CORPORATE

CORPORATE LAW
LAW
Week
Week10
10
Scope
Scopeof
ofCorporate
CorporateLaw
Lawand
and
Regulation
Regulation

By
Muhammad Naveed Chohan

Monday, April 20, 2020

 Outline
 Corporate Law as a Special Law
 Meaning and Distinctive Features of the Company
 History of the Company
 Object and Division of the Company
 Difference Between the Company and Other
Organisations
 Classification of the Companies
 Company Law and the Jurisdiction of the Courts

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

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 Introduction to Corporate Law
Meaning of Word “Company”
Derived from a Latin word
‘‘PANIS’’

In English means “BREAD”

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 Introduction to Corporate Law
What is meant by Company/Joint Stock Company?
‘‘Joint stock company is an artificial person, recognised by law, with
a distinctive name, a common seal, a common capital,
comprising transferable shares, carrying limited liability having
a perpetual succession’’
‘‘Company means a company formed and registered under this Act
or company law’’
Section 2(1) (17) of Companies Act,2017

‘‘Company law means the repealed Companies Act, 1913,

Companies Ordinance, 1984, Companies Ordinance 2016 and
also includes this Act unless the context provides otherwise’’
Section 2(1) (5) of Companies Ordinance, 1984
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 Introduction to Corporate Law
What is meant by Company/Joint Stock Company?
‘‘A company is an association of many persons who contribute
money or money worth to a common stock and employ it for
some common purpose’’
Lord Justice Lindley

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 Introduction to Corporate Law
Distinctive Features of a Company/ Joint Stock Company:
 Artificial Person
 Recognized by Law
 Distinctive Name
 Common Seal
 Transferable Shares
 Limited Liability
 Perpetual Succession

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 Introduction to Corporate Law
An Overview of History:
 From 11th to 16th Century : Earlier Forms
• Merchant Guilds (Commenda and Societas) in Islam Sharikah and Mudarabah
• Liability of worker Unlimited in Commenda while Limited in case of
Sharikah
• Liability of investor limited in Commenda and lost in case of total loss
• Socialites became Partnership in modern form while Limited Liability
Partnership Commenda
 From the 16th Century to 1825: Royal Chartres
• In 16th century rise of and granted charters to companies by Tudor monarchs
• In 17th century companies started on behalf of merchants
• Rise of “Joint Stock Company”
• Not fixed capital and development of fixed capital in the form of shares
• Property belongs to company operated through board of directors
• Incorporation through Royal Charters and Act of Parliament
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 History of Company Law
An Overview of History:
 1720: Fear of Companies
• In preview Rise of South Sea Company and Collapse of the company
• Passed Bubble Act by Parliament in 1720
• Curtailed the Use of Joint Stock company due to fraud and Collapse
 Unincorporated Associations
• Formation of Partnerships
• Deed of settlement
• Transferable Shares and Limited Liability
• Large Partnership formed
 1825 – 1855: Repeal of the Bubble Act and Creation of Limited Liability
• Modern company rise in 1825 due to repeal of Bubble Act
• Capital responsibility and sue in its own name

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 History of Company Law
An Overview of History:
 The Joint Stock Companies Act, 1844
• Prohibited large unincorporated companies
• Withheld the admission of limited liability by Limited Liability Act 1855
• First Indian companies Act 1850
• Another Act in 1857 and privilege of limited liability
 Later Developments – 1856 to 1910
• The Companies Act 1862 to bear short title “ Companies Act”
• First Modal Articles appeared as Table A in the 1st Schedule
• Recast in the Companies Act of India
• Amendments in 1891 and 1895
• In England new law in 1908 in consolidated form followed by 18
amendments
• Introduction of “Private Company”
• In India new law passed in 1910
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 History of Company Law
An Overview of History:
 The Companies Act, 1913 till the Present
• The Companies Act 1913 followed by “The Companies (Foreign Interest)
Act, 1908”
• The Companies Amendment Act ,1930
• The Securities and Exchange Ordinance, 1969
• The Companies (Managing Agency and Election of Directors) Order, 1972
• Companies (Shifting of Registered Office) Ordinance, 1972
• The Companies Ordinance, 1984 repealed all previous laws except Securities
and Exchange Ordinance 1969
• Single Member Companies Law in 203
• Companies Ordinance 2016
• Companies Act 2017

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 Object and Division of C. L.
Object of Company Law in the Shape of Companies Act 2017:
 Consolidation and amendment of law
 Healthy growth of corporate entities
 Fix minimum standards of Integrity and promotion of management
 Prevent misconduct and malpractices
 Protections of shareholders
 Enforce proper duties
 Require discloser of information
 Adjustments of rights
 Empower government
 Ensure Good Corporate Governance
 Ensure steps to make strong arrangements regarding Anti-Money Laundering
 To Regulate Real State Activities of Companies

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 Object and Division of C. L.
The Functions of Company Law:
 Enabling Environment for Economic Growth and promote Social Policies
 Minimum standards of Control
 Regulatory Guidelines to Minimise Risks
 Require Disclosers in Public Companies
 Appointment of Professional Managers and work for Company’s Interest
 Framework of Winding Up and Protection of Interests

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 14

Winding Up
Restructuring
Object and Division of C. L.

Management and
Administration
Borrowing and
Charges
Division of Company Law:

Membership
Allotment of shares
and Share Capital

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Incorporation
 Kinds of Companies

On the Basis On he Basis

On the Basis On the Basis
of of Number of
of Liability of Ownership
Incorporation Members

• Statutory Company • Public Company

• Charted Company • Private Company
• Registered Company • Single Member Company
• Listed Company • Company Limited by
Shares • Holding Company
• Company Limited by • Subsidiary Company
Guarantee • Associated Company
• Unlimited Company • Foreign Company
• Association not for
Profit

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 Jurisdiction of Courts under C/L
What is (Company) Court?
‘‘(Company) court means a court having jurisdiction under
Companies Ordinance, 1984’’
Section 2(23) of Companies Act, 2017

Jurisdiction: (U/S 5 of Companies Act 2017)

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

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 Jurisdiction of Courts under C/L
Proceedings of Company Court: (U/S 6)
 Written Submissions to Register of Company Benches
 Notices to parties including electronic means
 Written reply by the other party
 Judgment within 120 days
 Day to day hearing of case or on the fixed date
 Reason of delay in proceedings and fine Rs.10,000 or such higher
 Court follow summary proceedings and judgment based on filed documents
 In exceptional circumstances recording of evidences by registrar of CB
Appeal: U/S 6 (14)
 Appeal to Supreme Court of Pakistan
 Appeal will be filed in 60 days
 No Appeal against Interlocutory Orders
 Application of other laws on the discretion of the court
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 Jurisdiction of Courts under C/L
Power s of (Company) Court under Companies Act 2017:
To deal with the Reference of FG or Commission U/S 8
Reduction of share capital by the confirmation of the court U/S 89 – 96
Application of Manager and Receiver of Property for the direction U/S 116
Power of Court to Fix Remuneration of Manager and Receiver U/S117
Power of Court to Rectify Register of Members U/S 126
Court may declare proceedings of General Meeting Invalid U/S 136
Court may declare election of the Directors as Invalid
Declaring a Director to be lacking fiduciary behavior U/S 212
Direct to Conduct investigation (to commission) U/S 257
Power of Court Hearing Application of Winding Up U/S 268, 293, 381
To Prevent Oppression and Mis-Management U/S 286 – 291, 301
To deal with Complain by Commission, registrar, member or creditor of offences
U/S 477
Power to grant Relief U/S 492
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 Jurisdiction of Courts under C/L
Power s of (Company) Court under Companies Act 2017:
To Punish Company Officials for Inadequate allotment of Shares U/S 498
To Punish for non-compliance of directive of Court U/S 499

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 Jurisdiction of Courts under C/L
Order of the Court when Commission Applies: (U/S 264 of CA 2017)
Remove any Director, CEO, Managing Agent or any other officer
Direct changes in the Management and Administration
Direct changes in the Accounting Policies
Direct Company to Call Meeting for Remedial Action
Annulled any Contract

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 End of Week #10 Lecture Presentation
Thanks for Patience

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