Company Act,1994

Definition
 Oxford Dictionary 
• “A business organization that makes money by producing or selling goods or services.”
 Sec 2 of the Company Act, 1994 states that, 
• “Company means a company formed and registered under this Act or an existing
company.”
 Justice John Marshall 
• “A company is an artificial person, invisible, intangible & existing only in contemplation
of law”
 Solomon vs. Solomon & Co. (1897) 
• “Company is a legal person, separate from & capable of surviving beyond the lives of
its members.”
 Elements/Features
a. Registration or incorporation: COMPULSORY
b. Voluntary association: Free consent
c. Legal entity or personality
d. Contractual capacity: To NP vs AP, & AP vs AP
e. Capital: minimum capital for private: 1 lac & public: 5 lac
f. Management: Chairman, CEO, MD, DMD, Director etc.
g. Permanent existence: Unlike human being
 Elements/Features
h. Registered office/location/address.
i. Common seal, logo etc.
j. Limited liability: As per License.
k. Not a citizen: Unlike human being.
l. Transferability: Any percent at any time.
m. Statutory obligations: AGM, Annual report, Auditing, Tax etc.
 Types
 Generally there are two types of company:
1. Registered
2. Unregistered: Ex: Partnership business
 Registered company
a. Chartered Company Ex: East India Co.
b. Statutory Company
 Types
 Statutory Company: 3 kinds,
a. Domestic Company: Rahim steel
b. Foreign Company: Air India
c. Multinational Company: Beximco Pharma, Crown cement, PRAN
 Domestic Company: 2 kinds,
a. Private Company----- i) Limited
b. Public Company ------ i) Limited ii) Unlimited
 Limited Company
a. Limited by shares
b. Limited by guarantee
 Types
 Another Companies:
a. Holding company: The company who holds/controls all subsidiary
companies. Ex: Bashundhara Group of companies/BRAC
b. Subsidiary company: The company who is controlled/governed
by Holding company. Ex: Bashundhara Tissue/Cement. Aarong (A sister
concern)
c. Non-trading or non-profit company: No profit = No tax
d. Investment company: Stock exchange companies.
e. Public financial company: Ex: Jibon Bima Corporation
Differences between Private & Public Co.
Topic Private company Public company

Section Section 2(k) Section 2(j)

Minimum paid up Capital 1 lac tk. 5 lac tk.

Number of members Min: 02, Max: 50 Min: 07, Max: unlimited

Number of Directors Min: 02 Min: 03

Restriction on Name “Private limited” No restriction or “limited”

Differences between Private & Public Co.
Restriction on transfer of Limited by shares No restriction
Shares

Issue a Prospectus Prohibited No restriction

Issue a Right share Not applicable Applicable
Statutory Meeting (SM) Not applicable Applicable
& Statutory Report (SR)

Commencement of Certificate of Certificate of Incorporation

Business Incorporation (CI) & Certificate of
Commencement (CC)
 Memorandum of Association
• Definition of Memorandum of Association
• The MoA is a document which contains the fundamental rules
regarding the constitution & activities of a company. It is the basic
document which lays down how the company is to be
constituted/formed and what work it shall undertake. This is an
external document of the company.
 Memorandum of Association
• Contents or Clauses of Memo:
a. Name Clause - Name of the Company.
b. Situation or Registered Office/address/location clause.
c. Objects Clause. Main object & other objects.
d. Liability Clause. Limited & unlimited
e. Capital Clause.
f. Subscription Clause.
* Declaration by the directors.
 Articles of Association
• Definition of Articles of Association
• Articles of Association is a constitutional document that lays down the
rules, regulations & bye-laws regarding the internal affairs of the
company. This is an internal document of the company.
 Articles of Association
• Contents of Articles:
a. Share capital, share certificate
b. Rights of share holders
c. Calls on shares
d. Transfer of shares
e. Forfeiture of shares
f. General meetings & voting rights of members
g. Appointment & remuneration of directors, managers & secretary
h. Accounts & audit
i. Mode and limit of Borrowings
j. Capitalization of profit
k. Dividend, reserves etc.
l. Amalgamations, mergers etc.
m. Winding up
Differences between Memorandum of
Association & Articles of Association
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