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basic legal documents of a company

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basic legal documents of a company

  1. 1. • Articles of Association •Ultra vires and indoor management •Difference between Memorandum of Association and Articles of Association •Prospectus Ramsha 11-arid-1214 Ujala 11-arid- 1231 Yasir 11-arid-1183 Osama 11-arid-1198 Uroosa 12-arid-2892
  2. 2. Characteristics of Meezan Bank Company name: Al Meezan Investment Bank  Date of inauguration: October 1997  Registered Capital: Rs. 721 million  Paid up Capital: Rs. 7 billion  Par value: Rs. 10 per share  Market price: Rs 15.73 per share  Liability: the shareholders have a limited liability. Last year’s liability amounted Rs. 266,188,881000 
  3. 3. Al Meezan Investment Bank Objectives: Meezan Bank aims to fulfill its prime objective of providing customers accessibility and convenience, within an atmosphere and culture of dedicated service and recognition of their needs.  Vision: Establish Islamic banking as banking of first choice to facilitate the implementation of an equitable economic system, providing a strong foundation for establishing a fair and just society for mankind. 
  4. 4. Al Meezan Investment Bank            The Board of Directors of Meezan Bank comprises of: H. E. Sheikh Ebrahim Bin Khalifa AlKhalifa (Chairman) Abdul lateef A. Al-Asfour Shaharyar Ahmad Rana Ahmed Humayun Riyadh S. A. A. Edress Mohammed Azzaroog Rajab Alaa A. Al-Sarawi Mohammad Abdul Aleem Irfan Siddiqui (President & CEO) Ariful Islam (Deputy CEO)
  5. 5. INTRODUCTION    A sole proprietorship or partnership firm can be formed to carry out its business even without any registration. But a company can not be formed or permitted to run its business without registration. In fact, a company comes into existence only when it is registered with the Registrar of Companies. For this purpose the promoter has to take the steps to create the three basic legal documents for the company in order to get it registered
  6. 6. Basic Legal documents After getting the name approved the promoter makes an application to the Registrar of Companies of the State in which the Registered Office of the company is to be situated for registration of the company. The application for registration must be accompanied by the following documents. (i) Memorandum of Association (MOA): It defines the objectives of the company and Incorporation. There are six main clauses in MOA which are as follows:  Name clause  Object clause  Liability clause  Capital clause  Head office clause  Subscription clause
  7. 7. Object clause ultra vires  The object of the memorandum of the company contains the object for which the company is formed. An act of the company must not be beyond the object clause, otherwise it will be ultra vires and therefore void and cannot be ratified even if all the members wish to ratify it this is called the doctrine of ultra vires .
  8. 8. Consequences of ultra vires Injunction  Personal liability of director  Breach of warranty and authority 
  9. 9. Consequences of borrowing No loan  Injunction  Subrogation  Identification and tracing ULTRA VIRES PROPERTY ULTRA VIRES CONTRACTS 
  10. 10. Indoor management    The Doctrine of indoor management is a presumption on the part of the people dealing with the company such as the shareholders that the internal requirements with regard to the articles of association and memorandum of association have been complied with. The doctrine of indoor management helps in protection of external members from the company and states that the people are entitled to presume that the internal proceedings are as per the documents submitted with the registrar of companies. They are not allowed to go into the procedural aspect, such as the fact that the internal proceedings might not happen regularly, or what are the proceedings before the directors, in an extraordinary general meeting.
  11. 11. ORIGIN ROYAL BRITISH BANK Vs TURQUAND (1856)   FACTS OF THE CASE ARE: The Articles empowered the Directors to borrow money provided they were authorized by a Resolution passed at the General Meeting of the Co. POINT DECIDED IS: The outsiders dealing with the Co. are entitled to presume that as far as the internal management of the Co. is concerned, everything has been regularly done.
  13. 13. DOCTRINE OF INDOOR MANAGEMENT “Persons transacting business with the Co. are deemed to have notice of what they would have discovered by making a search at the office of the Registrar of Co.’s, and they would be stopped from asserting that they had not read the documents. But such persons are not deemed to have notice of, nor are they under a duty to inquire into the internal proceedings of a Co. . Thus an outsider is presumed to know the Constitution of a Co., but not what may or may not have taken place within the doors that are closed to him.”
  15. 15. RUBEN Vs GREAT FINGALL Ltd. LORD LOREBURN observed of the case: “It is quite true that persons dealing with limited liability Co.’s are not bound to inquire into their indoor mgt. & will not be affected by irregularities of which they have no notice. But this doctrine, which is well established, applies only to irregularities that otherwise might affect a genuine transaction. It can’t apply to a FORGERY”.
  16. 16.  Ujala
  17. 17. Basic legal documents (contd…) Articles of Association (AOA). It contains the rules and regulations regarding the internal management of the company. It must be properly stamped, duly signed by the signatories to the Memorandum of Association and witnessed. (iii) Prospectus: A formal legal document, which is required by and filed with the Securities and Exchange Commission, that provides details about an investment offering for sale to the public. A prospectus should contain the facts that an investor needs to make an informed investment decision.
  18. 18.       1) Articles of Association of a company contain the rules and Regulations relating to the Management of its internal Affairs. 2) It defines the rights, powers and duties of the Management. 3) It must not contain anything which is against the memorandum of association or against the companies Act or Public policy. 4) A public company limited by shares may Register its own Articles of Association or it may adopt Table A . 5) A company limited by Guarantee with out having share capital may file its own Articles or may adopt Table C. 6) The Articles of Association must be printed, divided into paragraphs, numbered consecutively and signed by each signatory to the MOA in the presence of at least one attesting witness.
  19. 19. The articles of a company must contain the following restrictions.  Restrict the right to transfer shares.  Limit the number of members to fifty.  Prohibit any invitation to the public to subscribe for any shares in, or debentures of, the Company.
  20. 20. Allawasaya Textile & Finishing Mills Ltd.  VISION STATEMENT  Allawasaya Textile and Finishing Mills Limited becomes a truly professional organization, achieve higher  quality standards, utilize maximum capacity, capture expansion opportunities and become a least cost  operator amongst its competitors
  21. 21. Allawasaya Textile & Finishing Mills Ltd.          BOARD OF DIRECTORS 1. Mian Muhammad Jamil - Chairman 2. Mian Tanvir Ahmad Sheikh - Chief Executive 3. Mrs. Nusrat Jamil - Director 4. Mian Anis Ahmad Sheikh - Director 5. Mian Sarfraz Ahmad Sheikh - Director 6. Mian Tauqir Ahmad Sheikh - Director 7. Mian Muhammad Bilal Ahmad Sheikh - Director 8. Mian Muhammad Alamgir Jamil Khan – Director  Total equity and liabilities 557,541,375  ,incorporated in31stMarch 1958
  22. 22. Contents in the Articles of Association                  Adoption of preliminary contracts. Number and value of shares Allotment of shares Calls on shares Transfer of shares Forfeiture,reissue,surrender of shares Alteration of share capital Share certificates Conversion of shares in to stocks Meetings and proceedings Voting rights , proxies and polls Appointment , Remmunaration,etc of Directors Borrowing powers Dividend and Reserves Accounts and audit Procedure of winding up Seal of the company
  23. 23. Differentiate between MOA&AOA
  24. 24. Prospectus    A prospectus is thus any document which invites the public to provide funds to the company bye law of deposits or subscriptions to its shares and debentures. It is a valuable document containing important details about a company It should be duly signed by the company.
  25. 25. Saudi pak leasing  Saudi Pak Leasing Company Limited (formerly Standard Chartered Merchantile Leasing Company Limited) was incorporated in January 1991.
  26. 26. objective  The fundamental objective of Saudi Pak Leasing Company Limited (SAUDI PAK) is to contribute towards capital formation in the economy through extending lease facilities, term financing, advisory & arrangement services and debt swapping, thereby supporting the growth of credit industry
  27. 27. vision  To become industry leader by offering unique business solutions to the customers driven by a cohesive team of professionals
  28. 28. CEO and BOD Mr. Ahsanullah Khan (CEO)  It has 6 BOD,S  Mr. Muhammad Iqbal Hussain (Chairman)  Mr. Farhan Malik (Vice Chairman)  Mr. Muhammad Tariq Masood (Director)  Ms. Parveen A. Malik (Director)  Mr. Shoaib Ahmed Khan (Director)  Mr. Arsalan I. Khan (Director 
  29. 29. Share value date open high low close 1/28/2014 3.23 3.21 3.00 3.06 1/27/2014 2.84 3.64 2.88 3.23 1/24/2014 2.68 2.84 2.75 2.84 1/23/2014 2.72 2.75 2.68 2.68 2012 Earnings per share 2013 18.20 3.08
  30. 30. Important points of Prospectus       It is an invitation to the public to subscribe to the shares and debentures of the company. It informs public about the company and stimulates people to invest money in the company. It provides an authentic record of the terms and conditions on which shares and debentures have been issued. It identifies the persons who can be held responsible for any untrue or incorrect statements made in it. It reflects the business policies and programmes of the company. It helps the investors to take investment decisions.
  31. 31. Contents of the prospectus               Name of the company Address of the Registered office. Nature and objects of business Capital structure History of the company Particulars about Underwriters,auditors,brokers,bankers Date of opening and closing subscription list Name of stock exchanges where applications for listing has been made. Information about material contracts with managerial personnel Outstanding liabilities Financial information. Consent of managerial personnel Management perception of risk factors. Statutory or other information.
  32. 32. Types of prospectus   Shelf prospectus: It is a prospectus issued by public financial institutions like public sector bank and scheduled bank Red -herring Prospectus: It means a prospectus which does not contain full particulars on price of the securities offered and their number. It is issued by companies which raise capital through the book building process.
  33. 33. Sitara Chemical Industries Ltd  Registered Office: 601-602 business centre, Mumtaz hasan road Karachi-74000  History: SCIL was incorporated in 1981 and began producing caustic soda in 1985, initially at a rate of 30 metric tones Caustic a day. The plant’s capacity was gradually increased over years to current level of 610 metric tones a day. In addition, various by-product facilities have been added and expanded from time to time to cope with growing demand. Company entered into Textile Spinning Business in 1995. Its specialty chemicals and export division was established in 2001 and agric chemicals division in 2003.
  34. 34. Sitara Chemical Industries Ltd Objectives: Continuing growth and diversification for bottom line results with risk well contained.  Vision Strive to develop and employ innovative technological solutions to add value to business with progressive and proactive approach.  CEO Mr; mohammad Adrees Board Of directors Haji Bashir Ahmed(chairman) Mr: Mohamma adrees (CEO) Mr: mohammad Anis Mr: Imran Ghafoor Mr: haseeb Ahmed Mr: Mohammad Khalil Mr: Ijaz hussain 
  35. 35. Statement in lieu of prospectus  The public limited companies, which are yet to obtain the certificate of commencement of business, without filing of business, require the SLP (Statement in lieu of prospectus). It must be filed when a Private company becomes a Public company  A public company issue this to the Registrar of Companies at least three days before the allotment of shares.
  36. 36. Minimum subscription   Minimum amt of money from the proposed issue of shares If the minimum subscription is not received within 120 days of the issue of prospectus, the amt received on applications must be refunded to the applicants within 10 days.
  37. 37. Minimum subscription cover following expenses       Preliminary expenses Underwriting commission Working capital The cost of any property; purchased or to be purchased. Payment of any money borrowed for the above purpose Any other necessary expendeture
  38. 38. Scanning a prospectus from the view point of an investor Nature of business Prospective investor should examine the condition of industry, demand and supply etc… Objects Success and prospects of a company depend on its objects management The standing of the promoters and directors should be judged Capital structure Minimum subscription ,securities, rights etc… Property acquired The amt paid or proposed to be paid for goodwill and other properties should be carefully scrutinized. Past history Investor checked history of companies especially existing business liability & assets. Material contracts Details of contracts must mentioned in prospectus Business associates& restrictions Associated organizations and its reputation and restrictions in AOA.
  39. 39. THANK YOU … question answer session