Corporate Law 01- COMPANY ‘The Companies Act 2017 is the law which regulates all matters relating to the companies Originally it had 515 sections and 8 schedules. It provides the guiding principles and lays down the rules and regulations which cover almost the whole matters relating to a company. The Companies Act 2017 was promulgated on 31 May, 2017 and came into force on 1# July, 2017 in Pakistan DEFINITIONS, 1, Associated Companies / Associated Undertaking Associated companies and associated undertakings mean two or more companies or undertakings are interconnected with each other in any of the following manners. a, Ifa person in relation to one company or undertaking is the: i Owner ii, Partner ili, Director iv. Holder of 20% or more shares having voting rights, b, If the companies or undertakings are under common management or control; ¢. If one of the companies or undertakings is the subsidiary of another; d, If the undertakings is a modaraba managed by the modaraba Company. 2. Body corporate / corporation Body corporatel includes: ~ a. A company incorporated under this Act or company law; or 'b. A company incorporated outside Pakistan, or ¢. A statutory body declared as body corporate in the relevant statute, but does not include: - (i) a co-operative society registered under any law relating to cooperative soci (ii) any other entity, not being a company as defined in this Act 3. Company Limited by Guarantee Company Limited by Guarantee means a company having the liability of its members limited by the memorandum to such amount as the members may respectively thereby undertake to contribute to the assets of the company in the event of its being wound up: 4. Company Limited by Shares Company Limited by Shares means a company: having the liability of its members limited by the memorandum to the extent of amount, if any, remaining unpaid on the shares respectively held by them; 5. Debenture Debenture includes debenture stock, bonds, term finance certificate or any other instrument of a company evidencing a debt, whether constituting a mortgage or charge on the assets of the company or nots 6. Financial Institution Financial institution includes: - a. any company whether incorporated within or outside Pakistan which transacts the business of banking or any associated or ancillary business in Pakistan through its branches within or outside Pakistan and includes a government savings bank, but excludes the State Bank of Pakistan; b, a modaraba or modaraba management company, leasing company, investment bank, venture capital company, financing company, asset management company and credit or investment institution, corporation or company; c._any company authorized by law to carry on any similar business JAMSHAID IFTIKHAR MPhil Commerce & FinanceCorporate Law 7. Financial Period Financial period, means the period in respect of which any financial statements are required to be made pursuant to this Act; 8. Financial year Financial Year means the period in respect of which any financial statement of the company presented in general meeting, 9. Foreign company a. Foreign Company means any company or body corporate incorporated outside Pakistan, which: - b. has a place of business of liaison office in Pakistan whether by itself or through an agent, physically or through electronic mode; or ¢. conducts any business activity in Pakistan in any other manner as may be specified; 10. Mortgage or Charge Itmeans an interest or lien created on the property or assets of a company or any of its undertakings or both as security: 11. Net worth It means the amount by which total assets exceeds total liabilities; 12,Private company Private company means a company: - restricts the right to transfer its shares; b. limits the number of its members to fifty not including persons who are in the employment of the company; and ¢. prohibits any invitation to the public to subscribe for the shares, or debentures or redeemable capital of the company: 4d. Provided that, where two or more persons hold one or more shares in a company jointly, they shall, for the purposes of this definition, be treated as a single member: 13. Promoter Promoterl means a person:- a. Who’s named as a subscriber to the memorandum of association of a company; b. Who has been named as such in a prospectus; ¢. Who has control over affairs of the company, directly or indirectly whether as a shareholder, director or otherwise; or 4. Whose advice, directions or instructions the board of the company is accustomed to act 14. Dividend warrants Dividends are paid warrants, sent by the secretary of the company to each shareholder, on the authority of the director. Like a cheque, a dividend warrants is an unconditional order to the bank to pay the sum of money specified thereon to the named shareholder in cash or by credit to his account. JAMSHAID IFTIKHAR M.Phil Commerce & FinanceCorporate Law 15, Charge Where a borrower provides any property or asset as a security to the lender this is termed as creation ofa charge or encumbrance. 16. Underwriter ‘An underwriter is a person who, in consideration of a commission payable to him in any event, agrees with the company that if all or some of the company's shares are not taken up by the public or other persons he (the underwriter) would purchase the shares not so subscribed the agreed number of shares 17. Share ‘The total authorized capital of the company is divided into small units and each unit is individually called Share. The purchasers of these shares are called shareholders. 18. Redeemable Capital Redeemable capital means finance obtained on the basis of: a. Participation term certificate b. Musharika certificate c. Term finance certificate d. Any other security or obligation €. Any other security and instrument as the Federal Government may notify as redeemable capital. 19. Voting Every member of a company having a share capital shall have votes proportionate to the paid-up value of the shares held by hm. Where the decision is to be made by show of hands, every member shall have one vote. The votes may be given either personally or by a proxy. 20, Proxy Proxy means the authority to act for another. Every member of a company limited by shares and a company limited by guarantee having share capital, who is entitled to attend and vote at a meeting, is entitled to appoint any other person as his proxy. JAMSHAID IFTIKHAR M.Phil Commerce & Finance