TERMINAL EXAMINATION

Spring 2020 Total: 50 Marks

Course Name Company Law

Student Name: Registration ID:

Guidelines for students

1- Students will be evaluated on the submission of completed assignment

2- Students has to submit the required assessment within due date
3- If any students have a query they can contact to academic department during 10 to 12 during week days.

Company Law

Q.1 Define a “Joint Stock Company” Explain in brief the various stages of formation of a
“Public Company”
Joint stock company
In different countries, the meaning of Joint Stock Company varies according the country where
they are registered. In the US, the legal from of the association for businesses is referred to the
joint stock company where a certain amount of capital for funding the operations of the
organisation is provided by the different individuals who are referred to the shareholders in
exchange off shares which are issued in proportion to the contribution of each individual. The
shareholders of the joint stock company are liable for all the financial commitments and debts of
the organisation. They have to pay back their liability whether from the company’s assets or their
personal assets.
Formation of the public company
The formation of the company is considered to be the lengthy process. The process of company
formation is divided into four stages for convenience. These four stages include:
1. Promotion stage
2. Incorporation or registration stage
3. Capital subscription stage
4. Business commencement stage
Stage#01 Promotion stage
The first stage of formulation of the company is the promotion stage. The aggregate of activities
which is designed to bring an enterprise to operate the business is referred to the term promotion.
The technical processing of the commercial position with its reference to potential profitability is
presupposed. The steps that is required for promoting the business is further discussed below:
Stage#02 Incorporation or registration stage
The second stage for formation of the public company is incorporation or registration stage. The
company can only come into existence if it is registered. For constituting the proper company it
is mandatory to duly register the company under the Act and the company should also obtain the
certificate of incorporation from the companies’ registrar.
Stage# 03 Capital subscription stage
The business can be commenced immediately on the incorporation if the private or public
company do not have capital share. The public companies which have a share capital are relevant
for the capital subscription stage and commencement of business stage. Such a company has to
pass through these additional two stages before it can commence business.
Stage#04 Commencement of business stage
A private company can start its business just after getting the certificate of incorporation whereas
a public company can only start their business after getting the certificate of commencement of
business.
Q. 2 who is “Company Director” Briefly explain the provisions relating to the appointment
and retirement of directions.
The director of the company is the person who is responsible for managing, controlling and
directing the affairs of the company. They make decisions on behalf of the organisation. The
directors are the trustees of the company’s money, and assets.
According to the law, in case of public limited company only three directors re required within
the organisation that are known as board of directors whereas in case of private limited company
only two directors are allowed within the organisation.
Provisions related to appointment of directors
According to section 152, every director of the company is appointed in the annual general
meeting (AGM) of the organisation. Any person who is proposed for the post of director is
required to submit their DIN, a declaration of his qualification and his consent in form No. DIR-
2. There are different directors in each firm. The first director is appointed as per the Articles, if
it is not provide then the subscriber of the memorandum of association are considered as first
directors of the organisation.
Provisions related to retirement of directors
According to section 158, all the directors of the company on the date of expiry of the terms of
office directors or in the first annual general meeting shall be retired from the organisation. The
retired directors will still be responsible for performing their functions until their successors are
elected.
Q.3 what do you mean by “Articles of association? What are its contents?
The legal document which serves as the constitution of the company is referred to the articles of
association (AOA). The internal affairs of the organisation are governed by the rules and
regulations that are mentioned in the articles of association. The article aims to manage the
internal affairs of the organisation and carry out the objectives that are mentioned in
memorandum of association. The way in which organisation is required to carry out its task is
mentioned in it.
Contents of Articles of association
Following are the contents of articles of association that are mentioned below:
1. Classes of shares, the rights and the values that are attached to each one of them.
2. Transfer of shares, calls on share, share conversions, forfeiture and alteration of capital.
3. Directors, their appointments, powers and responsibilities etc.
4. Notices, meetings, minutes etc.
5. Audit and accounts
6. Appointment of remuneration of auditors.
7. Voting, poll, proxy etc.
8. Reserves and dividends.
9. Winding up procedures
10. Borrowing powers from the board of directors and managers.
11. Minimum subscription
12. Rules regarding the usage, and custody of common seal.
13. Lien on shares.
14. Rules and regulations regarding the conversion of fully paid shares into stock.
Q.4 what do you mean by “Annual General Meeting”? And discuss its importance.
Annual general meeting

The meeting that is held between the general members of the public limited organisation is
referred to the annual general meeting. The membership associations and companies with
shareholders are included in the organisation. The annual general meeting can be required by the
law, constitution, and charter or by regulatory bodies. The annual general meeting is also
denoted by AGM.

Importance of annual general meeting

The significant governance process for the members of the organisation is annual general meeting. The
transparency, provision of updates, and opportunity can be given to vote for the different matters within
the organisation is made sure by the annual general meeting. The annual general meetings are really
essential for communicating with the investors and encourage them to participate within the organisation.