Kinds of Companies
There are three kinds of companies which can be
registered in our country under the provisions of the Companies Ordinance,
1984.
Un-Limited Companies
These are the companies in which the liability of the
members is unlimited. It may or may not have share capital. If the company goes
into liquidation the private property of the members will be liable for
attachment for satisfying debts of the company. As the risk involved is great,
unlimited companies are not found in this country. Companies Limited by
Guarantee
These are the companies whose shareholders undertake to
contribute a certain sum towards the assets of the company in the event of its
being wound up to meet the claims of the creditors. Generally, such companies
do not have any share capital.
From another angle. we can classify companies as private
and public.
Private Company
According to section 2 (28) of the Companies Ordinance
1984, a private company means a company which by its articles: Restricts the
right to transfer its shares:
Limits the number of its members to fifty not including
persons who are in the employment of the company; and Prohibits any invitation
to the public to subscribe for their shares, if any or debentures of the
company.
Note: A private company is required to add word (Private)
as a part of its name before the word limited.
Public Company
It means a company. which is not a Private Company
Section 2 (30). A company whose articles do not contain all the restrictions
specified in Section 2 (28) is a Public Company. Further, a public company may
be listed or unlisted. A listed company is one whose securities are listed in
Stock Exchange for purpose of trading in it. In a simple word, a public company is
a company that invites the general public to subscribe to its share capital.
Formation of a Company
The founders of the company are called promoters of the
company. Promoting persons take initiative in the formulation of the company.
Promotion of a company means planning its establishment, negotiation of
preliminary contracts, assessment of capital requirements, choice of first
directors, drafting of the memorandum, and. articles of association and prospectus
and arranging underwriting and other matters relating to raising the proposed
capital of the company. The memorandum and articles of association are filed
with the Registrar of the Joint Stock Companies. If the Registrar is satisfied
that the company is being formed for lawful purposes, that none of its objects
stated in the memorandum Is inappropriate or deceptive and that
all the requirements of the Company's Ordinance, 1984 have been complied with in respect of registration, he shall retain and register the memorandum and articles of association. When the documents are found in order, the i Registrar issues a certificate of incorporation
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