Professional Practices

LECTURE 5
ALEENA SHUJA
What is a Company?- Definition, Characteristics
A company's ownership can range from a partnership to a
proprietorship, or even a corporation.
Companies may be either public or private.
A company is generally organized to earn a profit from business
activities.
Companies are an important contributor to the health of an
economy as they employ individuals and attract disposable income
to spur growth.
https://www.investopedia.com/terms/c/company.asp
How a Company Works
A company is essentially an artificial person—also known as
corporate personhood—in that it is an entity separate from the
individuals who own, manage, and support its operations.
Companies are generally organized to earn a profit from business
activities.
Each company has its own hierarchy and corporate structures.
 Types of Companies
Partnerships are formal arrangements in which two or more parties
cooperate to manage and operate a business.

Corporations are legal entities that are separate and distinct from their
owners and provide the same rights and responsibilities as a person

Associations are based on any group of individuals who join together for
business, social, or other purposes as a continuing entity.

Funds are businesses engaged in the investing of pooled capital of

investors.

Trusts are fiduciary arrangements in which a third party holds assets on

behalf of beneficiaries.
Company Constitution
A legally binding agreement between your company and its internal members
that defines rules related to internal governance, business activities and rights
and obligations of its internal members.
It is submitted as part of a company’s incorporation process.
A company constitution has the following components:
1. Name and type of company
2. Decision-making and board member selection structure
3. Nature and extent of liabilities of company members
4. Details of company shareholders
5. Business objectives and activities of the company
6. Rules and regulations pertaining to share issuance, board resolutions and
director duties
Companies’ Constitution Pakistan

https://na.gov.pk/uploads/documents/1487136261_767.pdf

https://www.ma-
law.org.pk/pdflaw/Companies%20Ordinance,%201984.pdf
Company Disclosure
In the financial world, disclosure refers to the timely release of all information
about a company that may influence an investor's decision.
It reveals both positive and negative news, data, and operational details that
impact its business.
Companies’ Disclosure Requirements under
Accounting Standards
Under the Companies Acts, financial statements must also comply with
accounting standards in order for those financial statements to give a true and
fair view.
Accounting standards contain guidance on how matters should be dealt with
in a company’s financial statements.
The accounting standard most relevant to the subject matter of this guidance
is Financial Reporting Standard 8 (FRS8) Related Party Disclosures.
This requires the disclosure of information on related party transactions.
 Company Financial Statements Disclosure
The information required to be disclosed in company financial statements is:

1. Names of the transacting related parties

2. Description of the relationship between the parties
3. Description of the transactions
4. The amounts involved
5. Any other elements of the transaction necessary for an understanding of the
financial statements
6. Amounts due to or from related parties at the balance sheet date and provisions
for doubtful debts due from such parties at that date
7. Amounts written off in the period in respect of debts due to or from related
parties.
Organization

An organization is a group of people who work together, like a

neighborhood association, a charity, a union, or a corporation
Organizational Structure
An organizational structure is a system that outlines how certain
activities are directed in order to achieve the goals of an
organization.
These activities can include rules, roles, and responsibilities.
The organizational structure also determines how information
flows between levels within the company.
Organizational Structure
An organizational structure outlines how certain activities are directed to
achieve the goals of an organization.
Successful organizational structures define each employee's job and how it fits
within the overall system.
A centralized structure has a defined chain of command, while decentralized
structures give almost every employee receiving a high level of personal
support.
Senior leaders should consider a variety of factors before deciding which type
of organization is best for their business, including the business goals, industry,
and culture of the company.
investopedia.com/terms/o/organizational-structure.asp#:~:text=An%20organizational%20structure%20is%20a,between%20levels%20within%20the%20company


Functional
Structure
Divisional
Structure
Team-Based
Structure
Circular
Organizational
Structure
https://www.youtube.com/watch?v=u3PnRC6Z3pg

https://www.youtube.com/watch?v=xcTtQ0hiHbE