr
oper
ty

A companyi
sadi
sti
nctl
egalent
it
y.Thecompany
'spr
oper
tyi
sit
sown.A member
cannotcl
aim t
o beowneroft
hecompany
'spr
oper
tydur
ing t
heexi
stenceoft
he
company
.

v
.Tr
ansf
erabi
l
ityofShar
es

Shar
esi
napubl
i
ccompanyar
efr
eel
ytr
ansf
erabl
e,subj
ectt
ocer
tai
ncondi
ti
ons,such
t
hatnoshar
e-hol
deri
sper
manent
lyornecessar
il
yweddedt
oacompany
.Whena
membert
ransf
ershi
sshar
est
oanot
herper
son,t
het
ransf
ereest
epsi
ntot
heshoesof
t
het
ransf
erorandacqui
resal
lther
ight
soft
het
ransf
erori
nrespectoft
hoseshar
es.
Butt
hisi
snott
hesamei
npr
ivat
ecompani
es.

v
i.CommonSeal

Acompanyi
sanar
ti
fi
ci
alper
sonanddoesnothav
eaphy
sicalpr
esence.Thus,i
tact
s
t
hroughi
tsBoar
dofDi
rect
orsf
orcar
ryi
ngouti
tsact
ivi
ti
esandent
eri
ngi
ntov
ari
ous
agr
eement
s.Suchcont
ract
smustbeundert
hesealoft
hecompany
.Thecommonseal
i
stheof
fi
cialsi
gnat
ureorr
ubberst
ampoft
hecompany
.Thenameoft
hecompany
mustbeengr
avedont
hecommonseal
.

v
ii
.Capaci
tyt
osueandbei
ngsued

Acompanycansueorbesuedi
nit
sownnameasdi
sti
nctf
rom i
tsmember
s.

v
ii
i.Separ
ateManagement

2
 Acompanyi
sadmi
nist
eredandmanagedbyi
tsmanager
ialper
sonneli
.e.t
heBoar
dof
Di
rect
ors.Theshar
ehol
der
sar
esi
mpl
ythehol
der
soft
heshar
esi
nthecompanyand
neednotbenecessar
il
ythemanager
soft
hecompany
.

i
x.OneShar
e-OneVot
e

Thepr
inci
pleofv
oti
ngi
nacompanyi
soneshar
e-onev
otei
.e.i
faper
sonhas10shar
es,
hehas10v
otesi
nthecompany
.Thi
sisi
ndi
rectdi
sti
nct
iont
othev
oti
ngpr
inci
pleofa
co-
oper
ati
ve soci
ety wher
ethe "
One Member-One Vot
e"pr
inci
ple appl
i
es i
.e.
i
rr
espect
iveoft
henumberofshar
eshel
d,onememberhasonl
yonev
ote.

1.
3Cl
assi
fi
cat
ionofCompani
es

Sect
ion 389 oft
he compani
es Actpr
ovi
des t
hat“
no company
,associ
ati
on or
par
tner
shi
psconsi
sti
ngofmor
ethan20per
sonsshal
lbef
ormedunl
essi
tisr
egi
ster
ed
asacompanyundert
hisAct
”.

Ther
ear
ethr
eet
ypesofcompani
espr
ovi
dedf
orundert
hissect
ion:
-
i
.Char
ter
edcompani
es
i
i
.St
atut
orycompani
es
i
i
i.Regi
ster
edcompani
es

(
i)
  
 Char
ter
edCompani
es
TheBr
it
ishgov
ernmenthadpowert
ocr
eat
eacor
por
ati
onbygr
ant
ingchar
ter(
aut
hor
it
y
orr
ight
)toaper
sonorcor
por
ati
on.Nosuchcompani
escanbef
ormedi
nKeny
aaf
ter
i
ndependenceand sect
ion 389 onl
yser
veasa r
emi
nderofEngl
i
sh or
igi
n ofour
compani
esAct
.
(
ii
) 
  
 St
atut
orycompani
es

Acompanymaybei
ncor
por
atedbymeansofaspeci
alActofpar
li
ament
.Ast
atut
ory
companyhasnoshar
ehol
der
sandi
tsi
nit
ialcapi
tali
spr
ovi
dedbyt
het
reasur
y.I
tis
expect
edt
ooper
ateaccor
dingt
ocommer
cialpr
inci
plesandt
omakepr
ofi
t.I
fitmakes
l
ossesand becomesunabl
eto payi
tsdebt
s,i
tspr
oper
tycanbeat
tached byi
ts

3
 cr
edi
tor
sbuti
tcannotbewounduponappl
i
cat
ionofanycr
edi
tor
. Howev
er,t
he
gov
ernmentwi
l
lcomet
oit
sai
difi
thasnocashorot
herasset
stopayi
tscr
edi
tor
s.
Exampl
esi
ncl
ude-Kengen,
KP&L.
Co,
Keny
aPi
pel
i
ne,
Keny
aRai
l
way
s,KTDAet
c.

(
ii
i)
  
 Regi
ster
edcompani
es

Ar
egi
ster
edcompanyi
sfor
medbyr
egi
str
ati
onundert
heCompani
esActCap286.
Sect
ion 2 oft
he Compani
esActdef
inesa companyas“
a companyf
ormed and
r
egi
ster
edundert
hisAct
.”

Regi
ster
edcompani
esar
ecl
assi
fi
esi
ntoTWO
(
a) 
 
 Publ
i
ccompany–Acompanyf
ormedbyanySev
enorMor
eper
sons.

(
b) 
 
 Pr
ivat
ecompany–Acompanyf
ormedbyanyTwoormor
ePer
sons(Maxi
mum 50)
.

1.
4Pr
ivat
eandPubl
i
cCompani
es
1.Pr
ivat
eCompany
Accor
dingt
osect
ion30(
1)oft
heAct
,apr
ivat
ecompanymeansacompanywhi
chbyi
ts
ar
ti
cles
(
a) 
 
 Rest
ri
ctst
her
ightt
otr
ansf
eri
tsshar
es.
(
b) 
 
 Li
mit
sthenumberofi
tsmember
sto50noti
ncl
udi
ngper
sonswhoar
einempl
oyment
oft
hecompany
.
(
c) 
 Pr
ohi
bit
sanyi
nvi
tat
iont
othepubl
i
ctosubscr
ibef
oranyshar
esordebent
uresoft
he
company
.Sect
ion30(
2)pr
ovi
dest
hatwher
etwoormor
eper
sonshol
doneormor
e
shar
esi
nacompanyj
oint
ly,t
heyshal
l
,fort
hepur
poseoft
hissect
ion,bet
reat
edasa
si
ngl
emember
.

a)Char
act
eri
sti
csofaPr
ivat
eCompany

(
i)Apr
ivat
ecompanymayconsi
stofami
nimum of2member
s.
(
ii
)Apr
ivat
ecompanyi
sent
it
ledt
ocommencebusi
nessi
mmedi
atel
yoni
ncor
por
ati
on.
(
ii
i)Apr
ivat
ecompanymayal
l
otshar
eswi
thouti
ssui
ngapr
ospect
ust
oar
egi
str
ara
st
atementi
nli
euofpr
ospect
us(
Sect
ion30(
1)(
all
otshar
e-i
ssueshar
es)

4
Apr
ospect
usi
sal
egaldocumenti
ssuedbycompani
est
hatar
eof
fer
ingsecur
it
iesf
or
sal
e.
(
vi)Apr
ivat
ecompanyi
snotr
equi
redt
ohol
dast
atut
orymeet
ingorf
il
east
atut
ory
r
epor
twi
tht
her
egi
str
ar.St
atut
orymeet
ing ameet
ing t
hatmust
,byl
aw,behel
d
bet
weenoneandt
hreemont
hsaf
teracompanyst
art
sdoi
ngbusi
ness,
(
v)Apr
ivat
ecompanyneednothav
emor
ethant
wodi
rect
ors.
(
vi)Copi
esofbal
ancesheetandpr
ofi
tandl
ossaccountf
il
edwi
tht
her
egi
str
arcannot
bei
nspect
edbyt
hepubl
i
c.

Adv
ant
agesofPr
ivat
eCompany

i
. Li
mit
edLi
abi
l
ity
:Itmeanst
hati
fthecompanyexper
iencef
inanci
aldi
str
ess
becauseofnor
mal
busi
nessact
ivi
ty,
theper
sonal
asset
sofshar
ehol
der
swi
l
lnot
beatr
iskofbei
ngsei
zedbycr
edi
tor
s.
i
i. Cont
inui
tyofexi
stence:
busi
nessnotaf
fect
edbyt
hest
atusoft
heowner
.
i
ii
. Mi
nimum numberofshar
ehol
der
sneedt
ost
artt
hebusi
nessar
eonl
y2.
i
v. Mor
ecapi
tal
canber
aisedast
hemaxi
mum numberofshar
ehol
der
sal
l
owedi
s
50.
v
. Scopeofexpansi
oni
shi
gherbecauseeasyt
orai
secapi
tal
from f
inanci
al
i
nst
it
uti
ons.

Di
  sadv
ant
agesofPr
ivat
eCompany

i
. Gr
owt
hmaybel
i
mit
edbecausemaxi
mum shar
ehol
der
sal
l
owedar
eonl
y50.
i
i. Theshar
esi
napr
ivat
eli
mit
edcompanycannotbesol
dort
ransf
err
edt
oany
one
el
sewi
thoutt
heagr
eementofot
hershar
ehol
der
s.

2.Publ
i
cLi
mit
edCompany

A publ
i
cli
mit
edcompanyi
sacompanyt
hathasper
missi
ont
oof
feri
tsr
egi
ster
ed
secur
it
ies f
orsal
etot
he gener
alpubl
i
c,t
ypi
cal
l
ythr
ough a st
ock exchange,or
occasi
onal
l
yacompanywhosest
ocki
str
adedov
ert
hecount
er(
OTC)v
iamar
ket

5
maker
swhousenon-
exchangequot
ati
onser
vices.St
ockexchange,shar
eexchange,
equi
tyorsecur
it
iesar
euni
toff
inanceasshar
esorbondsordebent
ures

Char
act
eri
sti
csofPubl
i
cLi
mit
edCompani
es

i
. I
tmusthav
eatl
eastsev
enshar
ehol
der
s.
i
i. Apubl
i
ccompanyi
snotaut
hor
izedt
obegi
nbusi
nessupont
hegr
antoft
he
cer
ti
fi
cat
eofi
ncor
por
ati
on(
li
censecer
ti
fi
cat
e).I
nor
dert
obeel
i
gibl
etost
art
busi
nessasacor
por
ati
on,
itshoul
dobt
ainanot
herdocumentcal
l
ed"
tr
adi
ng
cer
ti
fi
cat
e".
i
ii
. I
tshoul
dpubl
i
shapr
ospect
usorf
il
east
atementi
ninst
eadofapr
ospect
us
bef
orei
tcanst
artt
ransact
ingbusi
ness.
i
v. Apubl
i
ccompanyi
sneededt
ohav
eatl
eastt
hreedi
rect
ors.
v
. I
tshoul
dhol
dst
atut
orymeet
ingsandobt
aingov
ernmentappr
oval
fort
he
appoi
ntmentoft
hemanagement
.

Adv
ant
agesofaPubl
i
cLi
mit
edCompany

i
. Theshar
ehol
der
shav
eli
mit
edl
i
abi
l
ity
.
i
i. Acompanycanr
aiseaddi
ti
onal
capi
tal
byi
ssui
ngmor
eshar
esordebent
ures.
i
ii
. Gr
eat
erbor
rowi
ngpower
.
i
v. Aboar
dofdi
rect
orswi
thex
per
ience/exper
ti
secanbeappoi
nted.
v
. Shar
ehol
der
scansel
l
/tr
ansf
ert
hei
rshar
esf
reel
y.

Di
sadv
ant
agesofaPubl
i
cLi
mit
edCompany

i
. Ther
eisal
ossofov
eral
lowner
shi
p.
i
i. Ther
eisal
ossofcont
rol
oft
hebusi
ness.
i
ii
. Deci
sionst
akel
ongerandt
her
emaybedi
sagr
eement
.
i
v. Theper
sonal
touchmaybel
ost
.
v
. Whenset
ti
ngupacompany
,si
gni
fi
cantex
pensesar
eincur
red.
v
i. Ther
ear
emor
est
atut
oryr
egul
ati
onst
oconf
orm.

6
v
ii
. Pr
ofi
tsar
eshar
edamongstaf
argr
eat
ernumberofpeopl
e.
v
ii
i. Publ
i
cdi
scl
osur
eoft
hef
inanci
alaf
fai
rsi
snecessar
y.

Di
sti
nct
ionbet
weenaPubl
i
ccompanyandaPr
ivat
ecompany
1.Mi
nimum numberofmember
s:
Forpubl
i
ccompanyi
ssev
enwher
easpr
ivat
ecompanyi
stwo.
2.
  Maxi
mum numberofmember
s:
Ther
eisnol
i
mitont
hemaxi
mum numberi
ncaseofpubl
i
ccompany
,butapr
ivat
e
companycannothav
emor
ethan50member
s.
3.Commencementofbusi
ness:
-
A pr
ivat
ecompanycan commencebusi
nessassoon asi
tisgi
ven cer
ti
fi
cat
eof
i
ncor
por
ati
onwher
easapubl
i
ccompanyshal
lnotcommencei
tsbusi
nessi
mmedi
atel
y
unl
essi
thasbeengr
ant
edt
het
radi
ngcer
ti
fi
cat
e.
4.
  I
nvi
tat
iont
opubl
i
c:-
Apubl
i
ccompanybyi
ssui
ngapr
ospect
usmayi
nvi
tepubl
i
ctosubscr
ibet
oit
sshar
es
wher
easapr
ivat
ecompanycannotext
endsuchi
nvi
tat
iont
othepubl
i
c.
5.
 Tr
ansf
erabi
l
ityofshar
es:
-
Ther
eisnor
est
ri
cti
onont
het
ransf
erofshar
esi
ncaseofapubl
i
ccompanywher
eas
pr
ivat
ecompanybyi
tsar
ti
clesmustr
est
ri
ctt
her
ightofmember
soft
ransf
err
ingt
he
shar
es.
6.
  
Numberofdi
rect
ors:
-
Apubl
i
ccompanymusthav
eatl
eastt
hreedi
rect
orswher
easpr
ivat
ecompanymay
hav
etwodi
rect
ors.
7.St
atut
orymeet
ing:
-
Apubl
i
ccompanymusthol
dast
atut
orymeet
ingandf
il
ewi
tht
her
egi
str
arast
atut
ory
r
epor
t,buti
ncaseofapr
ivat
ecompanyt
her
ear
enosuchobl
i
gat
ions.
8.Name:
-
Thenameofapr
ivat
ecompanymusti
ncl
udet
hewor
ds“
pri
vat
elt
d”att
heendofi
ts
name,
butapubl
i
ccompanyhast
ouset
hewor
ds“
lt
d”att
heendofi
tsname.

Wi
ndi
ngupoft
heCompani
es

7
TheCompani
esActCap.486doesnotdef
inet
het
erm wi
ndi
nguporl
i
qui
dat
ion,
howev
eri
tuses t
hem i
nter
changeabl
e,hence we assume t
hem as sy
nony
mous.
Wi
ndi
ngup,meansapr
ocessofput
ti
nganendt
othel
i
feofacompany
. I
tisa
pr
oceedi
ngbymeansofwhi
chacompanyi
sdi
ssol
vedandi
nthecour
seofsuch
di
ssol
uti
oni
tsasset
sar
ecol
l
ect
edandi
tsdebt
sar
epai
dof
foutoft
heasset
soft
he
companyorf
rom cont
ri
but
ionsbyi
tsmember
s,i
fnecessar
y. 

Met
hodsofWi
ndi
ngupaCompany

Ther
ear
ethr
eemodes:

i
)Compul
sor
ywi
ndi
ngupbyt
hecour
t.
i
i
)Vol
unt
arywi
ndi
ngup:
(
a) 
  
 Member
s’v
olunt
arywi
ndi
ngup.
(
b) 
  
Credi
tor
s’v
olunt
arywi
ndi
ngup

(
ii
i)
  Wi
ndi
ngupundert
hesuper
visi
onoft
hecour
t.

I
nthi
swi
ndi
nguppr
ocess,
cour
tcanonl
ysuper
viset
hepr
ocedur
e.I
nagener
almeet
ing,
t
her
esol
uti
onf
orwi
ndi
ngupi
spassedandcour
tmayputsomegener
alt
erms.I
tmust
bepr
ovedbypet
it
ionert
hatwi
ndi
ngupcannotcont
inuewi
thf
air
nessandt
henan
addi
ti
onal
li
qui
dat
oral
ongwi
thexi
sti
ngl
i
qui
dat
ormaybeappoi
ntedbyt
heCour
t.

1.
5Di
sti
nct
ionbet
weenacompanyandPar
tner
shi
p

1.Apar
tner
shi
pisanagr
eementbet
weent
woormor
eper
sonswhocomet
oget
hert
o
car
ry outa busi
ness,and shar
e pr
ofi
t& l
osses mut
ual
l
y.A company i
s an
i
ncor
por
atedassoci
ati
on,al
socal
l
edanar
ti
fi
cialper
sonhav
ingsepar
atei
dent
it
y,
commonseal
andper
pet
ual
successi
on.
2.Ther
egi
str
ati
onoft
hepar
tner
shi
pfi
rmi
snotcompul
sor
ywhi
l
eiti
smandat
oryi
n
caseofacompany
.
3.Fort
hecr
eat
ionofapar
tner
shi
p,t
her
emustbeatl
eastt
wopar
tner
s.Fort
he

8
 f
ormat
ionofacompany
,ther
emustbeatl
east2member
sincaseofpr
ivat
e
compani
esand7i
nregar
dtopubl
i
ccompani
es.
4.Thel
i
mitf
ort
hemaxi
mum numberofpar
tner
sinapar
tner
shi
pfi
rmi
s20.Ont
he
ot
herhand,t
hemaxi
mum numberofmember
sint
hecaseofapubl
i
ccompanyi
s
unl
i
mit
edandi
nthecaseofapr
ivat
ecompanyt
hemember
sar
eli
mit
edt
o50.
5.Apar
tner
shi
pfi
rm canbedi
ssol
vedbyanyoneoft
hepar
tner
s.I
ncont
rastt
othi
s,
t
hecompanycannotbet
ermi
nat
edbyanyofi
tsmember
s.
6.Apar
tner
shi
pfi
rmi
snotboundt
ouset
hewor
dli
mit
edorpr
ivat
eli
mit
edatt
heend
ofi
tsnamewhi
l
eacompanyhast
oaddt
hewor
d‘l
i
mit
ed’i
fiti
s apubl
i
ccompany
and‘
pri
vat
eli
mit
ed’
ifi
tisapr
ivat
ecompany
.
7.Thel
i
abi
l
iti
esoft
hepar
tner
sar
eunl
i
mit
edwher
east
hel
i
abi
l
iti
esoft
hecompany
member
sar
eli
mit
edt
otheext
entoft
hei
rshar
es
8.Asacompanyi
sanar
ti
fi
cialper
sonsot
hati
tcanent
eri
ntocont
ract
sini
tsown
name.
 Buti
nthecaseofapar
tner
shi
pfi
rm cannotent
eri
ntoacont
ractwi
thi
ts
name(
member
sar
etheonewhocanent
eri
ntoacont
ract
)
9.A companycansueandbesuedwhi
l
ethepar
tner
shi
pcannotsueorbesued
becausei
snotl
egal
ent
it
y(onl
yit
smember
scansueorbesued)

1.
6Incor
por
ati
on

Def
ini
ti
onofI
ncor
por
ati
on'

I
ncor
por
ati
on i
sthe l
egalpr
ocess used t
ofor
m a cor
por
ate ent
it
yorcompany
.
I
ncor
por
ati
oni
nvol
vesdr
aft
ingl
egaldocument
scal
l
ed"
Art
icl
esofI
ncor
por
ati
on"t
hat
l
i
stt
hepr
imar
ypur
poseoft
hebusi
ness,i
tsnameandi
tsl
ocat
ion,andt
henumberof
shar
esandcl
assofst
ockbei
ngi
ssued,i
fany
.Incor
por
ati
onal
soi
nvol
vesj
uri
sdi
cti
on-
speci
fi
cregi
str
ati
oni
nfor
mat
ionandf
ees.

1.
6.1Consequences/I
mpor
tance/
Adv
ant
agesofCompany
’si
ncor
por
ati
on

1.Cr
eat
esaSepar
ateLegal
Ent
it
y: 

Thi
sst
atest
hatacompanyi
sindependentandsepar
atef
rom i
tsmember
s,andt
he

9
member
scannotbehel
dli
abl
efort
heact
soft
hecompany
,ev
enwhenapar
ti
cul
ar
memberownsmaj
ori
tyofshar
es.Thi
swashel
dint
hecaseof
 Sal
omonvSal
omon&Co.
Lt
d.(  Companyhas.Themosti
1897)AC 22. mpor
tantr
easont
oincor
por
atey
our
busi
nessi
sto pr
otectmember
sfr
om busi
nessl
i
abi
l
iti
es.I
fyou ar
eoper
ati
ng an
uni
ncor
por
atedbusi
ness,i
tscr
edi
tor
smaybeabl
etor
eachy
ourper
sonalasset
s.
Asset
ssuchasy
ourper
sonalr
esi
denceandper
sonalbankaccountcanbeusedt
opay
busi
ness debt
s ort
o sat
isf
ya l
awsui
tagai
nsty
ourbusi
ness.I
fyou i
ncor
por
ate,
busi
nesscr
edi
tor
scannotr
eachy
ourper
sonalasset
s,asani
ncor
por
atedbusi
nessand
i
tsowner
sar
esepar
ateent
it
ies.

2.Per
pet
ual
Successi
on

Thet
erm per
pet
ualsuccessi
on meanscont
inuousexi
stence,whi
ch meanst
hata
companynev
erdi
es,ev
en i
fthe member
scease t
o exi
st.The member
shi
p ofa
companychangesf
rom t
imet
oti
me,butt
hathasnoef
fectont
heexi
stenceoft
he
company
.Thecompanyonl
ycomest
oanend,
wheni
tiswoundupaccor
dingt
olaw,
as
pert
hepr
ovi
sionsoft
heCompani
esAct
,

3.CanownSepar
atePr
oper
ty

Si
nceacompanyi
ster
medasasepar
atel
egalent
it
yint
heey
esofl
aw,i
tcanhol
d
pr
oper
tyi
nit
sownnameandt
hemember
scannotcl
aimt
obet
heowneroft
he
company
’spr
oper
ty(
s).Acompanyi
sadi
sti
nctl
egalent
it
y.Thecompany
'spr
oper
tyi
s
i
tsown.Amembercannotcl
aimt
obeowneroft
hecompany
'spr
oper
tydur
ingt
he
exi
stenceoft
hecompany
.

4.Capaci
tyt
osueandbesued:

Thecompanyhast
hecapaci
tyofsui
ngaper
sonorbei
ngsuedbyanot
herper
soni
nit
s
ownname.A company
,thoughcanbesuedorsuei
nit
sownname,i
thast
obe
r
epr
esent
edbyanat
ural
per
sonandanycompl
aintwhi
chi
snotr
epr
esent
edbyanat
ural
per
soni
sli
abl
etobedi
smi
ssedi
nthesamewayi
nwhi
chani
ndi
vi
dualcompl
ainti
s
l
i
abl
etobedi
smi
ssedi
ntheabsenceoft
hecompl
ainant
.

10
5.Easi
eraccesst
oCapi
tal
:
 

Rai
si
ngcapi
tal
iseasi
erf
oracor
por
ati
on,
sinceacor
por
ati
oncani
ssueshar
esofst
ock.
Thi
smaymakei
teasi
erf
ory
ourbusi
nesst
ogr
owanddev
elop.I
fthei
nthemar
ketf
ora
bankl
oan,t
hat
’sanot
herr
easont
oincor
por
ate,si
ncenmostcases,bankspr
eferand
easi
l
ylendmoneyt
oincor
por
atedbusi
nessv
ent
ures.

6.Gai
nTaxAdv
ant
ages

I
fyoui
ncor
por
atey
ourbusi
ness,
ther
ear
etaxdeduct
ionsf
orawi
dev
ari
etyofoper
ati
ng
cost
swhi
ch wi
l
lsubst
ant
ial
l
ycutbacky
ourcompany
'sov
eral
ltaxl
i
abi
l
ity
.These
deduct
ionsmayi
ncl
udet
hecostofmat
eri
als/
product
ion,empl
oyeewages,t
hecostof
i
nsur
ance,t
hecostofr
eti
rementpl
ans,aswel
lasbusi
nesst
rav
elandent
ert
ainment
expenses.

7.Enhancet
heCompany
'sI
mage

Anot
heressent
ialr
easont
oincor
por
atey
ourbusi
nessi
sthati
taddscr
edi
bil
i
tyt
oit
s
oper
ati
on.Theper
cept
ionofabusi
nessi
simpr
ovedbyi
tsi
ncor
por
ati
onanduseof
"
Inc.
,
""Co.
,
"or"
LLC"f
oll
owi
ngt
henameoft
hebusi
ness.Cust
omer
sar
emor
eli
kel
yto
t
rustanddealwi
thabusi
nesst
hathast
hisposi
ti
vei
mage.Mor
eimpor
tant
ly,t
he
busi
nesswi
l
lbemor
eat
tract
ivet
obanksandi
nvest
orsi
fandwhent
hebusi
nessseeks
out
sidef
inanci
ng.

8.I
mpr
oveabi
l
ityt
oManage

Thedeci
sion-
maki
ngaut
hor
it
yofani
ncor
por
atedbusi
nessi
scent
ral
i
zed,
whi
chusual
l
y
meanst
hatt
heshar
ehol
der
shav
evest
edt
heaut
hor
it
yinaBoar
dofDi
rect
ors.The
Boar
d ofDi
rect
ors can del
egat
ethi
s aut
hor
it
ytot
he company
's of
fi
cer
s.I
n an
uni
ncor
por
atedbusi
ness,
thepowerst
ruct
ureanddeci
sion-
maki
ngaut
hor
it
ymaynotbe
def
inedandmaybesubj
ectt
omani
pul
ati
onbyaco-
ownerorempl
oyee.

1.
6.2Di
sadv
ant
agesofCompany
’sI
ncor
por
ati
ons

1.Hi
ghI
nit
ial
Cost

11
The i
nit
ialcostofi
ncor
por
ati
on i
ncl
udes t
he f
ee r
equi
red t
ofi
l
eyour
 ar
ti
cles of
i
ncor
por
ati
on,pot
ent
ialat
tor
ney or account
ant f
ees,or t
he cost of usi
ng an
i
ncor
por
ati
onser
vicet
oassi
sty
ouwi
thcompl
eti
onandf
il
ingoft
hepaper
wor
k.Ther
e
ar
eal
soongoi
ngf
eesf
ormai
ntai
ningacor
por
ati
on.

2.Doubl
eTaxat
ion

Somet
ypesofcor
por
ati
onshav
ethepot
ent
ialt
oresul
tin“
doubl
etaxat
ion.
”Doubl
e
t
axat
ionoccur
swhenacompanyi
staxedonceonpr
ofi
ts,andagai
nont
hedi
vi
dends
pai
dtoshar
ehol
der
s.

3.LossofPer
sonal
Owner
shi
p

I
facor
por
ati
oni
sa 
stockcor
por
ati
on,
oneper
sondoesn’
tret
aincompl
etecont
rol
oft
he
ent
it
y.The cor
por
ati
on i
s gov
erned bya boar
d ofdi
rect
ors who ar
e el
ect
ed by
shar
ehol
der
s.

4.Requi
redSt
ruct
ure

Wheny
ouf
orm acor
por
ati
on,y
ouar
erequi
redt
ofol
l
owal
loft
her
ulesout
li
nedbyt
he
st
atei
nwhi
chy
ouf
il
ed.Thi
sincl
udest
hemanagementoft
hecor
por
ati
on,oper
ati
onal
r
equi
rement
sandt
hecor
por
ati
on’
saccount
ingpr
act
ices.

5.Ongoi
ngPaper
wor
k

Mostcor
por
ati
onsar
erequi
redt
ofi
l
eannualr
epor
tsont
hef
inanci
alst
atusoft
he
company
.The ongoi
ng paper
wor
k al
so i
ncl
udes t
ax r
etur
ns,account
ing r
ecor
ds,
meet
ingmi
nut
esandanyr
equi
redl
i
censesandper
mit
sforconduct
ingbusi
ness.

6.Di
ff
icul
tyDi
ssol
vi
ng

Whi
l
eper
pet
ualexi
stencei
sabenef
itofi
ncor
por
ati
ng,i
tcanal
sobeadi
sadv
ant
age
because i
tcan r
equi
re si
gni
fi
cantt
ime and money t
o compl
etet
he necessar
y
12
pr
ocedur
esf
ordi
ssol
uti
on.

7.Li
ft
ingofCor
por
ateVei
l

I
nanumberofci
rcumst
ances,
theCour
twi
l
lpi
erceori
gnor
ethecor
por
atev
eilt
oreach
t
heper
sonbehi
ndt
hev
eilort
orev
ealt
het
ruef
orm andchar
act
eroft
heconcer
ned
company
.Ther
ati
onal
ebehi
ndt
hisi
spr
obabl
ythatt
hel
awwi
l
lnotal
l
owt
hecor
por
ate
f
ormt
obemi
susedorabused.I
nthoseci
rcumst
ancesi
nwhi
cht
heCour
tfeel
sthatt
he
cor
por
atef
ormi
sbei
ngmi
sused,
itwi
l
lri
pthr
ought
hecor
por
atev
eil
andexposei
tst
rue
char
act
erandnat
ure.

1.
7Cor
por
ateVei
l(cov
er,
cur
tai
n,shel
l
,shi
eldorbl
anket
)

1.
7.1Meani
ngofCor
por
ateVei
l
A cor
por
atev
eili
sal
egalconceptt
hatsepar
ates cor
por
ati
on and shar
ehol
der
per
sonal
i
ties and pr
otect
s shar
ehol
der
sfr
om bei
ng hel
d per
sonal
l
yli
abl
efort
he
company
'sdebt
sandot
herobl
i
gat
ions.

1.
7.2Meani
ngofLi
ft
ingorPi
erci
ngt
heCor
por
ateVei
l

Li
ft
ing oft
he cor
por
atev
eilmeans Di
sregar
ding ori
gnor
ing t
he Cor
por
atel
egal
Per
sonal
i
tyandsubj
ect
ingacor
por
ati
on'
sshar
ehol
der
sordi
rect
orsper
sonal
l
yli
abl
efor
hecor
t por
ati
on'
sli
abi
l
iti
esordebt
s.I
not
herwor
ds,wher
eaf
raudul
entanddi
shonest
usei
smadeoft
hel
egalent
it
y,t
hei
ndi
vi
dual
sconcer
nedwi
l
lnotbeal
l
owedt
otake
shel
terbehi
nd t
he cor
por
ate per
sonal
i
ty.I
nthi
sregar
ds t
he cour
twi
l
lbr
eak t
he
cor
por
atev
eilorshel
landappl
ythepr
inci
pleofwhati
sknownas“
li
ft
ingorpi
erci
ngt
he
cor
por
atev
eil
.Fr
audul
enti
sdecept
ionorsomet
hingdonewi
thi
ntent
iont
odecei
ve.

1.
7.3Reasonsf
orLi
ft
ingcor
por
ateVei
l

13
1.Li
ft
ingt
hecor
por
ateVei
lbasedonJudi
cial
Prov
isi
on(
rel
atedt
ocour
t)

2.Li
ft
ingt
hecor
por
ateVei
lbasedonSt
atut
oryPr
ovi
sions(
company
’sact
)

1.Li
ft
ingt
hecor
por
ateVei
lbasedonJudi
ci
alPr
ovi
si
on(
rel
atedt
ocour
t)

i
.Fr
audori
mpr
operConduct(
Decept
ion)

TheCour
tshav
ebeenmor
ethatpr
epar
edt
opi
ercet
hecor
por
atev
eilwheni
tfel
l
sthat
f
raudi
sorcoul
dbeper
pet
rat
edbehi
ndt
hev
eil
.TheCour
tswi
l
lnotal
l
owt
heSal
omon
pr
inci
palt
obeusedasanengi
neoff
raud.(
Fraudi
sdecept
ionoractcommi
tt
edwi
th
i
ntent
ionofdecei
vi
ng)

i
i
.Wheni
tisusedf
ort
axev
asi
on(
Non-
pay
mentorunder
pay
mentoft
ax)

“
TheCour
thast
hepowert
odi
sregar
dcor
por
ateent
it
yifi
tisusedf
ort
axev
asi
onort
o
ci
rcumv
entt
axobl
i
gat
ions.

i
i
i.EnemyChar
act
er(
resi
dentofenemycount
ry)

Acompanymayassumeanenemychar
act
erwhenper
sonsi
ndef
act
ocont
rolofi
ts
af
fai
rsar
eresi
dent
sinanenemycount
ry.I
nsuchacase,t
heCour
tmayexami
net
he
char
act
erofper
sonsi
nrealcont
roloft
hecompany
,anddecl
aret
hecompanyt
obean
enemycompany
.

i
v.Wher
etheCompanyi
saSham (
fakeornotgenui
ne)

TheCour
tsal
sol
i
ftt
hev
eil
wher
eacompanyi
saf
akeorsham ornotgenui
ne

v
.Companyav
oidi
ngLegalObl
i
gat
ions(
for
medt
oav
oidl
egalobl
i
gat
ionl
i
kepay
ing
t
axes)

Wher
etheuseofani
ncor
por
atedcompanyi
sbei
ngmadet
oav
oidl
egal
obl
i
gat
ions,
the
Cour
tmay di
sregar
dthe l
egalper
sonal
i
ty oft
he company and pr
oceed on t
he
assumpt
ionasi
fnocompanyexi
sted.

14
v
i.Wher
eacompanyi
sact
ingasagentf
ori
tsshar
ehol
der
s

Wher
eacompanyi
sact
ingasagentf
ori
tsshar
ehol
der
,theshar
ehol
der
swi
l
lbel
i
abl
e
f
ort
heact
soft
hecompany
.Iti
saquest
ionoff
acti
neachcasewhet
hert
hecompany
i
sact
ingasanagentf
ori
tsshar
ehol
der
s.Ther
emaybeanExpr
essagr
eementt
othi
s
ef
fectoranagr
eementmaybei
mpl
i
edf
rom t
heci
rcumst
ancesofeachpar
ti
cul
arcase.

v
ii
.Av
oidanceofWel
far
eLegi
slat
ion(
sameasav
oidi
ngoft
axat
ion)

Av
oidanceofwel
far
elegi
slat
ioni
sascommonasav
oidanceoft
axat
ionandt
he
appr
oachoft
heCour
tsi
nconsi
der
ing pr
obl
emsar
isi
ng outofsuchav
oidancei
s
gener
all
ythesameasav
oidanceoft
axat
ion.I
tist
hedut
yoft
heCour
tsi
nev
erycase
wher
eingenui
tyi
sexpendedt
oav
oidwel
far
elegi
slat
iont
ogetbehi
ndt
hesmokescr
een
anddi
scov
ert
het
ruest
ateofaf
fai
rs.

v
ii
i.Publ
i
cInt
erest(
conf
li
ctwi
thpubl
i
cint
erestorpol
i
cy)

TheCour
tsmayl
i
ftt
hev
eilt
opr
otectpubl
i
cpol
i
cyandpr
eventt
ransact
ionscont
rar
yto
publ
i
cpol
i
cy.TheCour
tswi
l
lrel
yont
hisgr
oundwhenl
i
fti
ngt
hev
eili
sthemost‘
j
ust
’
r
esul
t,butt
her
ear
enospeci
fi
cgr
oundsf
orl
i
fti
ngt
hev
eil
.Thus,wher
ether
eisa
conf
li
ctwi
th publ
i
cpol
i
cy,t
heCour
tsi
gnor
ethef
orm and t
akei
nto accountt
he
subst
ance.

2.Li
ft
ingt
hecor
por
ateVei
lbasedonSt
atut
oryPr
ovi
si
ons(
Company
’sact
)

i
.Reduct
ionofNumberofMember
s(l
esst
han2i
npr
ivat
eandl
esst
han7i
npubl
i
c)

UnderCompani
esAct
,ifacompanycar
ri
esonbusi
nessf
ormor
ethansi
xmont
hsaf
ter
t
henumberofi
tsmember
shasbeenr
educedbel
owsev
eni
ncaseofapubl
i
ccompany
andt
woi
ncaseofapr
ivat
ecompany
,ev
eryper
sonwhoknowst
hisf
actandi
sa
memberdur
ingt
het
imet
hatt
hecompanysocar
ri
esonbusi
nessaf
tert
hesi
xmont
hs,
becomes l
i
abl
ejoi
ntl
yand sev
eral
l
ywi
tht
he companyf
ort
he pay
mentofdebt
s
cont
ract
edaf
tersi
xmont
hs.I
tisonl
ythatmemberwhor
emai
nsaf
tersi
xmont
hswho
canbesued.

15
i
i
.Fr
audul
entTr
adi
ng(
car
ryi
ngbusi
nesswi
thi
ntent
ionofdecei
vi
ngcust
omer
s)

Anybusi
nessofacompanyi
scar
ri
edonwi
tht
hei
ntentt
odef
raudcr
edi
tor
soft
he
companyorcr
edi
tor
sofanyot
herper
sonorf
oranyf
raudul
entpur
pose,whowas
knowi
ngl
ya par
tyt
othecar
ryi
ng on oft
hebusi
nessi
nthatmanneri
sli
abl
eto
i
mpr
isonmentorf
ineorbot
h.Thi
sappl
i
eswhet
herornott
hecompanyhasbeenori
sin
t
hecour
seofbei
ngwoundup.(
E.g.sel
l
ingf
akegol
d)

i
i
i.Mi
sdescr
ipt
ionoft
heCompany(
fai
l
ingt
ost
atet
henameoft
hecompany
)

Mi
sdescr
ipt
ioni
sawr
ongori
naccur
atedescr
ipt
ion.Compani
esAct
,pr
ovi
dest
hati
fany
of
fi
ceroft
hecompanyorot
herper
sonact
ingoni
tsbehal
fsi
gnsoraut
hor
izest
obe
si
gnedonbehal
foft
hecompanyanybi
l
lofexchange,pr
omi
ssor
ynot
e,endor
sement
,
chequeoror
derf
ormoneyorgoodsi
nwhi
cht
hecompani
esnamei
snotment
ionedi
n
l
egi
blel
ett
ers,hei
sli
abl
etof
ineandhei
sper
sonal
l
yli
abl
etot
hehol
deroft
he
i
nst
rumentunl
esst
hecompanyhasal
readypai
dtheamount
.

i
v.Pr
emat
ureTr
adi
ng(
commenci
ngbusi
nesswi
thoutt
radi
ngcer
ti
fi
cat
e)

Apubl
i
cli
mit
edcompanynewl
yincor
por
atedmustnot"
dobusi
nessorexer
ciseany
bor
rowi
ngpower
"unt
ili
thasobt
ainedacer
ti
fi
cat
eoft
radi
ngf
rom t
her
egi
str
arof
compani
est
hathascompl
i
edwi
tht
hepr
ovi
sionsoft
heactr
elat
ingt
other
aisi
ngoft
he
pr
escr
ibedshar
ecapi
tal

v
.Fai
l
uret
oref
undAppl
i
cat
ionMoney

I
ntheev
entoft
hecompanynotbei
ngabl
etor
ecei
vet
hemi
nimum subscr
ipt
ionby
120t
hdayaf
tert
hei
ssueoft
hepr
ospect
us,
all
moneyr
ecei
vedf
rom t
heappl
i
cant
sfor
shar
esshal
lber
etur
nedt
othem wi
thouti
nter
estwi
thi
nthenext10day
s.I
fanysuch
moneyi
snotr
epai
dwi
thi
n130day
soft
hei
ssueoft
hepr
ospect
us,
thedi
rect
orsoft
he
companyshal
lbecomej
oint
lyandsev
eral
l
yli
abl
etopayt
hemoneywi
thi
nter
estatt
he
r
ateof6%perannum f
rom t
heexpi
ryoft
he130t
hday
,unl
esst
heycanshowt
hatt
he
def
aul
twasnotduet
oanymi
sconductornegl
i
genceont
hei
rpar
t.Accor
dingt
o
Compani
esAct
,thedi
rect
orsofacompanyar
ejoi
ntl
yandsev
eral
l
yli
abl
etor
epayt
he
16
appl
i
cat
ionmoneywi
thi
nter
esti
fthecompanyf
ail
stor
efundt
hemoneywi
thi
n130
day
soft
hedat
eofi
ssueofpr
ospect
us,
thent
hedi
rect
orsofacompanyar
ejoi
ntl
yand
sev
eral
l
yli
abl
etor
epayt
heappl
i
cat
ionmoneywi
thi
nter
est
.Howev
er,
thi
swon’
tin
any
 ef
fect
 t
hecont
inuanceoft
hecompanyandi
tssepar
ateexi
stence.

v
.Mot
herandSubsi
diar
yCompani
es(
Par
entandDaught
erCompany
)

I
ntheey
esofl
aw,t
hemot
hercompanyandi
tssubsi
diar
iesar
esepar
atel
egalent
it
ies.
Butt
hesubsi
diar
ymayl
osei
tssepar
ateent
it
yift
hemot
hercompanyf
ail
stodi
scl
ose
i
tsi
dent
it
ytoi
tsmember
sinagener
almeet
ing.

1.
8Doct
ri
neoful
tr
avi
res(
bey
ondPower
s)

1.
8.1Meani
ngofDoct
ri
neul
tr
avi
res
Thedoct
ri
neof
”ul
tr
avi
res”i
saLat
int
erm whi
chmeansbey
ondpower
s.Thi
ster
m
r
efer
stot
heact
soft
hecor
por
ati
onsorcompani
est
hatar
etakenout
sidet
hepoweror
aut
hor
it
ygr
ant
edt
othem byl
aw.Act
sthatar
eint
rav
iresmayequi
val
ent
lybet
ermed
"
val
i
d"andt
hoset
hatar
eul
tr
avi
res"
inv
ali
d".Thedoct
ri
neoful
tr
avi
resi
sthebasi
c
doct
ri
nei
nadmi
nist
rat
ivel
aw.Thedoct
ri
nest
atest
hatanaut
hor
it
ycanbeexer
ciseonl
y
byt
hepowerconf
err
edoni
tbyl
aw.Anact
ionoft
heaut
hor
it
yisi
ntr
avi
reswheni
tfal
l
s
wi
thi
nthel
i
mit
soft
hepowerconf
err
edoni
tbutul
tr
avi
resi
fitgoesout
sidet
hisl
i
mit
.

1.
8.2Mai
npur
poseofDoct
ri
neofUl
tr
aVi
res
Themai
npur
poseoft
hedoct
ri
neoful
tr
avi
resi
stopr
otectt
hei
nter
estofi
nvest
orsand
cr
edi
tor
s.I
tpr
event
sthecompanyf
rom i
nvest
ingi
tscapi
talot
hert
hant
hepur
pose
pr
escr
ibedi
ntheobj
ectcl
auseoft
hememor
andum ofassoci
ati
onoft
hecompany

1.
8.3FourTy
pesoful
tr
a-v
iresact
s

1.Act
swhi
char
eul
tr
a-v
irest
otheCompani
esAct
.
2.Act
swhi
char
eul
tr
a-v
irest
otheMemor
andum oft
hecompany
.
3.Act
swhi
char
eul
tr
a-v
irest
otheAr
ti
clesofassoci
ati
onoft
hecompanybuti
ntr
a-
v
irest
othememor
andum.

17
4.Act
swhi
char
eul
tr
a-v
irest
othedi
rect
orsoft
hecompanybuti
ntr
a-v
irest
othe
company
.

1.Act
swhi
char
eul
tr
a-v
irest
otheCompani
esAct

Anyactorcont
ractwhi
chi
sent
eredbyt
hecompanywhi
chi
sul
tr
a-v
irest
heCompani
es
Act
,isv
oid,ev
eni
fmemor
andum orar
ti
clesoft
hecompanyaut
hor
izedi
t.Suchact
cannotber
ati
fi
edi
nanysi
tuat
ion.Si
mil
arl
y,someact
sar
edeemedt
obei
ntr
a-v
iresf
or
t
hecompanyev
eni
ftheyar
enotment
ionedi
nthememor
andum orar
ti
clesbecauset
he
Compani
esActaut
hor
izest
hem.

2.Act
swhi
char
eul
tr
a-v
irest
othememor
andum oft
hecompany

Anacti
scal
l
edul
tr
a-v
irest
hememor
andum oft
hecompanyi
f,i
tisdonebey
ondt
he
power
spr
ovi
dedbyt
hememor
andum t
othecompany
.Ifapar
toft
heactorcont
racti
s
wi
thi
ntheaut
hor
it
ypr
ovi
dedbyt
hememor
andum andr
emai
ningpar
tisbey
ondt
he
aut
hor
it
y,andbot
hthepar
tscanbesepar
ated.Thenonl
ythatpar
twhi
chi
sbey
ondt
he
power
sisconsi
der
ed asul
tr
a-v
ires,and t
he par
twhi
ch i
swi
thi
nthe aut
hor
it
yis
consi
der
edasi
ntr
a-v
ires.Howev
er,i
ftheycannotbesepar
atedt
henwhol
econt
ractor
actwi
l
lbeconsi
der
edasul
tr
a-v
iresandhence,v
oid.Suchact
scannotber
ati
fi
edev
en
byshar
ehol
der
sast
heyar
evoi
d.

3.Act
s which ar
e ul
tr
a-v
ires t
othe Ar
ti
cle ofassoci
ati
on buti
ntr
a-v
ires t
othe
memorandum

Al
ltheact
sorcont
ract
swhi
char
emadeordonebey
ondt
hepower
spr
ovi
dedbyt
he
ar
ti
clesbutar
ewi
thi
nthepower
sandaut
hor
it
ygi
venbyt
hememor
andum ar
ecal
l
ed
ul
tr
a-v
irest
hear
ti
cl
esbuti
ntr
a-v
irest
hememor
andum.Suchact
sandcont
ract
scanbe
r
ati
fi
edbyt
heshar
ehol
der
s(ev
enr
etr
ospect
ivel
y)bymaki
ngal
ter
ati
onsi
nthear
ti
cles
t
othatef
fect
.

4.Act
swhi
char
eul
tr
a-v
irest
othedi
rect
orsbuti
ntr
a-v
irest
othecompany

Al
ltheact
sorcont
ract
swhi
char
emadebyt
hedi
rect
orsbey
ondt
hepower
spr
ovi
dedt
o
t
hem ar
ecal
l
edact
sul
tr
a-v
irest
hedi
rect
orsbuti
ntr
a-v
irest
hecompany
.Thecompany

18
canr
ati
fysuchact
sandt
hent
heywi
l
lbebi
ndi
ng.

1.
8.4Adv
ant
agesoft
heDoct
rneofUl
i tr
aVi
res
1.Pr
otect
ionofi
nvest
ors:
(owner
s)

Thecapi
taloft
hecompanyi
sacont
ri
but
ionbyt
heshar
ehol
der
sandt
hecompanyi
sa
t
rustf
ort
hem,Thust
hei
nvest
orsi
nacompanymaybeassur
edbyt
hisr
ulet
hatt
hei
r
i
nvest
mentwi
l
lnotbeempl
oyedf
ort
heobj
ect
soract
ivi
ti
eswhi
cht
heydi
dnothav
ein
mi
ndatt
het
imeofi
nvest
ingt
hei
rmoneyi
nthecompany
. Gowerexpr
essedhi
svi
ew
t
hatt
hisdoct
ri
neenabl
est
hei
nvest
orsi
nthecompanyt
oknow t
heobj
ect
sinwhi
ch
t
hei
rmoneyi
stobeempl
oyed.

2.Pr
otect
ionofcr
edi
tor
s:

Thi
s doct
ri
ne pr
otect
sthe cr
edi
tor
s ofa company
,and t
he cr
edi
tor
str
ustt
he
cor
por
ati
onf
ort
her
epay
mentonl
youtofi
tsasset
sandbusi
nessconcer
n.Thev
ery
i
deai
sthatt
hecompany
’scapi
talcannotbespentonanypr
ojectorbusi
ness.
 Out
side
t
heor
bitoft
heobj
ect
scl
ause.
 Thi
sgi
vest
hecr
edi
tor
saf
eel
i
ngofsecur
it
y.

3.Pr
otect
iont
othePubl
i
cint
erest
:(i
fissof
tdr
inkl
eti
tnotshi
ftt
oal
cohol
)

Thest
atementofobj
ect
sser
vespubl
i
cint
erestbyconf
ir
mingt
hecor
por
ateact
ivi
ti
es
wi
thi
nadef
inedf
iel
d.I
tpr
event
sdi
ver
sif
icat
ionofacompany
’sact
ivi
ti
esi
ndi
rect
ions
notcl
osel
yconnect
edwi
tht
hebusi
nessf
orwhi
cht
hecompanymayhav
ebeeni
nit
ial
l
y
est
abl
i
shed.
 

1.
8.5Theef
fect
sofUl
tr
a-Vi
resTr
ansact
ions

1.I
njunct
ion

Anymemberoft
hecompanycanbr
ingi
njunct
ionagai
nstt
hecompanyt
orest
rai
nit
f
rom doi
ngul
tr
a-v
iresact
s.I
njunct
ioni
stheor
derr
est
rai
ningf
rom doi
ngsomet
hing

2.Per
sonal
Liabi
l
ityofDi
rect
ors:
(hel
dli
abl
etor
etur
nthef
undoft
hecompany
)

Thedi
rect
orsoft
hecompanyar
eper
sonal
l
yli
abl
etomakegoodt
hosef
undsoft
he

19
companywhi
cht
heyhav
eusedf
orul
tr
a-v
irespur
poses.I
tist
hedut
yoft
hedi
rect
orsof
t
hecompanyt
oempl
oyf
undsandpr
oper
ti
esoft
hecompanyf
ort
hepur
posesl
aid
downi
nthememor
andum ofassoci
ati
onoft
hecompany
.

3.Cont
ract
str
eat
edasVoi
d:(
noef
fect
s)

Anycont
ractwhi
chi
sul
tr
a-v
ires,t
hecompanywi
l
ltr
eati
sasv
oidandofnoef
fect
.“An
ul
tr
avi
rescont
ractbei
ngv
oidsandcannotbecomei
ntr
avi
resbyr
easonofest
oppel
,
l
apseoft
ime,r
ati
fi
cat
ion,ordel
ay”
.Howev
er,i
fthecont
racti
sonl
yul
tr
a-v
irest
he
power
soft
hedi
rect
orsbutnotul
tr
a-v
irest
hecompany
,itmayr
ati
fysuchacont
racti
n
t
hegener
almeet
ingandt
her
ebybeboundbyi
t.

4.Ul
tr
a-v
iresAcqui
si
ti
onofPr
oper
ty(
companyr
ightt
oownpr
oper
tyi
spr
otect
ed)

Whenmoneyofacompanyi
sspentul
tr
avi
resi
nacqui
ri
ngapr
oper
ty,t
her
ightoft
he
companyov
ert
hatpr
oper
tywoul
dbesecur
e.Thi
sisbecauset
hepr
oper
tyr
epr
esent
s
cor
por
atecapi
tal
,thoughacqui
redwr
ongl
y.

5.Ul
tr
a-v
iresBor
rowi
ngs:

Al
lul
tr
avi
resbor
rowi
ngsar
evoi
dandcannotber
ati
fi
edbyt
hecompanyandt
hel
ender
i
snotent
it
ledt
osuet
hecompanyf
ort
her
etur
noft
hel
oan.Howev
ert
hecour
tshav
e
dev
elopedcer
tai
npr
inci
plesi
nthei
nter
estofj
ust
icet
opr
otectsuchl
ender
s.Rat
if
iedi
s
t
oendor
seorsuppor
t

Theconsequencesoful
tr
avi
resbor
rowi
ngs

i
.InLawNoLoani
ssuedbyt
hel
ender

I
nthef
ir
stpl
ace,anul
tr
avi
resl
enderhasnol
egalorequi
tabl
edebtagai
nstt
he
company
.Consequent
lyhecannotsuet
hecompanyt
orecov
erhi
sloan.

i
i
.Lendercanof
ferI
njunct
ionr
est
rai
ningt
hecompanyf
rom usi
ngt
heMoney

Buti
fthemoneyadv
ancedt
othecompanyhasnotbeenspent
,thel
endermayby
meansofani
njunct
ionr
est
rai
nthecompanyf
rom usi
ngt
heMoney
.Ther
easonf
ort
his

20
r
ulei
sthatt
hel
oani
sul
tr
avi
resandt
hecompanyi
snott
heowneroft
hatmoney
.The
l
endercont
inuest
obet
heownerandhast
her
ightt
otakebackt
hemoney

i
i
i.TheLender
’sr
ightt
orecov
erhi
sloani
sonl
ythr
oughSubr
ogat
ion(
subst
it
uti
on)

Wher
ethemoneyofanul
tr
avi
resl
enderhasbeenusedt
opayof
flawf
uldebt
soft
he
company
,hewoul
dbesubr
ogat
ed(
subst
it
uted)t
otheposi
ti
onoft
hedebt
orpai
dof
f
and t
othatext
entwoul
d hav
ethe r
ightt
orecov
erhi
sloan f
rom t
he company
.
Subr
ogat
ioni
sal
l
owedf
ort
hesi
mpl
ereasont
hatwhenal
awf
uldebthasbeenpai
dof
f
wi
thanul
tr
avi
resl
oan,t
het
otali
ndebt
ednessoft
hecompanyr
emai
nst
hesame.By
subr
ogat
iont
heul
tr
avi
resl
ender
,thecour
tsar
eabl
etopr
otecthi
mfr
om l
oss,
whi
l
ethe
debtbur
denoft
hecompanyi
sinnowayi
ncr
eased.Butt
hesubr
ogat
edcr
edi
torwi
l
lnot
enj
oyt
hepr
ior
it
yoft
heor
igi
nal
credi
tor
.

i
v.LendercanCl
aim hi
smoneybacki
fiti
sinor
igi
nal
for
m andcanbei
dent
if
ied.

Asl
ongast
hemoneyoft
hel
enderi
sint
hehandsoft
hecompanyi
nit
sor
igi
nalf
orm
andcanbei
dent
if
ied,
hecancl
aimi
tback.Butt
hepr
obl
em i
smuchmor
edi
ff
icul
twhen
t
hel
ender
’smoneyandt
hatofcompanyhav
ebeenmi
xedup.

Abankorot
herper
sonl
endi
ngt
ocompanyf
orpur
posesul
tr
a-v
irest
hememor
andum
cannotr
ecov
ert
he moneyundert
hatl
oan agr
eement
.Butnot
hing pr
event
sthe
companyf
rom r
epay
ingt
hatmoney
.Thel
enderi
sal
soent
it
ledt
oat
raci
ngor
der
,andi
f
t
hemoneyl
enti
str
acedi
nspeci
eori
ntoanyi
nvest
menthel
dbyt
hecompany
,the
l
endercanr
ecov
eri
tfr
om t
hecompany
.Fur
ther
,ift
hatmoneyi
susedbyt
hecompany
i
ndi
schar
ginganydebt
sorl
i
abi
l
iti
esoft
hecompany
,thel
enderwi
l
l,onaccount
sof
pr
inci
pleofsubr
ogat
ion,st
epi
ntot
heshoesoft
hecr
edi
tor
swhosecl
aimshav
ebeen
pai
dof
fbyt
hecompanyandacqui
ret
hei
rri
ght
sagai
nstt
hecompany
.

6.Ul
tr
a-v
iresLendi
ng:

I
fthemoneyhasbeenl
entbyt
hecompanyandt
hel
endi
ngi
sul
tr
a-v
ires,
thecont
racti
s
v
oid.Noact
ioncanbebr
oughtoni
t,butt
hecompanycansuef
orr
ecov
eryofi
tsmoney
.
Thi
sisbecauset
hebor
rowerwhohasmadeapr
omi
set
orepayt
hatmoneycannotbe

21
al
l
owedt
oref
rai
nfr
om pay
ingi
tbackont
hegr
oundt
hati
tiswi
thoutaut
hor
it
y.

7.Ul
tr
a-v
iresTor
ts:
I
nor
dert
omaket
hecompanyl
i
abl
efort
het
ort
s(ci
vi
lwr
ongs)ofi
tsempl
oyees,i
thas
t
obepr
ovedt
hat
:
i
)Thet
ortwascommi
tt
edi
nthecour
seofanact
ivi
tywhi
chf
all
swi
thi
nthescopeoft
he
company
’smemor
andum.
i
i
)Thet
ortwascommi
tt
edbyt
heempl
oyeei
nthecour
seofhi
sempl
oyment
.

LECTURETWO

REGI
STRATI
ONANDFORMATI
ONOFCOMPANY

FourI
mpor
tantSt
agesi
nthef
ormat
ionofacompany

1.Pr
omot
ionofaCompany
2.Regi
str
ati
onofaCompany
3.Cer
ti
fi
cat
eofI
ncor
por
ati
on.
4.Commencementoft
heBusi
ness.

1.Pr
omot
ionofaCompany
:

Thepr
omot
ioni
sthef
ir
stst
agei
nthef
ormat
ionofacompany
.Pr
omot
ionmaybe
def
inedast
hepr
ocessofi
dent
if
yingbusi
nessoppor
tuni
ti
esandt
her
equi
redf
unds,
pr
oper
tyandmanpowerf
ort
hepur
poseofmaki
ngpr
ofi
ts.Pr
omot
ionbegi
nswhen
someonei
dent
if
iesbusi
nessi
deawhi
chcanbepr
ofi
tabl
yunder
taken.Anyper
sonwho
assumespr
imar
yresponsi
bil
i
tyf
ort
hesemat
ter
s,i
ster
medapr
omot
er.Abusi
ness
ent
erpr
isedoesnotcomei
ntoexi
stenceoni
tsown.I
tcomesi
ntoexi
stenceasar
esul
t
oft
heef
for
tsofani
ndi
vi
dualorgr
oupofpeopl
eorani
nst
it
uti
on.Thati
s,i
thast
obe
pr
omot
edbysomeper
sonorper
sons.Thepr
ocessofbusi
nesspr
omot
ionbegi
nswi
th
t
heconcei
vi
ngofani
deaandendswhent
hati
deai
str
ansl
atedi
ntoact
ioni
.e.
,the
est
abl
i
shmentoft
hebusi
nessent
erpr
iseandcommencementofi
tsbusi
ness.

 
2.Regi
str
ati
onofaCompany

22
Regi
str
ati
on i
s a pr
erequi
sit
e condi
ti
on f
orf
ormat
ion ofa r
egi
ster
ed company
.
Company
’sactpr
ovi
dest
hat“
nocompanyorassoci
ati
onconsi
sti
ngofmor
ethan20
per
sonsshal
lbef
ormedunl
essi
tisr
egi
ster
edasacompany
,Fai
l
uret
oregi
stera
pr
oposedcompanywi
l
lmeant
hati
tdoesnotl
egal
l
yexi
st.

I
mpor
tantdocument
srequi
redi
nregi
str
ati
on

1.TheMemor
  andum ofAssoci
ati
on

AMemor
andum ofAssoci
ati
on(
MOA)i
sal
egaldocumentpr
epar
edi
nthef
ormat
ion
andr
egi
str
ati
onpr
ocessofal
i
mit
edl
i
abi
l
itycompanyt
odef
inei
tsr
elat
ionshi
pwi
th
shar
ehol
der
s.Memor
andum ofAssoci
ati
on(
MOA)i
sthesupr
emepubl
i
cdocument
whi
chcont
ainsal
lthosei
nfor
mat
iont
hatar
erequi
redf
ort
hecompanyatt
he 
ti
meof
i
ncor
por
ati
on.I
tcanal
sobesai
dthatacompanycannotbei
ncor
por
atedwi
thout

Cont
ent
sofMemor
andum ofAssoci
ati
on

1.ThenameCl
ause:
stat
est
hecompany
'spr
oposedname.
2.Theobj
ect
scl
ause:
stat
est
hemai
nobj
ect
iveoft
hecompany
3.Ther
egi
ster
edof
fi
ceCl
ause:
Thi
sexpl
aint
hepl
acewher
ethecompanyi
slocat
ed
4.Thecapi
talcl
ause,t
hisexpl
ainst
hei
nfor
mat
ionaboutt
het
otalcapi
talhel
dbyt
he
pr
oposedcompany
.
5.Li
abi
l
itycl
ause:
Thi
sexpl
ainst
hel
i
abi
l
ityoft
hecompany
’smember
s.
6.Associ
ati
onCl
ause:Thi
scl
auseexpl
ainst
hatanyi
ndi
vi
dualsi
gni
ngt
hebot
tom of
t
he MOA want
sto be par
toft
he associ
ati
on t
hat
's bei
ng f
ormed by t
he
memor
andum.

2.
 Ar
ti
clesofAssoci
ati
on

Ar
ti
clesofAssoci
ati
on‘
shor
tl
yknownasAOA,i
sadocumentcont
aini
ngal
lther
ules
andr
egul
ati
onsdesi
gnedbyt
hecompany
.

Cont
ent
sofAr
ti
cl
eofAssoci
ati
on

1.Di
rect
orsi
nfor
mat
ion
23
2.Gener al Meeti
ngs
3.Account i
ngandAuditing
4.Shar eholders
5.Transf erandTransmissionofShar
es
6.Conv ersionofSharesinStock
7.AlterationofCapit
al
8.Vot i
ngRi ghts
9.Dividendsandr eserv
es
10.Wi ndingup

3.Li
stofDi
rect
ors:

Al
i
stofdi
rect
orswi
tht
hei
rnames,addr
essandoccupat
ioni
stobepr
epar
edandf
il
ed
wi
tht
heRegi
str
arofCompani
es.

4.Wr
it
tenconsentoft
heDi
rect
ors:

Awr
it
tenconsentoft
hedi
rect
orst
hatt
heyhav
eagr
eedt
oactasdi
rect
orshast
obe
f
il
edwi
tht
heRegi
str
aral
ongwi
thawr
it
tenunder
taki
ngt
otheef
fectt
hatt
heywi
l
ltake
qual
i
ficat
ionshar
esandwi
l
lpayf
ort
hem.

5.St
atut
oryDecl
arat
ion:

Ast
atut
orydecl
arat
ioni
saf
ormalst
atementmadeaf
fi
rmi
ngt
hatsomet
hingi
str
uet
o
t
hebestknowl
edgeoft
heper
sonmaki
ngt
hedecl
arat
ion.I
thast
obesi
gnedbyany
adv
ocat
eoft
heSupr
emeCour
torofaHi
ghCour
t,oranat
tor
ney
.Whent
her
equi
red
document
s hav
e been f
il
ed wi
tht
he Regi
str
aral
ong wi
tht
he pr
escr
ibed f
ee,t
he
Regi
str
arscr
uti
nizest
hedocument
s.I
ftheRegi
str
ari
ssat
isf
ied,t
henameoft
he
companyi
sent
eredi
nther
egi
ster
.

3.Cer
ti
fi
cat
eofI
ncor
por
ati
on

Ont
her
egi
str
ati
onofMemor
andum ofAssoci
ati
on,Ar
ti
clesofAssoci
ati
onandot
her
document
s,t
he Regi
str
ar wi
l
lissue a cer
ti
fi
cat
e known as t
he ‘
Cer
ti
fi
cat
e of
I
ncor
por
ati
on‘
.Thei
ssueofcer
ti
fi
cat
eist
heev
idenceoft
hef
actt
hatt
hecompanyi
s
i
ncor
por
atedandt
her
equi
rement
soft
heCompani
esActhav
ebeencompl
i
edwi
th.

24
4.Cer
ti
fi
cat
eoft
radi
ngorCommencement

Assoonasapr
ivat
ecompanyget
sthecer
ti
fi
cat
ionofi
ncor
por
ati
on,i
tcancommence
i
tsbusi
ness.A publ
i
ccompanycancommencei
tsbusi
nessonl
yaf
terget
ti
ngt
he
cer
ti
fi
cat
e ofcommencementort
radi
ng cer
ti
fi
cat
e.Af
tert
he company get
sthe
cer
ti
fi
cat
eofi
ncor
por
ati
on,
apubl
i
ccompanyi
ssuesapr
ospect
usf
ori
nvi
ti
ngt
hepubl
i
c
t
osubscr
ibet
oit
sshar
ecapi
tal
.Itf
ixest
hemi
nimum subscr
ipt
ion.Theni
tisr
equi
redt
o
sel
lthemi
nimum numberofshar
esment
ionedi
nthepr
ospect
us.Af
tercompl
eti
ngt
he
sal
eoft
her
equi
rednumberofshar
es,
acer
ti
fi
cat
eissentt
otheRegi
str
aral
ongwi
tha
l
ett
erf
rom t
he bank st
ati
ng t
hatal
lthe money i
srecei
ved.The Regi
str
art
hen
scr
uti
nizest
hedocument
s.I
fhei
ssat
isf
iedhei
ssuesacer
ti
fi
cat
eknownas‘
Cer
ti
fi
cat
e
of Commencement of Busi
ness’
. Thi
s i
s t
he concl
usi
ve ev
idence f
or t
he
CommencementofBusi
ness.

2.
 Regi
str
ati
onofPr
ivat
eCompany

 
Inor
dert
osecur
eregi
str
ati
onofapr
ivat
ecompanyt
hepr
ocedur
edescr
ibedabov
eis
f
oll
owedexceptt
hat
;

1.Thememor
andum ofassoci
ati
onwi
l
lbesi
gnedbyatl
eastt
wooft
hecompany
’s
pr
ospect
iveshar
ehol
der
s.
2.I
far
ti
cl
esofassoci
ati
onar
enotdel
i
ver
edf
orr
egi
str
ati
ont
hepr
ovi
sionsofpar
t1
wi
l
lbecomet
hecompany
’sAr
ti
cleofassoci
ati
on.

2.
2Theef
fectofr
egi
str
ati
on

1.Separ
atel
egal
per
sonal
i
ty

 
Thecompanyi
sdi
sti
nctanddi
ff
erentf
rom i
tsmember
sinl
aw.I
thasi
tsownsealand
i
tsownname,i
tsasset
sandl
i
abi
l
iti
esar
esepar
ateanddi
sti
nctf
rom t
hoseofi
ts
member
s.I
tiscapabl
eofowni
ng pr
oper
ty,i
ncur
ri
ng debt
,and bor
rowi
ng money
,
empl
oyi
ngpeopl
e,hav
ingabankaccount
,ent
eri
ngi
ntocont
ract
sandsui
ngandbei
ng
suedsepar
atel
y.

25
2.
  
Limi
tedl
i
abi
l
ity

Pr
ovi
dedacompanyi
sfor
medont
hebasi
sofal
i
mit
edl
i
abi
l
ity
,it
smember
sar
enot
l
i
abl
efort
hecompany
’sdebt
s.Compl
eteabsenceofl
i
abi
l
ityi
snothowev
er,per
mit
ted.
Eachmemberi
sli
abl
etocont
ri
but
e,i
fcal
l
edupont
odoso,
thef
ullnomi
nalv
alueofhi
s
shar
essof
arast
hishasnotal
readybeenpai
d.

 
3. 
 Separ
atePr
oper
ty

Thepr
oper
tyoft
hecompanyi
sdi
sti
ngui
shedf
rom t
hatofi
tsmember
s.I
ncont
rastt
he
pr
oper
tyofapar
tner
shi
pisj
oint
lyownedbyt
hepar
tner
s.Thi
scancausepr
obl
ems
whendef
ini
ngt
het
ruenat
ureoft
hei
nter
est
soft
hepar
tner
s,whi
chwi
l
lbenecessar
y
whenapar
tnerr
eti
res.

 
4. 
  
  Cont
ract
ual
capaci
tyt
osueandbesued

Thequest
ionofcont
ract
ualcapaci
tyi
scl
osel
yrel
ated t
othepr
oper
tyowner
shi
p.
Compani
eshav
econt
ract
ual
capaci
tyandcansueandbesuedont
hei
rcont
ract
s.

 
5. 
  
  Per
pet
ual
successi
on

Thecont
inui
tyoft
hecompanyi
snotaf
fect
edbyt
hedeat
hori
ncapaci
tyofsomeoral
l
ofi
tsmember
s.

 
6. 
Transf
erabl
emember
shi
p

I
ncor
por
ati
ongr
eat
lyf
aci
l
itat
est
het
ransf
erofmember
s’i
nter
est
s.Shar
esar
eit
emsof
pr
oper
tywhi
char
efr
eel
ytr
ansf
erabl
epr
ovi
dedt
heconst
it
uti
onoft
hecompanydoes
notcont
ainanexpr
esscl
auset
othecont
rar
y.

7.Separ
ateManagement

Acompanyi
sadmi
nist
eredandmanagedbyi
tsmanager
ialper
sonneli
.e.t
heBoar
dof
Di
rect
ors.Theshar
ehol
der
sar
esi
mpl
ythehol
der
soft
heshar
esi
nthecompanyand
neednotbenecessar
il
ythemanager
soft
hecompany

26
 
8. 
 I
ncr
easedbor
rowi
ngpower
s

I
tisl
ogi
cal
toassumet
hatuni
ncor
por
atedt
rader
sorpar
tner
shi
pswoul
dfi
ndi
teasi
ert
o
bor
rowmoneybecauseoft
hei
rper
sonall
i
abi
l
ity
.Thi
sisnott
hecasesi
nceacompany
cangi
veassecur
it
yaf
loat
ingchar
ge.Thi
sisnotav
ail
abl
etoanuni
ncor
por
atedt
rader
orpar
tner
shi
p.

2.
3Thekeyf
unct
ionsoft
heRegi
str
arofCompani
es

1.Toi
ssueacer
ti
fi
cat
eofI
ncor
por
ati
onaf
teraut
hent
icat
ingt
hedocument
s
submi
tt
edi
nsuppor
tforsuchi
ncor
por
ati
on.
2.Mai
ntenanceofr
egi
sterofCompani
es/
LLPbyent
eri
ngt
henamesofnewl
y
i
ncor
por
atedcompani
esandr
emov
ingt
henamesoft
hosewhi
char
est
ruckof
f.
3.Keept
rackofal
lthef
il
ingswhi
char
erequi
redt
obedonebyt
heCompani
es/
LLP
andupdat
ethemast
erdat
ainaccor
dancewi
tht
hef
il
ing.

2.
3PROMOTFR

Def
ini
ti
onofapr
omot
er

Apr
omot
eri
saper
sonwhounder
takest
ofor
m acompanywi
thr
efer
encet
oagi
ven
pr
ojectandt
oseti
tgoi
ng.Thedef
ini
ti
oni
sver
ywi
deandpr
act
ical
l
yany
onewho
per
for
msv
ari
ousf
unct
ionswi
thav
iewt
oincor
por
ati
ngacompanywi
l
lbeapr
omot
er.

Pr
omot
ercanbeaper
son:

i
. Whohadt
hei
deaoff
ormi
ngt
hecompanyf
oracer
tai
npur
pose
i
i.Whodr
aft
edt
hememor
andum andar
ti
clesorgav
einst
ruct
ionst
opr
epar
ethem.
i
ii
.Whopai
dfort
her
egi
str
ati
onoft
hecompanyandcostofpr
epar
ingt
hedocument
s
i
v.Whoar
rangedf
orper
sonst
obecomet
hef
ir
stdi
rect
ors

Thedut
iesoft
hepr
omot
er;
-

1.Pr
omot
erst
andsi
naf
iduci
aryr
elat
ionshi
pwi
tht
hecompanywhi
chhei
sfor
ming.
2.Pr
omot
ermustdi
scl
oseanypr
ofi
tmadet
othecompany(
shar
ehol
der
s).

27
3.Pr
omot
ercannotf
orm acompanyandsel
lhi
sownl
andt
oitatapr
ofi
t.
4.Pr
omot
erneed t
o di
scl
oset
othepot
ent
ialmember
sint
hepr
ospect
usi
fthe
companyi
stobesol
dtot
hepubl
i
c
5.Pr
omot
erneedt
oinf
orm shar
ehol
der
sthev
alueoft
hei
rshar
eswhenhemaki
ngt
he
deci
sionofwhet
herornott
opur
chaset
heshar
es.

NBA f
iduci
aryi
saper
sonoror
gani
zat
iont
hatact
sonbehal
fofanot
herper
sonor
per
sonst
omanageasset
s.Essent
ial
l
y,af
iduci
aryowest
othatot
herent
it
ythedut
iesof
goodf
ait
handt
rust
.

Remedi
esf
ort
hebr
eachofpr
omot
ersdut
ies

1.Resci
ssi
on(
set
ti
ngt
hecont
ractasi
de)

Theequi
tabl
eremedyofr
esci
ssi
oni
sav
ail
abl
etot
hecompanyi
nrespectofany
cont
ractent
eredi
ntoasar
esul
tofnon-
discl
osur
eormi
srepr
esent
ati
on.

2.Paydamages

Pr
omot
ersmaybel
i
abl
efordamagesf
ormi
srepr
esent
ati
oni
nduci
ngacont
ract
.

Pay
mentf
orPr
omot
ers

1)
  
Promot
ersar
enotent
it
ledt
opay
mentbecause

i
)Thecompany
,bei
ngnon-
exi
stenceatt
het
imeoft
hepr
omot
ioncoul
dnothav
e
r
equest
edf
ort
hepr
omot
er’
sser
vice.Ther
eist
her
efor
enocont
ractbet
weenhi
m and
t
hecompanywhi
chwoul
dent
it
lehi
mtosuef
orhi
sexpensesorpr
ofessi
onal
ser
vice.

i
i
)Thecompanycoul
dnotaf
teri
tsi
ncor
por
ati
on,ent
eri
ntocont
ractt
opayhi
mforhi
s
ser
vicesbecauset
heser
vicesr
ender
edwoul
dbepastconsi
der
ati
on.

2)
 Howev
er,t
he ar
ti
cl
es wi
l
lpr
ovi
de t
hat‘
the busi
ness oft
he companyshal
lbe
managedbyt
hedi
rect
orswhomayexer
ciseal
lthepower
soft
hecompany
’.The
di
rect
orsmayt
her
efor
epayt
hepr
omot
erst
hei
rexpenses.I
npr
act
icet
her
ewi
l
lnor
mal
l
y

28
bet
hef
ir
stdi
rect
ors.

3)
 Anot
hermet
hodofpay
mentwoul
dbef
ort
hepr
omot
ert
osel
lpr
oper
tyt
othe
companyatan ov
er-
val
uat
ion (
thedi
ff
erencebei
ng t
he‘
pay
ment
’)
.Thi
swoul
d be
accept
abl
epr
ovi
dedal
lthedi
scl
osur
erequi
rement
sar
esat
isf
ied.

Pr
e-i
ncor
por
ati
oncont
ract

A pr
e-i
ncor
por
ati
on cont
racti
s an agr
eementwhi
ch i
s ent
ered i
nto usual
l
ybya
pr
omot
eronbehal
fofacompanyatat
imewhenacompany
’sf
ormat
ionhasnotbeen
compl
etedbyr
egi
str
ati
on.

Rul
esappl
i
cabl
etoPr
e-i
ncor
por
ati
oncont
ract

1.I
ftheagr
eementi
swr
it
tenandi
tisappar
entt
hatt
hepr
omot
erwascont
ract
ingas
i
ndi
vi
dual
,hewi
l
lbehel
dper
sonal
l
yli
abl
eundert
hecont
ract
.
2.I
ftheagr
eementi
sawr
it
tenandi
tshowst
hatt
hepr
oposedcompanywast
he
cont
ract
ingpar
tyt
hepr
omot
erswi
l
lnotbeal
l
owedt
oenf
orcei
tint
heev
entofi
ts
br
eachbyt
heot
herpar
ty.
3.Apr
e-i
ncor
por
ati
oncont
ractcannotber
ati
fi
edbyt
hecompanyaf
teri
tsr
egi
str
ati
on.

29
 LECTURETHREE

THECONSTI
TUTI
ONOFTHECOMPANY

TheMemor
andum ofAssoci
ati
onandt
heAr
ti
clesofAssoci
ati
on

 Thememorandum ofassoci
ati
on
 TheAr
ti
cl
esofassociati
on.

3.
1TheMemor
andum ofAssoci
ati
on

AMemor
andum ofAssoci
ati
on(
MOA)i
sal
egaldocumentpr
epar
edi
nthef
ormat
ion
andr
egi
str
ati
onpr
ocessofal
i
mit
edl
i
abi
l
itycompanyt
odef
inei
tsr
elat
ionshi
pwi
th
shar
ehol
der
s.Memor
andum ofAssoci
ati
on(
MOA)i
sthesupr
emepubl
i
cdocument
whi
chcont
ainsal
lthosei
nfor
mat
iont
hatar
erequi
redf
ort
hecompanyatt
he 
ti
meof
i
ncor
por
ati
on.I
tcanal
sobesai
dthatacompanycannotbei
ncor
por
atedwi
thout

3.
2Cont
ent
soft
hememor
andum ofassoci
ati
on

1.TheNameCl
ause
2.Regi
ster
edof
fi
cecl
ause
3.Theobj
ectcl
ause
4.TheLi
abi
l
itycl
ause
5.Thecapi
tal
clause
6.Theassoci
ati
oncl
ause.

1.NameCl
ause

Thi
scl
ausest
atest
hecompany
'spr
oposedname.

i
. I
tmustendi
nthewor
d"l
i
mit
ed"i
fit
'
sapubl
i
ccompanyor"
pri
vat
eli
mit
ed"i
fit
'sa
pr
ivat
ecompany
.
i
i. I
tcan'
tbei
dent
ical
toanyexi
sti
ngcompany
'sname.
i
i.I
i tcan'
tal
l
udet
othenewcompanydoi
ngt
hebusi
nessofanexi
sti
ngcompany
.
i
v.I
tshoul
dnotbemi
sleadi
ngi
nanyway
.

30
2.Regi
ster
edOf
fi
ceCl
ause

Ther
egi
ster
edof
fi
cecl
ausel
i
stst
henameoft
hest
atewher
ethecompany
'sr
egi
ster
ed
of
fi
cei
sphy
sical
l
ylocat
ed.

i
. Ther
egi
ster
edof
fi
ce'
sphy
sical
locat
iondet
ermi
neswhi
chj
uri
sdi
cti
ont
he
Regi
str
arofCompani
esandwhi
chcour
tthecompanywoul
dfal
lunder
.
i
i.I
tal
soconf
ir
mst
hecompany
'snat
ional
i
ty.
i
ii
.Ther
egi
ster
edof
fi
ce'
sful
laddr
essmustbepr
ovi
dedt
otheRegi
str
arof
Compani
est
osi
mpl
i
fyf
urt
hercommuni
cat
ions.

3.Obj
ectCl
ause

Theobj
ectcl
auseexpl
ainedwhyt
hecompanyi
sest
abl
i
shi
ng.Compani
esar
en'
tl
egal
l
y
al
l
owedt
odoanyki
ndofbusi
nessot
hert
hant
heki
ndofbusi
nesst
hati
sspeci
fi
cal
l
y
st
atedi
nthi
scl
ause.Anobj
ectcl
auseshoul
dcont
ain:

i
. Al
i
stoft
hemai
nobj
ect
sthecompanywi
l
lbepur
sui
ngaf
teri
t'
sIncor
por
ated
i
i
.Inci
dent
alobj
ect
sthatar
enecessar
ytoachi
evet
hemai
nobj
ect
i
i
i.Anyot
herobj
ect
sthatar
en'
ti
ncl
udedi
nthemai
nobj
ect
sori
nci
dent
alobj
ect
i
v.Not
hingi
l
legal
v
.Not
hingt
hat
'
sagai
nstt
hepubl
i
cint
erest
v
i.Not
hingt
hat
'
sagai
nstt
hecount
ry'
sgener
alr
uleofl
aw

4.Li
abi
l
ityCl
ause

Thel
i
abi
l
itycl
auseexpl
ainswhatl
i
abi
l
ityeachoft
hecompany
'smember
sfaces.I
fthe
companyi
sli
mit
edbyshar
es,
thel
i
abi
l
ityt
hateachmemberf
acescanbenomor
ethan
t
hef
acev
alueofshar
est
hatheorshehol
ds.I
fit
'sacompanyt
hat
'sl
i
mit
edby
guar
ant
ee,
thi
scl
ausemustdef
inehowmuchl
i
abi
l
ityeachi
ndi
vi
dual
companymember
hol
ds.I
fit
'sanunl
i
mit
edcompany
,thi
spar
ti
cul
arcl
ausewoul
dnotbei
ncl
udedi
nthe
MOA.

5.Capi
tal
Clause
31
Thecapi
tal
clausel
i
stsi
nfor
mat
ionaboutt
het
otal
capi
tal
hel
dbyt
hepr
oposed
company
.Thi
samounti
scal
l
edt
hecompany
'saut
hor
izedcapi
tal
.Compani
esar
en'
t
per
mit
tedt
ocol
l
ectmor
emoneyt
hant
heamountl
i
stedunderaut
hor
izedcapi
tal
.The
wayt
hecapi
tal
isdi
vi
dedi
ntoequi
tyshar
ecapi
tal
andpr
efer
enceshar
ecapi
tal
also
needst
obel
i
stedi
nthecapi
tal
clause.Thenumberofshar
est
hecompanyput
sin
equi
tyshar
ecapi
tal
andpr
efer
enceshar
ecapi
tal
,al
ongsi
det
hei
rval
ue,
needst
obe
i
ncl
udedi
ntheMOA.

6.Associ
ati
onCl
ause

Theassoci
ati
oncl
auseexpl
ainst
hatanyi
ndi
vi
dualsi
gni
ngt
hebot
tom oft
heMOA
want
stobepar
toft
heassoci
ati
ont
hat
'
sbei
ngf
ormedbyt
hememor
andum.TheMOA
hast
obesi
gnedbyatl
eastsev
enpeopl
eormor
eifi
t'
sapubl
i
ccompany
.Ithast
obe
si
gnedbyatl
eastt
woormor
epeopl
eifi
t'
sapr
ivat
ecompany
.Thesi
gnat
uresal
sohav
e
t
obeaf
fi
rmedbywi
tnesses.Ther
ecanbeonewi
tnessf
oral
loft
hesi
gnat
ures,but
noneoft
hesubscr
iber
scanwi
tnesst
hesi
gnat
uresoft
heot
her
s.Al
lsubscr
iber
sand
wi
tnessesmustpr
ovi
det
hei
raddr
essesandoccupat
ionsi
nwr
it
ing.

3.
3Impor
tanceofMemor
andum ofassoci
ati
on

i
. Memor
andum ofAssoci
ati
on i
sthe supr
eme basi
clegaldocumentf
ora
company
i
i.I
tist
hebasi
cofi
ncor
por
ati
onandacompanycannotber
egi
ster
edwi
thouta
Memor
andum ofAssoci
ati
on.I
tcont
ainst
hef
undament
alcondi
ti
onsuponwhi
ch
al
onet
hecompanycanbei
ncor
por
ated.
i
ii
.Iti
sthechar
teroft
hecompany
,whi
chdef
inest
heobj
ect
soft
hecompany
’s
f
ormat
ionandt
heut
mostpossi
blescopeofi
tsoper
ati
onsbey
ondwhi
chi
ts
act
ionscannotgo.
i
v.I
tcanbesai
dtobet
hef
oundat
ionst
one,uponwhi
cht
hef
utur
est
ruct
ureoft
he
companywi
l
lst
and
v
.Itdet
ermi
nest
hel
i
mit
sofaCompany
’sact
ivi
ti
es.Anyact
ivi
tydoneout
sidet
he
scopeoft
hememor
andum wi
l
lbeul
tr
avi
resandv
oid.

32
 v
i.I
tenabl
esout
sider
stoknowwhet
hert
hecompanyi
saut
hor
izedt
oent
eri
ntoa
par
ti
cul
art
ransact
ion.
v
ii
.Iti
ndi
cat
est
henamesandaddr
essesoft
hepeopl
ewhohav
epr
omot
edt
he
company
.Itmakesknownt
otheshar
ehol
der
stheext
entoft
hei
rli
abi
l
ity
.

3.
4Ar
ti
clesofAssoci
ati
on
The Ar
ti
cles ofAssoci
ati
on orAOA ar
ethe l
egaldocumentt
hatal
ong wi
tht
he
memor
andum ofassoci
ati
onser
vesast
heconst
it
uti
onoft
hecompany
.Iti
scompr
ised
ofr
ulesandr
egul
ati
onst
hatgov
ernt
hecompany
'si
nter
nal
aff
air
s.

3.
5Cont
ent
sofAr
ti
clesofAssoci
ati
on
1.Di
rect
ors

TheAOAdef
inest
hegui
del
i
nesoft
heDi
rect
ors’
appoi
ntment
;thei
rqual
i
ficat
ionsf
or
appoi
ntment
;thei
rremuner
ati
ononceappoi
ntedandt
hepower
soft
heBoar
dof
Di
rect
orsi
ntheCompanymeet
ings.

2.Gener
alMeet
ings

TheAOApr
ovi
dest
hebasi
cfr
amewor
kofal
ltheGener
alMeet
ingst
obeconduct
edas
wel
lasal
lthepr
ovi
sionst
hatar
erel
atedt
othef
unct
ioni
ngoft
heGener
alMeet
ingsi
n
anymanner
.

3.Account
ingandAudi
ti
ng

Thepr
ovi
sionsi
nAOAwi
l
ldef
inet
hegui
del
i
nessubj
ect
edt
otheAudi
ti
ngoft
he
account
ingoft
heCompany
.

4.Shar
ehol
der
s

TheAOAst
reaml
i
nest
hesub-
div
isi
onoft
heShar
ecapi
tal
oft
heCompanyi
ncl
udi
ngt
he

33
r
ight
soft
heShar
ehol
der
sandt
her
elat
ionshi
poft
heser
ight
swi
thot
herel
ement
sof
t
heCompany
.Theshar
ehol
der
shav
etopayt
hewhol
eorpar
toft
her
emai
ningunpai
d
amountoneachshar
epur
chasedont
heCompany
’sdemand.

5.Tr
ansf
erandTr
ansmi
ssi
onofShar
es

TheAOAdef
inest
hepr
ocedur
edur
ingt
hepr
ocessoft
ransf
erofshar
esbet
weent
he
t
ransf
ereeandt
heshar
ehol
der
s.Tr
ansmi
ssi
onofshar
escomesi
ntoef
fectwi
thdeat
h,
i
nsol
vency
,mar
ri
age,
successi
on,
etc.I
tisal
soapar
tofAOAdespi
tebei
ngi
nvol
unt
ary
.

6.Conv
ersi
onofShar
esi
nSt
ock

TheCompanycanpassanor
dinar
yresol
uti
oni
naGener
alMeet
ingt
oconv
ertt
hei
r
shar
esi
ntost
ock.Themanagementoft
hedeci
sionandr
esol
uti
onpassedshoul
dbei
n
accor
dancewi
tht
heAOA.

7.Al
ter
ati
onofCapi
tal

Si
mil
art
otheconv
ersi
onofShar
esi
ntoSt
ock,
AOApr
ovi
dest
her
ulesoft
hepr
ocedur
e
t
oal
tercapi
tal
aspert
heCompany
’si
nter
est
s.TheCompanycandeci
det
oincr
ease,
decr
easeorr
ear
ranget
heCapi
tal
.

8.Vot
ingRi
ght
s

TheAOAnot
esdownt
hespeci
fi
cCompanymat
ter
swhi
chcal
l
sforv
oti
ngbymember
s
aswel
last
hepr
ocedur
eofv
oti
ngwhet
herbyapol
lort
hroughpr
oxi
es.

9.Di
vi
dendsandr
eser
ves

TheAOAal
sopr
ovi
dest
hedi
str
ibut
ionofdi
vi
dendsamongt
heShar
ehol
der
soft
he
Company
.

10.Wi
ndi
ngup

Wi
ndi
ngupoft
heCompanymeanst
hel
i
qui
dat
ionofal
ltheasset
soft
heCompanyt
o
payi
tsdebt
.Ther
emai
ningmoni
esl
eftaf
tert
hepay
mentofal
ldebtandexpensesar
e

34
di
str
ibut
edamongt
heshar
ehol
der
soft
heCompany
.TheAOAal
sopr
ovi
dest
he
pr
ovi
si
onsandpr
ocedur
erel
atedt
otheWi
ndi
ngUpoft
heCompanyandhast
opr
oceed
i
naccor
dancewi
tht
heAOA.

3.
6Al
ter
ingAr
ti
clesofAssoci
ati
on
Companymayal
terr
egul
ati
onscont
ainedi
nit
sAr
ti
clesanyt
imebypassi
ngaspeci
al
r
esol
uti
on,subj
ectt
oat
hepr
ovi
sionsoft
heCompani
esActandCondi
ti
onscont
ained
i
ntheMemor
andum Thef
undament
alr
ightofacompanyt
oal
teri
tsar
ti
clesi
ssubj
ect
t
othef
oll
owi
ngl
i
mit
ati
ons:
a)Theal
ter
ati
onmustnotexceedt
hepower
sgi
venbyt
heMemor
andum ofAssoci
ati
on.
b)I
tmustnotbei
nconsi
stentwi
thanypr
ovi
sionsofCompani
esActoranyot
herst
atut
e.
c)I
tmustnotbei
l
legal
oragai
nstpubl
i
cpol
i
cies
d)Theal
ter
ati
onmustbebonaf
idef
ort
hebenef
itoft
hecompanyasawhol
e.
e)I
tshoul
dnotbeaf
raudonmi
nor
it
y,ori
nfl
i
ctahar
dshi
ponmi
nor
it
y
f
)Theal
ter
nat
ionmustnotbei
nconsi
stentwi
thanor
deroft
hecour
t.
g)Theal
ter
ati
oncannothav
eret
rospect
iveef
fect
.Itcanoper
ateonl
yfr
om t
hedat
eof
amendment
.

3.
7Impor
tanceoft
heAr
ti
clesofAssoci
ati
on

i
.Itpr
ovi
despr
ocedur
es,r
ulesandr
egul
ati
onsf
orhandl
i
ngcompany
’sf
inanci
al
af
fai
rs,
shar
ehol
der
sandDi
rect
orsr
esponsi
bil
i
ties.
i
i.I
tshowsdet
ail
soft
hev
oti
ngr
ight
soft
hemember
saswel
last
hepr
ocedur
eof
t
hev
oti
ng.
i
ii
.Itpr
otect
sthei
nter
est
soft
hei
nvest
orsandt
heShar
ehol
der
s.
i
v.I
tkeepst
hei
nter
est
soft
heDi
rect
orsi
nanycompet
ingbusi
nessandpr
event
s
f
rom anyconf
li
ctofi
nter
est
.
v
.Itf
aci
l
itat
escompany
’ssmoot
hrunni
ngandf
ulf
il
li
ngofi
tsobj
ect
ives

3.
8 Dif
ference bet
ween Memor
andum ofAssoci
ati
on and Ar
ti
cles of
Associ
ati
on

35
1.Memor
andum ofAssoci
ati
on i
s a documentt
hatconsi
sts ofal
lthe dat
a
essent
ialf
ort
hei
ncor
por
ati
onoft
heCompany
.Ont
hecont
rar
y,t
heAr
ti
clesof
Associ
ati
onar
epr
ovi
sionsandr
ulessetupt
oregul
ateandgov
ernt
heCompany
.
2.TheMemor
andum ofAssoci
ati
onr
est
rai
ntst
hepower
soft
heor
gani
zat
ionwhi
l
e
t
heAr
ti
cl
esofAssoci
ati
ononl
ydemonst
rat
ether
ight
s,obl
i
gat
ionst
hatt
he
member
soft
heor
gani
zat
ionar
eresponsi
blet
ofol
l
owandadher
e.
3.TheAr
ti
cl
esofAssoci
ati
oni
ssubor
dinat
etot
heMemor
andum whi
chhol
dst
he
Supr
emest
atusi
nthehi
erar
chyoft
hedocument
soft
heCompanywhi
l
e
4.TheMemor
andum ofAssoci
ati
onmustcont
ainsi
xcl
ausesi
ntot
albutt
he
Ar
ti
cles ofAssoci
ati
on can hav
e cl
auses accor
ding t
othe deci
sion oft
he
Company
.
5.TheMemor
andum speci
fi
est
heobj
ect
ivesoft
heCompanywhi
l
etheAr
ti
clesof
Associ
ati
onspeci
fi
est
her
ulest
hroughwhi
cht
heobj
ect
ivesar
etobef
ulf
il
ledby
t
heCompany
.
6.Anypr
ovi
si
onsoft
heAOAt
hatgoesagai
nstt
heMemor
andum i
srender
ed
i
nval
i
dandt
heMemor
andum ofAssoci
ati
oncont
rol
stheAr
ti
cles.
 

36
 LECTURERFOUR

MEMBERSHI
PANDMI
NORI
TYPROTECTI
ON

4.
1Mi
nor
it
yShar
ehol
der

A mi
nor
it
yshar
ehol
deri
s anyshar
ehol
derwho does notexer
cise cont
rolov
era
company
.Themaj
ori
tyshar
ehol
der
sal
mostal
way
sexer
tanabsol
utecont
rolov
ert
he
company
,it
smanagement
,it
sboar
dofdi
rect
ors,
andsoon.

4.
2Mi
nor
it
yPr
otect
ion

Mi
nor
it
yshar
ehol
der
sshoul
dbepr
otect
edf
rom abusi
veact
ionsby
,ori
nthei
nter
estof
,
cont
rol
l
ingshar
ehol
der
sact
ingei
therdi
rect
lyori
ndi
rect
ly;andshoul
dhav
eef
fect
ive
meansofr
edr
ess.I
nacor
por
ati
on,someshar
ehol
der
shol
denoughshar
esoft
he
cor
por
ati
on st
ockt
hatt
heycan exer
cise cont
rolov
ert
he cor
por
ati
on.A mi
nor
it
y
shar
ehol
deri
sanyshar
ehol
dert
hatdoesnotexer
cisecont
rolov
eracor
por
ati
on.By
def
ini
ti
on,mi
nor
it
yshar
ehol
der
sownl
esst
han50% oft
hecompany
’sout
standi
ng
shar
es.

4.
3Member
shi
p

Anyper
sonwhohasagr
eedi
nwr
it
ingt
obecomeapar
toft
hecompanyandal
sohol
ds
shar
esoft
hecompanyi
sconsi
der
edt
he‘
Memberoft
heCompany
’andi
ssai
dtohol
d
Member
shi
pinacompany
.

4.
4Met
hodsofacqui
ri
ngmember
shi
pofaCompany

1.Subscr
ibi
ngorsi
gni
ngt
othememor
andum ofassoci
ati
on

Subscr
iber
stot
he memor
andum ofassoci
ati
on become or
igi
nalmember
s ofa
companyf
rom t
hedat
eofi
tsi
ncor
por
ati
on.I
fyousubscr
ibet
othememor
andum of
associ
ati
on,t
heny
oubecomeamember
.Subscr
iber
sar
ethef
ir
stshar
ehol
der
sina
l
i
mit
edbyShar
esCompany
,ort
hef
ir
stguar
ant
orsi
nal
i
mit
edbyGuar
ant
eeCompany
.
Theyar
e cal
l
ed ‘
subscr
iber
s’becauset
heysubscr
ibe(
signed t
hei
rnames)t
othe

37
memor
andum ofassoci
ati
ondur
ingt
hecompanyf
ormat
ionpr
ocess.Bydoi
ngso,t
hey
ar
eagr
eei
ngt
ofor
mthebusi
nessandbecomemember
soft
hatcompany
.Anyper
son
orcor
por
ateent
it
ycanbeasubscr
iberormember
.Humansubscr
iber
sar
eref
err
edt
o
as‘
nat
ural
’shar
ehol
der
sorguar
ant
ors.Non-
humansubscr
iber
sar
eref
err
edt
o as
‘
cor
por
ate’
shar
ehol
der
sorguar
ant
ors.

2.
)Agr
eei
ngt
opur
chasequal
i
fiedshar
eswhenappoi
ntedasf
ir
stdi
rect
or

I
fyouagr
eet
opur
chasequal
i
fiedshar
eswhenappoi
ntedast
hef
ir
stdi
rect
orofapubl
i
c
company
,theny
ouat
tai
nmember
shi
p.Qual
i
fiedshar
ear
eShar
est
hataper
sonmust
hol
dinor
dert
oqual
i
fyasadi
rect
orar
eal
socal
l
edqual
i
ficat
ionshar
es

3.
)Appl
i
cat
ionofshar
es

Wheny
ouappl
yforshar
esandy
ou'
real
l
ott
edori
ssuedwi
thshar
es,t
heny
oucanget
y
ournamel
i
stedi
nther
egi
sterofmember
shi
p.Byget
ti
ngy
ournameont
her
egi
ster
,
y
ouacqui
remember
shi
pofacompany
.

4.
)Thr
oughTr
ansf
erofShar
es

Shar
esofapubl
i
ccompanyar
efr
eel
ytr
ansf
erabl
e.Wheny
oupur
chaseshar
esf
rom a
per
soni
ntheopenmar
ketandgett
hem t
ransf
err
edt
oyout
hrought
heexecut
ionofan
i
nst
rumentt
ermedasshar
etr
ansf
erf
orm,t
hent
henameoft
het
ransf
erori
sdel
eted
f
rom t
her
egi
sterofmember
shi
pandy
ournameent
eredi
nit
.Thi
smeanst
haty
oucan
acqui
remember
shi
pofacompanyt
hrought
ransf
erofshar
es.

5.Thr
oughSuccessi
on

Youcanat
tai
nmember
shi
pofacompanybysuccessi
on.Youcani
nher
itt
heshar
esof
t
hedeceased,i
nsaneori
nsol
ventmemberbyonl
ypr
oduci
ngl
egalev
idenceofher
ent
it
lementandgety
ournamel
i
stedi
nther
egi
sterofmember
shi
p.

6.Conv
ert
ingy
ourShar
eWar
rant
sint
oShar
es

Youcanbecomeamemberbyconv
ert
ingy
ourshar
ewar
rant
sint
oshar
ecer
ti
fi
cat
es.

38
Wheny
our
equestf
ort
heconv
ersi
onshar
ewar
rant
sint
oshar
ecer
ti
fi
cat
esandi
t'
s
accept
ed,t
heny
oucangety
ournamel
i
stedi
nther
egi
sterofmember
shi
p.AShar
e
War
rant
sar
esol
dbycompani
esasawayt
orai
secapi
tal
.Iti
sadocumenti
ssuedbyt
he
companyunderi
tscommon seal
,st
ati
ng t
hati
tsbear
eri
sent
it
led t
otheshar
es
speci
fi
edt
her
ein.Shar
ewar
rant
sar
enegot
iabl
einst
rument
s.Theyar
etr
ansf
erabl
eby
mer
edel
i
ver
ywi
thoutr
egi
str
ati
onoft
ransf
er.

7.Al
l
otmentofShar
esf
oraConsi
der
ati
onot
hert
hanCash

Wheny
ouobt
ainal
l
otmentofshar
esf
oraconsi
der
ati
onot
hert
hancash,t
heny
ou
at
tai
nmember
shi
pifonl
yyougety
ournamel
i
stedi
nther
egi
sterofmember
shi
p.Thi
s
happens i
fyou acceptshar
es f
ort
he ser
vices y
ou r
ender
ed t
othe companyor
pr
oper
ti
esy
ouhadsol
dtoi
t.

8.Thr
oughanor
deroft
hecour
t

Youcanbecomeamembert
hroughanor
deroft
hecour
t.Yournamecanbel
i
stedi
n
t
her
egi
sterofmember
shi
paspert
heor
deroft
hecour
t.

9.WhenEqui
tyshar
ehol
derr
enounceshi
sri
ghtofshar
est
ohi
snomi
nee

I
ncaseanexi
sti
ngequi
tyshar
ehol
derr
enouncesherr
ightshar
est
oyouasher
nomi
nee,
theny
oucangety
ournamel
i
stedi
nther
egi
sterofmember
shi
p.Renounce-
to
gi
veupacl
aim

10.Conv
ert
ingDebent
uresi
ntoShar
es

I
fyouhol
ddebent
uresandy
ouappl
ytot
hecompanyt
oconv
ertt
hem i
ntoshar
esand
t
heappl
i
cat
ioni
saccept
ed,t
heny
oubecomeamemberoft
hatcompanyaf
teronl
y
get
ti
ngy
ournamel
i
stedi
nther
egi
sterofmember
shi
p.

11.Thr
oughest
oppel

Onecanat
tai
nmember
shi
pofacompanyt
hroughest
oppel
.Thi
shappenswheny
ou
knowi
ngl
yal
l
ow y
ournamet
oremai
nint
her
egi
sterofmember
sev
enaf
tery
ouhav
e
di
sposedofy
ourshar
esorhol
dyour
sel
fasamemberbymaki
ngot
her
sbel
i
evet
hat
39
y
ou'
reamember
.You'
l
lbeest
oppedf
rom deny
ingt
hef
actt
haty
ou'
reamembert
hus
y
oubecomer
esponsi
blef
ort
hel
i
abi
l
iti
esasamember
.

Subscr
iber
sar
ethef
ir
stshar
ehol
der
sinal
i
mit
edbyshar
escompany
,ort
hef
ir
st
guar
ant
orsi
nal
i
mit
edbyguar
ant
eecompany
.Theyar
ecal
l
ed‘
subscr
iber
s’because
t
heysubscr
ibe (
add t
hei
rnames)t
othe memor
andum ofassoci
ati
on dur
ing t
he
companyf
ormat
ionpr
ocess.Bydoi
ngso,t
heyar
eagr
eei
ngt
ofor
mthebusi
nessand
becomemember
soft
hatcompany
.

4.
5Capaci
tyofMember
s

1.Mi
nor
s

Aper
sonundert
heageof18maybeamember
,howev
er;

i
.Ift
hecompanyknowst
hataper
soni
sami
nori
thast
hepowert
oref
uset
oacceptt
he
per
sonasamember
.

i
i
.Wher
eami
nori
sinadv
ert
ent
lyr
egi
ster
edasamember
,thecompany
,pr
ovi
dei
tact
s
pr
ompt
ly,canappl
ytot
hecour
ttohav
ethet
ransf
ersetasi
deandt
het
ransf
eror
r
est
oredt
other
egi
ster
.

i
i
i.A mi
norwhohasbeenr
egi
ster
edasamembermayr
epudi
atehi
smember
shi
p
bef
oreorwi
thi
nar
easonabl
eti
meaf
terr
eachi
ng18.

 
2.Per
sonal
Repr
esent
ati
ves

Onamember
’sdeat
hhi
sshar
esv
esti
nhi
sper
sonalr
epr
esent
ati
vewhomayr
equi
re
r
egi
str
ati
onofhi
msel
fasamember
.Ifaper
sonalr
epr
esent
ati
vei
sregi
ster
edasa
memberhei
sent
it
ledt
ovot
eandi
sper
sonal
l
yli
abl
eforcal
l
s,al
thoughhemaycl
aim an
i
ndemni
tyoutoft
hedeceased’
sasset
s.

 
3.Tr
ust
eesi
nBankr
upt
cy

Theposi
ti
onofat
rust
eei
nbankr
upt
cyi
ssi
mil
art
othatofaper
sonalr
epr
esent
ati
vei
n

40
t
hathecant
ransf
ert
heshar
eswi
thoutbei
ngr
egi
ster
edasamember
,orhecanr
equi
re
r
egi
str
ati
on.I
fhedoesnotr
egi
ster
,thebankr
uptmustv
oteast
het
rust
eedi
rect
s.A
Tr
ust
eesar
epeopl
ewhoar
eappoi
ntedorsel
ect
edt
oov
erseepar
ti
cul
arbankr
upt
cy
cases.

4.Tr
ust
eesandBenef
ici
ari
es

Shar
esmaybehel
dunderat
rust
,andt
het
rust
eewi
l
lbeent
eredont
her
egi
sterof
member
s.Howev
er,nonot
iceofat
rustshal
lbeent
eredont
her
egi
sterofmember
s.
Thepur
poseoft
hisi
stoav
oidt
hei
nvol
vementoft
hecompanyi
ndi
sput
eswher
ether
e
ar
esev
eralequi
tabl
eint
erest
sinonepi
eceofpr
oper
ty,
andt
orel
i
evet
hecompanyf
rom
l
i
abi
l
ityt
obenef
ici
ari
esi
faf
raudul
entt
rust
eet
ransf
erst
heshar
esi
nbr
eachoft
rust
.

 
5.Compani
es

Acompanymaybeamemberofanot
hercompany
,butcannotbeamemberofi
tsown
hol
dingcompany

4.
6TheRegi
sterofMember
s

Ther
egi
sterofmember
s,orr
egi
sterofshar
ehol
der
s,i
sar
ecor
doft
hei
ndi
vi
dual
swho
ownt
hecompanyandt
hedet
ail
soft
heshar
est
heyhol
d.

1.Cont
ent
soft
heRegi
ster

1. 
Thenameandaddr
essofeachmember
;
2. Ast
atementoft
heshar
eshel
dbyeachmember
.Wher
ethecompanyhasmor
e
t
hanonecl
assofi
ssuedshar
est
heymustbedi
sti
ngui
shedbycl
ass;
3. 
Theamountpai
duponeachshar
e;
4. Thedat
eofent
ryont
her
egi
ster
;and
5. Thedat
eoft
ermi
nat
ionofmember
shi
p.

 
 4.
7Maj
ori
tyRul
e

Maj
ori
tyr
ulei
sadeci
si
onr
ulet
hatsel
ect
sal
ter
nat
iveswhi
chhav
eamaj
ori
ty,t
hati
s,

41
mor
ethanhal
fthev
otes.Thi
sissuppor
tedbyTheRul
einFossVHar
bot
tl
e

4.
8Rul
einFossVHar
bot
tl
e(1843)

Thi
sisar
uleofcor
por
ati
on’
slaw whi
chst
atest
hatshar
ehol
der
shav
enosepar
ate
causeofact
ioni
nlawf
oranywr
ongswhi
chmayhav
ebeeni
nfl
i
cteduponacor
por
ati
on.
Wher
eawr
ongi
sdonet
oacompany
,ort
her
eisani
rr
egul
ari
tyi
nthemanagementofa
company
,andt
her
ear
isesaneedt
oenf
orcet
her
ight
soft
hecompany
,iti
sfort
he
companyt
odeci
dewhatact
iont
otakeandi
tist
hecompanywhi
chi
sthepr
oper
pl
aint
if
fint
heact
ion.Forexampl
e:

I
nPav
li
desvJensen(
1956)t
hedi
rect
orssol
danassetoft
hecompanyt
oat
hir
dpar
ty
atagr
ossunder
val
uat
ion.Ami
nor
it
yshar
ehol
dercommencedanact
ion.I
twashel
d
t
hatt
heycoul
dnothav
edonet
hatdoso,
itwasupt
othecompanyt
odeci
dewhet
hert
o
suet
hedi
rect
orsf
ornegl
i
genceorf
orgi
vet
hem.

4.
9Ther
easons/
adv
ant
agesf
ort
heappl
i
cat
ionof(
FossVHar
bot
tl
erul
e)

1.I
tist
hel
ogi
calconsequenceoft
hef
actt
hatacompanyi
sasepar
atel
egalper
son.
I
tist
hecompanyt
hathassuf
fer
edawr
ongandnoti
ndi
vi
dualmember
,ther
efor
eit
i
sthecompanywhi
chseeksr
emedyorcompensat
ion.
2. I
tpr
eser
vest
hepr
inci
pleofmaj
ori
tyr
ule,wher
ebyt
hewi
shofmaj
ori
typr
evai
l
s
3. I
tpr
event
smul
ti
pleact
ions.I
feach shar
ehol
derwer
eper
mit
ted t
o sue,t
he
companymi
ghtbesubj
ect
edt
omanyl
awsui
tsst
art
edbynumer
ouspl
aint
if
fs.
4. 
Itpr
event
sfut
il
eact
ions.I
fthei
rr
egul
ari
tyi
sonewhi
chcanef
fect
ivel
yber
ati
fi
ed
byt
hecompanyi
ngener
almeet
ing,i
twoul
dbef
uti
l
etohav
eli
ti
gat
ionabouti
t
wi
thoutt
heconsentoft
hegener
almeet
ing.

 
4.10Except
ionst
otheRul
einFossVHar
bot
tl
e

 
i
.Wher
ethecompanydoesani
l
legal
orul
tr
avi
resact
.

Thedi
rect
orsofacompany
,orashar
ehol
dingmaj
ori
tymaynotuset
hei
rcont
roloft
he
companyt
opaperov
eract
ionswhi dbeul
chwoul tr
avi
rest
hecompany
,ori
l
legal

42
i
i
.Wher
etheact
ionsr
equi
resaspeci
almaj
ori
ty:
I
fsomespeci
alv
oti
ngpr
ocedur
ewoul
dbenecessar
yundert
hecompany
'sconst
it
uti
on
orundert
heCompani
esAct
,thent
hesi
mpl
emaj
ori
tycanmakeanact
ionbi
ndi
ng.(
2/3
oft
hemember
spr
esent
,notbasedont
het
otal
member
s)

i
i
i.Wher
eiti
sal
l
egedt
hatmember
sri
ght
sisi
nfr
inged

A companymember
'sr
ightt
ovot
eorshar
edi
vi
dendsmaynotbei
nter
fer
edwi
th,
becausei
tst
ipul
atedi
nthecompany
’sar
ti
cleofassoci
ati
on.Anyi
nter
fer
encel
eadst
oa
per
sonal
rightofamembert
osuei
nhi
sownnamet
oenf
orcehi
sri
ght

i
v.Wher
ether
eisabr
eachofdut
y

Mi
nor
it
yshar
ehol
dercanbr
ingasui
tagai
nstt
hecompanywher
ether
eisabr
eachof
dut
ybyt
hedi
rect
orsandmaj
ori
tyshar
ehol
der
stot
hedet
ri
mentoft
hecompany

v
.Wher
etheactofmaj
ori
tyconst
it
utesaf
raudonmi
nor
it
y

Thi
sisasi
tuat
iont
hemaj
ori
tywantt
obenef
itatt
heexpenseofmi
nor
it
y

v
i.Wher
ethecompanyact
sonar
esol
uti
onwhi
chhasnotbeenpr
oper
lypassed.

Ther
ulei
nFossVHar
bot
tl
epl
acest
hemaj
ori
tyi
nsuchast
rongposi
ti
ont
hatmi
nor
it
y
shar
ehol
der
swoul
dbeataser
iousdi
sadv
ant
agei
fthef
oll
owi
ngexcept
ionswer
enot
al
l
owed.Except
ionst
other
uleal
l
owsami
nor
it
yshar
ehol
dert
obr
ingacl
aim onbehal
f
oft
hecompany
.

4.
11Mi
nor
it
yPr
otect
ionatCommonLaw

Mi
nor
it
yshar
ehol
der
sownl
esst
han50%oft
hecompany
'sout
standi
ngshar
es.Whena
cor
por
ati
on,act
ingt
hroughi
tsof
fi
cer
s,di
rect
ors,ormaj
ori
tyshar
ehol
der
s,v
iol
atest
he
r
ight
sofami
nor
it
yshar
ehol
der
,themi
nor
it
yshar
ehol
dercanbr
inganact
ionagai
nst
t
hecor
por
ati
on.Except
ionst
otheFossVHar
bot
tl
erul
eal
l
owsami
nor
it
yshar
ehol
der
t
obr
ingacl
aim onbehal
foft
hecompany
.

43
4.
12WhyMi
nor
it
yShar
ehol
der
sSeeki
ngRemedi
esorcompensat
ion?

i
.Inunet
hical
compani
es,
themi
nor
it
yshar
ehol
der
swi
l
lal
way
slosei
nthel
ongr
un.
i
i.Unet
hical
manager
stendt
ofi
ndl
oophol
esi
nlaws,
andget
ti
ngt
hel
egal
adv
iceof
t
hebestl
awy
ers,
incasesofwr
ongdoi
ngt
othemi
nor
it
yshar
ehol
der
s.
i
ii
.Boar
dsofDi
rect
orsandexecut
ivesofcompani
est
endt
osaf
eguar
dpr
imar
il
ythe
i
nter
est
soft
hemaj
ori
tyorcont
rol
l
ingshar
ehol
der
s,whohav
eappoi
ntedand
r
emuner
atet
hem.
i
v.I
ndependentDi
rect
ors,whoar
eappoi
ntedbyt
heexecut
ives,deci
sionsoft
hei
r
commi
tt
ees,andf
air
nessopi
nionst
hatt
heyor
der
,ar
einmanycasesunr
eli
abl
e
t
omi
nor
it
yshar
ehol
der
s,ast
heyt
endt
ocompl
ywi
tht
heopi
nionsoft
hemaj
ori
ty
shar
ehol
der
s.

4.
13Thr
eet
ypesofAct
iont
hatcanbet
akenbyMi
nor
it
yShar
ehol
der
s

i
.Per
sonal
Act
ion.

Aper
sonalact
ionmaybecommencedbyamembert
oenf
orcear
ightduet
ohi
m
per
sonal
l
ywher
esuchr
ight
shav
ebeenabusedbyanact
.Anexampl
eofper
sonal
act
ioni
swher
eashar
ehol
dercommencesanact
iont
o enf
orcet
het
erm ofa
cont
ract
ual
obl
i
gat
ionwi
tht
hecompany
.

i
i
.Repr
esent
ati
veAct
ion.

Ar
epr
esent
ati
veact
ioni
scommencedwher
eani
ndi
vi
dualmember
’sr
ighthasbeen
i
nfr
inged,and t
he i
nfr
ingementaf
fect
s ot
hermember
sint
he company
,the
appr
opr
iat
eact
ionwi
l
lbear
epr
esent
ati
veact
ionexampl
e:Amemberwi
l
lbesui
ng
t
hecompanyonbehal
fofhi
msel
fandot
heraggr
iev
edmember
s

i
i
i.Der
ivat
iveAct
ion.

Ader
ivat
iveact
ioni
swhenmi
nor
it
ymember
s/shar
ehol
der
sbr
inganact
ioni
nthe
name oft
he companyt
o cor
rectt
he wr
ong done t
o a companyt
hrough t
he
maj
ori
ty/
cont
rol
l
ingshar
ehol
der
s.

44
4.
14Ri
ght
sandLi
abi
l
iti
esofCompanyMember
s

A shar
ehol
der
s’r
ight
s ar
e conf
err
ed by t
he compani
es’Act
,the company
’s
memor
andum andt
heAr
ti
clesofAssoci
ati
on.

1.Ri
ghtt
ogetcompanyi
nfor
mat
ion

Amemberhast
her
ightt
ogetacopyoft
hef
oll
owi
ngcompanydocument
s:

i
)Thecompany
’sconst
it
uti
on;

i
i)Theresol
utions–thesear
edeci
sionsmadebyvot
eofmember
susual
l
yatanannual
gener
almeeting(AGM)orextr
aor
dinar
ygener
almeet
ing(
EGM)
;

i
i
i)Mi
nut
es(
det
ail
sofwhatwassai
dandagr
eed)atAGMsandEGMs;

i
v)Thecompany
’sr
egi
ster
s,i
ncl
udi
ngt
her
egi
sterofmember
s;

v
)Thecompany’sfi
nanci
alst
atement
sincl
udi
ngt
hedi
rect
ors’r
epor
tandt
heaudi
tor
’s
r
epor
t(i
fany
);and

v
i)Thefi
nanci
alst
atement
sofanysubsi
diar
y(anot
hercompanyownedbyt
hecompany
)
i
nthepast10year
s.

2.Ri
ghtt
oat
tendannual
gener
almeet
ings(
AGMs)

Compani
esmusthol
danAGM wi
thi
n15mont
hsoft
hei
rlastAGM.Theonl
yexcept
ions
ar
epr
ivat
eli
mit
edcompani
es(
LTDs)andcompani
eswi
thj
ustonemember
.Speci
al
r
ulesappl
ywher
eacompanydeci
desnott
ohol
danAGM.

3.Ri
ghtt
orecei
venot
iceofmeet
ings

Member
shav
ether
ightt
oat
tendandv
oteatAGMsandEGMsandt
ogetnot
icei
n
wr
it
ingoft
hesemeet
ings.Thenot
iceshoul
d:

4.Ri
ghtt
oat
tendext
raor
dinar
ygener
almeet
ings(
EGMs)

Thedi
rect
orsmayhol
danEGM i
ftheyt
hinkonei
sneeded,f
orexampl
etogett
he

45
member
s’appr
oval
forspeci
albusi
nessort
ochanget
hecompany
’sconst
it
uti
on.

5.Ri
ghtt
ovot
eatAGMsandEGMs

Member
svot
ebyr
aisi
ngt
hei
rhandt
oindi
cat
ethatt
heyagr
eewi
thapr
oposal
.The
v
otesar
ecount
edandt
hechai
rper
sonannounceswhet
herapr
oposalhasbeenpassed
ornot
.Thi
sisnor
mal
l
ysuf
fi
cientunl
essaf
ormal
vot
eiscal
l
edf
or.

6.Ri
ghtt
oappoi
ntPr
oxi
es

Anymemberwhocannotat
tendameet
ingcanappoi
ntsomeone(
cal
l
eda‘
proxy
’)t
o
at
tendt
hemeet
ingont
hei
rbehal
f.Apr
oxyhast
hesamer
ight
sast
hemembert
ovot
e
andspeakatt
hemeet
ing.

7.Ri
ghtt
ogetdi
vi
dends

A di
vi
dendi
smoneypai
dfr
om acompany
’spr
ofi
tswhi
chmaybeshar
edwi
tht
he
member
s.Thedi
rect
orspr
oposet
heamountoft
hedi
vi
dendandt
hemember
svot
eon
t
hisatt
heAGM.Acompanydoesnothav
etopayadi
vi
dend.

8.Ri
ghtt
oseekani
nvest
igat
ionofacompany

Somemember
s(andot
herpeopl
esuchasadi
rect
ororacr
edi
tor
)canaskt
hecour
tto
appoi
ntani
nspect
ort
oinv
est
igat
eandr
epor
tont
hecompany
’saf
fai
rs.Thi
sincl
udes:

9.Ri
ghtt
obuynewshar
es(
pre-
empt
ionr
ight
s)

Thi
s appl
i
es onl
yto pr
ivat
e compani
es.When new shar
es ar
e bei
ng i
ssued,t
he
shar
ehol
der
s hav
eal
egalr
ightt
o buyt
hem f
ir
sti
n pr
opor
ti
on t
othei
rexi
sti
ng
shar
ehol
ding.Howev
er,t
hecompanycanr
emov
ethi
sri
ghtf
rom i
tsconst
it
uti
onby
passi
ngaspeci
alr
esol
uti
onatagener
almeet
ing.

10.Ri
ghtt
owi
ndupt
hecompany

46
Member
scandeci
det
oendacompany
’sexi
stencebyei
ther
:

i
)Av
oteof75%oft
hoseat
tendi
ngaspeci
all
ycal
l
edEGM;
or

i
i
)Av
oteof50%pl
usonei
fthecompanyi
sunabl
etopayi
tsdebt
s.

Al
i
qui
dat
ormustbeappoi
ntedatt
heEGM.

Af
tert
hel
i
qui
dat
or’
scost
sandt
hemoneyowedt
ocr
edi
tor
sar
epai
d,anyr
emai
ning
moneyi
sdi
vi
dedamongt
hemember
sinpr
opor
ti
ont
othenumberofshar
est
heyhol
d,
dependi
ngont
her
ight
sat
tachi
ngt
othei
rshar
es.

11.Ri
ghtt
orest
oret
hecompanyt
otheRegi
ster

Whenacompanyi
sst
ruckof
ftheRegi
sterofCompani
es,i
tnol
ongerexi
stsl
egal
l
y.A
membercanappl
ytot
heCompani
esRegi
str
ati
onOf
fi
ce(
CRO)wi
thi
n12mont
hst
o
r
est
oret
hecompanyt
otheRegi
ster
.TheCROwi
l
ldot
hisi
fthecompanysendsi
nit
s
out
standi
ngdocument
sandpay
sal
lout
standi
ngf
ees.

4.
15Right
softhemember
swhi
chcannotbechangedbyt
hecompanyi
na
gener
almeet
ing

Ri
ght
sconf
err
edbyt
hememor
andum andt
hear
ti
clesofAssoci
ati
on

i
)  
Ther
ightt
ogetdi
vi
dends
i
i
)  
Ther
ightt
ohav
ecapi
talr
etur
nedt
otheshar
ehol
der
sonawi
ndi
ngupoft
he
companyi
i
i)  
Ther
ightt
oat
tendantmeet
ings
i
v Ther
ightt
ovot
e

4.
16Ri
ghtwhi
chcanbechangedbyt
hecompanyi
nagener
almeet
ing

 
(Ri
ghtr
elat
edt
oMember
sObl
i
gat
ionsi
nacompany
)

4.
17Ter
minat
ionofMember
shi
p

47
 
1.For
fei
torwi
thdr
awofonesr
ightt
ohav
eshar
es

Acompanymayf
orf
eitt
heshar
esofamemberi
fit
sAr
ti
clesofAssoci
ati
onaut
hor
izes
i
ttodoso.I
nsuchcaset
hepowermustbeexer
cisedwi
thi
nthest
ri
ctpr
ovi
sionsoft
he
ar
ti
cles.Wher
eacompany
’sar
ti
clesaut
hor
izet
ofor
fei
tthemember
s’shar
esandt
he
di
rect
orsf
orf
eital
loft
heshar
esbysuchamember
,themember
shi
pceasesf
rom t
he
dat
especi
fi
edi
nthear
ti
clesast
heef
fect
ivedat
eforf
orf
eit
ure.

 
2.Sur
renderofShar
es

I
faper
sonsur
render
shi
sshar
est
othecompany
,hi
smember
shi
pwi
l
lcomet
oanend.
Thesur
rendermustbewi
tht
heappr
oval
oft
hedi
rect
ors.

3.Tr
ansmi
ssi
onofshar
esbydeat
hofamember

Whenaper
sondi
eshi
sowner
shi
pofacompany
’sshar
eswi
l
lcomet
oanaut
omat
ic
endbyv
irt
ueoft
hepr
ovi
sionsoft
hel
awofsuccessi
on.Theshar
eshel
dbyhi
mlegal
l
y
becomet
hepr
oper
tyofhi
slegal
repr
esent
ati
ve.

 
4.Tr
ansmi
ssi
ononbankr
upt
cyofamember

Whenaper
sonbecomesbankr
upthi
sowner
shi
pofcompany
’sshar
eswi
l
lcomet
oan
endundert
hepr
ovi
si
onsofTheBankr
upt
cyAct
.

5.Sal
ebyacompanyunderi
t,l
i
en

Acompanyhasar
ightofl
i
en(
ri
ghtt
oret
ain)oni
tsshar
esassecur
it
yfort
hebal
anceof
t
hei
rpr
ice.I
fthecompanysel
l
sal
ltheshar
eshel
dbyamember
,themember
shi
pwi
l
l
comet
oanendf
rom t
hemomentt
henewbuy
er’
snamei
sent
eredi
nther
egi
ster
.

 
6.Redempt
ionofr
edeemabl
epr
efer
enceshar
es

I
famember
’sshar
esconsi
stexcl
usi
vel
yofr
edeemabl
epr
efer
enceshar
esandal
lthese
shar
esar
eredeemedbyt
hecompanyundert
hecompani
esAct
,heceasest
obea
memberf
rom t
hedat
eonwhi
chhi
snamei
sremov
edf
rom t
her
egi
sterofmember
s.
Redempt
ioni
sthebuy
ingbackofshar
es

48
7.Li
qui
dat
ion

Acompany
’sl
i
qui
dat
iont
ermi
nat
esmember
shi
pofal
lmember
sfr
om t
hedat
eoft
he
or
derofl
i
qui
dat
ion.

LECTUREFI
VE

COMPANYSHARESANDSHARECAPI
TAL

 
5.1Shar
eCapi
tal

Thewor
dShar
ecapi
talorcapi
tali
susedt
oindi
cat
etheamountofmoneywhi
cha
companyr
aisesf
rom asal
eofi
tsshar
es.Theshar
ecapi
taloft
hecompanymaybe
def
inedast
het
otalf
undofr
esour
cesatt
hecompany
’sdi
sposal
.Itdi
ff
ersf
rom ot
her
f
ormsofr
esour
ceobt
ainedf
rom out
sidet
hecompanybecauset
heshar
ecapi
tali
snot
al
i
abi
l
ity
.

5.
2Ty
pesofShar
ecapi
tal

1.Regi
ster
ed,
Aut
hor
izedorNomi
nal
Capi
tal
:(speci
fi
edi
nmemor
andum)

49
TheMemor
andum ofAssoci
ati
onofev
erycompanyhast
ospeci
fyt
heamountof
capi
talwi
thwhi
chi
twant
stober
egi
ster
ed.Thecapi
talsost
atedi
scal
l
edRegi
ster
ed,
Aut
hor
izedorNomi
nalCapi
tal
.TheRegi
ster
edCapi
tali
sthemaxi
mum amountofshar
e
capi
tal
whi
chacompanycanr
aisebywayofpubl
i
csubscr
ipt
ion.

2.I
ssuedCapi
tal

Thecompanymaynoti
ssuet
heent
ir
eaut
hor
izedcapi
talatonce.I
tgoesonr
aisi
ngt
he
capi
talasandwhent
heneedf
oraddi
ti
onalf
undi
sfel
t.So,
issuedcapi
tali
sthatpar
tof
Aut
hor
ised/
Regi
ster
edorNomi
nalCapi
talwhi
chi
sof
fer
edt
othepubl
i
cforsubscr
ipt
ion
i
nthef
orm ofshar
es.

3.Uni
ssuedCapi
tal
:

Thebal
anceofnomi
nal
capi
tal
remai
ningt
obei
ssuedi
scal
l
edUni
ssuedCapi
tal
.

4.Subscr
ibedCapi
tal
:

I
tist
hatpar
tof“
issuedcapi
tal
”forwhi
chappl
i
cat
ionsar
erecei
vedf
rom t
hepubl
i
c.The
subscr
ibedcapi
tali
sal
l
ott
edt
other
espect
ivesubscr
iber
sasperr
esol
uti
onpassedby
t
hedi
rect
orsoft
hecompany
.

5.Cal
l
edupCapi
tal
:

I
tist
hatpar
tofsubscr
ibedcapi
talwhi
chhasbeencal
l
edupbyt
hecompany
.A
companydoesnotcal
latoncet
hef
ullamountoneachoft
heshar
esi
thasal
l
ott
edand
t
her
efor
e,cal
l
suponl
ysuchamountasi
tneeds.Cal
l
edupCapi
tali
sthev
alueoft
he
i
ssuedshar
est
hathav
eremai
nedf
ull
yorpar
ti
all
yunpai
d,andwhosehol
der
shav
enow
beencal
l
edupont
opayt
hebal
ance.

50
6.Uncal
l
edupCapi
tal
:

I
tist
heuncal
l
edpor
ti
onoft
heal
l
ott
edcapi
talandr
epr
esent
scont
ingentl
i
abi
l
ityoft
he
shar
ehol
der
sont
heshar
es.Uncal
l
edshar
ecapi
tali
sthatpar
tofsubscr
ibedshar
e
capi
tal
whi
chhasnotbeencal
l
edf
orpay
mentbyacompany
.

7.Pai
dupCapi
tal
:

I
tist
hatpar
tofcal
l
edupcapi
talagai
nstwhi
chpay
menthasbeenr
ecei
vedf
rom t
he
member
sont
hei
rrespect
iveshar
esi
nresponset
othecal
l
smadebyt
hecompany
.

8.Reser
veCapi
tal
orReser
veLi
abi
l
ity
:

ByReser
veCapi
tal
wemeant
hatamountwhi
chi
snotcal
l
abl
ebyt
hecompanyexcepti
n
t
heev
entoft
hecompanybei
ngwoundup.Thecompanycannotdemandt
hepay
ment
ofmoneyont
heshar
est
othatext
entdur
ingi
tsl
i
fet
ime.Reser
vecapi
talmaybe
cr
eat
edbymeansofaspeci
alr
esol
uti
onpassedbyt
hecompanyi
nit
sGener
alMeet
ing
byt
hree-
four
thsmaj
ori
tyoft
hosev
oti
ngoni
t.Whenoncet
heReser
veCapi
talhasbeen
socr
eat
edt
hecompanycannotal
teri
tsAr
ti
clesofAssoci
ati
onsoast
omaket
he
r
eser
vel
i
abi
l
ityav
ail
abl
eatanyt
ime.TheReser
veCapi
talcannotbechar
gedassecur
it
y
f
orl
oansbyt
hedi
rect
ors.I
tcannotbet
urnedi
ntoor
dinar
ycapi
talwi
thoutt
heor
derof
t
hecour
t.I
tcannotbecancel
l
edatt
het
imeofr
educt
ionofcapi
tal
.

9.Fi
xedCapi
tal
:

Thef
ixedcapi
talofacompanyi
swhatt
hecompanyr
etai
nsi
ntheshapeoff
ixedasset
s
suchasl
andandbui
l
dings,
plantandmachi
ner
y,f
urni
tur
e,et
c.

10.Ci
rcul
ati
ngCapi
tal
:

Theci
rcul
ati
ngcapi
tali
sapar
tofsubscr
ibedcapi
talwhi
chi
sci
rcul
atedi
nbusi
nessi
n
t
hef
orm ofusi
nggoodsorot
herasset
ssuchasbookdebt
s,bi
l
lrecei
vabl
es,
cash,
bank
bal
ance,
etc.

51
5.
3TwoMaj
orCl
assesofShar
eCapi
tal
:

1.Equi
tyshar
ecapi
tal
.

2.Pr
efer
enceshar
ecapi
tal

1.Equi
tyShar
eCapi
tal
:

TheEqui
tyshar
eCapi
talr
efer
stot
hatpor
ti
onoft
heor
gani
zat
ion’
scapi
tal
,whi
chi
s
r
aisedi
nexchangef
ort
heshar
eofowner
shi
pint
hecompany
.Theseshar
esar
ecal
l
ed
t
heequi
tyshar
es.Theequi
tyshar
ehol
der
sar
etheowner
soft
hecompanywhohav
e
si
gni
fi
cantcont
rolov
eri
tsmanagement
.Theyenj
oyt
her
ewar
dsandbeart
her
iskof
owner
shi
p.Howev
er,
thei
rli
abi
l
ityi
sli
mit
edt
otheamountoft
hei
rcapi
talcont
ri
but
ions.
TheEqui
tyCapi
tal
isal
socal
l
edast
heshar
ecapi
tal
orequi
tyf
inanci
ng.

Adv
ant
agesofEqui
tyCapi
tal

i
. Thef
ir
m hasnoobl
i
gat
iont
oredeem t
heequi
tyshar
essi
ncet
hesehav
eno
mat
uri
tydat
e.
i
i. Theequi
tycapi
talactasacushi
onf
ort
hel
ender
s,aswi
thmor
eandmor
eequi
ty
base,t
hecompanycaneasi
l
yrai
seaddi
ti
onalf
undsonf
avor
abl
eter
ms.Thus,i
t
i
ncr
easest
hecr
edi
twor
thi
nessoft
hecompany
.
i
ii
. Thef
ir
misnotboundt
opaydi
vi
dends,i
ncaset
her
eisacashdef
ici
t.Thef
ir
m
canski
ptheequi
tydi
vi
dendswi
thoutanyl
egal
consequences.

Di
sadv
ant
agesofEqui
tyCapi
tal

i
. Wi
tht
hemor
eissueofequi
tyshar
es,t
heowner
shi
pget
sdi
l
utedal
ongwi
tht
he
cont
rol
overt
hemanagementoft
hecompany
.
i
i
. Thecostofequi
tycapi
tal
ishi
ghsi
ncet
heequi
tyshar
ehol
der
sexpectahi
gherr
ate
ofr
etur
nascompar
edt
oot
heri
nvest
ors.
i
i
i. Thecostofi
ssui
ngequi
tyshar
esi
susual
l
ycost
li
ert
hant
hei
ssueofot
hert
ypesof
secur
it
ies.Suchasunder
wri
ti
ngcommi
ssi
on,br
oker
agecost
,et
c.ar
ehi
ghf
ort
he
equi
tyshar
es.

52
i
v. Thecostofequi
tyi
srel
ati
vel
ymor
e,si
ncet
hedi
vi
dendsar
epai
doutofpr
ofi
taf
ter
t
ax,
butt
hei
nter
estpay
ment
sar
etax-
deduct
ibl
e.

2.Pr
efer
enceShar
eCapi
tal
:

ThePr
efer
enceShar
eCapi
tali
sthatpor
ti
onofcapi
talwhi
chi
srai
sedt
hrought
hei
ssue
oft
he pr
efer
ence shar
es.Thi
sist
he hy
bri
dfor
m off
inanci
ng t
hathas cer
tai
n
char
act
eri
sti
csofequi
tyandcer
tai
nat
tri
but
esofdebent
ures.

Adv
ant
agesofPr
efer
enceCapi
tal

i
. Ther
eisnol
egalobl
i
gat
ionont
hef
ir
mtopayadi
vi
dendt
othepr
efer
ence
shar
ehol
der
s.
i
i. Ther
edempt
ionofpr
efer
enceshar
esi
snotdi
str
essf
ulf
oraf
ir
m si
ncet
he
shar
esar
eredeemedoutoft
hepr
ofi
tsandt
hrought
hei
ssueoff
reshshar
es
(
pref
erenceshar
esandequi
tyshar
es)
.
i
ii
. Thepr
efer
encecapi
tali
sconsi
der
edasacomponentofnetwor
thandhencet
he
cr
edi
twor
thi
nessoft
hef
ir
mincr
eases.
i
v. Pr
efer
enceshar
ehol
der
sdonotenj
oyt
hev
oti
ngr
ight
s,andt
hus,t
her
eisno
di
l
uti
onofcont
rol
.

Di
sadv
ant
agesofPr
efer
enceCapi
tal

i
. I
tisv
eryexpensi
veascompar
edt
othedebt
-capi
talbecauseunl
i
kedebti
nter
est
,
pr
efer
encedi
vi
dendi
snott
axdeduct
ibl
e.
i
i
. Al
though,t
her
eisnol
egalobl
i
gat
iont
opayt
hepr
efer
encedi
vi
dends,whent
he
pay
menti
smadei
tisdoneal
ongwi
tht
hear
rear
s.
i
ii
. Thepr
efer
enceshar
ehol
dercancl
aim pr
iort
otheequi
tyshar
ehol
der
s,i
ncaset
he
di
vi
dendsar
ebei
ngpai
doratt
het
imeofwi
ndi
ngupoft
hef
ir
m.
i
v. I
fthecompanydoesnotpayorski
pst
hepr
efer
encedi
vi
dendf
orsomet
ime,t
hen
t
hepr
efer
enceshar
ehol
der
scoul
dacqui
ret
hev
oti
ngr
ight
s.

5.
4AShar
es

53
Ashar
eiscompany
’suni
tofcapi
tal
,expr
essi
ngt
heowner
shi
prel
ati
onshi
pbet
weent
he
companyandt
heshar
ehol
der
.

5.
5Ty
pesofShar
es

1Or
dinar
y/equi
tyshar
es

Thesecar
rynospeci
alr
ight
sorr
est
ri
cti
ons.
 Theyr
ankaf
terpr
efer
enceshar
esas
r
egar
dsdi
vi
dendsandr
etur
nofcapi
talbutcar
ryv
oti
ngr
ight
s(usual
l
yonev
oteper
shar
e)notnor
mal
l
ygi
vent
ohol
der
sofpr
efer
enceshar
es(
unl
esst
hei
rpr
efer
ent
ial
di
vi
dendi
sinar
rear
s).

2Def
err
edor
dinar
yshar
es

I
sat
ypeofor
dinar
yshar
eonwhi
chdi
vi
dendsar
enotpai
dunt
ilaspeci
fi
eddat
eor
ev
entorunt
ilaf
teral
ltheor
dinar
yshar
eshav
erecei
vedt
hei
rdi
vi
dends.Ther
eaf
tert
hey
wi
l
lusual
l
ybef
ull
ypar
ti
cipat
ing.
 Onawi
ndi
ngupt
heywi
l
lonl
yrecei
vesomet
hingonce
ev
eryot
herent
it
lementhasbeenmet
.

3Non-
vot
ingor
dinar
yshar
es

Vot
ingr
ight
sonor
dinar
yshar
esmayber
est
ri
ctedi
nsomeway–e.
g.t
heyonl
ycar
ry
v
oti
ngr
ight
sifcer
tai
ncondi
ti
onsar
emet
.Al
ter
nat
ivel
y,t
heymaycar
rynov
oti
ngr
ight
s
atal
l
. Theymayal
sopr
ecl
udet
heshar
ehol
derev
enat
tendi
ngaGener
alMeet
ing.I
nal
l
ot
herr
espect
stheywi
l
lhav
ethesamer
ight
sasor
dinar
yshar
es.

4Redeemabl
eshar
es(
opt
ionofbuy
ingback)

Thet
ermsofr
edeemabl
eshar
esgi
vet
hecompanyt
heopt
iont
obuyt
hem backi
nthe
f
utur
e;occasi
onal
l
y,t
heshar
ehol
dermay(
also)hav
etheopt
iont
osel
lthem backt
othe
company
,al
thought
hat
’smuchl
esscommon.Theopt
ionmayar
iseatoraf
tera
speci
fi
cdat
e,bet
weent
wodat
esorbeef
fect
iveatanyt
imet
heshar
esar
eini
ssue.The
r
edempt
ionpr
icei
susual
l
ythesameast
hei
ssuepr
ice,butcanbesetdi
ff
erent
ly.A
companycanonl
yredeem shar
esoutofpr
ofi
tsort
hepr
oceedsofanewshar
eissue,

54
whi
chmayr
est
ri
cti
tsabi
l
ityt
oredeem shar
esev
eni
fthedi
rect
orswoul
dli
ket
o
exer
ciset
heopt
ion.

5Pr
efer
enceshar
es

Theseshar
esar
ecal
l
edpr
efer
enceorpr
efer
redsi
ncet
heyhav
ear
ightt
orecei
veaf
ixed
amountof
 di
vi
dend 
ever
yyear
. 
Thi
sisr
ecei
vedaheadofor
dinar
yshar
ehol
der
s. The
amountoft
hedi
vi
dendi
susual
l
yexpr
essedasaper
cent
ageoft
henomi
nal
val
ue.
 So,
a
£1,5%pr
efer
enceshar
ewi
l
lpayanannualdi
vi
dendof5p.Thef
ullent
it
lementwi
l
lbe
pai
dev
eryy
earunl
esst
hedi
str
ibut
abl
ereser
vesar
einsuf
fi
cientt
opayal
lorev
ensome
ofi
t.
 Onawi
ndi
ngup,t
hehol
der
sofpr
efer
enceshar
esar
eusual
l
yent
it
ledt
oany
ar
rear
sofdi
vi
dendsand t
hei
rcapi
talahead ofor
dinar
yshar
ehol
der
s. Pr
efer
ence
shar
esar
eusual
l
ynon-
vot
ing 
(oronl
yhav
eav
oteonl
ywhent
hei
rdi
vi
dend 
i
sinar
rear
s).

I
nanot
herar
ti
cl
e,y
oucanr
eadi
nmor
edet
ail
aboutpr
efer
enceshar
es.

6Cumul
ati
vepr
efer
enceshar
es

I
fthedi
vi
dendi
smi
ssedornotpai
dinf
ull
thent
heshor
tfal
lwi
l
lbemadegoodwhent
he
company next has suf
fi
cient di
str
ibut
abl
e r
eser
ves.
 Itf
oll
ows t
hat or
dinar
y
shar
ehol
der
swi
l
lnotr
ecei
veanydi
vi
dendsunt
ilal
lthear
rear
soncumul
ati
vepr
efer
ence
shar
eshav
ebeenpai
d.

5.
6TheDoct
ri
neofCapi
tal
Mai
ntenance

The doct
ri
ne ofCapi
talmai
ntenance st
ipul
ates a company mustr
ecei
ve pr
oper
consi
der
ati
onf
orshar
est
hati
tissuesandt
hathav
ingr
ecei
vedsuchcapi
tali
tmustnot
r
epay i
tto member
s excepti
n cer
tai
n ci
rcumst
ances.The pr
imar
yreason why
compani
esengagei
nbusi
nessact
ivi
ti
esi
stomakepr
ofi
t.Howev
er,mostoft
hese
cor
por
ateent
it
iesar
efi
nanced,notbyt
hoser
unni
ngt
hebusi
nessbutbycr
edi
tor
sor
shar
ehol
der
s.I
nvi
ewoft
his,
itt
her
efor
ebecomesessent
ialt
hatpr
ofi
tabi
l
ityandsaf
ety
ofcapi
talbeascer
tai
nedbef
orecr
edi
tor
scoul
dri
ski
nvest
ingi
nanycompany
.Asaway
ofassur
ingi
nvest
ors,sev
eralAct
sandl
egi
slat
ionswer
epr
omul
gat
edofwhi
chcapi
tal
mai
ntenancei
spar
t.Despi
tet
hat
,busi
nesst
ransact
ionshav
econt
inuedt
ounder
go

55
ev
olut
ion t
her
eby r
ender
ing t
he pr
otect
ion af
for
ded by t
he condi
ti
ons ofcapi
tal
mai
ntenancedoct
ri
nei
nsuf
fi
cientt
omeetmoder
nneeds.

5.
7Under
wri
ti
ng

Under
wri
ti
ngi
sanagr
eement
,ent
eredi
nto,
byacompanywi
thaf
inanci
alagency
,or
i
ndi
vi
dual
orpar
tner
shi
pfi
rm,
inor
dert
oensur
ethati
fthepubl
i
cwi
l
lnotsubscr
ibef
or
t
heent
ir
eissue,
ofshar
esordebent
ures,
madebyt
hecompany
,theunder
wri
ter
swi
l
l
(
buy
)orsubscr
ibet
hem.Thef
inanci
alagencyi
sknownast
heUnder
wri
terandi
tagr
ees
t
obuyt
hatpar
toft
hecompany
’ssecur
it
ieswhi
chi
snotsubscr
ibedbyt
hepubl
i
c,i
n
consi
der
ati
onofaspeci
fi
edunder
wri
ti
ngcommi
ssi
on.

Ty
pesofunder
wri
ti
ng

1.Compl
eteunder
wri
ti
ng

I
fthewhol
eissueofshar
esordebent
uresofacompanyi
sunder
wri
tt
en,
iti
scal
l
ed
compl
eteunder
wri
ti
ng.

2.Par
ti
alunder
wri
ti
ng

I
fpar
tofi
ssueofshar
esordebent
uresofacompanyi
sunder
wri
tt
en,
iti
ssai
dtobe
par
ti
alunder
wri
ti
ng.

3.Fi
rm under
wri
ti
ng

Whenanunder
wri
teragr
eest
obuyadef
ini
tenumberofshar
esordebent
uresi
n
addi
ti
ont
otheshar
esanddebent
ureshehast
otakeundert
heunder
wri
ti
ngagr
eement
,
t
hisi
scal
l
edf
ir
m under
wri
ti
ng.

5.
8Under
wri
ti
ngCommi
ssi
on

Under
wri
ti
ngcommi
ssi
oni
sapay
ment
,whi
chi
sgi
venbyt
hecompany
,tounder
wri
ter
s
f
ort
hei
rser
vicesofunder
wri
ti
ng.Compani
escangi
vemaxi
mum 5% commi
ssi
ont
o
under
wri
ter
sforsel
l
ingi
tsshar
es.

56
Under
wri
teri
saper
sonorcompanyt
hatunder
wri
tesani
nsur
ancer
isk.

Under
wri
test
osi
gnandacceptl
i
abi
l
ityunder(
ani
nsur
ancepol
i
cy)
,thusguar
ant
eei
ng
pay
menti
ncasel
ossordamageoccur
s.

5.
9IssueofShar
esatPr
emi
um

Thei
ssueofshar
esatpr
emi
um r
efer
stot
hei
ssueofshar
esatapr
icehi
ghert
hant
he
f
acev
alueoft
heshar
e.I
not
herwor
ds,t
hepr
emi
um i
stheamountov
erandabov
ethe
f
acev
alueofashar
e.Usual
l
y,t
hecompani
est
hatar
efi
nanci
all
yst
rong,
wel
l
-managed
andhav
eagoodr
eput
ati
oni
nthemar
keti
ssuet
hei
rshar
esatapr
emi
um.Acompany
maycal
ltheamountofpr
emi
um f
rom t
heappl
i
cant
sorshar
ehol
der
satanyst
age,i
.e.
att
het
imeofappl
i
cat
ion,al
l
otmentorcal
l
s.Howev
er,acompanygener
all
ycal
l
sthe
amountofPr
emi
um att
het
imeofal
l
otment
.

Secur
it
iespr
emi
um
Secur
it
iespr
emi
um i
sthegai
nmadebyanor
gani
sat
iononi
ssui
ngofshar
eofacer
tai
n
f
acev
aluef
orapr
icehi
ghert
hant
hesai
dfacev
alue.

Account
ingt
reat
mentofSecur
it
iesPr
emi
um

Thecompanyneedst
o cr
edi
ttheamountofPr
emi
um i
n asepar
ateaccounti
.e.
Secur
it
iesPr
emi
um A/
c,asi
tisnotapar
toft
heShar
eCapi
tal
.Iti
sact
ual
l
yagai
nfor
t
hecompany
.Aspert
heCompani
esAct
,2013t
hecompanyshowst
hecr
edi
tbal
anceof
t
heSecur
it
iesPr
emi
um A/
cundert
heheadi
ng‘
Reser
vesandSur
plus’ont
hel
i
abi
l
iti
es
si
deoft
heBal
anceSheet
.

5.
11Debent
ure
Adebent
urei
saf
orm ofl
ong-
ter
mloanwhi
chi
sissuedbyt
hecompany
.Thedebent
ure
t
ypi
cal
l
ycar
ri
esaf
ixedr
ateofi
nter
estov
ert
hecour
seoft oan.Adebent
hel urei
soneof
t
hemostt
ypi
calf
ormsofl
ongt
erml
oanst
hatacompanycant
ake.I
tisnor
mal
l
yal
oan
t
hatshoul
dber
epai
donaspeci
fi
cdat
e.

57
5.
12Maj
orTy
pesofDebent
ures

i
.Regi
ster
edDebent
ures:

Thesear
edebent
ureswhi
char
epay
abl
etot
her
egi
ster
edhol
der
si.
e.,per
sonswhose
namesappeari
ntheRegi
sterofDebent
urehol
der
s.Suchdebent
uresar
etr
ansf
erabl
ein
t
hesamewayasshar
es.

i
i
.Bear
erDebent
ures:

Bear
erdebent
ures ar
e si
mil
art
o shar
e war
rant
sint
hatt
heyt
oo ar
e negot
iabl
e
i
nst
rument
s,t
ransf
erabl
ebydel
i
ver
y.Thei
nter
estonbear
erdebent
uresi
spai
dby
meansofat
tachedcoupons.Onmat
uri
ty,
thepr
inci
pal
sum i
spai
dtot
hebear
ers.

i
i
i.Redeemabl
eDebent
ures:

Thesedebent
uresar
eissuedf
oraspeci
fi
edper
iodoft
ime.Ont
heexpi
ryoft
hat
speci
fi
edt
imet
hecompanyhast
her
ightt
opaybackt
hedebent
urehol
der
sandhav
eit
s
pr
oper
ti
esr
eleasedf
rom t
hemor
tgageorchar
ge.Gener
all
y,debent
uresar
eredeemabl
e.

i
v.Per
pet
ual
orI
rr
edeemabl
eDebent
ures:

Adebent
urewhi
chcont
ainsnocl
auseast
opay
mentorwhi
chcont
ainsacl
auset
hati
t
shal
lnotbepai
dbacki
scal
l
eda‘
per
pet
ualdebent
ure’or‘
i
rredeemabl
edebent
ure’
.
Thesedebent
uresar
eredeemabl
eonl
yont
hehappeni
ngofacont
ingencyoront
he
expi
rat
ionofaper
iod,howev
erl
ong.I
tfol
l
owst
hatdebent
urescanbemadeper
pet
ual
,
i
.e.
,thel
oani
srepay
abl
eonl
yonwi
ndi
nguporaf
teral
ongper
iodoft
ime.

v
.Secur
edDebent
ures:

Whenanypar
ti
cul
arorspeci
fi
edpr
oper
tyoft
hecompanyi
sof
fer
edassecur
it
ytot
he
debent
ure-
hol
der
sandwhent
hecompanycandealwi
thi
tonl
ysubj
ectt
othepr
iorr
ight
oft
hedeben¬t
ure-
hol
der
s,f
ixedchar
gei
ssai
dtohav
ebeencr
eat
ed.Ont
heot
herhand,
whent
hedebent
ure-
hol
der
shav
eachar
geont
heunder
taki
ngoft
hecompanyi
.e.
,on

58
t
hewhol
eoft
hepr
oper
tyoft
hecompany
,bot
hpr
esentandf
utur
e,andwheni
tcandeal
wi
tht
hepr
oper
tyi
ntheor
dinar
ycour
seofbusi
nessunt
ilt
hechar
gecr
yst
all
i
zesi
.e.
,
whent
hecompanygoesi
ntol
i
qui
dat
ionorwhenar
ecei
veri
sappoi
nted,t
hechar
gei
s
sai
dtobeaf
loat
ingchar
ge.

v
i.Nakedorunsecur
edDebent
ures:

Nor
mal
l
ydebent
uresar
esecur
edbyamor
tgageorachar
geont
hecompany
’sasset
s.
Howev
erdebent
uresmaybei
ssuedwi
thoutanychar
geont
heasset
soft
hecompany
.
Suchdebent
urei
scal
l
ed‘
nakeddebent
ure’or‘
unsecur
eddebent
ure’
.Theyar
emer
e
acknowl
edgmentofadebtduef
rom t
hecompany
,cr
eat
ingnor
ight
sbey
ondt
hoseof
unsecur
edcr
edi
tor
s.

v
ii
.Debent
uresI
ssuedasCol
l
ater
alSecur
it
yforaLoan:

Thet
erm col
l
ater
alsecur
it
yorsecondar
ysecur
it
ymeans,asecur
it
ywhi
chcanbe
r
eal
i
zedbyt
hepar
tyhol
dingi
tint
heev
entoft
hel
oanbei
ngnotpai
datt
hepr
opert
ime
oraccor
dingt
otheagr
eementoft
hepar
ti
es.Att
imes,t
hel
ender
sofmoneyar
egi
ven
debent
uresasacol
l
ater
alsecur
it
yforl
oan.Thenomi
nalv
alueofsuchdebent
uresi
s
al
way
smor
ethan t
hel
oan.I
n caset
hel
oan i
srepai
d,t
hedebent
uresi
ssued as
col
l
ater
alsecur
it
yar
eaut
omat
ical
l
yredeemed.

5.
13Di
ff
erencesbet
weenShar
esandDebent
ures

Thef
oll
owi
ngar
ethemaj
ordi
ff
erencesbet
weenShar
esandDebent
ures:

1.Thehol
derofshar
esi
sknownasashar
ehol
derwhi
l
ethehol
derofdebent
uresi
s
knownasdebent
urehol
der
.
2.Shar
eist
hecapi
tal
oft
hecompany
,butDebent
urei
sthedebtoft
hecompany
.
3.Theshar
esr
epr
esentowner
shi
poft
heshar
ehol
der
sint
hecompany
.Ont
he
ot
herhand,
debent
uresr
epr
esenti
ndebt
ednessoft
hecompany
.
4.The i
ncome ear
ned on shar
es i
sthe di
vi
dend,butt
he i
ncome ear
ned on
debent
uresi
sint
erest
.

59
 5.I
ntheev
entofwi
ndi
ngup,
debent
uresgetpr
ior
it
yofr
epay
mentov
ershar
es.
6.Shar
escannotbeconv
ert
edt
odebent
uresbutdebent
urescanbeconv
ert
edt
o
shar
es
7.Ther
eisnosecur
it
ychar
gecr
eat
edf
orpay
mentofshar
es.Conv
ersel
y,secur
it
y
char
gei
scr
eat
edf
ort
hepay
mentofdebent
ures.
8.At
rustdeedi
snotexecut
edi
ncaseofshar
eswher
east
rustdeedi
sexecut
ed
whent
hedebent
uresar
eissuedt
othepubl
i
c.
9.Unl
i
kedebent
urehol
der
s,shar
ehol
der
shav
evot
ingr
ight
s.
10.
Shar
esar
eissuedatadi
scountsubj
ectt
osomel
egalcompl
i
ance.Debent
ures
canbei
ssuedatadi
scountwi
thoutanyl
egal
compl
i
ance.

5.
14Si
mil
ari
ti
esbet
weenDebent
uresandShar
e

i
. Hol
der
sofbot
har
einv
est
orsi
nthecompany
i
i
. Bot
hcanbet
hepubl
i
c
i
i
i. Bot
har
efundr
aisi
ngt
ool
sfort
hecompany

5.
15Di
sti
nct
ionsbet
weenDebent
uresandbond

Bondsar
egener
all
ylong-
ter
minst
rumentpr
omi
singt
opayaf
ixedi
nter
estov
era
speci
fi
cti
mef
ramewher
easdebent
uresar
eamedi
um t
ermi
nst
rument
.Bondsar
e
gener
all
yissuedbygov
ernmentagenci
esandl
argecor
por
ati
ons,butpubl
i
ccompani
es
i
ssuedebent
ures,
tor
aisemoneyf
rom t
hemar
ket
.Debent
uresar
eloancont
racti
ssued
byacompanyorpubl
i
cbodyspeci
fyi
nganobl
i
gat
iont
oret
urnbor
rowedf
undsandpay
i
nter
est
,secur
edbyal
lorpar
toft
hecompany
’spr
oper
ty.

Char
ges

Acompanychar
gei
sasecur
it
yint
eresthel
dbyal
enderov
ert
heper
sonalpr
oper
tyofa
company

5.
16TwoTy
pesofchar
ges

60
1.Fi
xedChar
ge

Fi
xedChar
gei
sdef
inedasamor
tgageori
nter
est(
loan/
debt
)cr
eat
edov
erspeci
fi
cand
i
dent
if
iabl
efi
xed asset
sli
ke l
and & bui
l
ding,pl
ant& machi
ner
y,i
ntangi
bles i
.e.
t
rademar
k,goodwi
l
l,copy
right
,pat
entandsoonagai
nstt
hel
oan.Thechar
gecov
ersal
l
t
hoseasset
sthatar
enotsol
dbyt
hecompanynor
mal
l
y.I
t 
iscr
eat
edt
osecur
ethe
r
epay
mentoft
hedebt
.

I
nthi
sty
peofar
rangement
,theuni
quef
eat
urei
sthataf
tert
hecr
eat
ionofchar
get
he
l
enderhasf
ullcont
rolov
ert
hecol
l
ater
alassetandt
hecompany
 (bor
rower
)isl
eftov
er
wi
tht
hepossessi
onoft
heasset
.Ther
efor
e,i
fthecompanywant
stosel
l
,tr
ansf
eror
di
sposeof
ftheasset
,thenei
therpr
evi
ousappr
ovaloft
hel
enderi
stobet
aken,
ori
thas
t
odi
schar
geal
ltheduesf
ir
st.

2.Fl
oat
ingChar
ge

Fl
oat
ingchar
gei
samor
tgageori
nter
estwhi
chi
s notat
tachedt
oapar
ti
cul
arassetof
t
hecompany
.Thechar
gei
sdy
nami
cinnat
urei
nwhi
cht
hequant
it
yandv
alueofasset
changesper
iodi
cal
l
y.I
tisusedasamechani
sm t
osecur
ether
epay
mentofal
oan.I
t
cov
erst
heasset
sli
kest
ock,
debt
ors,
vehi
clesnotcov
eredunderf
ixedchar
geandsoon.

61
LECTURESI
X

COMPANYMEETI
NGS
6.
1Meani
ngofCompanyMeet
ings

Acompanymeet
ingi
sdef
inedasanassembl
yofper
sonswhoar
econnect
edwi
tht
he
companyf
ordi
scussi
ngt
hemat
ter
srel
ati
ngt
odi
ff
erentact
ivi
ti
esoft
hecompany
.
Companymeet
ingsar
ecl
assi
fi
edaccor
dingt
othepur
posesandal
sot
hei
rimpor
tance.
Thechai
rmani
sel
ect
edt
ochai
rthemeet
ingandt
hesecr
etar
ywr
it
esdownt
hemi
nut
es
oft
hemeet
ingsaccor
dingl
y.

6.
2Cl
assi
fi
cat
ionofmeet
ing
1.Meet
ingsofShar
ehol
der
s:

Theshar
ehol
der
sar
ether
eal
owner
soft
hecompany
,butduet
ocer
tai
nli
mit
ati
onst
hey
cannott
ake par
tint
he managementoft
he company
.They l
eav
ethi
stot
hei
r
r
epr
esent
ati
vescal
l
edt
hedi
rect
ors.Forcont
rol
l
ingt
heboar
dofdi
rect
orsandt
hei
r
act
ivi
ti
es‘
shar
ehol
der
s’‘
meet
ings’
arehel
dfr
om t
imet
oti
me.

Cl
assi
fi
cat
ionofShar
ehol
derMeet
ing

a)St
atut
oryMeet
ing:

Ev
ery publ
i
c company hav
ing shar
e capi
talmustconv
ene a gener
almeet
ing of
62
shar
ehol
der
swi
thi
naper
iodofnotl
esst
hanonemont
handnotmor
ethansi
xmont
hs
af
tert
hedat
eonwhi
chi
tisaut
hor
izedt
ocommencei
tsbusi
ness.Thi
sist
hef
ir
st
meet
ingoft
heshar
ehol
der
soft
hecompanyandi
tishel
doncei
nthewhol
eli
feoft
he
company
.

Obj
ect
iveofSt
atut
oryMeet
ings

1.I
nfor
m member
sont
hecompanypr
ospect
us.
2.Gi
ve member
s oppor
tuni
tyt
o di
scuss managementmet
hods and compani
es
pr
ospect
us.
3.Toappr
ovet
hemodi
fi
cat
ionoft
het
ermsofanycont
ractnamedi
nthepr
ospect
us.

b)Annual
Gener
alMeet
ing(
AGM)
:

I
tisameet
ingofshar
ehol
der
swhi
chi
shel
doncei
nay
ear
.Theobj
ectofhol
dingt
his
meet
ingi
stor
evi
ewt
hepr
ogr
essandpr
ospect
soft
hecompanyandel
ecti
tsof
fi
ce-
bear
ersf
ort
hecomi
ngy
ear
.

c)Ext
raor
dinar
yGener
alMeet
ing:

Ext
raor
dinar
ymeet
ingi
sagener
almeet
ingwhi
chi
shel
dbet
weent
woAnnualGener
al
Meet
ings.Ext
raor
dinar
yGener
alMeet
ingi
scal
l
edt
odi
scussanypar
ti
cul
armat
terof
ur
genti
mpor
tancet
othecompany
.Thi
smeet
ingi
scal
l
edf
ort
heconsi
der
ati
onofany
speci
fi
csubj
ect
,deci
si
onofwhi
chcannotbepost
ponedt
othenextAnnualGener
al
Meet
ing.Whi
chmayi
ncl
ude,Al
ter
ati
onofanycl
auseofMemor
andum ofAssoci
ati
on;
orChangesi
ntheAr
ti
clesofAssoci
ati
on;orSchemeoft
her
educt
ionofshar
ecapi
tal
et
c.

d)Cl
assMeet
ings:

Whent
hemeet
ingofapar
ti
cul
arcl
assofshar
ehol
der
stakespl
acesuchaspr
efer
ence
shar
ehol
dermeet
ing,
iti
sknownascl
assmeet
ing.Suchameet
ingcanbeat
tendedonl
y
byt
hatcl
assofshar
ehol
der
s.Thear
ti
clesdef
inet
hepr
ocedur
eforcal
l
ingsuchmeet
ing.

63
Such a meet
ing i
s cal
l
ed f
ort
he al
ter
ati
on i
nthe r
ight
s and pr
ivi
l
eges oft
he
shar
ehol
der
sandf
ort
hepur
poseofconv
ersi
onofonecl
assofshar
esi
ntoanot
her
.

2.Meet
ingsofDi
rect
ors:

a)Meet
ingsofBoar
dofDi
rect
ors:

Thedi
rect
orsofacompanyexer
cisemostoft
hei
rpower
sinaj
ointmeet
ingcal
l
edt
he
meet
ingoft
heBoar
d.I
nthecaseofev
erycompany
,ameet
ingoft
heBoar
dofDi
rect
ors
mustbehel
d:Atl
eastoncei
nev
eryt
hreemont
hs,
andAtl
eastf
oursuchmeet
ingsshal
l
behel
dinev
eryy
ear
.Inot
herwor
ds,not
hreemont
hsshoul
dpasswi
thoutdi
rect
ors’
meet
ingbei
nghel
d,andnoy
earshoul
dexpi
rewi
thoutatl
eastf
ourdi
rect
ors’meet
ings
hav
ingbeenhel
dini
t.Theobj
ectoft
hissect
ioni
stoensur
ethatt
heBoar
dmeet
ings
ar
ehel
datr
easonabl
yfr
equenti
nter
val
ssot
hatt
hedi
rect
orsmaybei
ntouchwi
tht
he
managementoft
heaf
fai
rsoft
hecompany
.

b)Meet
ingsoft
heCommi
tt
eesofDi
rect
ors:

TheBoar
dofDi
rect
orsmayf
orm cer
tai
ncommi
tt
eesanddel
egat
esomeofi
tspower
s
t
othem.Thesecommi
tt
eesshoul
dconsi
stofonl
ydi
rect
ors.Thedel
egat
ionofpower
s
t
osuchcommi
tt
eesi
stobeaut
hor
isedbyt
heAr
ti
clesofAssoci
ati
onandshoul
dbe
subj
ectt
othepr
ovi
sionsoft
heCompani
esAct
.Inal
argecompanyr
out
inemat
ter
sli
ke
Al
l
otment
,Tr
ansf
er,Fi
nancear
ehandl
edbysub-
commi
tt
eesoft
heBoar
dofDi
rect
ors.
Themeet
ingsofsuchcommi
tt
eesar
ehel
dint
hesamewayast
hoseofBoar
dMeet
ings.

3.Meet
ingsofCr
edi
tor
s:

Themeet
ingsofcr
edi
tor
sar
ecal
l
edwhent
hecompanypr
oposest
omakeaschemef
or
ar
rangementwi
thi
tscr
edi
tor
s.Compani
esActnotonl
ygi
vepower
stot
hecompanyt
o
compr
omi
sewi
tht
hecr
edi
tor
sbutal
sol
aydownt
hepr
ocedur
eofdoi
ngso.

4.Meet
ingsofDebent
ureHol
der
s:

Meet
ingsoft
hedebent
urehol
der
sar
ehel
daccor
dingt
othecondi
ti
onscont
ainedi
nthe
debent
uret
rustdeed.Thesemeet
ingsar
ecal
l
edf
rom t
imet
oti
mewher
ethei
nter
est
s
64
ofdebent
ure hol
der
s ar
einv
olv
ed att
he t
ime ofr
econst
ruct
ion,r
eor
gani
zat
ion,
amal
gamat
ionorwi
ndi
ngupoft
hecompany
.Ther
ulesandr
egul
ati
onsent
eredi
ntr
ust
deedr
elat
etot
henot
iceoft
hemeet
ing,appoi
ntmentofaChai
rmanoft
hemeet
ing,
passi
ngt
her
esol
uti
ons,
quor
um oft
hemeet
ingandt
hewr
it
ingandsi
gni
ngofmi
nut
es.

Ter
msusedi
nmeet
ings

Agendawhi
chi
sthei
ssuet
obedi
scussedi
nameet
ing.

Mi
nut
eswhi
char
erecor
dsofact
ivi
ti
est
aki
ngpl
aceandt
hedeci
sionsmade.

Quor
um whichr
efer
stot
her
equi
rednumberf
orat
tendancef
oradeci
sionormeet
ingt
o
t
akeplace.

Not
icewhi
chi
saf
ormal
not
if
icat
iont
omember
s.

Chai
rper
sonwhoi
stheper
sonwhopr
esi
desov
erameet
ing.

Secret
arykeepsr
ecor
ds,
takesnot
esandhandl
esgener
alcl
eri
calwork.
Aproxyissomeonewhoattendsagener
almeeti
ngandvotesinpl
aceofamemberof
thecompany .

6.
3Si
xpossi
blev
oti
ngmet
hodsi
nameet
ing

1.Voi
ceVot
e
Av
otebyv
oicei
sther
egul
armet
hodofv
oti
ngonanymot
iont
hatdoesnotr
equi
re
mor
ethanamaj
ori
tyv
otef
ori
tsadopt
ion.Thechai
raskst
hosei
nfav
oroft
hemot
ion
t
osay“
Aye”
.Thosewhoar
eopposedar
easkedt
osay“
No.
”Thepr
esi
dentshoul
dnot
askt
hosewho ar
eopposed t
o“r
espond wi
tht
hesamesi
gn”becausei
tcan be
conf
usi
ngt
othemember
s.

2.Showofhands
Asanal
ter
nat
ivet
ovot
ingbyv
oice,av
otebyshowofhandscanbeusedast
hebasi
c
v
oti
ngmet
hodi
nsmal
lboar
dsori
ncommi
tt
ees,
andi
tisusedi
nsomeassembl
i
es.An
i
nconcl
usi
vev
oicev
otei
sal
sosomet
imesv
eri
fi
edbyt
hismet
hod.Useofv
oti
ngby
show ofhandsi
nassembl
i
esshoul
dbel
i
mit
edt
over
ysmal
lmeet
ingswher
eev
ery
membercancl
ear
lyseeev
eryot
hermemberpr
esent
.

65
3.Si
mpl
eri
singv
ote

Thesi
mpl
eri
si
ngv
ote,i
nwhi
cht
henumberofmember
svot
ingoneachsi
dei
snot
count
ed,i
sused pr
inci
pal
l
yincaseswher
eav
oicev
otehasbeent
akenwi
than
i
nconcl
usi
ver
esul
tandast
henor
malmet
hodofv
oti
ngonmot
ionsr
equi
ri
ngat
wo-
t
hir
dsv
otef
oradopt
ion.Thechai
raskst
hosei
nfav
oroft
hemot
iont
ori
seandt
henbe
seat
ed.

4.Count
edRi
si
ngVot
e

Thi
smet
hodi
sof
tenusedonmot
ionsr
equi
ri
nga2/
3vot
eorwhenan“
uncount
ed”
r
isi
ngv
oteorshowofhandsi
stoocl
oset
ocal
l
.Thechai
raskst
hosei
nfav
oroft
he
mot
iont
ori
se.Af
tercount
ing,t
hesemember
sar
easkedt
osi
t.Thechai
rthenasks
t
hoseopposedt
ori
seandaf
tercount
ingt
obeseat
ed.

5.Bal
l
otVot
e

Thi
smet
hodi
nvol
veswr
it
ingav
oteonasl
i
pofpaperorpr
epar
edbal
l
ot.Thi
sisagood
wayt
ovot
eoncont
rov
ersi
almot
ionsandi
sthepr
escr
ibedmet
hodt
ovot
eforof
fi
cer
s.

6.Unani
mousconsent

I
ncaseswher
ether
eseemst
obenoopposi
ti
oni
nrout
inebusi
nessoronquest
ionsof
l
i
ttl
eimpor
tance,
timecanof
tenbesav
edbyt
hepr
ocedur
eofunani
mousconsent
.The
met
hodofunani
mousconsentcanbeusedt
oadoptamot
ionwi
thoutt
hest
epsof
st
ati
ngt
hequest
ionandput
ti
ngt
hemot
iont
oaf
ormal
vot
e.

6.
4Requi
rement
sofaVal
i
dMeet
ing

Themeet
ingi
sagat
her
ingofi
ndi
vi
dual
stot
akesomedeci
sions.Thef
oll
owi
ng
r
equi
rement
sshoul
dbeconsi
der
edt
ohav
eameet
ingl
egal
orv
ali
d:

1.Ther
eshoul
dbel
egal
conv
enerwhowi
l
lcal
lameet
ing.

66
 2.Thenot
iceofameet
ingmustbei
ssuedt
oal
lmember
shi
ghl
i
ght
ingt
hef
oll
owi
ng
t
hings:

 Dat
eofmeet
ing
 Venueofmeet
ing
 St
art
ingt
imeofameet
ing.

3.Thenot
iceofameet
ingshoul
dbesenti
nti
met
hroughappr
opr
iat
emedi
a.Wher
eas,
anot
iceofacompanymeet
ingshoul
dbesentt
oev
erymember21day
sbef
oret
he’
meet
ingi
shel
d.
4.I
temsort
opi
csofdi
scussi
oni
,e,
Agendashoul
dbesentt
oev
erymemberbef
orea
meet
ingi
shel
d.
5.Onl
yaut
hor
izedpeopl
ewi
l
lbepar
ti
cipat
ingi
nameet
ing.
6.Ameet
ingmusthav
eachai
rman.Thatt
hechai
rmanshoul
dbeanymemberel
ect
ed
byt
hepar
ti
cipat
ingmember
s.
7.Ameet
ingmustf
ulf
il
lquor
um i
,e,
themi
nimum peopl
easr
equi
redbyt
hemeet
ing
shoul
dbepr
esent
.
8.ThePr
oceedi
ngsoft
hemeet
ingi
,e,
minut
eshoul
dbekeptpr
oper
ly.
9.Ameet
ingmustbeconf
inedt
oagendaandanyr
esol
uti
onpassedbey
ondt
heagenda
wi
l
lber
egar
dedasi
nval
i
d.

6.
5Pur
poseofmeet
ing:
i
. Toai
rvi
ewsorgr
iev
ances.
i
i
. Toshar
eideas,
exper
ience,
knowl
edgeandski
l
ls.
i
i
i. Tosol
vepr
obl
emsandf
indsol
uti
ons.
i
v. Toobt
ainassi
stancef
rom ot
hermember
s
v
. Topassandr
ecei
vei
nfor
mat
ion.
v
i. Tocoor
dinat
eorar
rangeact
ivi
ti
est
obeunder
taken.
v
ii
. Tocr
eat
einv
olv
ementandi
nter
esti
ncer
tai
nideas.

6.
6Pr
ocedur
esf
orconduct
ingmeet
ings

67
1.Pr
ovi
denot
icet
omember
sear
li
er.
2.Agendagi
vent
omember
sinadv
ance.
3.Fi
ndi
ngav
enueandi
nfor
mthemember
sinadv
ance.
4.Themeet
ingst
art
swhent
hechai
rper
soncal
l
sint
oor
der
.
5.Heorshedecl
arest
hemeet
ingopenedatwhat
evert
imei
tshoul
dst
art
.
6.Thesecr
etar
yst
art
swr
it
ingmi
nut
es.
7.Heorsher
ecor
dthenamesofmember
sci
ti
ngwhet
herpr
esentorabsent
.
8.Secr
etar
yreadsmi
nut
esoft
hepr
evi
ousmeet
ing.
9.Member
sdi
scussmat
ter
sar
isi
ngf
rom t
hepr
evi
ousmeet
ing.
10.
Thechai
rper
sonr
eadst
heday
’sagendat
obedi
scussedbymember
s.
11.
Member
sdi
scusst
heagendaswhi
l
ethesecr
etar
ywr
it
esmai
npoi
nts.
12.
Deci
sioni
sreached
13.
Thechai
rper
soncl
osest
hemeet
ingandst
atest
het
imef
ort
henextmeet
ing.

6.
7Adv
ant
agesandDi
sadv
ant
agesofMeet
ings

Adv
ant
agesofMeet
ings
1.Peopl
ecanai
rthei
rvi
ewsorgr
iev
ances

2.Peopl
eav
oidi
nconv
eni
encescausedbyi
ndi
vi
dual
deci
sions.

3.Peopl
egetsol
uti
onst
othei
rpr
obl
ems.

4.Peopl
ecanaskf
orassi
stancei
ntaskst
hatar
edi
ff
icul
ttoper
for
m.

5.Rel
ati
onshi
panduni
tyi
nanor
gani
zat
ioni
spr
omot
edt
hroughi
nter
act
ion.

6.Encour
agesshar
ingofi
deas.

7.Peopl
e’
sideasar
erespect
ed.

8.Sol
vesconf
li
ctsandr
educest
ensi
on.

9.I
mprovementi
nper
for
manceofanor
gani
zat
ioni
sat
tai
ntedt
hroughi
deasshar
edi
n
meet
ings.

Di
sadv
ant
agesofaMeet
ing

1.Cost
lyi
ncaseswher
eonehast
otr
avel
todi
ff
erentpl
acest
oat
tendmeet
ings.

68
2.Wast
ageoft
imei
ncaset
heagendaoft
hemeet
ingi
snotmetorpeopl
efai
lto
cont
ri
but
etot
hemeet
ingef
fect
ivel
y.
3.Sl
owi
mpl
ement
ati
onofact
ivi
ti
esort
asksi
ncei
thast
obeappr
ovedbymember
sin
t
hemeet
ing.I
thast
ofol
l
owcer
tai
npr
ocedur
e.
4.Demandsper
sonal
appear
ancef
ort
hemeet
ingt
otakepl
ace.
5.Sl
owdeci
sionmaki
ngbecausemember
shav
etor
aiseopi
nionsandser
iouspoi
ntst
o
benot
eddown.Themember
shav
etodeci
deonwhi
cht
ofol
l
owandwhatt
ofor
ego.
6.Ov
erdependenceonot
hermember
stocomeupwi
thef
fect
iveandsui
tabl
eidea.

6.
8Chai
rmani
nagener
almeet
ing
Hei
sthepr
esi
dingof
fi
ceroft
hemeet
ing
I
mpor
tanceofchai
rman
Hei
sresponsi
blef
orkeepi
ngor
derandconduct
ingt
hemeet
ing.
Hei
sthepr
operper
sont
oputmot
ionst
othemeet
ing,countv
otes,decl
aret
her
esul
ts
andaut
hent
icat
ethemi
nut
esbyhi
ssi
gnat
ure.
6.
9Dut
iesoft
hechai
rman

1.Mustactatal
lti
mesbonaf
ideandi
nthei
nter
est
soft
hecompanyasawhol
e
2.Mustensur
ethatt
hemeet
ingi
spr
oper
lyconv
enedandconst
it
uted.
3.Ensur
ethepr
oceedi
ngsar
epr
oper
lyandr
egul
arl
yconduct
edmai
ntai
ningor
der
.
4.Ensur
ethepr
ovi
si
onsoft
heActandt
heAr
ti
clesar
eobser
ved.
5.Shoul
dseebusi
nesst
ransact
edi
swi
thi
nthescopeoft
hemeet
ing
6.Mustal
l
owr
easonabl
edi
scussi
onandcar
ethatt
hemi
nor
it
yri
ght
sar
enoti
gnor
ed.

69
LECTURESEVEN

ARESOLUTI
ON

7.
1Meani
ngofr
esol
uti
on
Ar
esol
uti
oni
saf
ormaldeci
siont
akenatameet
ingbymeansofav
ote.Acor
por
ate
r
esol
uti
oni
sacor
por
ateact
ion,
somet
imesi
nthef
orm ofal
egaldocumentt
hatwi
l
lbe
v
otedonorhasbeenv
otedonatameet
ingoft
heboar
dofdi
rect
orsf
oracor
por
ati
on.
7.
2Ty
pesofResol
uti
on

1.Or
dinar
yResol
uti
on

Anor
dinar
yresol
uti
oni
sref
erst
oar
esol
uti
on,
passedbyt
hemember
soft
hecompany
byabar
emaj
ori
ty.I
tisar
esol
uti
onmeansi
nwhi
cht
hev
otescasti
nfav
orofr
esol
uti
on
exceedst
hev
otescastagai
nsti
t.Ther
esol
uti
onaf
fi
rmedbymor
ethanhal
fmember
s,
pr
esenti
nper
sonorpr
oxyatt
heGener
alMeet
ing.I
tshoul
dbepassedbyv
otescast
,by
anyoft
hef
oll
owi
ngmodes,i
.e.showofhands,pol
l
ingorel
ect
roni
cal
l
y,i
nfav
oroft
he

70
r
esol
uti
on.

Thenot
iceconv
eni
ngt
hemeet
ingshal
lbedul
ygi
vent
othemember
s.I
naddi
ti
ont
othi
s,
t
hemember
swhodon’
tpar
ti
cipat
einv
oti
ngar
enott
akeni
ntoconsi
der
ati
on.I
ngener
al,
t
heor
dinar
yresol
uti
onmustbepassedt
otr
ansactt
heor
dinar
ybusi
nessatAGM
(
Annual
Gener
alMeet
ing)
.Or
dinar
yBusi
nessi
ncl
udest
hef
oll
owi
ngbusi
ness:

 Adopt
ionoff
inal
account
s.
 Decl
arat
ionoft
hedi
vi
dend.
 Ret
ir
ementandappoi
ntmentofDi
rect
ors.
 Ret
ir
ementandappoi
ntmentofAudi
tor
sandf
ixi
ngt
hei
rremuner
ati
on.

2.Speci
alResol
uti
on/
Ext
raor
dinar
yResol
uti
on

Aspeci
alr
esol
uti
oni
sther
esol
uti
ont
hati
saf
fi
rmedbyt
hemember
soft
hecompany
byt
hree-
four
thmaj
ori
ty(
3/4)
.Iti
sar
esol
uti
oni
nwhi
cht
hev
otescasti
nfav
ouroft
he
r
esol
uti
onmustbet
hreet
imeshi
ghert
hant
hev
otescastagai
nsti
t.Ther
ear
ecer
tai
n
t
hings,
whi
chcanbedonebyt
hecompanyonl
yifaspeci
alr
esol
uti
oni
saf
fi
rmedatt
he
dul
yconst
it
utedgener
almeet
ing.Thenot
iceoft
hegener
almeet
ingshoul
dbedul
y
gi
vent
othemember
s,andt
henot
iceshoul
dcont
aint
hei
ntent
iont
opur
poset
he
r
esol
uti
onasSRt
obement
ionedspeci
fi
cal
l
y.Ther
esol
uti
oni
srequi
redt
obepassedby
anymet
hods,suchasv
oti
ngonashow ofhandsorpol
l
ingorel
ect
roni
cal
l
ybyt
he
member
spr
esenti
nper
sonorpr
oxyorpost
albal
l
ot.

7.
3Di
ff
erencesbet
weenOr
dinar
yResol
uti
onandSpeci
alResol
uti
on

1.Or
dinar
yResol
uti
on i
s one wher
ein si
mpl
e maj
ori
tyi
srequi
red t
o mov
ethe
r
esol
uti
onatt
hegener
almeet
ing.Speci
alResol
uti
onmeansar
esol
uti
oni
nwhi
ch
super
maj
ori
tyi
sneededt
opasst
her
esol
uti
onatt
hegener
almeet
ing.
2.I
ntheor
dinar
yresol
uti
on,consentofatl
east51% member
s,i
srequi
redf
ort
he
r
esol
uti
ont
obepassed.Ont
heot
herhand,t
hespeci
alr
esol
uti
onr
equi
rest
he
consentofatl
east75%member
s,i
nfav
ouroft
her
esol
uti
on.
3.Thecopyofanor
dinar
yresol
uti
on,
signedbyt
heof
fi
ceroft
hecompanyshoul
dbe

71
 f
il
edwi
tht
her
egi
str
aronl
yincer
tai
ncases.Acopyofspeci
alr
esol
uti
onpr
int
edor
handwr
it
tencont
aini
ngt
hesi
gnat
ureoft
heof
fi
ceroft
hecompanymustbef
il
ed
wi
tht
heRegi
str
arofCompani
es(
ROC)wi
thi
n30day
s.
4.Or
dinar
yResol
uti
onpassedt
otr
ansactOr
dinar
ybusi
ness.Howev
er,aspeci
al
r
esol
uti
onpassedt
otr
ansactspeci
albusi
ness

3.Wr
it
tenResol
uti
on

Usedwhenagener
almeet
ingi
snotr
equi
redt
opassanor
dinar
yresol
uti
onorspeci
al
r
esol
uti
on.Wr
it
tenr
esol
uti
onr
efer
stoar
esol
uti
onpassedout
sideagener
almeet
ingby
member
sofapr
ivat
ecompany
.Suchar
esol
uti
oncanbepassed asanor
dinar
y
r
esol
uti
onorasaspeci
alr
esol
uti
on.Usual
l
y,awr
it
tenr
esol
uti
ondoesnotdi
smi
ssa
di
rect
ororaudi
toroft
hecompany
.Awr
it
tenr
esol
uti
oni
slegal
l
yval
i
d,asi
tcar
ri
est
he
si
gnat
uresofal
lmember
swhoar
eent
it
ledt
ovot
e.

LECTUREEI
GHT

DI
RECTORSOFTHECOMPANY

8.
1Di
rect
ors

Di
rect
orsr
efert
othecol
l
ect
ivebodyknownast
heBoar
dofDi
rect
orst
hati
sresponsi
ble
f
orcont
rol
l
ing,managi
ng and di
rect
ing t
he af
fai
rs ofa company
.Di
rect
ors ar
e
consi
der
edt
het
rust
eesofcompany
’spr
oper
tyandmoney
,andt
heyal
soactast
he
agent
sint
ransact
ionswhi
char
eent
eredi
ntobyt
hem onbehal
foft
hecompany
.
Di
rect
orsar
eexpect
edt
oper
for
mthei
rdut
iesandobl
i
gat
ionsasar
ati
onal
l
ydi
l
igent
per
sonwi
thski
l
l,knowl
edge,andexper
ienceast
heper
soncar
ryi
ngoutf
unct
ionsofa
di
rect
orandoft
hathi
msel
f.Hence,adi
rect
orpl
ayssev
eralr
olesi
nacompany
,asan

72
agent
,asanempl
oyee,
asanof
fi
cerandasat
rust
eeoft
hecompany
.

8.
2Posi
ti
onofDi
rect
orsi
nacompany

Di
rect
orsar
etheper
sonsdul
yappoi
ntedbyt
hecompanyt
odi
rectandmanaget
he
af
fai
rs oft
he company
.Thei
rlegalposi
ti
on i
s somet
imes descr
ibed as agent
s,
somet
imesasmanagi
ngpar
tner
s,andsomet
imesast
rust
ees.

8.
3Dut
ies&Responsi
bil
i
tiesofBoar
dofDi
rect
ors

Thedut
iesandr
esponsi
bil
i
tiesoft
heboar
dofdi
rect
orsar
easf
oll
ows

1.Tr
ust
eeshi
p:Theboar
dofdi
rect
orsactast
rust
eest
othepr
oper
tyandwel
far
eoft
he
company
.Hence,t
heboar
dmustuset
hecompany
’spr
oper
tyf
ort
hel
ong-
rungai
nof
t
hecompany
,butnotf
ort
hei
rper
sonal
use.

2.For
mul
ati
onofMi
ssi
on,
Obj
ect
ionandPol
i
cies:Boar
dofdi
rect
orsmustseet
hel
ong
r
unv
iewandhav
elongr
unper
spect
iveoft
hecompany
.Theboar
dfor
mul
ates,r
evi
ews
andr
efor
mul
atest
hecompany
’smi
ssi
on,
obj
ect
ivesandpol
i
cieswhi
chf
ormst
hebasi
s
f
orst
rat
egyf
ormul
ati
onandi
mpl
ement
ati
on.

3.Desi
gni
ng Or
gani
zat
ionalSt
ruct
ure:The boar
d desi
gns t
he st
ruct
ure of t
he
or
gani
zat
ion based on t
he obj
ect
ives,pol
i
cies,env
ironment
alf
act
ors,degr
ee of
compet
it
ion,
rol
eofqual
i
ty,
expect
ati
onsofempl
oyeeset
c.

4.Sel
ect
ionofTopExecut
ives:
Theboar
dshoul
dassumet
her
esponsi
bil
i
tyofscr
eeni
ng
andsel
ect
ingt
het
opexecut
iveswhocanf
ormul
ateandi
mpl
ementt
hest
rat
egi
es.Chi
ef
execut
ivesar
ekeyper
sonnel
int
hepr
ocessofst
rat
egyi
mpl
ement
ati
on.

5.Fi
nanci
alAut
hor
izat
ions:The i
mpor
tantf
inanci
aldeci
sions l
i
ke aut
hor
izi
ng of
f
inances t
ovar
ious pr
oject
s,r
eser
ves,di
str
ibut
ion ofpr
ofi
tto shar
ehol
der
s and
r
epay
mentofl
oansandadv
anceset
c.,ar
etakenbyt
heboar
d.Fur
ther
,theboar
d
r
evi
ewst
hef
inanci
alper
for
manceoft
hecompanyf
rom t
imet
oti
meandr
efor
mul
ates
t
hef
inanci
alpol
i
cies.

73
6.Feedf
orwar
dandFeedback:Theboar
dhast
oobt
aini
nfor
mat
ionf
rom t
heex
ter
nal
env
ironment
alf
act
orsandf
eedt
hati
nfor
mat
ionf
orwar
dtov
ari
ouskeypoi
ntsi
nthe
companyi
nor
dert
opr
eventpossi
blehur
dlesandmi
stakesi
nthepr
ocessofachi
evi
ng
or
gani
zat
ionalgoal
s.Fur
ther
,theboar
d al
so obt
ainst
hei
nfor
mat
ionf
rom i
nter
nal
sour
cesoft
heor
gani
zat
ion,
andf
eedsi
tfor
war
dtopr
eventpossi
blef
ail
uresi
ndeci
sion
-
maki
ngbyt
het
opl
evel
execut
ives.

Theboar
dal
sof
eedst
hei
nfor
mat
ionbackt
otheexecut
ivesr
egar
dingt
hei
rfai
l
uresi
n
deci
si
on-
maki
ngwi
thav
iewt
oav
oidt
her
ecur
renceofsuchmi
stakes.Thus,f
eedback
ofi
nfor
mat
ionhel
pst
heboar
dtocheckandcont
rolt
heact
ivi
ti
esasboar
dhast
he
ul
ti
mat
eresponsi
bil
i
tyf
ort
hesuccessoft
hecompany
.

7.Li
nkbet
weent
heCompanyandExt
ernalEnv
ironment
:Theboar
dact
sav
italand
cont
inuousl
i
nkbet
weent
hecompanyandext
ernalenv
ironmentl
i
kegov
ernment
,ot
her
compani
es,
soci
alandeconomi
cinst
it
uti
onset
c.

Thechar
terofdut
iesandr
esponsi
bil
i
tiesf
orboar
dofdi
rect
orsassuggest
edbyMace,
ar
eshownbel
ow.

8.
4Responsi
bil
i
tiesofBODt
oShar
ehol
der
s

1.Moni
tor
ing:

 Ret
urnonI
nvest
ment
 Secur
it
yofI
nvest
ment
 Di
vi
dendPol
i
cy
 Soci
alAccount
abi
l
ity

2.Sel
ectandel
ectCEO (
usual
l
ythepr
esi
dent
)anddel
egat
etohi
m al
lthedut
iest
o
managet
hecompanynotspeci
fi
cal
l
yreser
vedt
otheboar
d.

3.Ev
aluat
etheper
for
manceoft
heCEOsanddi
vi
sionpr
esi
dent
sforper
for
manceand
compensat
ion.

74
4.Ev
aluat
eper
for
manceofCEOsanddi
vi
sionpr
esi
dent
squar
ter
lyi
ncompar
isonwi
th
compet
it
ors.

5.Rev
iewandappr
ovemaj
orcor
por
ateobj
ect
ives,pol
i
cies,budget
sandst
rat
egi
esas
i
nit
iat
edbyt
heCEO.I
nrev
iewi
ngt
hest
rat
egi
cpl
an,conf
ir
mit
sdi
rect
ors,orpr
opose
changesofdi
rect
ion.

6.Moni
tor
,rev
iewandappr
aisemanagement
:

 Pr
ovi
def
oror
der
lysuccessi
onofCEOs
 Dut
iesandl
i
mit
sofCEOs
 Sel
ect
ionofout
sidel
egal
counsel
 Sel
ectal
lof
fi
cer
s
 Compensat
ionofof
fi
cer
s
 Adv
iseManagi
ngDi
rect
orsandot
her
s.

7.Moni
tor
,rev
iewandappr
oveempl
oyeer
elat
ions.

8.Moni
torcompany
’sper
for
mance.

9.Managementoft
heboar
d.

10.Compl
i
ancewi
thal
ll
awsaf
fect
ingt
hebusi
ness.

8.
5Ty
pesofCompanyDi
rect
or

1.ShadowDi
rect
or

Ashadow di
rect
ori
stheper
sonwhoi
snott
echni
cal
l
ywi
tht
hef
ir
m buti
samaj
or
shar
ehol
derbutdoesn'
ttakepar
tingov
erni
ngt
hef
ir
m butwhose.I
naddi
ti
ont
othose
whoar
efor
mal
l
yappoi
ntedasdi
rect
ors,anyper
son,ot
hert
hanapr
ofessi
onaladv
iser
,
wi
thwhosei
nst
ruct
ionst
hedi
rect
orsoft
hecompanynor
mal
l
ycompl
yisashadow
di
rect
or.I
not
herwor
ds,wher
eaper
sonwhoi
snotadi
rect
orexer
tssuchani
nfl
uence
ov
ert
he company
's di
rect
orst
hatt
hose di
rect
ors ar
e accust
omed t
o act
ing i
n

75
accor
dancewi
tht
hatper
son'
sinst
ruct
ions,t
hatper
soni
sashadow di
rect
or.The
si
gni
fi
canceofbei
ngashadowdi
rect
ori
sthatashadowdi
rect
orhasmanyoft
hel
egal
r
esponsi
bil
i
tiesofadi
rect
or.

2.Al
ter
nat
eDi
rect
ors

Al
ter
nat
edi
rect
orsar
eper
sonswhoar
enomi
nat
edbyadi
rect
ort
oacti
nthei
rabsence.
Anal
ter
nat
edi
rect
orcanonl
ybeappoi
ntedwi
tht
heagr
eementofamaj
ori
tyoft
he
di
rect
ors.

3.Def
act
oDi
rect
ors

Ade-
fact
odi
rect
ori
ssomeonewhoact
sasadi
rect
orbutwhohasnotbeenf
ormal
l
y
appoi
ntedAdef
act
odi
rect
ori
saper
sonwhohasnotbeenv
ali
dlyappoi
ntedorwhoi
s
di
squal
i
fiedbutwhoi
nef
fectoccupi
est
heposi
ti
onof
,andact
sasi
fhewer
e,adi
rect
or.
I
naddi
ti
ont
othel
egalcat
egor
iesofdi
rect
orassetoutabov
e,ot
hert
ermsar
eusedi
n
busi
nesst
odescr
ibecompanydi
rect
ors.I
npr
act
icecompanydi
rect
orsar
egener
all
y
cat
egor
izedasei
therbei
ngexecut
ivedi
rect
orsornon-
execut
ivedi
rect
ors.Howev
er,
iti
s
i
mpor
tantt
onot
ethatt
hesear
enotl
egalcl
assi
fi
cat
ionsbutr
atherar
edi
sti
nct
ions
dr
awnundercor
por
ategov
ernancebestpr
act
ice.Regar
dlessofwhet
herani
ndi
vi
duali
s
anexecut
iveornon-
execut
ivedi
rect
or,
theyhav
eexact
lyt
hesamel
egal
responsi
bil
i
ties.

4.Execut
iveDi
rect
ors

Execut
ivedi
rect
orsar
edi
rect
orsoft
hecompanywhoar
einv
olv
edi
nthedayt
oday
managementoft
hecompany
.Ast
hesei
ndi
vi
dual
sar
einv
olv
edi
nthemanagementof
t
hecompanyt
heymay
,inpr
act
ice,
hav
especi
fi
cti
tl
eswi
thi
nthecompany
,forexampl
e,
managi
ngdi
rect
or,
mar
ket
ingdi
rect
ororf
inancedi
rect
or.

5.Non-
Execut
iveDi
rect
ors

Non-
execut
ivedi
rect
orsar
enoti
nvol
vedi
nthedayt
odaymanagementoft
hecompany
andar
eappoi
ntedf
rom out
sidet
hecompany
.Itshoul
dbenot
edt
hatt
her
eisnol
egal
obl
i
gat
ion f
or a company t
o appoi
nt non-
execut
ive di
rect
ors,howev
er,cer
tai
n
76
compani
esi
.e.compani
esl
i
stedont
heSt
ockExchangear
erequi
redt
ocompl
ywi
th
codesofcor
por
ategov
ernancebestpr
act
icewhi
chdor
equi
ret
hepr
esenceofnon-
execut
ivedi
rect
orsont
heboar
d.

8.
6Howt
oAppoi
ntDi
rect
orsi
ntheCompany
1.BySi
gnat
urest
otheMemor
andum
2.ByCompanyi
ntheGener
alMeet
ing
3.ByBoar
dofDi
rect
ors
4.ByThi
rdPar
ti
es
5.ByPr
opor
ti
onal
Repr
esent
ati
on
6.Byt
heCent
ral
Gov
ernment
. 

1.Appoi
ntmentofDi
rect
orsbySi
gnat
urest
otheMemor
andum:

I
fthedi
rect
orsar
enotnamedi
ntheAr
ti
clesoft
heCompany
,thenumberofdi
rect
ors
andt
henameoft
hedi
rect
orsshal
lbedet
ermi
nedi
nwr
it
ingbyt
hesubscr
iber
soft
he
Memor
andum oramaj
ori
tyoft
hem.I
fthef
ir
stdi
rect
orsar
enotappoi
ntedi
ntheabov
e
manner
,thesubscr
iber
soft
heMemor
andum whoar
eindi
vi
dual
sshal
lbedeemedt
obe
t
hedi
rect
orsoft
hecompany
.Theyshal
lhol
dof
fi
ceunt
ildi
rect
orsar
edul
yappoi
ntedi
n
t
hef
ir
stannual
gener
almeet
ing.[
Sec.254]

Subsequentdi
rect
orsshal
lbeappoi
ntedaccor
dingt
othepr
ovi
sionsofSec.255oft
he
Act
.

2.Appoi
ntmentofDi
rect
orsbyCompanyi
ntheGener
alMeet
ing:

I
nthecaseofapubl
i
ccompanyorapr
ivat
ecompanywhi
chi
sasubsi
diar
yofapubl
i
c
company
,unl
esst
heAr
ti
clespr
ovi
def
ort
her
eti
rementofal
ldi
rect
orsatanannual
gener
almeet
ing,atl
astt
wo-
thi
rdsoft
het
otalnumberofdi
rect
orsshal
lbel
i
abl
eto
r
eti
rebyr
otat
ionandshal
lbeappoi
ntedbyt
hecompanyi
ngener
almeet
ing.Thi
smeans
one-
thi
rdoft
het
otalnumberofdi
rect
orscanbeper
manentdi
rect
ors.Ther
emai
ning
di
rect
orsi
nthecaseofanysuchcompanyandal
lthedi
rect
orsi
nthecaseofpr
ivat
e
companynotbei
ngasubsi
diar
yoft
hepubl
i
ccompanymaybeappoi
ntedaspr
ovi
dedi
n
77
t
heAr
ti
cles.I
ntheabsenceofanyr
egul
ati
oni
ntheAr
ti
clesoft
hecompany
,these
di
rect
orsshal
lbeappoi
ntedbyt
hecompanyi
ngener
almeet
ing.

3.Appoi
ntmentofDi
rect
orsbyBoar
dofDi
rect
ors

Compani
esActempower
stheBoar
dtoappoi
ntaddi
ti
onaldi
rect
orsandAr
ti
clesof
ev
erycompanyal
soconf
ert
hispowert
otheBoar
d.Butt
headdi
ti
onal
dir
ect
orshal
lhol
d
hi
sof
fi
ceupt
othenextannualgener
almeet
ing.Thenumberofdi
rect
orsi
ncl
udi
ngt
he
addi
ti
onaldi
rect
orshoul
dinnocaseexceedt
hemaxi
mum numberofdi
rect
orsas
det
ermi
nedbyt
hear
ti
cl
esoft
hecompany
.

4.Appoi
ntmentofDi
rect
orsbyThi
rdPar
ti
es

Thear
ti
clesmayper
mitt
het
hir
d par
ti
esf
ort
heappoi
ntmentofdi
rect
orast
hei
r
nomi
nee,butt
henumberofdi
rect
orssoappoi
ntedshoul
dnotexceedone-t
hir
doft
he
t
otalnumberofdi
rect
orsandt
heyar
enotl
i
abl
etor
eti
rebyr
otat
ion.Thet
hir
dpar
ty
meanst
heVendor
,Banki
ngCompany
,Fi
nanceCor
por
ati
onandDebent
urehol
der
s.

5.Appoi
ntmentofDi
rect
orsbyPr
opor
ti
onal
Repr
esent
ati
on

Di
rect
orsar
eappoi
ntedi
ndi
vi
dual
l
yei
therbyshow ofhandsorbybal
l
otunl
esst
he
Ar
ti
cles ot
her
wise pr
ovi
de. I
fthe Ar
ti
cles per
mit
, a sy
stem of pr
opor
ti
onal
r
epr
esent
ati
onmaybeadopt
edf
ort
heappoi
ntmentofdi
rect
ors.Theappoi
ntmentmay
bemadebyt
hesi
ngl
etr
ansf
erabl
evot
eorbyasy
stem ofcumul
ati
vev
oti
ng.I
nthi
s
sy
stem,t
he mi
nor
it
y shar
ehol
der
s may become i
n a posi
ti
on t
o hav
ethei
r
r
epr
esent
ati
oni
ntheBoar
dofDi
rect
ors.

6.Appoi
ntmentofDi
rect
orsbyt
heCent
ral
Gov
ernment

Accor
dingt
oSec.408,t
heCent
ralGov
ernmentmayappoi
ntt
hedi
rect
orsbutnotmor
e
t
hant
woi
nnumberandf
ort
heper
iodnotex
ceedi
ng3y
ear
s.Theappoi
ntmentof
di
rect
orsi
smadet
opr
eventt
heaf
fai
rsoft
hecompanywhi
char
eoppr
essi
vet
oany
memberorwhi
ch ar
epr
ejudi
cialt
othepubl
i
corcompany
’si
nter
est
.TheCent
ral

78
Gov
ernmentmayappoi
ntt
hedi
rect
oront
heappl
i
cat
ionofnotl
esst
han100member
s
oft
hecompanyort
hemember
shol
dingnotl
esst
han1/
10t
hoft
het
otalv
oti
ngr
ight
s.
Such di
rect
orsneed nott
oret
ir
eannual
l
yand ar
eal
so notr
equi
red t
o hav
ethe
qual
i
ficat
ionshar
es.

8.
7Fi
rstDi
rect
ors
Fi
rstdi
rect
orsofaf
ir
m ar
eappoi
ntedbyt
heor
igi
nal
inv
est
ors(
member
sorsubscr
iber
s)
usual
l
yfr
om amongt
hemsel
ves,
andar
enamedi
nthear
ti
clesofassoci
ati
on.Howev
er,
ment
ioni
nthear
ti
cl
esdoesnotconst
it
uteav
ali
dappoi
ntmentunt
ilt
heper
songi
veshi
s
orhersi
gnedconsentt
ohol
dtheof
fi
ceofdi
rect
or,andi
snotdi
squal
i
fied(
forany
r
eason)f
rom hol
dingt
hatof
fi
ce.Appoi
ntmentorel
ect
ionoft
hesubsequentdi
rect
orsi
s
usual
l
yef
fect
edatagener
almeet
ingbyar
esol
uti
ont
otheef
fect
.Butt
heex
ist
ing
di
rect
orsof
tenhav
ethepowert
ofi
l
lvacanci
esont
heboar
dofdi
rect
orsatanyt
ime,
subj
ectt
oconf
ir
mat
ionl
ateratagener
almeet
ing.

8.
8SubsequentDi
rect
ors
The subsequentdi
rect
ors,i
nt c company
hecaseofapubl
i ,ar
eappoi
ntedbyt
he
member hecompanyi
soft nthegener
almeet
ing.Thesear
eel
ect
edbyt
hemember
sin
gener
almeet
ingbegi
nni
ngwi
tht
hef
ir
stgener
almeet
ingatwhi
chal
lthe1stdi
rect
ors
r
eti
ref
rom of
fi
ceandt
hemember
sel
ectnewones.Ther
eti
ri
ngdi
rect
orsar
ehowev
er
el
i
gibl
eforr
e-el
ect
ion.

8.
9Casual
vacancy
Casual
appoi
ntment
s
UnderAr
ti
cleast
heboar
dofdi
rect
orsmayf
il
lav
acancyi
ntheboar
donf
orpr
act
ical
r
easonsgetan addi
ti
onaldi
rect
ort
ojoi
ntheboar
d pr
ovi
ded t
hatt
henumberof
di
rect
orssoappoi
nteddoesnotexceedt
hel
i
miti
mposedbyt
hear
ti
cles.
Casualv
acancy
,whi
chi
sther
esul
tofadeat
hofanexi
sti
ngdi
rect
orcanbef
il
ledbyt
he
boar
dofdi
rect
orsbutt
hesamei
snotappl
i
cabl
einpur
elypr
ivat
ecompani
es.Pr
ivat
e
compani
escandosobyt
hei
rpr
ovi
sionsi
nthear
ti
cleofassoci
ati
onort
hrougha

79
gener
almeet
ing.

8.
10 Reasonsf
ort
heResi
gnat
ion orRemov
alofa Boar
d Memberor
Di
rect
or

1.Unet
hical
Behav
iour

Theboar
dofacompanyi
str
ust
edt
omakei
mpor
tantdeci
sionsr
egar
dingi
tsf
utur
e,so
i
t’
simpor
tantt
hatmember
sar
etr
ust
wor
thy
,put
ti
ngt
hebesti
nter
estoft
hebusi
ness
bef
oret
hei
rown.I
faboar
d memberi
scaughtbehav
ing i
n an unet
hicalmanner
,
cust
omer
s,shar
ehol
der
sandempl
oyeesmayf
eeluncomf
ort
abl
ehav
inghi
mremai
nan
adv
isert
othecompany
.Forexampl
e,LanceAr
mst
rongv
olunt
ari
l
yst
eppeddownf
rom
t
heboar
dofhi
sLi
vest
rongchar
it
y,whi
chhef
ounded,af
terhi
sdopi
ngscandal
.Ashe
wasper
sonal
l
yrecei
vi
ngagr
eatdealofnegat
iveat
tent
ion,
hedi
dn’
twanthi
sact
ionst
o
r
efl
ectpoor
lyonhi
schar
it
y.

2.Meet
ingAbsence

Boar
dmember
sandt
hedi
rect
orar
eappoi
ntedbecausecompanyl
eader
sfeelt
hese
i
ndi
vi
dual
scanmakev
aluabl
econt
ri
but
ionst
othebusi
ness.Regul
arat
tendanceat
meet
ingsandanyot
hernecessar
yfunct
ionsi
snecessar
ytor
emai
nanassett
othe
company
.Ifaboar
dmemberr
egul
arl
yski
psmeet
ingsandr
elat
edcommi
tment
s,he’
s
notdoi
nghi
spar
ttocont
ri
but
eany
thi
ngt
othecompany

3.Di
ff
erencesofOpi
nion

I
faboar
dmemberordi
rect
orf
eel
sli
kehi
sopi
nionsont
hef
utur
eoft
hecompanyar
e
v
erydi
ff
erentt
hanf
ell
ow boar
dmember
sorcompanymanagement
,hemaynotbe
muchofanasset
.Whi
l
edi
ff
erencesofopi
nioncansomet
imesbeagoodt
hing,i
fit
seemsl
i
kehi
sopposi
ng v
iewsar
en’
taddi
ng v
aluebutar
einst
ead sl
owi
ng down
i
mpor
tantdeci
sionsandcausi
ngev
ery
onet
ofeel
frust
rat
ed,
itmaybebestt
oresi
gn.

4.Goal
sAchi
eved

80
Somet
imesaboar
dmemberordi
rect
ort
akesonhi
sdut
iest
ohel
pthecompanyachi
eve
aspeci
fi
cgoalornav
igat
ethr
ought
ought
imes.Whent
heobj
ect
ivehasbeenachi
eved
ort
hecompanyt
urmoi
lhasbeensuccessf
ull
ydef
eat
ed,hemayf
eell
i
kehi
swor
kis
done.St
eppi
ngdownf
rom t
heposi
ti
onmakesr
oom f
oranewper
sont
ocomei
nand
of
fert
hecompanyaf
reshpr
ospect
ive.

LECTURENI
NE

9.
1Power
sofDi
rect
ors
1.Thepowert
omakecal
lonshar
esi
nrespectofunpai
dmoney
.
2.Thepowert
oaut
hor
izel
ackofshar
es.
3.Thepowert
oissuedebent
ures,
whet
heri
norout
side
4.Thepowert
oinv
esti
nfunds.
5.Thepowert
obor
rowmoneyot
her
wiset
hanondebent
ures.

9.
2Rel
ati
onshi
pbet
weent
heboar
dofdi
rect
orsandt
hemanagement

The r
elat
ionshi
p bet
ween t
he boar
d ofdi
rect
orsand t
he managementcannotbe
descr
ibedasj
ustbei
ngt
hatofar
elat
ionshi
pbet
weenanempl
oyeeandhi
sorher
manager
.Thought
heboar
dov
erseest
hedeci
sionst
akenbyt
hemanagementand
r
ati
fi
est
hem al
ongwi
thact
ingast
hef
inalar
bit
ersoft
hest
rat
egi
cdi
rect
ionandf
ocus
t
hatt
hecompanyi
sheadi
ngi
nto,t
her
elat
ionshi
pgoesbey
ondt
hat
.Fori
nst
ance,t
he
boar
dofdi
rect
orsi
sresponsi
blef
ort
heact
ionsoft
hemanagementandhencenotonl
y
doest
heboar
dneedt
omoni
tort
hemanagement
,themanagementneedst
otaket
he
boar
dint
oconf
idenceabouti
tsdeci
sions.

9.
3Managi
ngDi
rect
or

MDi
stheheadofmanagement(
eit
hershar
est
hesamei
mpor
tanceofCEO/COOori
s
super
iort
othem)
,Managi
ngDi
rect
ori
sresponsi
blef
ort
heday
-to-
daybusi
nessofa
company
.Ont
heot
herhand,
aChi
efExecut
iveOf
fi
cerhasnor
esponsi
bil
i
tyf
ort
hedai
l
y
af
fai
rsofaf
ir
m.

81
9.
4Power
sandDut
iesofManagi
ngDi
rect
or:

(
i)Toaf
fi
xthecommonseal
oft
hecompanyt
oanydocument
,or

(
ii
)Todr
awandendor
seanychequeonac¬countoft
hecompanyi
nanybank,
or

(
ii
i)Todr
awandendor
seanynegot
iabl
ein¬st
rument
,or

(
iv)Tosi
gnanycer
ti
fi
cat
eofshar
es,
or

(
v)Todi
rectr
egi
str
ati
onoft
ransf
erofanyshar
e.

9.
5Power
s,dut
iesandr
esponsi
bil
i
tiesoft
heMan¬agi
ngDi
rect
or

1.Asamemberoft
heBoar
dofDi
rect
orshepar
ti
cipat
esi
nfor
mul
ati
ngt
heobj
ect
ives
andpol
i
cy-
maki
ngf
unct
ionsoft
heBoar
d.

2.Toexecut
epol
i
ciesl
aiddownbyt
heBoar
dofDi
rect
ors.

3.Heistheli
aisonof
fi
cerbet
weent
heBoar
dofDi
rect
orsandt
her
estoft
he
organi
sati
on.

4.Toi
nter
pretandcommuni
cat
epol
i
ciesoft
hecompanyt
osubor
dinat
eempl
oyees.

5.Tor
evi
ewt
heoper
ati
onsoft
hecompanyandpr
esentt
otheBoar
dper
iodi
cal
l
y
account
sandst
ati
sti
csshowi
ngt
hepr
ogr
essandt
hepr
esentpo¬si
ti
onoft
hecompany
.

6.Tof
ormul
atet
heempl
oymentandcompen¬sat
ionpl
ani
naccor
dancewi
tht
he
accept
edpol
i
¬ci
esoft
hecompany
.

7.Toappoi
nthi
ghof
fi
ci
alsoft
hecompany
.

8.Topl
ant
hedev
elopmentandexpansi
onofbusi
ness.

9.Toor
gani
semeet
ingswi
thdepar
tmentheads.

10.Topr
omotehi
ghmor
aleamongt
heem¬pl
oyeesofcompanybycr
eat
ingasenseof
bel
ong¬i
ng.

9.
6Ski
l
lsofDi
rect
ors

82
TheDesi
ret
oGoAbov
eandBey
ond

Oneoft
hemostcommont
rai
tst
hata 
l
eaderseemst
ohol
dist
hatdesi
ret
oreal
l
ygo
abov
eandbey
ondandt
hatwi
l
li
ngnesst
oal
way
sdomor
ethant
hati
srequi
redofy
ou.
Rat
hert
hanj
ustdoi
ngenought
ogett
hej
obdone,successf
ull
eader
susual
l
yst
ri
vef
or
mor
eandwantt
opusht
hemsel
vest
hatext
rami
l
e.

2.ASt
rongSenseofI
nnov
ati
onandCr
eat
ivi
ty

Sur
e,y
ourexper
iencewi
l
lhel
pyour
eachal
eader
shi
prol
e,butt
hosewhoar
ereal
l
y
successf
uli
nther
olehav
eaknackf
ori
nnov
ati
onandcr
eat
ivi
ty.Ast
hesay
inggoes,
you
needt
obeabl
etot
hinkout
sidet
heboxandcomeupwi
thpr
oduct
s,ser
vices,
and
t
echni
quest
hatar
euni
que,
new,
creat
ive,
andi
nnov
ati
vei
nor
dert
opushy
ourcompany
f
orwar
d.

3.ACal
cul
atedRi
skTaker

Wheny
ouheart
hewor
ds“
ri
skt
aker
”itcanseem abi
tscar
yanddaunt
ing,
butwe’
renot
t
alki
ngext
remespor
tsher
e.Asuccessf
ul 
l
eaderi
sonet
hatr
ecogni
seswheni
tmakes
senset
otakear
isk,
andwhent
hatr
iskcanbewor
thi
t.I
t’
sal
laboutcal
cul
atedr
isks.

4.TheDesi
ret
oSucceed

Howcany
oupossi
blyheadupacompanyi
fyoudon’
thav
ethatdesi
ret
osucceed?Thi
s
t
rai
tjustgoeswi
tht
het
err
it
ory
,andmeansy
ou’
renotwi
l
li
ngt
oset
tl
eforany
thi
ngl
ess.

5.Excel
l
entCommuni
cat
ionSki
l
ls

Becomi
ngt
he 
l
eaderofacompanyi
sn’
taone-
per
sonshow.Al
ongt
hewayy
ou’
regoi
ng
t
oneedt
owor
kwi
thal
otofdi
ff
erentempl
oyees,
cust
omer
s,v
endor
s,andpar
tner
s.You
needt
obeabl
etowor
kwel
lwi
thot
her
s.Whatt
hismeansi
sthatcommuni
cat
ionski
l
ls
ar
eoft
heut
mostofi
mpor
tance.

6.Excel
l
entLi
steni
ngSki
l
ls

83
Justascommuni
cat
ionski
l
lsar
eacommont
rai
t,soar
eli
steni
ngski
l
ls.Asuccessf
ul
l
eaderneedst
obeabl
etol
i
stenandr
eal
l
yheart
hei
nfor
mat
iont
hati
sbei
ngshar
edwi
th
t
hem.Thi
sinf
ormat
ioncanbev
italt
othecompany
’ssuccess,so i
tshoul
dn’
tbe
br
ushedasi
de.Whena 
l
eadershowsr
espectt
hroughl
i
steni
ngt
owhatot
her
shav
eto
say
,ital
sopr
ompt
speopl
etocomet
othatl
eaderandshar
easmuchi
nfor
mat
ion,
i
nsi
ght
,andi
deasast
heyhav
e.

7.Opent
oLear
ningNewThi
ngs

Asuccessf
ul 
l
eaderi
sal
soonet
hati
sopent
olear
ningnewt
hings.Thatwi
l
li
ngnesst
o
hearpeopl
eout
,dor
esear
ch,askquest
ions,andal
way
slookt
opeelawayt
hel
ayer
sis
essent
ial
. 

8.TheAbi
l
ityt
oLear
nfr
om Mi
stakesandMi
sst
eps

No mat
terwho y
ou ar
e,how much educat
ion y
ou hav
e,orhow much on-
the-
job
exper
iencey
ouhav
e,mi
stakesandmi
sst
epsar
eboundt
ohappen.Asuccessf
ull
eader
i
sonet
hatcanl
ookatt
hosenegat
ivesi
tuat
ionsandf
indausef
ull
essoni
nthem.
Ev
ery
onemakesmi
stakes,
it’
swhaty
oudomov
ingf
orwar
dthatr
eal
l
ymat
ter
s.

9.TheAbi
l
ityt
oBui
l
dPr
ofessi
onal
Rel
ati
onshi
ps

Successf
ull
eader
sal
soexceli
nbei
ngabl
etobui
l
dpr
ofessi
onalr
elat
ionshi
ps.Thi
s
r
efer
stot
he r
elat
ionshi
p wi
th co-
wor
ker
s,cl
i
ent
s,cust
omer
s,par
tner
s,v
endor
s,
suppl
i
ers,et
c.Thi
squal
i
tyat
tract
sthebr
ight
estandbestpeopl
etot
het
eam,soy
ou
endupbei
ngsur
roundedbyan“
A-t
eam”i
fyouwi
l
l.

84
LECTURETEN

WI
NDI
NGUPORLI
QUI
DATI
ON
WI
NDI
NGUP

10.
1Def
ini
ti
on
Wi
ndi
nguporl
i
qui
dat
ioni
sthepr
ocessofput
ti
nganendt
othel
i
feofacompany
.Iti
s
t
hepr
ocessbywhi
chacompany
’sasset
sar
ecol
l
ect
edandsol
dinor
dert
opayi
ts
debt
s.Anyr
emai
ningmoneyaf
teral
ldebt
s,expensesandcost
shav
ebeenpai
dof
far
e
di
str
ibut
edamongstt
heshar
ehol
der
soft
hecompany
.Whent
hewi
ndi
nguphasbeen
compl
eted,
thecompanyi
sfor
mal
l
ydi
ssol
vedandi
tceasest
oexi
st.

10.
2ModesofWi
ndi
ngUp

Ther
ear
ethr
eemodes:
-
(
1) 
 Compul
  sor
ywi
ndi
ngupbyt
hecour
t.
(
2) 
 Vol
  unt
arywi
ndi
ngup
(
3) 
 Wi
  ndi
ngupundert
hesuper
visi
onoft
hecour
t.

(
1) 
  
Compul
sor
yWi
ndi
ngupbyt
heCour
t

85
Thi
smayoccuri
nthef
oll
owi
ngci
rcumst
ances:
- 

(
a) Speci
alr
esol
uti
onoft
hecompany
:

I
fthecompanyhasbyspeci
alr
esol
uti
onr
esol
vedt
hati
tmaybewoundupbyt
hecour
t,
t
hecour
tmaypassawi
ndi
ngupor
der
. Thepoweroft
hecour
tinsuchacasei
s
di
scr
eti
onar
y. Thecour
tmayr
efuset
oor
derwi
ndi
ngupwher
eiti
sopposedt
opubl
i
cor
company
’si
nter
est
.

(
b)Def
aul
tinhol
dingst
atut
orymeet
ingori
ndel
i
ver
ingt
hest
atut
oryr
epor
ttot
he
r
egi
str
ar:I
facompanydef
aul
tsi
ndel
i
ver
ingast
atut
oryr
epor
ttot
her
egi
str
arori
n
hol
dingt
hest
atut
orymeet
ing,
thecour
tmayor
derwi
ndi
ngupoft
hecompanyei
theron
t
hepet
it
ionoft
her
egi
str
aroront
hepet
it
ionofacont
ri
but
ory
.

(
c)Fai
l
uret
ocommenceorsuspensi
onofbusi
ness:
Wher
e a company does notcommence i
ts busi
ness wi
thi
n one y
earf
rom i
ts
i
ncor
por
ati
on,orsuspendsi
tsbusi
nessf
orawhol
eyear
,thecour
tmayor
derf
ori
s
wi
ndi
ngup.

Thecour
texer
cisespoweri
nthi
scaseonl
yift
hecompanyhasnoi
ntent
ionofcar
ryi
ng
oni
tsbusi
nessori
fiti
snotpossi
blef
ori
ttocar
ryoni
tsbusi
ness.

(
e)I
nabi
l
ityt
opaydebt
s

Acr
edi
tort
owhom t
hecompanyowesmor
ethanSh.1,
000hasl
eftatt
her
egi
ster
ed
of
fi
ce,demandunderhi
shandf
ort
hepay
mentoft
hesum due,andt
hecompanyhas
f
or3weekst
her
eaf
terr
efl
ect
edt
ohonourt
hesum.

(
f)Justandequi
tabl
e:
Thi
siswhent
hecour
tisoft
heopi
niont
hati
tisj
ustand
Equi
tabl
ethatt
hecompanyshoul
dbewoundup.
 Thi
scl
ausegi
vest
hecour
tver
ywi
de
power
stoor
derwi
ndi
ngwhenev
ert
hecour
tconsi
der
sitj
ustandequi
tabl
etodo.

Whomayf
il
epet
it
ionf
orwi
ndi
ngup

86
  Thedi
rect
orscanmakeapet
it
ioni
nthenameoft
hecompanywi
tht
hesanct
ion
ofgener
almeet
ingbywayofspeci
alr
esol
uti
on.
 Thecr
edi
tor
scanmakeapet
it
ioni
fthecompanyi
sunabl
etopayt
hedebt
s.The
cr
edi
tor
sincl
udeassi
gneeofdebt
,adecr
eehol
der
,asecur
ecr
edi
tor
,adebent
ure
hol
derort
rust
eeofdebent
urehol
der
s.
 Shar
ehol
der
scanpr
esentwi
ndi
nguppet
it
ioni
fnumberofmember
sincaseof
publ
i
ccompanyi
sreducedbel
ow7andbel
ow2,
incaseofpr
ivat
ecompany
.
 The Regi
str
arofcompani
es,af
terobt
aini
ng pr
iorsanct
ion oft
he cent
ral
gov
ernment
,canpr
esentapet
it
iononwi
ndi
ngupofcompany

(
2) 
Vol
unt
aryWi
ndi
ngup

Vol
unt
arywi
ndi
ngupmeanswi
ndi
ngupbymember
s,orcr
edi
tor
swi
thouti
nter
fer
ence
byt
hecour
t.
 Theyar
elef
ttoset
tl
ethei
raf
fai
rswi
thoutgoi
ngt
othecour
t.
 Theymay
,
howev
er,
appl
ytot
hecour
tforanydi
rect
ions,
ifandwhennecessar
y.

Acompanymaybewoundupv
olunt
ari
l
ywhen:
-

(
a) 
 Theper
iodf
ixedbyar
ti
clesf
ort
hedur
ati
onoft
hecompanyhasexpi
redoranev
ent
uponwhi
cht
hecompanyi
stobewounduphashappenedandt
hecompanyi
nagener
al
meet
inghaspassedanor
dinar
yresol
uti
on.
(
b) 
 I
 ft
hecompanyf
orwhat
everr
eason,haspassedaspeci
alr
esol
uti
ont
owi
ndup
v
olunt
ari
l
y.

Ty
pesofVol
unt
aryWi
ndi
ngUp

(
a) 
Member
svol
unt
arywi
ndi
ngup.

I
nav
olunt
arywi
ndi
ngupofacompany
,ifadecl
arat
ionofi
tssol
vencyi
smade,i
tisa
member
s’v
olunt
arywi
ndi
ngup.
 Thedecl
arat
ionshal
lbemadebymaj
ori
tyofdi
rect
ors
atameet
ingoft
heBoar
dthatt
heyhav
emadeaf
ulli
nqui
ryi
ntot
heaf
fai
rsoft
he
companyandt
hathav
ingdoneso,t
heyar
eoft
heopi
niont
hat
,Thecompanyhasno
debt
sandThati
twi
l
lbeabl
etopaydebt
sinf
ullwi
thi
n12mont
hsf
rom t
hedat
eof
87
commencementoft
hewi
ndi
ngup.

(
b)Cr
edi
tor
s’v
olunt
arywi
ndi
ngup

Wher
ethedecl
arat
ionofsol
vencyi
snotmade,
thewi
ndi
ngupi
sref
err
edt
oascr
edi
tor
s’
wi
ndi
ngup.
 Iti
spr
esumedt
hatt
hecompanyi
sinsol
vent
.Insuchacase,acompany
mustcal
lameet
ingofcr
edi
tor
sont
hesamedayort
hef
oll
owi
ngdayaf
tert
hemeet
ing,
atwhi
chr
esol
uti
onf
orwi
ndi
ngupi
stobemadeorpr
oposed.

(
3) 
 Wi
ndi
ngupSubj
ectt
oSuper
visi
onofCour
t

I
nthi
swi
ndi
nguppr
ocess,
cour
tcanonl
ysuper
viset
hepr
ocedur
e.I
nagener
almeet
ing,
t
her
esol
uti
onf
orwi
ndi
ngupi
spassedandcour
tmayputsomegener
alt
erms.I
tmust
bepr
ovedbypet
it
ionert
hatwi
ndi
ngupcannotcont
inuewi
thf
air
nessandt
henan
addi
ti
onall
i
qui
dat
oral
ongwi
thexi
sti
ngl
i
qui
dat
ormaybeappoi
ntedbyt
heCour
t.A
r
epor
tregar
dingt
hepr
ogr
essofl
i
qui
dat
ionmustbef
il
edev
ery3mont
hswi
tht
he
Regi
str
arbyt
heLi
qui
dat
or.Thecour
thaspowert
oappoi
ntandr
emov
ethel
i
qui
dat
or.
Thecour
tal
sohast
hepowert
oenf
orcecal
l
smadebyLi
qui
dat
orasi
for
derf
orwi
ndi
ng
upt
hecompanyhasbeenmadebycour
tit
sel
f.TheLi
qui
dat
orcandoal
lsuchact
sas
het
hinksbesti
nthei
nter
estoft
hecompany
.

Whenacompanyhaspassedar
esol
uti
ont
owi
ndupv
olunt
ari
l
y,t
hecour
tmayor
dert
he
cont
inuat
ionofv
olunt
ari
l
ywi
ndi
ngupsubj
ectt
othei
rsuper
visi
ononanyt
erms.The
l
i
qui
dat
orwi
l
lcont
inuet
oexer
ciseal
lpower
ssubj
ectt
other
est
ri
cti
onsl
aiddownbyt
he
cour
ts.
 Apet
it
ionf
ort
hewi
ndi
ngupoft
hecompanysubj
ectt
othesuper
visi
onoft
he
cour
tsmaybepr
esent
edbyanyper
sonent
it
ledf
ort
hecompul
sor
ywi
ndi
ngup,but
bef
oret
hecour
tref
usesormakesasuper
visi
onor
der
,theymustcal
lameet
ingf
or
ascer
tai
ningt
hewi
shesofcr
edi
tor
sandcont
ri
but
ori
es.Thecour
twi
l
lusual
l
ybecal
l
ed
t
o super
viseav
olunt
arywi
ndi
ng up i
fther
eisasubst
ant
ialdi
sput
ebet
weent
he
companyandcr
edi
tor
s,especi
all
ywher
etheydi
sagr
eeov
ert
heappoi
ntmentofa
l
i
qui
dat
or.

88
10.
3Consequencesofwi
ndi
nguporhav
ingappoi
ntedal
i
qui
dat
or.
 
1.Youl
osecont
rol
Thef
ir
stconsequencei
sthemostobv
iousbutonet
haty
ouhav
etounder
standbef
ore
y
ougodownt
hispat
h. Onceal
i
qui
dat
ori
sappoi
ntedy
oul
oseal
lcont
rolov
ert
he
companyandi
tsasset
s.
2.Thedi
rect
orsar
edi
rect
orsi
nnameonl
y
Thedi
rect
orsmayst
il
lhol
dthatt
it
lebutt
heyt
ool
oseal
lcont
rol
. Oncet
hel
i
qui
dat
or
t
akesov
ert
hedi
rect
orscannol
ongerexer
tanyi
nfl
uenceont
hedi
rect
ionoft
he
company
.
3.Al
loft
heasset
swi
l
lbesol
dtopaydebt
s
I
fthecompanyneedst
ohav
eal
i
qui
dat
orappoi
ntedi
t’
sbecauset
hebusi
nessi
s
i
nsol
ventandcan’
tpaybackcr
edi
tor
s. Al
i
qui
dat
or’
spr
imar
yresponsi
bil
i
tyi
stopay
backasmuchoft
hatdebt
.
4.
Thedi
rect
orsmayst
il
lowef
orper
sonal
guar
ant
ees
I
fadi
rect
ororsomeoneel
seatt
hecompanyhasper
sonal
l
yguar
ant
eedanyoft
he
debt
sincur
redbyt
hebusi
nesst
hatmoneyst
il
lhast
obepai
dback.
 Thebankr
upt
cyof
acompanywon’
twi
peoutt
hedebtt
hatwasper
sonal
l
yguar
ant
eed.
5.Gov
ernmentr
egul
ati
onsmayst
opy
ouf
rom pr
act
ici
ngy
ourpr
ofessi
on
I
fyou’
recompanyhasgonebankr
upti
ncer
tai
ntr
adesl
i
ket
hebui
l
dingi
ndust
ryy
ouar
e
bannedf
rom bei
ngabl
etooper
atei
nthati
ndust
ryf
ort
hreey
ear
s. 

10.
4ARecei
ver

Ar
ecei
veri
saper
sonappoi
ntedbyacour
twhi
l
econsi
der
ingamat
terunderi
ssue
bef
orei
t.Ar
ecei
veri
sappoi
ntedt
orecei
vet
her
ent
,pr
oceedsandpr
ofi
tfr
om l
and,
pr
oduceoranyot
herpr
oper
tyi
ndi
sput
e.

10.
5Di
sti
nct
ionBet
weenl
i
qui
dat
or(
Trust
ee)andRecei
ver
Al
i
qui
dat
ori
stheper
sonwhowi
ndsupacompany
.Ar
ecei
veri
stheper
sonwhosel
l
s
par
ti
cul
arcompanyasset
s on behal
fofa l
ender
.Wher
eal
oan i
s secur
ed on a
company
'sent
ir
ebusi
ness,a'
recei
vermanager
'canbeappoi
ntedasmanageroft
he

89
busi
nessdur
ingt
her
ecei
ver
shi
p.Thedi
ff
erencebet
weenar
ecei
verandal
i
qui
dat
or,i
s
t
hatar
ecei
ver
’smai
ndut
yist
otakecar
esecur
edcr
edi
tor
,whi
chi
susual
l
yabank,
wher
easal
i
qui
dat
ori
sconcer
nedwi
thal
loft
heaf
fai
rsofacompanyandal
lofi
ts
cr
edi
tor
s.

10.
6Power
sanddut
iesoft
her
ecei
ver
.

(
1)Takepossessi
onoft
heCor
por
ati
oni
nor
dert
owi
ndupt
hebusi
nessoper
ati
onsof
t
heCor
por
ati
on,col
l
ectt
hedebt
sowedt
otheCor
por
ati
on,l
i
qui
dat
eit
spr
oper
tyand
asset
s,payi
tscr
edi
tor
s,anddi
str
ibut
ether
emai
ningpr
oceedst
ost
ockhol
der
s.The
r
ecei
veri
saut
hor
izedt
oexer
ciseal
lpower
snecessar
ytot
heef
fi
cientt
ermi
nat
ionof
t
heCor
por
ati
on'
soper
ati
onaspr
ovi
dedf
ori
nthi
spar
t.

(
2)Aut
omat
ical
l
ysucceedsal
lri
ght
s,t
it
les,power
s,andpr
ivi
l
egesoft
heCor
por
ati
on
andofanyst
ockhol
der
,of
fi
cer
,ordi
rect
oroft
heCor
por
ati
onwi
thr
espectt
othe
Cor
por
ati
onandt
heasset
soft
heCor
por
ati
on;
and

(
3)Ther
ecei
veroft
heCor
por
ati
onser
vesast
het
rust
eeoft
her
ecei
ver
shi
pest
ateand
conduct
sit
s oper
ati
ons f
ort
he benef
itoft
he cr
edi
tor
s and st
ockhol
der
s oft
he
Cor
por
ati
on.

(
3)Bor
rowf
undst
omeett
heongoi
ngadmi
nist
rat
iveexpensesorot
herl
i
qui
dit
yneeds
oft
her
ecei
ver
shi
p.

(
4)Payanysum t
her
ecei
verdeemsnecessar
yoradv
isabl
etopr
eser
ve,conser
ve,or
pr
otectt
heCor
por
ati
on'
sasset
sorpr
oper
tyorr
ehabi
l
itat
eori
mpr
ovesuchpr
oper
tyand
asset
s.

(
5)Payanysum t
her
ecei
verdeemsnecessar
yoradv
isabl
etopr
eser
ve,conser
ve,or
pr
otectanyassetorpr
oper
tyonwhi
cht
heCor
por
ati
onhasal
i
enori
nwhi
cht
he
Cor
por
ati
onhasaf
inanci
alorpr
oper
tyi
nter
est
,andpayof
fanddi
schar
geanyl
i
ens,
cl
aims,
orchar
gesofanynat
ureagai
nstsuchpr
oper
ty.

90
(
6)I
nvest
igat
eanymat
terr
elat
edt
otheconductoft
hebusi
nessoft
heCor
por
ati
on,
i
ncl
udi
ng,
butnotl
i
mit
edt
o,anycl
aim oft
heCor
por
ati
onagai
nstanyi
ndi
vi
dual
orent
it
y,
andi
nst
it
uteappr
opr
iat
elegal
orot
herpr
oceedi
ngst
opr
osecut
esuchcl
aims.

(
7)I
nst
it
ute,pr
osecut
e,mai
ntai
n,def
end,i
nter
vene,andot
her
wisepar
ti
cipat
einany
l
egalpr
oceedi
ng byoragai
nstt
heCor
por
ati
onori
nwhi
cht
heCor
por
ati
onori
ts
cr
edi
tor
sorst
ockhol
der
shav
eanyi
nter
est
,andr
epr
esenti
nev
erywayt
heCor
por
ati
on,
i
tsst
ockhol
der
sandcr
edi
tor
s.

(
8)Empl
oyat
tor
ney
s,account
ant
s,appr
aiser
s,andot
herpr
ofessi
onal
stogi
veadv
ice
andassi
stancet
other
ecei
ver
shi
pgener
all
yoronpar
ti
cul
armat
ter
s,andpayt
hei
r
r
etai
ner
s,compensat
ion,
andexpenses,
incl
udi
ngl
i
tigat
ioncost
s.

(
9)Hi
re any agent
s orempl
oyees necessar
yforpr
operadmi
nist
rat
ion oft
he
r
ecei
ver
shi
p.

(
10)Execut
e,acknowl
edge,anddel
i
ver
,inper
sonort
hroughagener
alorspeci
fi
c
del
egat
ion,anyi
nst
rumentnecessar
yforanyaut
hor
izedpur
pose,andanyi
nst
rument
execut
edundert
hispar
agr
aphshal
lbev
ali
dandef
fect
iveasi
fithadbeenexecut
edby
t
heCor
por
ati
on'
sof
fi
cer
sbyaut
hor
it
yofi
tsboar
dofdi
rect
ors.

Unf
airPr
ejudi
ce

Unf
airpr
ejudi
cecl
aimst
ypi
cal
l
yar
isewhenmaj
ori
tyshar
ehol
der
s,whoi
nmanycases
ar
eal
sodi
rect
ors,useorabuset
hei
rpower
stopr
omot
ethei
rowni
nter
est
stot
he
det
ri
mentoft
hemi
nor
it
y.Tobeabl
etoest
abl
i
sht
hatt
her
ehasbeenunf
airpr
ejudi
ce,
y
ouf
ir
stneedt
obeabl
etoshowt
hatt
heconducti
nquest
ionr
elat
est
other
unni
ngof
t
hebusi
nessandaf
fect
syoui
nyourcapaci
tyasashar
ehol
der
.

91