Company Law

Point of Company Law

encourage investments

ensure due and proper administration of funds and assets of

investors

any wrong doings by directors and managers

provide audit and investigation into companies affairs

 What is company?

the term company is used to describe an association of a

number of persons, formed for some common purpose and
registered according to the law relating to companies
 Separate Legal Entity

a company registered under the companies act is regarded

by law as a single person having specified rights and
obligation

a company is different from its members and the

individuals composing it

a b c d e , xy corp
One man company or Family comp.

could be

majority share one person

 Statutory company

formed by an act of legislature

Bangladesh Bank
 Registered Company

A company registered by the companies act

 Unregistered Company

an association or company not

Essential features of a company

registration

voluntary association

legal personality

contractual capacity (a shareholder cannot bind the company in

any way)

management (Board of Directors, etc)

capital

permanent existence
registered office

common seal

limited liability

transferability

statutory obligations (filing balance sheets, registers, etc)

not a citizen
 Company and partnership

Registration

minimum number of members (pvt company 1), (pub

company 7), (partnership 2)
maximum number of members (pvt company 50,
partnership general 20)

legal status

authority of members (partnership property- joint property)

(property of company belongs to company)

Contractual capacity- shareholder can be employee and

enter into contracts with the company, partners can contract
with other partners but not the firm as a whole
management: partner manager or other managers

-company- managed by Board of Directors, Managing

Director etc

length of existence: company-perpetual succession (ended

by liquidation as per Company Act), Partnership: in the
absence of a contract to the contrary, comes to a end when
a partner dies or becomes insolvent

liability of members: partnership unlimited, company

liability is limited
liability of firm and company: the creditors of firm are
creditors of individual partner, -creditors of a company are
not creditors of individual shareholders
 Types of Companies

Private company

Public company
 Private Company

by its articles: 1. restricts the rights of the members to

transfer shares

2. limits the number of members

3. prohibits any invitation to the public to subscribe for any

shares
 Public Company

three types

1. Companies limited by shares (share capital and nominal

value)

2. Companies limited by guarantee ( each member

promises to pay a fixed sum of money in the event of
liquidation)

3. unlimited companies (liabilities are unlimited)

 Difference between a Private
Company and Public Company
Pvt Company must have minimum paid up capital of 100,000
lac tk

Public Company must have minimum paid up capital 5 lac tk

Pvt company has restrictions on transfer of shares

Restrictions on invitation to public- Pvt company cannot

invite public to purchase shares

Restrictions on name: Pvt limited

prospectus

commencement of business

number of directors: Private -1, Public-3

 Chapter 2 The Memorandum and Articles of Association
The memorandum contains:

• it contains the basic rules regarding company constitution

and and activities of the company

• purpose is to let others know what its powers are and the
range of its activities

• it contains rules regarding the capital structure, the liability

of its members and all important matters relating to the
company

• it shows the range of the enterprise

 Articles of Association

• contains the rules and regulations

• should be in line with the rules in the memorandum

 Memorandum contains the following

• name clause

• situation clause (name of the place where the company has registered office)

• objects clause

• area of operation clause

• liability clause: nature of liability of the members

• capital clause: state the amount of share capital

 Alteration of Memorandum

• it can be altered by following the procedure laid down in

the companies act

• provisions of the memo can be divided into two classes

• 1. the inclusion which is made compulsory

• 2. the provisions which the owners of the company

included by their desire
The Formation of a Company
The essential steps of forming a company

• the memo and the articles should be prepared

• should have a paid-up capital

• if the company formed intends to participate in an industry

which is included in the schedule annexed to the Industries
(Development and Regulation) Act, 1956, a license must be
obtained under that act

• the company must be registered in accordance with provisions

of the Companies Act, 1956 and the Certification of
Incorporation must be obtained
in case of a public company, the following further steps need to
be taken

• the Prospectus or the Statement instead of Prospectus must

be issued and registered with the Registrar

• the allotment of shares must be made after the minimum

subscription is raised

• the Certificate of the Commencement of Business must be

obtained from the Registrar
 Procedure of Registration and Incorporation

• the following documents with the necessary fees must be

submitted to the Registrar of Companies of the State

• the Memorandum of Association, prepared in accordance with the

provisions of the Companies Act, and signed by at least 7 persons
(public company) and 2 persons (private company)

• a declaration by either one of the following persons stating that

all the requirements of the Companies Act have been complied
with- an attorney, a chartered Accountant, or a person name in the
article as director, manager or the secretary of the company
• a signed list of persons have consented to be directors of
the company, their consent in writing and signed agreement
with regard to shares

• the registration fees based on amount of nominal capital

 The Certificate of Incorporation

• the Certificate issued by the Registrar after the company is

registered is called the Certificate of Incorporation
CONCLUSION