Corporate History

and Structure
Corporate Governance
Saif Ullah Khan
Proprietary form
of Business

Partnership
form Forms of Business
Organization
Joint Stock
Company

CORPORATE GOVERNANCE - LESSON 1 CORPORATE HISTORY AND STRUCTURE 2

Company

Company is derived from the French words

“Compaignie” that means a body of soldiers.

Definition: A company is a legal entity made up

of an association of persons, be it natural, legal
or a mixture of both, for carrying on a
commercial or industrial enterprise.

CORPORATE GOVERNANCE - LESSON 1 CORPORATE HISTORY AND STRUCTURE 3

Characteristics of a Company

Separation
It is an of ownership
Artificial Separate Perpetual Common Limited Transferable Separate
incorporated and
legal person legal entity succession seal liability Shares Property
association managemen
t

CORPORATE GOVERNANCE - LESSON 1 CORPORATE HISTORY AND STRUCTURE 4

Chartered Company

Statutory Company
Classification of
Companies by Mode
Registered Company of incorporation
• Companies limited by shares
• Companies limited by guarantee
• Unlimited company

CORPORATE GOVERNANCE - LESSON 1 CORPORATE HISTORY AND STRUCTURE 5

Classification on the basis of Number of Members

Private Limited Company Public Limited Company

1. Restricts the transfer of shares by its members. 1. No restriction on the transfer of shares.
2. Limits the maximum number of member to 50. 2. No limits on the maximum number of shareholders.
3. Prohibits any invitation to public for debentures 3. Can invite public for shares and debentures.
4. It can be started by two people 4. Minimum number of shareholders is seven.
5. It is not required to issue a prospectus 5. It needs to issue a prospectus.
6. It can start operations as soon as it receive certificate of 6. Has to wait for completion of subscription process to start
incorporation. operation.
 History of Company form of Business
1 3 5 7 9

Kongo Koma Bingley Bian Yi Tuttle’s Red Barn

Gumi
Japan Japan
n
Hotel Business.
United Kingdom
Arms Fang
China
United States
Barn
Construction work Arms and Ammunition
Pharmaceuticals

717 AD

162
141
953
578

AD
AD

4
6
862
705 AD

AD

1239

4
161
Nishigama Onsen Staffelter Egghebell Shirley
Keiunkan Germany
Hof France
a Plantatio
Wine Wine
Japan n
United States
Hotel Business Plantation

2 4 6 8
CORPORATE GOVERNANCE - LESSON 1 CORPORATE HISTORY AND STRUCTURE 7
 Growth of the company form of Acceptance of the new concept of “Limited Liability”.
business in the 19th and 20th century 01 Acceptance in England in 1855

Growth of stock exchanges around the world.

04 London Stock Exchange (1698)
02 New York Stock Exchange(1817)
Shanghai Stock Exchange (1860)
Tokyo Stock Exchange (1878)

03 Popularization of Capitalism as a philosophy of Development.

Free markets, private capital, freedom in economic activities.
05 03 Introduction of separate laws for Joint Stock Companies in different
countries.
US Company Law (1846)
04 Companies Act (1856)
Prussian Act (1843)
Japanese Companies Act (1844)
Chinese Companies Act (1924)

End of cold war and the changes that followed.

05 Economic Integration
Convergence in International Legal and Financial Systems

01 02
Development of Big Emerging Markets.
06 China, India, Brazil, Turkey, South Korea, South Africa, Russia
 Development of Modern Company in
Subcontinent 3 Phase 3

2 Phase 2

1 Phase 1
From 1600 to 1850
• English East India Company (1600).
• Dutch East India Company (1602).
• Registration of Joint Stock Companies Act
1850, didn’t recognized ‘Limited Liability’.
• Joint Stock Companies Act (1857), recognized
‘Limited Liability’.
• Companies Act (1866), later modified in
1882.
• Indian Companies Act (1913).
Establishment of Family Businesses.
• Tata.
• Birla.
• House of Habib.
Cotton Boom and Jute Boom • Dewan.
• Cotton Boom.
• Jute Boom.
• Bombay Stock Exchange (1875).
• Ahmedabad Stock Exchange (1894).
• Calcutta Stock Exchange (1908).
• Madras Stock Exchange (1920).
• Indore Stock Exchange (1930).
• Karachi Stock Exchange (1949).

CORPORATE GOVERNANCE - LESSON 1 CORPORATE HISTORY AND STRUCTURE 9

Development of Modern Company in Pakistan
1. Karachi Stock Exchange (1949)
2. Securities and Exchange
Ordinance, 1969.
3. Securities and Exchange Authority
of Pakistan (SEAP), 1970.
6. Corporate Law Authority (CLA), 12. Companies Ordinance
1981 from the merger of SEAP, (Amended) 2002.
Registrar of Companies and the 13. Companies Act, 2017
Monopoly Control Authority
(MCA).
7. Companies Ordinance (1984).

4. Monopoly and Restrictive Trade 8. Opening of Pakistani Stock Market to foreign

Practices (Control and
Prevention) Ordinance, 1970.
5. The Companies (Appointment of
Legal Adviser) Act, 1974.
investors in 1991.
9. Central Depository Company of Pakistan
(CDC), 1997.
10. Securities and Exchange Commission of
Pakistan (SECP), 1999.
11. Monopoly Control Authority (MCA) was
separated from SECP and transformed into
Competition Commission of Pakistan (CCP).