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
2), (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
company as a whole

management: partner manager or other managers

-company- manages 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 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 -2, Public-3

Chapter 2 The
Memorandum and Articles
of Association
its 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

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 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

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