Financial Management Presentations Hard Copy

Submitted to: Sir Mohammad Zahid Students:

Zeeshan Nazir Fa10-bba-007 Wajahat Aslam Fa10-bbaKhizar Hayat Fa10-bba-

Formation of Public Company:

A Public Company may be formed by a group of persons, associated for any lawful purpose, by subscribing their names to the Memorandum of Association and complying with the requirements of the Companies Ordinance 1984, in respect of the registration. For the registration as a public company, the firms should have compliance with the following conditions. The minimum requirement for the number of persons for Public Company is three for unlisted and seven for listed companies. Take Prior Approval of the respective Ministries is required for incorporation of companies. Seek the certificate of commencement of Business form Commission. Must raise minimum subscription before obtaining certificate of commencement of business. Must require filing Prospectus or SILOP for obtaining certificate of commencement of business.

Incorporation of Companies:
The companies have to incorporate themselves after approval of respective ministry. Incorporation means that Company will now be a body corporate and will be treated as a legal entity. Following are the steps for the Incorporation of Companies.

Availability of Name:
The first step with regard to incorporation of a company is to confirm the availability of the name of the proposed company from the concerned Registrar on payment of a nominal fee. The name should not be inappropriate, deceptive or designed to offend the religious sensibilities of the people, and it should neither be identical nor have a close resemblance to the name of any existing company.

Documents for Incorporation of Companies:

For incorporation of Company, following documents should be submitted to the Registrar.
1. Four copies of the Memorandum and Articles of Association signed by the promoter and one copy duly stamped 2. Declaration regarding compliance with the requirements of the companies Ordinance, 1984 signed by one of proposed Directors or an Advocate or Chartered Accountant or Cost and Management Accountant (on Form 1) 3. Address of the registered office of the company (on Form 21) 4. Particulars of the Chief Executive, Directors and other officers/executives (on Form 29) 5. List of persons consenting to act as Chief Executive/Directors (on Form 27) 6. Consent of the Chief Executive and Directors (on Form 28)

Conversion from Private to Public Company:

Section 45 of the Ordinance provides that a private company may convert its status into a public company by taking following steps.

The proposal for conversion of status of private company into public company is firstly discussed and approved by the Board of Directors Prospectus or a Statement in Lie of prospectus as the case may be, shall be filed with the registrar within 14 days after the date of conversion. The Company shall increase its directors and shareholders if they are less than the minimum number which are required for a public company. The company shall file the under-mentioned documents with the registrar concerned:-

a) Form - 26 within 15 days of passing of special resolution. b) Amended copy of the Memorandum and Articles of Association. c) Prospectus or Statement in Lieu of Prospectus within 14 days of passing of special resolution. d) Form 3 (allotment of shares to new members / directors in case, the new directors are not members of company) e) Form 27 i.e. list of persons consenting to act as directors. f) Form 28 Consent to act as directors. g) Form - 29 (in case of increase of directors, if the company does not already have three directors required for a public company) The registrar concerned shall issues a certificate regarding conversion of status of private company into public company and a filing certificate. The name of the company with the changed status i.e. without the word private shall be mentioned in all letterheads, bills, invoices, seal etc. Copies of Memorandum and Articles of Association are also recorded with the alteration.

Issue of Shares by Initial Public Offering:

The first sale of stock by a company to the public is called Initial Public Offering. Companies offering an IPO are sometimes new, young companies, or sometimes companies which have been around for many years but are finally deciding to go public. Factors triggering to go Public: Capital Needed Cheaper Cost Liquidity

Requirements to go for IPO: The greatest restrictions are actually the listing requirements necessary to have a stock listed on the major stock exchanges. These listing requirements include several millions of dollars in tangible assets and the filing of public financial records. Benefits of being listed on Stock Exchange:

Market Exposure: Through listing on a stock exchange a company is gaining market exposure to a broader membership of the financial community including market makers, buyers, sellers, and institutional traders, mutual funds and possibly hedge funds. Consequently, if a business is worth investing in, the listing opportunity has the potential to greatly increase capital investments. Improved brand equity through listing: Being listed on a stock exchange means that a business has met qualification standards set by the exchange. This can add credibility to a business and therefore brad equity, i.e. customer and/or client perception of value in a company and/or its products.

Potential for increased capitalization: Stock market listing is one of several sources of capital leveraging, but also happens to be one of the widest and most accessible forms of investment for both investors and businesses.

Methods of IPO: Best Efforts Selling: An agreement between an underwriter and an issuer in which the underwriter agrees to place as much of an offering with investors as possible, but is not responsible for any portion of the offering it fails to sell. For example, suppose an issuer makes a new issue of 100,000 shares. The issuer may make a best effort basis agreement with an underwriting firm for the underwriter to sell those shares to investors. If the

underwriting firm only sells 90,000, however, it is not required to buy the remaining 10,000 from the issuer. This reduces the risk to the underwriter; to reduce the risk to the issuer, best efforts are all-or-none offerings. Underwriting method: The process by which investment bankers raise investment capital from investors on behalf of corporations and governments that are issuing securities (both equity and debt) . The word "underwriter" is said to have come from the practice of having each risk-taker write his or her name under the total amount of risk that he or she was willing to accept at a specified premium. In a way, this is still true today, as new issues are usually brought to market by an underwriting syndicate in which each firm takes the responsibility (and risk) of selling its specific allotment. Shelf Registration:
Shelf registration or shelf offering is a type of public offering where certain issuers are allowed to offer and
sell securities to the public without a separate prospectus for each act of offering. Instead, there is a single prospectus for multiple, undefined future offerings. Before each offering and sale is actually made, the company must file a relatively short statement regarding material changes in its business and finances since the shelf prospectus was filed.