DEFINITIONS
IN
COMPANIES ORDINANCE 1984
Article.
"articles"
means the articles of association of a company as
originally framed or as altered in accordance with the
provisions of any previous Companies Act, or of this
Ordinance, including, so far as they apply to the
company, the regulations contained in Table A in the
First Schedule;
Associated Companies
"associated companies"
• A company whose 20 % or more shares (up
to 50%) are held by another company shall
be considered an associated company of
that company.
Body corporate
"Body corporate" or "corporation“
It means a setup having separate existence distinct from
its member. In includes company incorporated in Pakistan
and out side Pakistan, but does not include the following
i. a corporation sole; or
ii. a co-operative society registered under any law
relating to such societies; or
iii. any other body corporate, other than a company
defined in this Ordinance, which the Federal
Government may, by notification in the official
Gazette, specify for this purpose.
Book and/or Paper
"book and paper", "book or paper" or "books of
accounts" include
– accounts, deeds, vouchers,
– registers, writings and documents maintained on paper or
computer network, floppy , magnetic cartridge tape, CD, rom
or any other computer readable media.
Chief Executive and Commission
• "chief executive", in relation to a company means an
individual who, subject to the control and directions of the
directors, is entrusted with the whole, or substantially the
whole, of the powers of management of the affairs of the
company, and includes a director or any other person
occupying the position of a chief executive, by whatever
name called, and whether under a contract of service or
otherwise;
• “Commission” means the Securities and Exchange
Commission of Pakistan established under section 3 of the
Securities and Exchange Commission of Pakistan Act, 1997
(XLII of 1997);]
Company
• "company" means a company formed and registered
under this Ordinance or an existing company;
• "company limited by shares" means a company having
the liability of its members limited by the
memorandum to the amount, if any, unpaid on the
shares respectively held by them;
• "company limited by guarantee" means a company
having the liability of its members limited by the
memorandum to such amount as the members may
respectively thereby undertake to contribute to the
assets of the company in the event of its winding up;
Court, Debenture and Director
• "the Court" means the Court having jurisdiction under
this Ordinance
• "debenture" includes debenture stock, bonds, 2[term
finance certificate] and any other securities, other than
a share, of a company, whether constituting a charge of
the assets of the company or not;
• "director" includes any person occupying the position
of a director, by whatever name called:
Document and Existing Company
• "document" includes summons, notice, requisition,
order, other legal process, voucher and register;
• "existing company" means a company formed and
registered under any previous Companies Act;
Financial Institution
• “financial institution” includes:–
i.
a company or an institution whether established under any
special enactment and operating within or outside Pakistan
which transacts the business of banking or any associated
or ancillary business through its branches;
ii. a modaraba, leasing company, investment bank, venture
capital company, financing company, housing finance
company, a non-banking finance company; and
iii. such other institution or company authorised by law to
undertake any similar business, as the Federal Government
may, by notification in the official Gazette, specify for the
purpose;]
Financial year, Form and Holding
company
• "financial year" in relation to any body corporate,
means the period in respect of which any profit and
loss account or the income and expenditure account of
the body corporate, laid before it in general meeting, is
made up, whether that period is a year or not;
• "form" means a form set out in any of the schedules
as prescribed.
Listed Company and Member
• "listed" in relation to securities, means securities which have
been allowed to be traded on a stock exchange;
• "listed company", means a company or a body corporate or
other body whose securities are listed;
• "member" means, in relation to a company having share capital,
a subscriber to the memorandum of the company and every
person to whom is allotted, or who becomes the holder of, any
share, scrip or other security which gives him a voting right in
the company and whose name is entered in the register of
members, and, in relation to a company not having a share
capital, any person who has agreed to become a member of the
company and whose name is so entered;
Memorandum, Modarba and Officer
• "memorandum" means the memorandum of association of
a company as originally framed or as altered from time to
time in pursuance of the provision of any previous
Companies Act or of this Ordinance;
• "modaraba" and "modaraba company" have the same
meaning as in the modaraba Companies and Modaraba
(Floatation and Control) Ordinance, 1980 (XXXI of 1980);
• "officer" includes any director, chief executive, managing
agent, secretary or other executive of the company,
howsoever designated, but, save in sections 205, 220 to
224, 260, 261, 268, 351, 352, 412, 417, 418, 474 and 482,
does not include an auditor;
Previous Companies Act
• "previous Companies Act" includes any Act or Acts relating to
companies in force before the Indian Companies Act, 1866 (X of
1866), or the Acts repealed thereby, the Indian Companies Act.
1866 (X of 1866), the Indian Companies Act, 1882, (VI of 1882)
the Indian Companies Act 1913 (VII of 1913), or any law
corresponding to any of those Acts and in force in any of the
territories now constituting Pakistan before the extension of the
Companies Act, 1913 (VII of 1913), to such territories;
Private Company
• "private company" means a company which, by its
articles,—
i. restricts the right to transfer its shares, if any;
ii. limits the number of its members to fifty ;and
iii. prohibits any invitation to the public to subscribe for the
shares, if any, or debentures of the company:
Provided that, where two or more persons hold one or
more shares in a company jointly, they shall, for the
purposes of this definition, be treated as a single
member.
Prospectus and Public Company
• "prospectus" means any document described or issued
as prospectus, and includes any notice, circular,
advertisement, or other communication, inviting offers
from the public for the subscription or purchase of any
shares of a body corporate, or inviting deposits from
the public, other than deposits invited by a banking
company or a financial institution approved by the
Federal Government, whether described as prospectus
or otherwise;
• "public company" means a company which is not a
private company;
Registrar, Scheduled Bank and
Secretary
• "registrar" means a registrar, an additional registrar, a
joint registrar, a deputy registrar or an assistant
registrar, performing under this Ordinance the duty of
registration of companies;
• "scheduled bank" has the same meaning as in the
State Bank of Pakistan Act, 1956 (XXXIII of 1956);
• "secretary" means any individual appointed to perform
the secretarial, administrative or other duties ordinarily
performed by the secretary of a company;
Security
• "security" means
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–
–
–
–
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any share,
scrip,
debenture,
participation term certificate,
modaraba certificate,
musharika certificate,
term finance certificate bond,
pre-organization certificate or
such other instrument as the Federal Government may, by
notification in the official Gazette, specify for the purpose
Share and Ultra Vires
• Share means share in the share capital of a company;
– Share is a right to receive a certain proportion of profit made
by a company while it is a going concern and of the capital
when it is wound up.
• Ultra Vires means an act performed without any
authority to act on the subject.
Special Resolution
• "special resolution" means a resolution which has been
passed by a majority of not less than three-fourths of such
members entitled to vote as are present in person or by
proxy at a general meeting of which not less than twentyone days notice specifying the intention to propose the
resolution as a special resolution has been duly given:
Provided that, if all the members entitled to attend and vote
at any such meeting so agree, a resolution may be proposed
and passed as a special resolution at a meeting of which not
less then twenty-one days notice has been given;
Subsidiary and Holding Company
• Meaning of "subsidiary" and "holding company". For
purposes of this Ordinance, a company or body
corporate shall be deemed to be a subsidiary of
another if—
i.
that other company or body corporate directly or indirectly
controls, beneficially owns or holds more than fifty per cent
of its voting securities or otherwise has power to elect and
appoint more than fifty per cent of its directors; or
ii. the first mentioned company or body corporate is a
subsidiary of any company or body corporate which is that
other's subsidiary;
Where Ordinance is not applied
• Ordinance not to apply to certain corporations .Nothing in this Ordinance shall apply to—
i. a trading corporation owned or controlled by a
Province and carrying on business only within that
Province; or
ii. a co-operative society; or
iii. a university.
Non Trading Companies
• Application of Ordinance to non-trading companies
with purely provincial objects.• The powers conferred by this Ordinance on the Federal
Government or the Commission shall, in relation to
companies which are not trading corporations and the
objects of which are confined to a single Province, be
the powers of the Provincial Government.
Ordinance to override memorandum..
• Ordinance to override memorandum, articles, etc..Save as otherwise expressly provided herein,—
a) the provisions of this Ordinance which come into force by virtue
of a notification under sub-section (3) of section 1 shall have
effect notwithstanding anything contained in the memorandum
or articles of a company, or in any contract or agreement
executed by it, or in any resolution passed by the company in
general meeting or by its directors, whether the same be
registered, executed or passed, as the case may be, before or
after the coming into force or the said provisions; and
b) any provision contained in the memorandum, articles, agreement
or resolution aforesaid shall, to the extent to which it is
repugnant to the provisions of this Ordinance, become or be
void, as the case may be.
Artificial Person
• It means that a company possesses separate
legal entity, identify and personality of its
own, apart form its share holders.
• It can borrow money, enter into contracts, and
hold property in its own name
• It can sue and can be sued by its share
holders.
Auditors
• Auditors are independent persons who
examine the accounts of the company and
report on the same.
• The express their opinion on the accounts and
also supposed to detect fraud, manipulations
of accounts aimed at concealment of true
financial position of a company.
Common Seal
• Every company must have a seal of its own,
called “Common Seal”.
– Directors must provide for its safe custody.
– it shall be affixed to share certificate and any
other instrument, only on the authority of a
resolution of directors.
Convenant
• An agreement convention, or promise of two
or more parties, by deed in writing, signed
and delivered by which either of the parties
pledges himself to the other that something is
either done, or shall be done, or shall not be
done, or stipulates for the truth of certain
facts.
• In the broadest usage, it means any
agreement or contract.
Fiduciary and Fiduciary Behavior
• Fiduciary This term used to refer a person
having duties involving good faith, trust,
special confidence, and candor towards
others.
• Fiduciary Behavior it refers to the behavior in
good faith, trust, special confidence, and
candor towards others.
Incorporated Association
• Incorporation means the recognition of the
existence of a company, in the eyes of law as a
separate legal entity.
• IPSO FACTO
It means
a) By fact it self; or
b) By the mere fact
c) By the mere effect of an act or a fact
Limited Liability
• It means that the liability of the members of
the company to pay back the debts of the
company is limited upto the face value of their
shares.
• The fact of limited liability stems from the fact
of company being an artificial person.
Liabilities for repayments of loans tend to be
divided between company and the share
holders.
Par Value/ stated Value
• Par Value/ stated Value is the face or stated
value of a share or stock or bond is called par
value.
• Perpetual Succession means that a company
possesses permanent life which is not affected
by debt, insolvency, insanity or withdrawal of
any of its members.
Prima Facie
• Prima Facie it means
– At first sight
– On the first appearance
– Presumably
• Successor in Interest One who follows another in
ownership or control of property. In order to be a
successor in Interest a party must continue to
retain the same rights as original owner without
change in owner ship and there must be a change
in form only and not in substance and transferee
is not a successor in Interest.
Successors and Team of Management
• Successors Those persons, other than creditors
who are entitled to a property of a deceased
under his will or succession statute.
• Team of Management Share holders, being the
entrepreneurs, are owners of the company and
as such have the right to manage the company.
But owing to their large number, they delegate
most of their managerial powers to their elected
representatives.
Team of Management
• Team of Management is constituted as
follows
– Chairman
– Chief Executive
– Board Of Directors
– Share holders
– Secretary
– Chief Accountant
– Managers and other functionaries
Upcoming
• Courts, SECP and Registrar