Company Law
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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
aairs
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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
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Separate Legal Entity
a company registered under the companies act
is regarded by law as a single person having
specied rights and obligation
a company is dierent from its members and
the individuals composing it
a b c d e , !y corp
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"ne man company or#amily comp$
could be
ma%ority share one person
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Statutory company
formed by an act of legislature
&angladesh &an'
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(egistered Company
) company registered by the companies act
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*nregistered Company
an association or company not
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Essential features of acompany
registration
voluntary association
legal personality
contractual capacity +a shareholder cannot bind the
company in any way
management +&oard of -irectors, etc
capital
permanent e!istence
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registered o.ce
common seal
limited liability
transferability
statutory obligations +ling balance sheets,
registers, etc
not a citi/en
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Company and partnership
(egistration
minimum number of members +pvt company
0, +pub company 1, +partnership 0
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ma!imum number of members +pvt company 23,
partnership general 03
legal status
authority of members +partnership property4 %oint
property +property of company belongs to company
Contractual capacity4 shareholder can be employee
and enter into contracts with the company, partners
can contract with other partners but not the
company as a whole
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management5 partner manager or other managers
4company4 manages by &oard of -irectors,
6anaging -irector etc
length of e!istence5 company4perpetual succession
+ended by li7uidation as per Company )ct,
Partnership5 in the absence of a contract to thecontrary, comes to a end when a partner dies or
becomes insolvent
liability of members5 partnership unlimited,
company liability is limited limited
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liability of rm and company5 the creditors of
rm are creditors of individual partner,
4creditors of a company are not creditors of
individual shareholders
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8ypes of Companies
Private company
Public company
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Private Company
by its articles5 9$ restricts the rights of themembers to transfer shares
0$ limits the number of members
:$ prohibits any invitation to the public tosubscribe for any shares
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Public Company
three types
9$ Companies limited by shares +share capital
and nominal value
0$ Companies limited by guarantee + each
member promises to pay a !ed sum of money
in the event of li7uidation
:$ unlimited companies +liabilities are
unlimited
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-ierence between aPrivate Company and Public
CompanyPvt Company must have minimum paid up capital
of 933,333 lac t'
Public Company must have minimum paid upcapital 2 lac t'
Pvt company has restrictions on transfer of shares
(estrictions on invitation to public4 Pvt companycannot invite public to purchase shares
(estrictions on name5 Pvt limited
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prospectus
commencement of business
number of directors5 Private 40, Public4:
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6emorandum and )rticles
of )ssociation; its contains the basic rules regarding company
constitution and and activities of the company
; purpose is to let others 'now 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
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)rticles
; contains the rules and regulations
; should be in line with the rules in the
memorandum
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6emorandum contains thefollowing
; name clause
; situation clause +name of the place where the
company has registered o.ce
; ob%ects clause
; area of operation clause
; liability clause5 nature of liability of the members
; capital clause5 state the amount of share capital
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)lteration of 6emorandum
; it can be altered by following the procedure
laid down in the companies act
; provisions of the memo can be divided into two
classes
; 9$ the inclusion which is made compulsory
; 0$ the provisions which the owners of the
company included by their desire
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8he #ormation of aCompany
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8he essential steps offorming a company
; the memo and the articles should be prepared
; should have a paid4up capital
; if the company formed intends to participate in an
industry which included in the schedule anne!ed to
the <ndustries +-evelopment and (egulation )ct,
9=2>, a license must be obtained under that act
; the company must be registered in accordance
with provisions of the Companies )ct, 9=2> and the
Certication of <ncorporation must be obtained
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company, the followingfurther steps need to be
ta'en; the Prospectus or the Statement instead of
Prospectus must be issued and registered with
the (egistrar
; the allotment of shares must be made after the
minimum subscription is raised
; the Certicate of the Commencement of
&usiness must be obtained from the (egistrar
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Procedure of (egistrationand <ncorporation
; the following documents with the necessary fees must be
submitted to the (egistrar of Companies of the State
;the 6emorandum of )ssociation, prepared in accordance
with the provisions of the Companies )ct, and signed by at
least 1 persons +public company and 0 persons +private
company
; a declaration by either one of the following persons statingthat all the re7uirements of the Companies )ct have been
complied with4 an attorney, a chartered )ccountant, or a
person name in the article as director, manager or the
secretary of the company
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; 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
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8he Certicate of<ncorporation
; the Certicate issued by the (egistrar after the
company is registered is called the Certicate
of <ncorporation