Group ”C”Group ”C”

Shoaib Manzoor 23Farhan Sajid 13Ali Raza 34Ali Hassan 35Azam Bhutta 06

FORMATION OF A FORMATION OF A COMPANYCOMPANY

STAGES OF FORMATION OF A COMPANY

Promotion

Incorporation

Raising share capital.

Certificate of commencement.

1. PROMOTION STAGE INCLUDES

Professional Promoters.

Part time Promoters.

Promoters.

2.INCORPORATION STAGENominal Capital

Total amount of company’s capital

List of Directors

Director’s names and addresses

Qualification Shares

Minimum requirement

Consent of Directors

A written agreement

Declaration

Registration of the company

3. RAISING OF SHARE CAPITAL

Entering onto an agreement with underwriters.

Applying to the stock exchange for listing of

shares.

Issue of prospectus inviting public to subscribe.

Allotting shares.

4. Certificate of Commencement4. Certificate of Commencement

Minimum Subscriptions

No. of shares collected to start

Prospectus

Documentation of a company

Qualification Shares

Shares that directors purchased

Declaration

Written statement

Memorandum of AssociationMemorandum of Association

• The Name of a Company

• Location of Head office

• Liability of members

• Capital of the company

• Subscription clause

Alteration in Memorandum of Alteration in Memorandum of AssociationAssociation

Articles of Association Capital

Sales of shares

Commission on sales of shares

Transfer of shares

Conversion into stock

Alternation in Capital

Appointment of directors

Rights and Duties of Directors

Company’s meeting

Voting rights

Appointment of Employees

Winding up of a company

Distinction between Distinction between Memorandum of association Memorandum of association

and articleand article

Farhan Sajid

Roll No 13

Determine Scope of company and relation ship with Outsiders.

Statement by which internal affairs of company are managed.

Meaning:

Memorandum Articles

Objects:

Lays down the objectives of company.

Determine method by which the goals of company are achieved.

It is compulsory to Submit memorandum for registration of company.

If not submitted provision of table A of company ordinance will become automatically applicable

Registration:

Memorandum Articles

Relationship:

It determine relation of company with outsiders.

It determine relation B/W members and management of company.

It is constitution of company so its more important.

It is document of company’s internal regulation so it is less important.

Importance:

Memorandum Articles

Alteration:

Once registered it can not be changed except legal formalities.

It is company’s internal document so it can be changed any time.

Principal document(subordinate of Company’s Ordinance) of company so it can not contain contrary things.

AOA is subordinate of memorandum.

Subordinate:

Memorandum Articles

No.Of Clauses:

Usually Contain 6(Six) Clauses. According to company’s ordinance 1984 it should contain near 85 clauses.

Any act beyond the scope of memorandum is treated as illegal.

Any act beyond the scope of Article is Not illegal except through resolution.

Legal Affects:

Memorandum Articles

Nature:

Agreement B/W company and outsiders.

Agreement B/W company and its employs and shareholders.

Prospectus of Company

Prospectus is defined according to section 2(29) of company’s

Ordinance 1984. Basically It is document which introduce company

with public, invites applications for shares and investors.

Objectives and contents of Prospectus.

1->Content of memorandum:

Prospectus have all contents of memorandum like name or location of company etc..

2->Names of Signatories: Info of those who have signed memorandum.

3->Description of business: Company’s plans for past and future are mentioned like expansion of business.

4->Name of Management: Info of directors, chief executive, directors or other authorities are given.

8->Timing of subscription:

The date time of opening and closing of share subscription.

9->Right Issues: Who have rights for what.

10->Allotment other than cash: Number of shares issued or agreed to issue other than cash within two years.

11->Share at difference price: Difference in price of share and why this difference is caused.

7->Minimum subscription:

Minimum subscription of signatories of memorandum before offering share to general public.

ALI RAZA

ROLL NO 34

Purchase of Property:

The brief description of the property

purchased by the company within two

preceding years; the names addresses of

the vendors and the amount paid or

payable.

Preliminary Expenses:

The actual or estimated amount of

preliminary expenses and the person by

whom those expenses have been paid or

payable.

Payment to promoters:

Any amount or benefit paid or given to any

promoter or officer of the company within

two preceding years or is intended to be

paid or given is also stated in the

prospectus.

Auditors and Advisors:

The names and addresses of the auditors

and legal advisors of the company are also

given in prospectus.

Interest of Directors:

The full particulars of the nature and extent

of the interest within two years of the data

of prospectus.

Right of Voting:

The right of voting at meeting of the

company conferred by, and the right in

respect of capital and dividends attached to

shares are also stated.

Nature of Restrictions:

The nature and extent of restrictions, if any,

imposed by articles of association

regarding the voting rights.

Length of Business:

If the company has already been carrying

on business, the length of time during

which the business of the company has

been carried on.

Capitalization of Funds:

Time and Place of Inspection:

A reasonable time and place at which the

copies of all balance sheets and profit and

loss accounts of the company on which

auditor report is based is also mentioned.

If any reserve or profit of the company

or its subsidiary has been capitalized,

the particulars of such capitalized are

also given.

Principal Purposes:

Pending Cases:

Pending legal proceeding which is not of

ordinary routine matter, in which company

or any its subsidiaries is a party.

The principal for which the net

proceeds of the issue has been used

or intended to be used for each such

purpose.

Auditors Report:

It contain audit of company with respect to profit

loss assets etc. for the each of the last five

years mentioned in prospectus

SOURCES OF COMPANY FINANCE:

No business can run without finance.

It is needed at every step business

activity. the main sources of

company finance are follows:

(a)By issue of shares,

(b) by incorporating

savings

(c) by issuing

debentures

Share Capital:

The amount of funds invested into

the business by its owners is known

as capital, owners investment or

owners equity.

KINDS OF CAPITAL:

Authorized Capital:

The maximum limit of capital with which company is registered is known as nominal capital.

Issued Capital:

Issued capital is that part of the

authorized capital which company

has offered to the general public for

sale.

Subscribed Capital:

The subscribed capital is that part of the

issued capital for which people has applied to

purchase.

Called up Capital:

The called up capital is that part of

subscribed capital which is called

from the subscribers.

Paid up Capital:

The paid up capital is that part of called up

capital which is actually paid by the

shareholders.

Reserved Capital:

The reserved capital is that part of uncalled

capital which is only payable at the time of

winding up of the company.

Shares of companyShares of company

Ali Hassan

Roll No 35

SHARES

Total Capital of a company is divided into small units

of nominal value and each unit is known as share

persons who purchase the share called

shareholders.

Kinds of Share

1-> Preference share.

2-> Ordinary share.

3->Deferred share.

Preference share

These are the shares which have some preferential

rights over other kinds share. Profit rate is fixed.

Characteristics

1->Its has preference as to divide.2->It is callable at the option of the corporation.3->It has no voting Power.4->It can be converted into Common stock.

Types of Preference shares(Stock)

1->Cumulative Preference share:2->Non Cumulative Preference share:3->Convertible Preference Share:

Types of Preference

shares(Stock)

4->Non-Convertible Preference share.

5->Participating preference share.

6->Non-participating preference share.

Ordinary Shares

Common shareholders are the persons who are the real

owners of the business. These are the share on which rate of

dividend is not fixed and it is paid only when the preference

share holders got their profit.

Characteristics of OS

1-> ordinary share holders are treated as real owner of company.

2->They have voting rights.

3->They have dividend at declared rate which is not fixed.

4->They have right to purchase a proportionate number of shares

of any additional Issuance(preemptive right/right issue.)

Deferred Shares

These are the shares which are commonly issued to the promoters.

These are also known as Promoters shares. Company ordinance

does not allow issuance of these shares in Pakistan

Underwriting Commission

The section 82 of the ordinance allows the company to contract with

any person or institution to work as an agent of the company for the

sale of its shares. The company pays commission as reward for his

services.

Condition Underwriting

Commission

1-> The rate of commission must be in accordance with the articles of

association.

2->The rate of commission and its payment has been declared in

prospectus if the share are offered to general public.

Thank You

Thank You