Company Act,1994

Formation & Registration of Company

• A Company is a separate, unique legal entity with its distinct common
seal. The stages in the formation and registration of a Company are:
1. Step - 1 (Promotion Stage):
a) Discovery of a business opportunity. Uber, Foodpanda
b) Detailed investigation. Pros & Cons.
c) Assembling. (Factory: Place, Factory, Machineries, Worker etc.)
d) Financing the proposition.
 Formation & Registration of Company
2. Step - 2 (Incorporation Stage):
a) Name Clearance from The Registrar of Joint Stock Companies
and Firms (RJSC). An authorized name will be reserved for 6
months from the date of clearance.
b) Drafting of required documents: MoA, AoA, A declaration, A
list of directors.
c) Opening of bank account: must open a bank account in the
proposed name of the company.
d) Submission of documents to the RJSC and pay the registration
fees. If the RJSC is satisfied, then Incorporation Certificate,
Certified copies of Memorandum of Association and Articles of
Association and a list of directors will be issued.
 Formation & Registration of Company
3. Step - 3 (Post-Registration Compliance): The following things/ documents also need
to run the business:
a) share certificates for each shareholder
b) Company seal, logo etc.
c) Trade License
d) Tax Identification Number (TIN)
e) VAT Registration Certificate
f) Fire Certificate
g) Environmental Clearance Certificate (if necessary)
4. Step - 4 (Commencement Stage):
i) Certificate of Incorporation (for private company)
ii) Certificate of Incorporation & Certificate of Commencement (for public
company). A public company can prepare a prospectus and raise of share capital.
 Prospectus
• 1. Meaning of prospectus
• A document described or issued as a prospectus and includes any notice, circular, advertisement
or other document inviting deposits from the public for the subscription or purchase of any shares
in or debentures of a body corporate.
• 2. Contents of prospectus
• a) Objects of the Company
• b) Number and classes of shares
• c) Names, addresses and occupations of Directors, MDs, Secretaries, Managers etc.
• d) Qualification shares of Directors.
• e) Subscribed capital
• f) Minimum Subscription.
• g) Names and addresses of Auditors
• h) Voting rights of members
• i) Financial information of the Company.
• j) Terms and particulars of issue.
• k) Restrictions on transfer of shares.
 Meetings & Resolution
• 1. Definition:
• “An occasion when people come together to discuss or decide something”.
•
• 2. Kinds of Company Meetings: Generally 3 types of meeting:
• a. Meetings of the shareholders/ members:
• i) Statutory Meeting: the first general meeting of the members of the Company
• that is held within a period of not less than one month and not more than six
• months from the date of commencement.
• ii) Annual General Meeting: This is held every year for adoption of the annual
• accounts and appointment of auditors and directors. The first meeting should be
• held within 18 months from the date of incorporation of the Company.
• iii) Extraordinary General Meeting: This is held when some urgent business is to be
• conducted
 Meetings & Resolution
• b. Other Meetings:
• i) Meeting of the creditors
• ii) Meetings of the Debenture holders
• c. Other General Meetings:
• i) Meetings of the Board of Directors: At least once every quarter
of the year. The quorum of the Board meeting is one-third of the
total number of Directors.
• ii) Meeting by order of the Tribunal
• iii) Extra-ordinary General Meeting on requisition
 Meetings & Resolution
• 3. Rules of Meeting:
• a. Proper authority
• b. Notice
• c. Fix the agenda
• d. The Quorum
• e. The Chairman
• f. Proxy
• g. Method of voting
 Meetings & Resolution
• 1. Definition of Resolution
• A firm decision to do or not to do something.

• 2. Types of Resolution
• Ans: There are three types of resolutions:
• Ordinary resolution (Normally held in General meeting)
• Special resolution. (only majority)
• Extra-ordinary resolution. (not less than ¾ majority)
 Directors
• 1. Appointment of Directors (Sec: 91)
• Directors may be appointed in the following ways: -
• a. By subscribers to the MoA;
• b. By shareholders in General Meeting;
• c. By Board of Directors
• d. By Central Government
• e. By third parties
• 2. Disqualification of Directors (Sec: 94)
• a. If he is a minor.
• b. If he is of unsound mind.
• c. If he is an insolvent person.
• d. If he is of criminal background.
• e. If he fails to hold the minimum number of shares within two months of his
appointment.
 Directors
• 3. Qualification of Directors (Sec: 97)
• a. A director must be capable of entering into contract-
• i) Major person
• ii) Person of sound mind
• iii) Qualified person by law
• b. Must be a natural person
• c. Must have the capability to hold the minimum number of shares.
• d. A director must not be disqualified person under section 94.
• 4. Removal of Directors (Sec: 106)
• a. The company may be removed any share-holder director by extra-
ordinary resolution before the expiration of his period of office.
• b. A director so removed shall not be re-appointed a director by the Board
of Directors.
 Rights of Directors
• 1. Participation: Meeting, occasion, Decision making etc.
• 2. Remuneration: For extra duties other than directorship.
• 3. Compensation: For any loss by the company.
 Duties of Directors
• 1. To attend the meeting
• 2. Have a good faith
• 3. Distribution of work (Team work)
• 4. To take reasonable care
• 5. Degree of skill.
• 6. Not to disclose the internal matters to the others.
 Winding up of a Company
• Definition of winding up of a company
• The winding up or liquidation of a company means the termination of
the legal existence of a company by stopping its business, collecting
its assets & distributing the assets among creditors & shareholders
according to Company Act, 1994.
 Winding up
• Different modes of winding up of a Company:
• According to section 234 of Companies Act, 1994, there are 3 modes:
a. Compulsory winding up by the Court (sec: 241-285)
b. Voluntary winding up (sec: 291-315)
i) By the members (sec: 291-296)
i) By the creditors (sec: 297-305)
c. By the supervision of the Court (sec: 316-321)
 Winding up
• Compulsory Winding up by the Court (sec: 241)
a. If the company fails in filing the Statutory Report or in holding the
Statutory Meeting.
b. If the company does not commence its business within a year from its
registration.
c. If the company suspends its business for a whole year.
d. If the number of members is reduced (pvt. Co. below two & pub. Co.
below seven).
e. If the company is unable to pay its debts. Ex: Hallmark 4500 crore tk.
f. The just and equitable clause. Ex: Destiny-2000
 Winding up
• Voluntary winding up (sec: 286)
a. When certain duration of a company will be expired this has
fixed by A/A
b. If the company makes a decision by passing special resolution.
c. If the company makes a decision by passing extra-ordinary
resolution. (¾ majority)
• By the supervision of the Court (sec: 316)
The company makes an application to the court to terminate the
company.
 Winding up
• Who can apply for winding up?
a. The company itself
b. Any creditor or creditors
c. Any contributor
d. The registrar
e. A person authorized by the central govt.