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Assignment On

“Brief summary of company law”

Course Title: Company and Banking Law

Course Code: LLB -703

Submitted to
Mrs. Sabera Sultana
Lecturer, Department of Law

Prepared By
Iftekar Alam Munna
ID: 1824050010

Date of Submission: 10/04/2021

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ACKNOWLEDGEMENT

I owe an enormous debt of gratitude to my course teacher Mrs. Sabera Sultana

for her masterful presentation on Companies Act and also for her helpful
guidelines and inspirations on studying law in general have greatly shaped my
understanding of legal reasoning and methods. In particular, her ardent support
and encouragement in various steps of this work, and constant guidance and
directions has relentless motivated me to complete the project.
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INDEX

Serial Topic Page No.

no.
01 Introduction 05
02 Company Characteristics 05
03 Essential Features of a Company 06
04 Constitution and Incorporation 07
05 Conclusion 08
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Abstract

In this assignment, I seek to provide a deeper understanding on Company

Law under Companies Act, secondly, I will introduce us that how it’s worked and
finally, I am going to illustrate what its procedure and mechanism.

For start with the development of the research, it is important to have full
knowledge about the main topic that I am going to develop during the course of
the document, I mean, Company law and Companies Act, 1994. Within this
document, there are include some of the rights that probably could be the most
important ones.
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Introduction

The concept of ‘Company’ or ‘Corporation’ in business is not new but was dealt with Its’ shape got
revamped over a period of time according to the needs of business dynamics. Nowadays, business
matters have become more complicated and cannot be discussed at festive gatherings. Therefore, the
company form of organization has assumed greater importance. It denotes a joint-stock enterprise in
which the capital is contributed by several people. Thus, in popular parlance, a company denotes an
association of like minded persons formed for the purpose of carrying on some business or undertaking.
It is called a body corporate because the persons composing it are made into one body by incorporating
it according to the law and clothing it with legal personality. It is, for this reason, sometimes called an
artificial legal person. As a legal person, a corporation is capable of enjoying many of the rights and
incurring many of the liabilities of natural people. The persons who contributed in it or form it, or to
whom it belongs, are members. The proportion of capital to which each member is entitled is his
“share”. The shares are always transferable although the right to transfer them may be restricted. From
the foregoing discussion, it is clear that a company has its own corporate and legal personality distinct
which is separate from its members. A brief description of the various attributes is given here to explain
the nature and characteristics of the company as a corporate body. 1

Company Characteristics

Company incorporation in Bangladesh comes in a different form and procedure as per the Companies
Act 1994, under the act company registration procedure in Bangladesh differs depending on the types
of company registration one may opt for in Bangladesh. Followings shall give an understanding of
what is the procedure and what may be required to have a company incorporated/registered in
Bangladesh.

A company must be registered under the Companies Act. After registration, the Registrar of the
companies issues a Certificate of Incorporation. If any association or company is not registered it
should be called unregistered company. There are various types of company that can be formed in
different jurisdictions, but the most common types of companies are:

Private Company- A private company is one which, by its articles, a) restricts the right of the
members to transfer their shares, if any; b) limits the number of its members to 50; and c) prohibits any
invitation to the public to subscribe for any shares in, or debentures of, the company- Sec. 3( 1)(iii).

Public Company- All companies other than private companies are called public companies. – Sec.
3(1) (IV). Public companies may be classified into three types:

1 'Company Law' (Dictionary.cambridge.org, 2021) <https://dictionary.cambridge.org/dictionary/english/company-law>

accessed 9 April 2021.
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a. Companies Limited by share- In this company there is a share-capital and each share has fixed
nominal values which the shareholder pays at a time or by installments. The member is not liable to
pay anything more than the fixed value of the share.

b. Companies limited by guarantee- In these companies, each member promise to pay a fixed sum
of money in the event of liquidation of the company. This amount is called the Guarantee. Sometimes
the members are required to buy a share of a fixed value and also give a guarantee for a further sum in
the event of liquidation. There is no liability to pay anything more than the value of the share and the
guarantee.

c. Unlimited Company- In these companies the liability of the shareholder is unlimited, as in

partnership firms. Such companies are permitted under the companies Act but are not known.2

Essential Features of a Company

Registration– A Company comes into existence only after registration under the Companies
Act. But a Statutory Corporation is formed and commence business as notified or stated in the Act and
as passed in the Legislature.

Voluntary Association– A Company is an association of many people on a voluntary basis.

Therefore a company is formed by the choice and consent of the members.

Capital– A Company must have a capital, otherwise it cannot work.

Permanent Existence– The company has Perpetual Succession. The death or insolvency of a
shareholder does not affect its existence. A company comes into end only when it is liquidated
according to provision of the Company Act.

Legal Personality– A Company is regarded by law as a single person. It has a legal personality.
This rule applies even in the case of “One-man Company.”

Limited Liability– The liabilities of shareholders of a company are usually limited. The
creditors of a company are not creditors of individual shareholders and a decree obtained against a
company can not be executed against any shareholders. It can only be executed against the assets of the
company. According to the Company Act 1994 of Bangladesh, the liability of shareholder may be
limited by share under section 6(a) (4) or limited by the guarantee under section 7(a)(4).

2 'Company Act, 1994' (Bdlaws.minlaw.gov.bd, 2021) <http://bdlaws.minlaw.gov.bd/act-788.html> accessed 9 April

2021.
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Transferability– The shareholder of a company can transfer its share and ordinarily the
transferee becomes a member of the company.

Statutory Obligation– A Company is required to comply with various statutory obligations

regarding management, e.g., filling balance sheets, maintaining proper account books and registers etc.

Common Seal– Company can not sign on any contract because it is artificial person and it
works with common seal.

Right To Sue– Company can sue on other parties like natural person for protecting its assets
and properties. Other persons can also change on the company.

Financial Power– A company is given exclusive power and the only medium of organizing
business which is given the privilege of raising capital by public subscription either by way of shares or
debentures.3

Constitution and Incorporation

Memorandum of Association: The Memorandum of Association is a document which contains the

fundamental rules regarding the constitution and activities of a company. It is the document which is
regulate companies operations, alterations, activities. The main purpose of the memorandum is to know
the people its powers and its range of activities. This document contains company policy regarding
capital, its mandate and internal matters of companies.

Contents of Memorandum of Association: Memorandum of Association contains Name clause which

is define company’s name. Situation’s clause contains company location where its situated. Objects
clause contains ancillary and incidental and other objects not included in MoA. Liability clause state
liability of its members. The last clause contains amount and rate of shares.

Alteration of Memorandum of Association: Under Companies Act, it can be altered by following

procedure of act. For the purpose of alteration, the provisions of the memo can be divided into two
classes: provisions the inclusion which is made compulsory by the Act and other is which organizers
thinks that subtract or add.

Articles of Association: Articles of Association can be considered as a contract between the members
and the company. These articles bind the present as well as the future members of the company. The
company and its members are bound by the articles as soon as the document is signed.

• Members have various rights and duties towards the company.

3 Dr. M. Jahir, Company And Securities Laws (5th edn, The University Press Limited(UPL) 2015).
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• The articles together with the memorandum of association make the constitution of the
company.

Conclusion

At the end, the property of corporate separate personality is far- triumph. A company is regarded as a
legal entity in its own right and, as such, its members have imperfect liability for its amount
outstanding and obligations. Company has to market in a certain area by agents or subscriber. Their
main objective is to achieve the company goal. They are also a major part of the company but not at
law in compare with the members of the company. Here the supervisory boss role to implement the
laws in proper way to enhance the target. The tendency of human beings to break the rules if not
bindings. Finally, an elementary feature of corporate separate traits is that of perpetual succession,
which results in a long-term of the company’s survival regardless of its members.

Bibliography:

1. 'Company Law' (Dictionary.cambridge.org, 2021)

<https://dictionary.cambridge.org/dictionary/english/company-law> accessed 8 April 2021
2. 'Company Act, 1994' (Bdlaws.minlaw.gov.bd, 2021) <http://bdlaws.minlaw.gov.bd/act-788.html>
accessed 9 April 2021
3. Jahir D, Company And Securities Laws, page 424-426 (5th edn, The University Press Limited(UPL)
2015)