Corporations Act Business Law www.assignmentpoint.com

Corporations Legal “entities”/”persons” Can sue & be sued It has liability It has constitutional rights MUST meet formal requirements Liable for agents’ actions and contracts Closed corporation: Limited number of stockholders; stock is not traded on a stock exchange Public corporation: Stock is traded on a stock exchange; is likely to have many shareholders www.assignmentpoint.com

THE COMPANIES ACT, 1994 "company" means a company formed and registered under this Act or an existing company "private company" means a company which by its articles-- (i) restricts the right to transfer its shares, if any; (ii) prohibits any invitation to the public to subscribe for its shares or debenture, if any; (iii) limits the number of its members to fifty . Provided that where two or more persons hold one or more shares in a company jointly, the shall, for the purposes of this definitation be treated as a single member; "public company" means a company incorporated under this Act or under any law at any time in force before the commencement of this Act and which is not a private company; www.assignmentpoint.com

Types of company Any seven or more persons or, where the company to be formed will be a private company, any two or more persons associated for any lawful purpose may, be subscribing their names to a memorandum of association and otherwise with the requirements of  this Act  in respect or registration form an incorporated company, with or without limited liability, that is to say, either-- (a) a company limited by shares, that is to say, a company having the liability of its member limited by the memorandum to the amount, if any, unpaid on the shares respectively held by them; or (b) a company limited by guarantee, that is to say, 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 assets of the company on the event of its being wound up; or (c) an unlimited company, that is to say, a company having no limit on the liability of its members. www.assignmentpoint.com

company limited by shares.- with "limited" as the last word in its name (iv) that the liability of the members is limited; (v) the amount of share capital with which the company proposes to be registered, and the divisions thereof into shares of a fixed amount; company limited by guarantee- (v) that each member undertakes to contribute to the assets of the company in the event of its being wound up while he is a member or within one year afterwards, for payment of the debts and liabilities of the company contracted before he ceases to be a member, ad of the charges and expenses of winding up, and for adjustment of the right of the contributories among themselves, such amount as may be required, not exceeding a specified amount; the case of a Unlimited company (a) the memorandum shall state.-- (i) the name of the company,; (ii) The address of the registered office; (iii) the objects of the company, and, except in the case of trading companies, the territories to which they extend; (b) each subscriber of the memorandum shall take at least one share; (c) each subscriber shall write opposite to his name the number of shares he takes. www.assignmentpoint.com

Essential features of company Registration Voluntary association Legal personality Contractual capacity Management Capital Permanent existence Common seal Limited liability transferability Statutory obligation www.assignmentpoint.com

joint-stock company , holding company and subsidiary company joint-stock company- a company having a permanent paid up or nominal share capital of fixed amount divided into shares, also fixed amount, or held of and transferable as stock or divided and held partly in one way and partly in the other; and formed on the principle or having only for its members as the holders of those shares or that stock and for no other person. if a company can control the policies of another company – through the ownership of its share , or through control over the composition of its board of director the former or the controlling company called holding company and the later is called subsidiary company www.assignmentpoint.com

The memorandum and the article of association The memorandum of association is a document which contains the fundamental rules regarding the constitution and the activities of a company Name clause , situation clause, objects clause , area of operation clause , liability and capital clause The articles of association is a document which contains rule regulation and bye laws regarding the internal management of the company Articles of Incorporation and an d a statutory declaration with application are sent to the appropriate office Registrar issues a Certificate of Incorporation Any document described or issued as a prospectus and includes any notice , circular , advertisement or other document inviting deposit from the public or inviting offers from the public for the subscription or purchase of any share in or debenture of a body corporate www.assignmentpoint.com

Name of company and change of name. (1) A company shall not be registered by a name identical with that by which a company in existence is already registered, or so nearly resembling the name that there is likelihood of using the name to deceive, (2) If a company, through inadvertence or otherwise, on the direction of the Registrar, change its name within a period of one hundred and twenty days. (3) If a company makes a default in complying with the direction made under sub-section (2), the company shall be punishable with fine of five hundred take for every day during which the default continues and every officer who is in default shall be punishable with fine of one hundred taka for every day during which the default continues. (5) No company shall be registered by a name containing in any form the name or any abbreviation of the name of the United Nations or of any subsidiary body set up by the United Nations or of the World Health Organisation www.assignmentpoint.com

Change it name. (7) Were a company changes its name, the Registrar shall enter the new name on the register in place of the former name, and shall issued a certificate of incorporation in its new name to meet the circumstances of the case and on the issue of such a certificate, the change of name shall be complete. (8) The change of name shall not change any rights or obligations of the company, or (9) A company may, on payment of such fee as may be prescribed, apply to the Registrar for information whether any company is registered or proposed to be registered by a name specified in the application and the Registrar shall furnish the required information within a period of thirty days from the date of receipt of the application. www.assignmentpoint.com

Change of object (a) to carry on its business more economically or more efficiently; or (b) to attain its main purpose by new or improved means; or (c) to enlarge or change the local area of its operations; or (d) to carry on some business which, under the existing circumstances. may conveniently or advantageously be combined with the business of the company; (e) to restrict or abandon any of the objects specified in the memorandum; or (f) to sell or dispose of the whole or any part of the undertaking of the company; or (g) to amalgamate with any other company or body of persons. Before confirming the alteration, the Court must be satisfied-- (a) that sufficient notice has been given to every holder of debentures of the company, and to any person or class of person whose interest will, in the option of the Court, be affected by the alteration; and, www.assignmentpoint.com

Alteration of capital Increase in capital, consolidate or divide all or any of its share capital into shares of large amount, convert any of share into stock and reconvert stock into fully paid up share Reduction of capital- notice to all creditor of the company Variation of share holders right (3/4 members of issued share should be there Creation of reserve capital – any portion which has not been called up or shall not be called up Chang in the location of the registered office – procedure adopted for change in the object www.assignmentpoint.com

After incorporation Incorporators hold a first organization meeting Board of Directors and officers are elected, unless all shareholders agree to not have a board of directors. Minute book holds records of all meetings. Bylaws set the rules that govern internal operations for the corporation(o) Shareholder Agreements – set procedures for voting stock. Issue the corporation’s stock Issuing Debt – corporations often need to borrow funds for start-up. Bonds – long term debt secured by company assets. Debentures – long term, unsecured debt. Notes – short term, either secured or unsecured. www.assignmentpoint.com

Promoters Promoter’s Liability Before the Corporation is Formed A person who originates a scheme for the formation of the company has the memo and the articles prepared executed and registered a nd finds the first director , settle the terms of preliminary contract and prospectus and makes arrangement for advertising and circulating the prospectus and placing the capital is promoter Promoter’s Liability Before the Corporation is Formed The promoter is personally liable on any contract signed before formation. The corporation is not liable unless it adopts the contract after incorporation. Even if the corporation adopts the contract, the promoter is still liable until the third party agrees to a novation (new contract), unless the contract clearly indicates that the other party is relying only on the corporation, which he knows does not yet exist. www.assignmentpoint.com

Defective Incorporation The promoter has substantially complied with the requirements for incorporation, but has made some minor error. The promoter has made a good faith effort to incorporate and has actually used the corporation to conduct business. If a party enters into a contract believing the corporation exists, he cannot later take advantage of the fact that it does not. www.assignmentpoint.com

Share and stock “share" means a share in the capital of the company, and may mean any one of the following – nominal or authorized capital- total face value Issued capital – offered to the public to sale Subscribed capital – taken up and accepted by public Paid up capital – actually paid up Uncalled capital – the unpaid portion Stock – when all the shares of a company have been fully paid up , they may be converted into stock if so authorized by the articles Par value - minimum issue price Classes and series Owners of preferred stock have preference on dividends and liquidation. Common stock is last in line for any corporate payouts, including dividends and liquidation. www.assignmentpoint.com

Certificate of shares or stock. Share certificate- - A certificate under the common seal of the company specifying any shares or stock held by any member shall be prima facie evidence of the title of the member to the shares or stock therein specified. Share warrant – is a document issued by a company stating that its bearer is entitled to the shares therein specified – it is the substitute for share certificate debenture" includes debenture stock, bonds and any other securities of a company, whether constituting a charge on the assets of company or not www.assignmentpoint.com

Shareholders Owners of the corporation shareholders with a proper purpose have the right to Attend and vote in the general meeting Transfer his share Call special meeting Inspect and copy the corporation’s minute book, accounting records, and shareholder lists. Preference share holder have the right to get dividends Elect directors and also to remove them from office Shareholders have neither the right nor the obligation to manage the day-to-day business of the enterprise. Apply for the winding up , get the portion of surplus assets A corporation must seek shareholder approval before undergoing any of the following fundamental changes: Mergers , Sales of Assets , Dissolution , Amendments to the Bylaws A court may hold shareholders liable for debt www.assignmentpoint.com

"officer" "officer" means a director, managing agent, manager , secretary or any other officer of a company and also includes-- (i) where the managing agent is a firm any partner in the firm; (ii) where the managing agent is a body corporate, any director or manager of the body corporate; (iii) where the secretary is a body corporate; www.assignmentpoint.com

Board of Directors “director" includes any person occupying the position of director by whatever name called; Inside directors -- officers in the corporation, typically control their company’s board. Outside directors (also called independent directors) -- do not work for the company and typically have less control. Managing director" means a director who, by virtue of an agreement with the company or of a resolution passed by the company in its general meeting or by its directors or by virtue of its memorandum or articles of association, is entrusted with the substantial powers of management which would not otherwise be exercisable by him and includes a director occupying the position of a managing director by whatever name called; www.assignmentpoint.com

Directors right Directors, not shareholders, have the right to manage the corporate business. Right to Vote - A corporation must have at least one class of stock with voting rights. Have management power of large decisions Have fiduciary duties to the shareholders Controlling shareholders have a fiduciary duty to the minority shareholders. Minority shareholders have the right to overturn a transaction between the corporation and a controlling shareholder, unless the the transaction is fair to the minority shareholders. Controlling shareholders must include minority shareholders in any favorable arrangements that they make for their own stock. Many states prohibit a company from expelling shareholders unless the firm pays a fair price for the minority stock and the expulsion has a legitimate business purpose. www.assignmentpoint.com

Managers Managers - means an individual who, subject to the superintendence, control and direction of the Board of Directors, has the management of the whole, or substantially the whole, of the affairs and business of a company , and includes a director or any other person occupying the position of a manager to manage day-to-day decisions The manager has a duty of loyalty and a duty of care. The manager must act without a conflict of interest, with the care of an ordinary prudent person and in the best interests of the company. “Managing agent' means a person, firm or company by whatever name called, who or which is entitled to the management of the whole affairs and business of a company by virtue of an agreement with the company, and under the control and direction of the directors except to the extent, if any, otherwise provided for in the agreement; “Secretary" means any individual possessing the prescribed qualifications appointed to perform the duties which may be performed by a secretary under this Act and any other ministerial or administrative duties, www.assignmentpoint.com

Parties To A Corporation Managers – want, first to keep their jobs and second, to build a strong company. Managers have a fiduciary duty to act in the best interests of the shareholders. Shareholders – want the price of stock to increase. Stakeholders – want the business to grow and continue to use the stakeholders’ services. www.assignmentpoint.com

Shareholder Meetings The types of meetings Meeting of shareholder Statutory meeting –after one month –before six month Annual general meeting Extra ordinary general meeting - owning at least 10 percent of the stock have the right to call special meetings as needed. Class meeting Meeting of director Meeting of the creditor Meeting of the debenture holder Other meeting www.assignmentpoint.com

Termination of the Corporation (Dissolution) “Wind up” business to pay creditors and disburse profits to shareholders Voluntary Approval of the shareholders and the Board of Directors Articles of Dissolution are forced (by court order). Involuntary The state dissolves it Sometimes due to fraud in the establishment of or bankruptcy of the corporation Terminating a corporation is a three step process: Vote by a majority of the shareholders. Filing Articles of Dissolution with the Secretary of State. Winding up – paying debts and distributing assets. www.assignmentpoint.com

There are three ways to acquire control of a company: Buy the company’s assets. Merge with the company. Buy stock from the shareholders. Takeovers and tender offers are regulated: Federal Regulation of Tender Offers: The Williams Act State Regulation of Takeovers Common Law of Takeovers Companies may try to prevent takeovers in many ways: Transferring assets, re-distributing stock, re-structuring the board of directors, etc. When establishing takeover defenses, shareholder welfare must be the board’s primary concern. If the company must ultimately be sold, it must go to the highest bidder; it cannot give preferential treatment to a lower bidder. www.assignmentpoint.com