1.
Introduction to Company Law and Companies (Solutions) Page 734
Ch # 1: Introduction to Company Law and Companies
Q# Solution
Q1* Regulation V(2) and V(12) of Table F & Section 43 of Companies Act, 2017.
WCFA can appoint Afzal as legal adviser of the association but cannot pay any
remuneration as company is prohibited from making payment of remuneration for
services or otherwise to its members. Even after quitting the association the
prohibition of payment shall continue to apply for a period of five years.
Q2 Section 42 of Companies Act, 2017.
The Securities and Exchange Commission of Pakistan, on such conditions and subject
to such regulations as it thinks fit allow an association which has been formed or is
capable of being formed as a limited liability company to register as a limited
company without the addition of word ‘Limited’ or (Guarantee) Limited or (Private)
Limited etc. to its name, subject to the following:
Such association may be set up for any of the following purposes
- Commerce - Arts - Science
- Religion - health - education,
- research, - Sports - Protection of Environment
- Social Welfare - Charity - Any other useful object
It shall apply its profits (if any) in promoting its objects
It shall prohibit the payment of any dividend to its members and
Its objects and activities are not and shall not, at any time, be against the laws,
public order, security, sovereignty and national interests of Pakistan
Q3 Section 2(49) Definition of Private Company of Companies Act, 2017.
In connection with conversion of status of the company, SPL would have to make the
following changes in the articles of the company:
(i) Remove the restriction on transfer of shares;
(ii) Remove the limit on maximum number of members;
(iii) Remove the restrictions to make public offer of shares or debentures;
(iv) Remove the word (Private) from the name of the company.
Q4 Section 2(68) Definition of Subsidiary Company of Companies Act, 2017.
A company shall be deemed to be a subsidiary of another when:
(i) that other company:
- directly or indirectly owns or holds or control more than fifty per cent of its voting
securities or
- controls the composition of its board: or
(ii) the first mentioned company is a subsidiary of any company or body corporate
which is that other’s subsidiary
Q5* Section 2(49) of Companies Act, 2017.
The definition of a private limited company as contained in the Companies Act 2017,
along with other conditions, limits the number of its members to fifty.
1. Introduction to Company Law and Companies (Solutions) Page 735
In computing this number, those who are in the employment of the company would
not be counted. Moreover, where two or more persons hold one or more shares in a
company jointly, they shall, for the purposes of this definition, be treated as a single
member.
Therefore, in the given scenario, the total number of shareholders turns out to be 49
rather than 52. The total number of shareholders is thus not exceeding the limit as
fixed by the Companies Act 2017 hence no action is required.