Free Powerpoint TemplatesPage 1Free Powerpoint Templates Chapter # 01 Introduction and Definition Salman Masood Sheikh M.Com, MBA, M.Phil, ACMA, FPA, CA(Int)

Free Powerpoint Templates Page 1Free Powerpoint Templates

Chapter # 01

Introduction and

Definition

Salman Masood SheikhM.Com, MBA, M.Phil, ACMA, FPA, CA(Int)

Director Quality Assurance

Free Powerpoint Templates Page 2

Associated Companies/Undertakings:

“Associated companies” and “associated undertakings” “means two or more companies or undertakings, which are interconnected with each other in any of the following manners:If a person in relation to one company or undertaking is the:Owner;Partner;Director; orHolder of 20% or more shares having voting rights,Is also the owner; partner; director; or holder of 20% or more shares having voting right in another company or undertaking;If the companies or undertakings are under common management or control;If one of the companies or undertakings is the subsidiary of another ; or If the undertaking is a modaraba managed by the modaraba company.


Undertaking: It is also used to mean an enterprise which can be

owned and transferred. However some other statutes have defined this term, which are as below.

Banking companies ordinance, 1962 defines ‘undertaking’ as “any concern, institution, establishment or enterprise engaged in the production; supply or distribution of good, or in the provision or control of any services relating to the provision of transport, entertainment or amusement, or of facilities in connection with the supply of electrical or other energy, or insurance or investment.”

The competition Act, 2010 defines ‘undertaking’ as “any natural or legal person, governmental body including a regulatory authority , body corporate, partnership, association, trust or other entity in any way engaged, directly or indirectly, in the production, supply, distribution of goods or provision or control of services.”


Associated person

Where two or more companies or undertakings are

associated of each other then every such person who

is the owner, partner, director or holder of 10% or

more shares (having voting rights) in such companies

or undertakings shall be termed as ‘associated

person’ of every such other person who is also the

owner, partner, director or holder of 10% or more

shares in that companies or undertakings.


Body Corporate / Corporation

Body corporate or corporation includes a company

incorporated outside Pakistan, but does not include

the following:

A corporation sole;

A registered co-operative society; or

Any other body corporate, not being a company

as defined in the companies’ ordinance, 1984, which

the federal Government may specify.

While defining the term ‘body corporate’ the

ordinance uses the words “includes a company

incorporated outside Pakistan”.


Central Depository

‘Central depository’ means a company which fulfils the following conditions.

It should be incorporated under the companies ordinance, 1984.

It is registered with the SECP under section 32A of the securities and exchange ordinance, 1969.

It is form to establish and operate a system for the central handling of securities.

The securities are deposited with and held by or registered in the name of such company as a nominee for the depositors; and

Book and paper


Person who fulfills the following conditions shall be termed as a chief executive:

The chief executive must be an individual, i.e., a natural person. an artificial legal person cannot be appointed as chief executive of a company;

The chief executive works under the supervision and control of the directors (collectively known as board of directors);

The chief executive is entrusted with the whole or substantially the whole of the powers within a company.

These powers are vested in him for the management of the affairs of the company;

He may or may not be designated as chief executive or not.

Chief Executive


Commission means the securities and exchange commission of Pakistan (SECP). This is the regulatory body in respect of corporate laws and is established under section 3 of the Securities and Exchange Commission of Pakistan Act, 1997.

Company means a company formed and registered under the companies’ ordinance 1984 or an existing company.The term existing company has been defined as a company formed and registered under any of the previous companies acts.

Previous companies’ acts include the following enactments:All acts before the Indian companies act 1866 (i.e. the registration of joint stock companies act 1850 and the Indian companies act 1857)The Indian companies act 1866The Indian companies act 1882, andThe Indian companies act 1913

Commission

Company

Previous Companies Act


It means a company whose memorandum of association limits the liability of its members to the unpaid amount if any of the shares respectively held by each member.

It means a company whose memorandum of association limits the liability of its members to such amount as the members may respectively undertake to contribute to the assets of the company in the event of its winding up

The court means the court having jurisdiction under the companies ordinance 1984, section 7 of the ordinance specify that the court having jurisdiction under the ordinance shall be the high court having jurisdiction in the place at which the registered office of the company is situated.However the federal Government may empower any civil court to exercise all or any of the jurisdictions conferred upon the court by the companies’ ordinance, 1984.

Company Limited By Shares

The Court

Company Limited By Guarantee


Debenture means a borrowing instrument (any security other than shares ) issued by corporation or a company which creates a debt and contains an acknowledgement of the issuer with an obligation to repay the debt at a fixed future date and return on it at a specified rate payable by the issuer whether it makes a profit or not.

In use it is known as corporate bond. For the purpose of company law debenture

includes debenture stock bonds, term finance certificates or any other securities other than a share of a company such security may or may not constitute a charged against the assets of the company.

Any person by whatever name called occupying the position of a director is called the director.

A person who is member of the board of directors of a company and is entitled to participate and vote in the board meetings is a person who occupies the position of a director.

Debenture

Director


The term document includes summons notice requisition order other legal process voucher and register.

Financial year has been defined in relation to a body corporate and means a period in respect of which any profit and loss account or the income and expenditure account of the body corporate is made up and laid before it in the general meeting.

The period for which the financial statements are made may or may not be a year.

Generally the financial year is a period of twelve months however under the following cases it may be less or more than twelve months:

The first financial year of the companyThe period during which the financial year of the company is changed andThe last financial year (i.e., the period in which company is dissolved).

Document

Financial Year


Any institution which fulfills the following conditions:

It is a company or an institution established under any law (which may be the companies ordinance,1984 or some special enactment);

It is operating within or outside Pakistan; and It transacts the business of banking or any

associated or ancillary business through its branches.

A modaraba; A leasing company; An investment; A venture capital company; A financing company; A housing finance company; A non-banking finance company; and Any other company or institution authorized to

undertake any similar business and is notified as financial business by the federal Government.

Financial Institutions


From means a form set out in any of the schedules or as prescribed in the companies (general provision and forms) Rules 1985 or any other rules made under the companies ordinance 1984

Listed in relation to securities means such securities which have been allowed to be traded on stock exchange.

Listed company means such a company whose securities have been allowed to be traded on a stock exchange.

The term member has been defined in relation to class of the company. Broadly the companies may be classified into two major classes i.e. companies having share capital and companies not having share capital. The provisions of the law in respect of each class of companies are discussed below.

Form

Listed

Member

Listed Company


Member of a company having share capital means a person who fulfills any of the following conditions:A person who is the subscriber to the memorandum andA person who is a lawful holder of any share scrip or security which gives him a voting in the company.

Member of accompany not having share capital means a person who fulfills the following conditions:A person who has agreed to become a member of the company andWhose name is entered in the register of members of the company

Company having a Share Capital

Company not having a Share Capital


Memorandum means the memorandum of

association of a company as originally framed or as

altered from time to time in pursuance of the

provisions of the law.

Modaraba has been defined in the modaraba

companies and modaraba (floatation and control)

ordinance, 1980 as business in which a person

participates with his money and another with his

efforts or skill or both his efforts and skill.

Modaraba Company means a company engaged

in the business of floating and managing modaraba.

Memorandum of Association

Modaraba and Modaraba Company


The term officer includes any director, chief

executive, managing agent secretary or other

executive of the company howsoever designated

but does not include an auditor.

However the auditor is deemed to be an officer of

the company under various sections of the

companies’ ordinance 1984 sections 205, 220, to

224, 260, 261, 268, 351, 352, 417, 418, 474, and

482 deem an auditor as an officer of the

company

Officer


‘Participatory redeemable capital’ means such redeemable capital as is entitled to participate in the profit and loss of a company.

Redeemable Capital means finance obtained on the basis of: [2(1)30A)]

Participation Term Certificate (PTC)

Musharika Certificate

Term Finance Certificate (TFC)

Any other security or obligation (other than an ordinary share of a company) not based on interest; or

Any other certificate or instrument as the Federal Government may notify as redeemable capital.

Participatory Redeemable Capital


As respect the provisions of the companies ordinance

relating to the winding-up of companies and other

matters requiring to be determined or decided by the

court prescribed means the provisions prescribed by

rules made by the supreme court in consultation with

the high courts or where the supreme court advises

the federal government to do so by the federal

government in consultation with the high courts.

Provisions relating to the winding-up


Private company means a company which by its

articles:

1)Restricts the right to transfer its shares if any

2)Limits the number of its members to fifty (other than

the persons who are in the employment of the

company ); and

3)Prohibits any invitation to the public to subscribe for

the shares or debentures of the company.

Private Company


Prospectus means any document notice circular advertisement or other communication described or issued as prospectus or through which a company invites offers from the public for the purchase of its shares or debentures.

Any invitation made by a banking company or a financial institution for the deposits will not be considered as prospectus.

Following are the prerequisites for rendering a document as prospectus

1) It should be a communication;2) The communication is given to public; and3) It invites offers for subscription in shares or

debentures of the company.

Public company means a company which is not a private company.

Prospectus

Public Company


RegisterRegister means the register of members of a company. It also includes the register of debenture –holders or holder of the other securities issued by the company. The register may maintained on paper or computer network floppy, diskette, magnetic, cartridge tape, CD-Rom or any other computer readable media.

RegistrarRegistrar means a person who performs the duty of registration of companies etc. under the companies’ ordinance 1984. This term includes the following officials:1)A registrar2)An additional registrar3)A joint registrar4)A deputy registrar5)An assistant registrar.

Register and Registrar


Scheduled bank

Scheduled bank means a bank which is included in

the list of banks maintained by the state bank of

Pakistan for this purpose as required under the

provisions of the state bank of Pakistan act 1956.

Secretary

Secretary means any individual appointed to perform

the secretarial administrative or to other duties

ordinarily performed by the secretary of a company.

Scheduled bank & Secretary


SecuritySecurity means the following instrument:1)A share2)A scrip (scrip is a certificate to of a right receive something or it is a certificate representing a fraction of a share or stock)3)A debenture 4)A participation term certificate5)A modaraba certificate 6)A Musharika certificate7)A term finance certificate8)A bond9)A pre-organization certificate or10)Any other instrument specified by the federal government as security.

ShareShare means a share in the share capital of company. It is an interest of a person in the share capital of company which is measured by the sum of money.

Security and Share


Special ResolutionSpecial resolution means a resolution which fulfils the following conditions:1)It has been passed by a majority of at least three-forth of the members present, in person or by proxy, at a general meeting ;2)The meeting was held at a notice of at least 21 days; and 3)It was specified in the notice that the resolution shall be proposed and passed as a special resolution.

Stock exchange‘Stock Exchange’ means a stock exchange registered under the securities and exchange ordinance 1969The securities and exchange ordinance, 1969 defines a ‘stock exchange’ as any person who maintains or provides a market place or facilities for bringing together buyers and sellers of securities

Special Resolution & Stock Exchange


Ex-officio‘Ex-officio’ means ‘by virtue of the office. It is the office or power exercised by a person which are not specifically conferred upon him, but are necessarily implied in his office.Any person who has appointed as chief executive of a company will be ex-officio director of that company.

Intra viresIt means within the power or jurisdiction of. It is the opposite or ultra vires.

Ipso factoIt is a Latin word and means “because of the fact that has been mentioned. Its other meanings are:1)By the very nature of the case;2)By the fact itself;3)By the mare fact ; and4)By the mere effect of an act or a fact

Legal Terminologies


Pari passu

It means “on equal footing or proportionality. This

term is used at various occasions, i.e., issue of further

shares issue of a series of debentures, creating a

charge on the assets. Under all cases it denotes that

the new shares debentures or charge shall stand

equal to the existing ones.

Legal Terminologies


Prima facie

‘Prima facie’ means a fact presumed to be true unless

disproved by some evidence to the contrary. It also

denotes a fact or document which at the first sight or

appearance or on the face of it seems to be true

although it may be proved false later.

Ultra vires

It means “beyond the scope, power jurisdiction or

authority of any person, company, corporation or

statutory body.”

This term applies absence of capacity or power of the

person to do any act. Such act shall be void. It is not

necessary that an act to be ultra vires must illegal’ it

may or may not be illegal.

Legal Terminologies


Perpetual successionIt means a continuous existence which enables a corporation to manage its affairs and hold property without the necessity of perpetual conveyances for the purpose of transmitting it. By reason of this quality this ideal and artificial person remains in its legal entity and personality the same though frequent changes may be made of its members

PersonPerson generally means a human being. In the legal parlance it denotes an individual or an entity which:1)Can own property;2)Can incur liability;3)Can sue ;and4)Can be sued.

Perpetual succession & Person


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Free Powerpoint TemplatesPage 1Free Powerpoint Templates Chapter # 01 Introduction and Definition Salman Masood Sheikh M.Com, MBA, M.Phil, ACMA, FPA, CA(Int)