Synopsis: 01

Subject: Business Law

Companies Act 1994

Nature and formation of Companies: About the Companies Act-1994

A company has a dual nature, as an association of its members but also as a person
separate from its members. As soon as necessary formalities of incorporation are
satisfied, a new entity comes into existence which is separate and distinct from its
directors and shareholders. A company is a business entity registered under
the Companies Act-1994. . It is a legal entity with a separate identity from those
who are its members or operate it. Therefore it can be considered as an artificial
person created by the law.

As Under Sec 2 (1) (d) The Company Act, 1994: “Company means a company
formed and registered under this Act or an existing company.”

Objectives of Companies Act

There are two immediate objectives for the enactment of this Companies Act. They
are:
1. To inject discipline in the management
2. To protect the interest of the investors.

Types of Companies

Private Company
Companies limited by shares
Companies limited by guarantee
Public Company
Companies limited by shares
Companies limited by guarantee (guarantee for liquidation)
Unlimited companies
Classification on the Basis of Control:
Holding Company
Subsidiary Company
Classification of others:
Foreign company
Joint venture Company
Company Limited Liability by Shares: In these
companies there is a share capital, and each share has a
fixed nominal value which the shareholder pays at a time
or by the installments. The member is not to pay
anything more than the fixed value of the share, whatever
may be the liabilities of the company.
Company Limited by Guarantee: In these companies,
each member promises to pay fixed sum of money in the
event of liquidation of the company. This amount is
called the Guarantee.

Private Limited Company

As defined in Section 2(q) of the act, a private company
means a company which by its articles:
a) Restricts the right to transfer the share, if any; and,
b) Prohibits any invitation to the public to subscribe for
the shares, if any, or debentures of the company; and,
c) Limits the number of its members to fifty (50) not
including persons who are in the employment of the
company.
“A Company incorporates with more than two person and
it is limited to fifty members.
Public Limited Company
In public limited company,
-public can acquire,
-own, and
 -sell the share of such type of company at their
wishes.
-The company can issue prospectus to the public to subscribe
the share and debentures of the company and, thus, can
collect capital for the company.
“A companies which is constituted with a minimum of
seven members and maximum is unlimited, and members
called shareholders. Here the liability is limited up to
level of what he is invested”.
Tanvir Hasan, FCA
Deputy Managing Director
Company Secretary
MIDAS Financing Ltd
tanvir24@hotmail.com
01715094176