Articles are responsible for the good conduct of the whole management. The articles of association must be: • In a printed form • Divided into paragraphs • Numbered consecutively • Signed by the subscribers • Properly dated CONTENTS OF ARTICLES The articles usually state the rules and regulations about the following matters: 1. Share capital and its division into different types 2. Methods for the transfer of shares
Introduction to Business –MGT 211 VU © Copyright Virtual University of Pakistan 57 3. Conversion of shares 4. Alternation in share capital 5. Methods to call the meetings of the company 6. Voting power of members 7. Appointment of directors 8. Powers and duties of directors 9. Right regarding shareholders 10. Proceedings of Directors’ meetings 11. Disqualification of directors 12. Seal of the company 13. Dividends and reserves 14. Accounts and their audits 15. Notices to be issued by the company 16. Winding up a company ALTERNATION IN ARTICLES The shareholders of the company can change the articles by passing special resolution but this change should not be against the memorandum and the ordinance. PROSPECTUS DEFINITION According to English Companies Act, “Any prospectus, circular, notice, advertisement or other invitation, offering to the public for subscription or purchase any shares or debentures of the company.” Explanation A prospectus is a notice to general public about the formation of new company. The company tries to attract the public to purchase its shares through the prospectus, as the terms and conditions for the purchase of shares and debentures are written in it. There is an application form in every copy of a prospectus. Only the public company is required to issue the prospectus. CONTENTS OF PROSPECTUS The important matters to be included in a prospectus are divided in numbers with separate headings. Some of them are briefly discussed below: 1. Share Capital Authorized, issued and subscribed capital with basis of allotment. 2. Commission, Brokerage and Tax Exemption Commission to be paid to the bankers on issue, brokerage and tax exemption on investment in shares. 3. Brief history and Prospectus Brief history, main objects and location of the company, information about project, plant, etc. 4. Financial Information Auditor’s report, shareholders’ equity and liabilities, share capital, etc.
Introduction to Business –MGT 211 VU © Copyright Virtual University of Pakistan 58 5. Board of Directors Names, addresses and occupations of board of directors. 6. Interest of Directors Interest of directors in dividends, remuneration to be paid to directors, secretaries, etc. 7. General Information General information like: • Appointment,, election and powers of directors • Voting rights • Transfer of shares • Quorum of general meeting 8. Miscellaneous Place of registered office, factory and bankers, consultants, legal advisor of the company, etc.
You've reached the end of your free preview.
Want to read all 167 pages?