Business & Labour Law
Recommended Text Box
Business Law by Khalid Mehmood
Cheema
Course Assessment:
Quizzes: Minimum 5 quizzes
10 Marks
Mid Term
25 Marks
Final
40 Marks
Project
20 Marks
Presentation
05 Marks
Syed Salman Ahmed
[email protected]0300-3610026
Yahoo Group Name : bllfall15
MBA (Marketing & Finance) (Silver Medal) IBA
Karachi
MEM (Quality Management) (Silver Medal) NED UET
Karachi
MBA (MIS) (Silver Medal) IBA Karachi
MAS (HRM) UoK Karachi
MA (Economics) UoK Karachi
PGD (CIS) (Gold Medal) UoK Karachi
B E (Aerospace) NED UET Karachi
LLB UoK Karachi
Teaching Experience : 26 Years
Companies Law
Directors
Company is an artificial person
created by law who does not have
physical existence.
Company only exists in the eyes of
law.
Company acts through some
persons who are called Directors.
The directors of the company are
collectively known as Board of
Directors.
Director is a person responsible for
Companies Law
Number of Directors
A private company should have
minimum two Directors.
A public company should have
minimum seven Directors.
Terms of Office of Directors
First Director shall hold office until
the election of Directors in first
Annual General Meeting.
Companies Law
Terms of Office of Directors
The elected Director shall hold
office for a period of three years
unless the earlier resigns, becomes
disqualified from being a Director.
First Directors
The first Directors of a company
are to be appointed by the
subscribers of memorandum of
association. If they do not appoint
any Director, all the subscribers are
considered the Directors of the
Companies Law
Casual Vacancies of Directors
A casual vacancy occurs when the
office of a Director is vacated before
the expiry of his term.
Such vacancy may be filled up by
the Directors at the board meeting.
Any person so appointed holds the
office for remaining period.
Companies Law
Nominated Directors
In addition to Directors elected by
shareholders, the creditors of the
company can also nominate Directors
according to the agreement.
Alternate Directors
A Director is empowered to
appoint, with the approval of other
Directors, another person as an
alternate Director to act for him
during his absence from Pakistan.
Companies Law
Alternate Directors
The alternate Director shall vacate
office when the Director appointing
him returns to Pakistan.
Eligibility Conditions of Directors
A natural person can be a Director,
if he does not violate all conditions
earlier specified for ineligibility of a
Director except for the condition that
Person who is not a member
because this condition can be waived
off in following circumstances:-
Companies Law
Eligibility Conditions of Directors
A person representing the
government or an institution or
authority which is a member .
A whole time Director who is an
employee of the company.
A Chief Executive.
A person representing a creditor.
Companies Law
Removal of Director
A company may, by
resolution, passed in general
meeting, remove a director from
his office if the number of votes
cast is not less than:a)
The minimum number of
votes that were cast for the
election of a director at the
immediately preceding election
of directors, if the resolution
relates to removal of an elected
Companies Law
Removal of Director
b)
The total number of
votes for the time being
computed
divided
by
the
number of directors for the time
being, if the resolution relates to
removal of a director appointed
as first director or against a
casual vacancy.
Companies Law
Vacation of office by Director
A director who shall vacate
office if:a)
He
becomes
ineligible to be appointed as
director.
b)
He absents himself
from 3 consecutive meetings of
the BOD or from all the
meetings of directors for a
continuous period of 3 months,
whichever is longer, without
Companies Law
Vacation of office by Director
c)
He, without the
sanction of the company holds
any office of profit.
d)
He accepts a loan
or guarantee from the company.
Companies Law
Powers of Directors
To make calls on shareholders in
respect of moneys unpaid on their
shares.
To issue shares.
To
issue
debentures
or
participation term certificates.
To borrow money otherwise than
debentures.
To invest the funds of the
company.
To make loans.
Companies Law
Powers of Directors
To authorize directors to make
contract with the company for
making sales, purchase or supply of
goods or rendering services with the
company.
To approve annual or half yearly or
other periodical accounts as are
required to be circulated to the
members.
To approve the bonus for the
employees.
To incur capital expenditure
Companies Law
Duties of Directors
The Directors should make
arrangement for a loan or guarantee
or security for a loan.
The Director must perform their
duties with reasonable skill and care.
The Directors must perform their
duties within the powers given to
them.
The Directors shall take active part
in the management of the company.
The Directors must attend
meetings of the board of directors or
Companies Law
Duties of Directors
The Directors must keep proper
account books. They should prepare
profit and loss account and balance
sheet every year.
The Directors must call annual
general meetings of the company
every year.
The Directors must maintain a
separate register of the shareholders
and the Directors and mortgages and
charges.
The Directors should prepare and
Companies Law
Duties of Directors
The Directors are bound to submit
statement of affairs at the time of
winding up of a company.
They must act for the interest of
the Company.
They must send their consent to
act as Directors to the registrar.
They must pay for their
qualification shares.
Companies Law
Liability of Directors
Civil Liability
The Directors are liable to pay
compensation to the company and
to the creditors for untrue
statement in the prospectus.
The Directors are liable for
exceeding their authority.
The Directors are liable to
outsiders for secret profits made
by them about the affairs of the
company.
Companies Law
Liability of Directors
Criminal Liability
The Directors are liable to
punishment of imprisonment and
fine for untrue statement in
prospectus, failing to keep certain
register, etc.
Unlimited Liability
The liability of Directors may be
limited or unlimited as stated in
the Memorandum of Association.
Companies Law
Company Meetings
The meetings provide an opportunity
to shareholders to come together and
take decisions for their welfare by
controlling board of directors and their
activities.
Statutory Meeting
First meeting of the shareholders
of a public company.
Only one statutory meeting in the
life of a public company.
Companies Law
Objects of Statutory Meeting
To inform shareholders about the
progress of the company.
To give idea about the nature of
the work done by the company.
To discuss matter about the
formation of the company.
To present future plans of the
company.
To introduce the persons who are
involves in the promotion and
management of the company.
Companies Law
Objects of Statutory Meeting
To inform about the property which
has been purchased so far.
To inform where the money has
been used.
Time of Holding Statutory Meeting
Company limited by shares and
companies limited by guarantee &
having a share capital must hold the
meeting after a period of 3 months
but before six months of obtaining
Companies Law
Time of Holding Statutory Meeting
Private company on conversion
into company limited by shares or
company limited by guarantee &
having a share capital must hold the
meeting after a period of 3 months
from the date of such conversion.
Notice of the Statutory Meeting
The Directors shall send a notice
of the meeting to all the members of
the company at least 21 days before
Companies Law
Contents of the Statutory Meeting
Notice
The notice of meeting shall be
accompanied by a copy of the
statutory report. A notice of a
meeting , must state that it is the
statutory meeting and the date, time
and place of the meeting.
Business at Statutory Meeting
Following matters are discussed in
the meeting:-
Companies Law
Business at Statutory Meeting
Companys affairs since its
incorporation
Business plan, including any
change affecting the interest of
shareholders.
Business prospectus of the
company.
Contents of the Statutory Report
Details of the shares allotted.
Total number of shares allotted.
Companies Law
Contents of the Statutory Report
Abstract of the receipts &
payments of the company up to a
date within 7 days of the date of the
statutory report.
An estimate of preliminary
expenses and any commission or
discount
paid
on
shares
or
debentures.
Shares allotted for consideration
otherwise than cash.
The names, addresses and
Companies Law
Contents of the Statutory Report
The extent to which underwriting
contracts have been carried out.
Particulars of any commission or
brokerage paid on shares to any
director, chief executive, secretary or
officer.
Certification of Statutory Report
The statutory report must be
certified by at least three directors
including the chief executive of the
Companies Law
Auditors Certification of Statutory
Report
The statutory report must be
accompanied
by
the
auditors
certificate about the cash received in
respect of shares allotted and the
receipts and payments.
Filing of Statutory Report
The Directors shall send five
copies of the certified statutory
report to the registrar for registration
Companies Law
List of Members during Statutory
Meeting
The Directors shall provide a list of
members showing their names,
occupations,
nationality
and
addresses, at the commencement of
meeting.
This list shall be available to every
member during the meeting
Proceedings
&
Resolution
Statutory Meeting
at
Companies Law
Proceedings
&
Resolution
at
Statutory Meeting
Any resolution can be passed for
which the notice has been given.
No resolution can be passed for
which the notice has not been given.
Penalty of not holding Statutory
Meeting & not filing Statutory
Report to Registrar
In case of such defaults, the
company and its every officer shall
Companies Law
Penalty of not holding Statutory
Meeting & not filing Statutory
Report to Registrar
In case of such defaults, the court
may wind up the company.
Alternatively, the court may ask to
hold meeting and file the statutory
report with registrar.
Companies Law
Annual General Meeting
Purpose of these meetings is to
examine the past years working of
the company.
To determine various other
administrative
matters
of
the
company.
In these meetings, ultimate control
of shareholders over the affairs of
the company is discussed.
Companies Law
Time of Holding Annual General
Meeting
All companies registered under
company law must these meetings.
First annual general meeting must
be held within 18 months from date
of its incorporation.
Subsequent meetings must be
held once in calendar year within 6
months after the close of financial
year.
Interval between two meetings
Companies Law
Extension of Time in Holding
Annual General Meeting
In case of listed companies, the
authority and in case of non listed
companies, the registrar can extend
the time of holding the AGM on
account of some special reason for a
period of 90 days.
No extension can be granted in
case of first AGM.
Companies Law
Place of Annual General Meeting
In case of listed company, the
AGM must be held in town in which
the registered office of the company
is situated.
The authority may, due to some
special reasons, allow the company
to hold AGM other than town in
which the registered office of the
company is situated.
Companies Law
Notice of the Annual General
Meeting
The notice of the meeting must be
sent to all shareholders of the
company at least 21 days before the
date of meeting.
The same notice must also be
published in newspaper.
Companies Law
Business
at
Annual
General
Meeting
Following business is usually
transacted at the AGM:
Confirmation of the minutes of the
previous meeting.
Consideration of the audited
annual accounts.
Declaration of dividends.
Election of Directors.
Appointment of auditors and
fixation of their remuneration.
Companies Law
Business
at
Annual
General
Meeting
Any other business authorized by
the AOA to be dealt with at the AGM.
Penalty of not holding Annual
General Meeting
Failure to hold AGM, the company
and its every officer shall be liable to
fine.
Penalty
of
not
holding
two
Companies Law
Extraordinary General Meeting
All meetings of the company
except AGM & Statutory Meeting, are
called
Extraordinary
General
Meeting.
Necessity of Extraordinary General
Meeting
This meeting is called by the
company in the following cases:
When there is some special
business to be done.
When business is so important
Companies Law
Necessity of Extraordinary General
Meeting
When the work to be performed is
so urgent that it cannot be
postponed till the next AGM.
Notice of the Extraordinary General
Meeting
The notice of the meeting must be
sent to all members at least 21 days
before the date of meeting.
The same notice must also be
published in newspaper.
Companies Law
Shorter Notice of Extraordinary
General Meeting
In case of emergency, the
registrar
may,
authorize
such
meeting to be held at shorter notice.
Contents of the Extraordinary
General Meeting Notice
The notice of meeting shall state
the date, time, place of the meeting
and nature of business to be
transacted at meeting.
Companies Law
Persons
who
may
call
Extraordinary General Meeting
By Directors
The Directors may at any time call
this meeting.
By Directors on the requisition
The Directors must call this
meeting
immediately
on
the
requisition of members holding at
least one tenth of the voting powers
on the date of deposit of the
Companies Law
Persons
who
may
call
Extraordinary General Meeting
By Members
The requisitionists may call this
meeting, if the Directors do not call
this meeting within 21 days of
requisition submission date.
The said meeting must be held
within 3 months from the date of
requisition submission.
Companies Law
Contents of the Requisition
The requisition deposited by
members for convening the meeting
must state the object of the meeting.
It must be signed by the
requisitionists and deposited at the
registered office of the company.
Companies Law
Penalty
of
not
holding
Extraordinary General Meeting
Failure to hold Extraordinary
General Meeting, the company and
its every officer shall be liable to fine.
Meeting by Registrar
If default is made in holding
statutory meeting, AGM or any
EoGM, the registrar himself may, or
on application of any member or
Director of company , call or direct to
Companies Law
Meeting of the Board of Directors
Articles of Association of the
Company usually provide for the
regulations of the board meeting.
These AOA generally give power to
every Director to call thee meeting.
The AOA may prescribe the
number of Directors who will be
present to make the quorum for the
meeting of BOD.
The quorum for the BOD of a listed
company shall not be less than one
third of their numbers or four
Companies Law
Meeting of the Board of Directors
The BOD of a pubic listed
company shall take place at least
twice in a year.
If the Directors decide that the
meeting will be held regularly at a
particular time, then no notice is
required.
Otherwise the notice shall be
given for every meeting with
reasonable time.
Agenda for BOD is arranged by the
secretary, but the board may depart
Companies Law
Business at the Meeting of Board
of Directors
In case of every company, a
casual vacancy among the Directors
may be filled by the Directors.
Directors sanction for any
contract in which any Director, is
partner, and firm is interested.
Disclosure by a Director of his
interest in any contract.
Companies Law
Resolutions
The agenda (matters to be
considered) is presented before the
members in the meeting, to discuss
and make decision in the meeting.
Each matter is discussed, debated
and finally put to vote.
If it is carried by the requisite
majority, it becomes the resolution of
that particular matter.
Companies Law
Types of Resolution
Ordinary Resolution
An ordinary resolution is a
resolution passed by a simple
majority of the members entitled to
vote.
It is required for the following
matters:a)
Declaration of dividend
b)
Appointment of auditors
c)
Election of Directors
d)
Approval of annual accounts
Companies Law
Types of Resolution
Special Resolution
An ordinary resolution is a
resolution passed by a three fourth
majority of the members entitled to
vote.
In order to pass this resolution, a
notice of 21 days must be given to
call the meeting.
The notice must state that special
resolution is required to be passed.
However, with the consent of
Companies Law
Types of Resolution
Special Resolution
It is required for the following
matters:a)
Change the name of the
company
b)
Change the registered office
from one province to other.
c) Alter the AOA of company.
d)
Reduce the share capital of
the company.
e)
Make the liability of Directors
Companies Law
Types of Resolution
Special Resolution
g) Sanction the assignments of
office by a Director.
h) Initiate a winding up by court.
i) Wind up a company voluntarily.
j)
Enable voluntary liquidator to
make compromise with creditors.
