UOH Handouts

According to section 396 of Companies Ordinance, a voluntary winding up of a company can also be carried under the strict registration of the court. 1.  Resolution At first, company has to pass special resolution for the voluntary winding up of the company. 2.  Supervision Order Following are the common grounds on which the court issues the supervision order: 1.  The liquidator performs his duty in partial manner. 2.  The winding up resolution is obtained by fraud. 3.  The liquidator does not strictly observe the rules of winding up the company 3.  Power of the Court The court has the power to appoint an additional liquidator, or to remove any liquidator. 4.  Dissolution After the supervision order is made, the liquidator may exercise his powers in winding up of a company.  On completion of winding up, the court will make an order that the company is dissolved. Share Capital; In simple words, the term “capital” means the particular amoun...

VOLUNTARY WINDING UP; A joint stock company may be wound up voluntarily in following two ways: 1.  By Members According to section 362 of Companies Ordinance, 1984, the members can wind up a company voluntarily under following circumstances: (i)  Expiry of Period A company may be wound up voluntarily by the members, after the expiry of period, by passing resolution in the general meeting. (ii)  Statutory Declaration If majority of directors makes a statutory declaration to registrar that the company will be able to pay its debts in full within one year. (iii)  Special or Ordinary Resolution After submitting the statutory declaration to the registrar, the company, in general meeting passes an ordinary or special resolution to wind up the company. (iv)  Appointment of Liquidators In general meeting, the company appoints liquidators to wind up the company’s affairs.  Within ten days after the appointment must be sent to registrar. (v)  Final Meetin...

DIRECTOR’S MEETINGS The members of the company elect their representatives to run the business and management of the company.  These representatives are called the directors of the company and they are different in numbers in different companies.  All the business affairs are settled with mutual consultation of all directors.  So, the meeting called for directors to discuss the policies or to take the decisions is called directors’ meeting. 1.  When is it held? This meeting must be held at least once in three months and at least four times in a year. 2.  Notice Notice of every meeting must be sent to each directors, otherwise the proceedings of the meeting may be declared void. 3.  Objects •  To allot shares •  To invest company’s fund •  To recommend dividend •  To keep reserve out of profit •  To make loans •  To appoint officers or committee •  To discuss the contracts of the company WINDING UP OF COMPANY A c...

All the general meetings other than annual general meeting and statutory meeting shall be called extraordinary general meetings.  There is no time limit for it.  It may be held from time to time 1.  Right to Call Meeting (a)  The directors of the company may call extraordinary general meeting for doing some urgent business.  (b)  This meeting can also be called by the directors, on the request of shareholders, having not less than one tenth of the voting power.  (c)  In case the directors fail to call the extraordinary general meeting within 21 days, the shareholders themselves may call the meeting.  In such, case, meeting must be held within 3 months. 2.  Notice To call the extraordinary meeting, 21 days notice is served. 3.  Procedure The shareholders have to submit their demand to the secretary of the company.  With the consultation of directors, he will arrange to call the meeting.  The company bares the expen...

ANNUAL GENERAL MEETING According to section 158 of Companies Ordinance, every company must hold an annual general meeting of its shareholders, once in a year.  The meeting provides an opportunity to evaluate and measure the efficiency of the directors and other officers in carrying out the company’s affairs. 1.  Notice A notice of annual general meeting should be sent to the shareholders, at least 21 days before the date of the meeting. 2.  Place of Meeting In case of listed company, annual general meeting should be held in town where the registered office of the company is situated. 3.  Role of shareholders The shareholders can criticize the policies of the directors and other officers and can offer suggestions for their improvement. 4.  Occasion The first meting of this nature must be held within 18 months from the date of incorporation.  The gap between two annual general meetings must not be more than 15 months. 5.  Objects The main objectiv...

Meeting: “A gathering of two or more persons by previous notice or by mutual arrangement for the discussion and transaction of some business is called meeting.”                                                                                   SHAREHOLDERS’ MEETINGS                                  AND COMPANY’S MEETING  “When the members of a company gather at a certain time and place to discuss the business and managing affairs...

Joint Stock Company is the third major form of business organization. It has entirely different organizational structure from sole proprietorship and partnership. There are two advantages of Joint Stock Company. First of all, it enjoys the advantage of increased capital. Secondary, the company offers the protection of limited liability to the investors. The law relating to Joint Stock Company has been laid in Companies Ordinance, 1984, which came into force on January 1, 1985 in Pakistan. Following are the important stages or steps for the formation of a joint stock company: Formation of joint Stock Company PROMOTION STAGE The promoters do the basic work for the start of a commercial or an industrial business on corporate basis. Promotion is the discovery of ideas and organization of funds, property and skill, to run the business for the purpose of earning income. Following steps are involved in the stage of promotion. 1. Idea about Business Before starting the busine...

Some of the disadvantages of the joint stock company are given below: 1. Initial Difficulties It is more difficult to establish a joint stock company as compared to other business organizations. 2. Lack of Interest Most shareholders become relaxed and leave all the functions to be carried out by the directors. This usually encourages the directors to promote their own interest at the cost of the company. 3. Labor Disputes In such organization there is no close contact of the workers with the owners or the shareholders. This leads to formation of labor unions to fight against the company’s management. 4. Lack of Responsibility  There is lack of personal interest and responsibility in the business of a joint stock company. If any mistake occurs, everybody tries to shift or transfer his responsibilities to other persons and he remains safe. 5. Lack of Secrecy A joint stock company cannot maintain its secrecy due to the reason that a company has to submit various...

ADVATNAGES OF JOINT STOCK COMPANY Following are the advantages of Joint Stock Company:    1. Expansion of Business  A joint stock company sells the shares, debentures and bond s on large scale. So, a joint  stock company can collect a large amount of capital and can expand its business.    2. Easy Access to Credit  A joint stock company can get a huge amount of capital from banks and other institutions.    3. Easy to Exit  It is easy to separate oneself from a joint stock company by selling his shares.    4. Experts’ Services   Because a joint stock company has a strong financial position, so it may hire the service of  qualified and technical experts.    5. Employment  Joint stock companies are also playing very important role to provide employment to  unemployed persons of the country.    6. Flexibility   There is flexibility in such bu...

Joint Stock Company is the third major form of business organization. It has entirely different organizational structure from sole proprietorship and partnership. There are two advantages of Joint Stock Company. First of all, it enjoys the advantage of increased capital. Secondly, the company offers the protection of limited liability to the investors. The law relating to Joint Stock Company has been laid in Companies Ordinance, 1984, which came into force on January 1, 1985 in Pakistan. DEFINITIONS Following are some important definition of Joint Stock Company: 1. Simple Definition “A company may be defined as an association of persons for the purpose of making profit.” 2. According to Kimball, “A corporation by nature is an artificial person, created or authorized by a legal statue for some specific purpose.” 3. According o S.E. Thomas, “A company is an incorporated association of persons formed usually for the pursuit of some commercial purpose.” FEATURES OF JOINT ...

There are three kinds of partnership which are described as under:   1.  Partnership at will   2.  Particular partnership   3.  Limited partnership PARTNERSHIP AT WILL If the partnership is formed for an undefined time, it is called partnership at will.  Any partner can dissolve it at any time by giving the notice.   According to Partnership Act, 1932: “If no provision is made in the agreement regarding the partnership, it is called partnership at will.”   Partnership at will may be created under the following circumstances: 1.  Indefinite Period  If partnership has been formed for an indefinite period, it is called partnership at will. 2.  Existence after Completion of Venture If partnership has been formed for a particular venture and after completion such venture it remains continue, it becomes a partnership at will. 3.  Existence after Expiry of Period If partnership has been formed for a defi...

Partnership is the second stage in the evolution of forms of business organization.  It means an association of two or more persons to carry on a business for profit. According to Partnership Act, 1932  “Partnership is the relation between persons who have agreed to share the profits of a business, carried on by all or any of them active for all.” PARTNERS    “The individuals who comprise a partnership are known as partners.” KINDS OF PARTNERS Partners can be classified into different kinds, depending upon their extent of liability, participation in management, share of profits and other facts. 1.  Active Partner A partner who takes active part in the affairs of business and its management is called active partner.  He contributes his share in the capital and is liable to pay the obligations of the firm. 2.  Secret Partner A partner who takes active part in the affairs of the business but is unknown to the public as a partner is...

The disadvantages of partnership are enumerated one by one as under: 1.  Unlimited Liability It is the main disadvantage of partnership.  It means in case of loss, personal property of the partners can be sold to pay off the firm’s debts. 2.  Limited Life of Firm The life of this type of business organization is very limited.  It may come to an end if any partner dies or new partner enters into business. 3.  Limited Capital No doubt, in partnership, capital, is greater as compared to sole proprietorship, but it is small as compared to Joint Stock Company.  So, a business cannot be expanded on a large scale. 4.  Limited Abilities As financial resources of partnership are limited as compared to Joint Stock Company, so it is not possible to engage the services of higher technical and qualified persons.  This causes the failure of business, sooner or later. 5.  Limited number of Partners In partnership, the number of par...

Following are the advantages of partnership: 1.  Simplicity in Formation  This type of business of organization can be formed easily without any complex legal formalities.  Two or more persons can start the business at any time.  Its registration is also very easy. 2.  Simplicity in Dissolution  Partnership Business can be dissolved at any time because of no legal restrictions.  Its dissolution is easy as compared to Joint Stock Company. 3.  Sufficient Capital  Partnership can collect more capital in the business by the joint efforts of the partners as compared to sole proprietorship. 4.  Skilled Workers As there is sufficient capital so a firm is in a better position to hire the services of qualified and skilled workers. 5.  Sense of Responsibility  As there is unlimited liability in case of partnership, so every partner performs his duty honestly. 6.  Satisfaction of Partners In this type of...

Partnership and its Characteristics Partnership is the second stage in the evolution of forms of business organization.  It means the association of two or more persons to carry on as co‐owners, i.e. a business for profit. The  persons  who  constitute  this  organization  are  individually  termed  as  partners  and collectively known as firm; and the name under which their business is conducted is called “The Firm Name”. In ordinary business the number of partners should not exceed 20, but in case of banking business  it  must  nor  exceed  10.  This  type  of business  organization  is very  popular  in Pakistan. DEFINITION 1.  According to Section 4 of Partnership Act, 1932 “Partnership is the relation between persons who have agreed to share the profits of a business carried on by all or any of them acting for all.” 2.  According to Mr...

The disadvantages of sole proprietorship can be narrated as under: 1.  Continuity The continuity of sole proprietorship depends upon the health and life of the owner.  In case of death of the owner the business no longer continues. 2.   Chances of Fraud  In sole proprietorship, proper records are not maintained.  This increases the chances of errors and frauds for dishonest workers. 3.  Expansion Difficulty In sole proprietorship, it is very difficult to expand the business because of the limited life of proprietor and limited capital. 4.  Lack of Advertisement As the sources of single person are limited so he cannot bear the expense of advertisement, which is also a major disadvantage. 5.  Lack of Capital Generally, one‐man resources are limited, so due to financial problems he cannot expand his business. 6.  Lack of Inspection and Audit In sole proprietorship there is lack of inspection and audit, which increase...

Following are the advantages of sole proprietorship: 1.  Contacted with the Customers  In sole proprietorship a businessman has direct contact with the customer and keeps in mind the like and dislikes of the public while producing his products. 2.  Direct Relationship with Workers In sole proprietorship a businessman has direct relationship with workers.  He can better understand their problems and then tries to solve them. 3.  Easy Formation  Its formation is very easy because there are not legal restrictions required like registration etc. 4.  Easy Dissolution Its dissolution is very simple because there are no legal restrictions required for its dissolution and it can be dissolved at any time. 5.   Easy Transfer of Ownership A sole proprietorship can easily be transferred to other persons because of no legal restriction involved. 6.  Entire Profit Sole proprietorship is the only form of business organization where...

Sole Proprietorship and its Characteristics  Sole proprietorship is a simple and oldest form of business organization.  Its formation does not require any complicated legal provision like registration etc.  It is a small‐scale work, as it is owned and controlled by one person, and operated for his profit.  It is also known as “sole ownership”, “individual partnership” and “single proprietorship”. DEFINITION  Following are some important definition of sole proprietorship:     1.  According to D.W.T. Staffod  “It is the simplest form of business organization, which is owned and controlled by  one man.”  2.  According to G. Baker    “Sole proprietorship is a business operated by one person to earn profit.” CHARACTERISTICS  Following are the main characteristics of sole proprietorship:  1.  Capital  In sole proprietorship, the capital is normally provid...

Following are the main functions of a business:  1.  Production  Production of goods and services is the first main function of the business.  The production must be regular. The goods and services must be produced in such a way which can satisfy human needs.  2.  Sales  The sale is another important function of the business. Sales are of two types:  ƒ  Cash sales  ƒ  Credit sales  The sale must be regular and at reasonable price. It is very difficult job because there is hard competition in each market.  3.  Finance  It is also an important function of the business to secure finance. Finance is required for establishment and expansion of business.  There are two sources of raising funds:    (a)  Owner’s Capital    (b)  Borrowed Funds  4.  Management Function  “To  do  things  efficiently  and ...

The following points elaborate the role of business organizations:  1.  Distribution   Another benefit of business organization is that it solves the problems of marketing and distribution like buying, selling, transporting, storage and grading, etc.   2.  Feedback  An  organization  makes  possible  to  take  decisions  about  production  after  getting  the feedback from markets.  3.  Finance Management  It also guides the businessman that how he should meet his financial needs which is very beneficial for making progress in business. 4.  Fixing of Responsibilities  It also fixes the responsibilities of each individual. It introduces the scheme of internal check. In this way chances of errors and frauds are reduced.  5.  Minimum Cost  It helps in attaining the goals and objectives of minimum cost in the business.  ...

Technology has a variety of meanings, but as applied to the environment of business, it generally includes all the ways by which firms create value for their constituents. f.  Product and Service Technologies —the technologies employed for creating products (both physical goods and services) for customers. Although many people associate technology with manufacturing, it is also a significant force in the service sector.  g.  Business Process Technologies —are used not so much to create products as to improve a firm’s performance of internal operations (such as accounting, managing information flows, creating activity reports, and so forth). They also  help  create  better  relationships  with  external  constituents,  such  as suppliers and customers.  i.  Enterprise Resource Planning —Large‐scale information system for organizing  and  managing  a  firm’s  processes  across ...