MGT401 Financial Accounting II Assignment 1 Solution Fall 2014

Case Assignment question is regarding formation and registration of company under companies’ ordinance 1984. Different scenarios are given and you are required to give proper treatment of these situations with respect to companies’ registration process devised by security and exchange commission of Pakistan (SECP). Mr. M. Gulzar is sole owner of a foundry business. With his determination and hardworking attitude, he managed to make his business profitable and expand it at large scale. As foundry is second largest industry of Pakistan and there is great opportunity to avail. Mr. M. Gulzar who is sole owner is working on different options (going public, single member company, Pvt Company etc.) all have their pros and cons.

REQUIREMENTS: (3+3+3+3+08)

• If Mr.M.Gulzar decided to avail any one option listed above how much time it will take to complete registration with SECP assuming all other procedures are completed? (03 Marks)

• Is there any certificate needed prior to incorporate the Pvt Ltd Company, if yes, from which Government department/Mistry Mr.M.Gulzar will take permission? (03 Marks)

• Mr.Gulzar thinking about name if he decides to go publicly that is “Askari Foundry”. Is this name is allowed by SECP, if not why and if yes why? (03 Marks)

Solution: Pakistan Foundry Association.

• Precisely give the online procedure of registration of Company for Mr. M. Gulzar with SECP. (03 Marks)

Obtain Name Availability

Enter your User ID and Password to log in athttps://eservices.secp.gov.pk/eServices/

Create additional User IDs, as required through Manage Company Users button available

on the top right hand side of the web page. You will need to create separate User IDs for

all proposed Subscribers in order to obtain their digital signatures.

Obtain the required Digital Signatures for all Subscribers from NIFT

https://secp.niftetrust.com/

Log in again at https://eservices.secp.gov.pk/eServices/ and fill out the data. Press

Continue button at the bottom of the page. The next page will be displayed and the information entered so far will be automatically saved by the System.

Attach and Save Memorandum of Association in the attachment link provided. Please note that the attachment size should not exceed 2 MB.

Attach and Save Articles of Association in the attachment link provided. Please note that

the attachment size should not exceed 2 MB.

Attach and Save CNICs of all the Subscribers and any other required document(s) under

Fill New Attachment Form link.

Open and Save Challan Form which is automatically generated through the System. Do

not print Challan at this stage.

Click Sign Forms

Select and Sign Forms using the digital signatures obtained from NIFT. Every Subscriber needs to sign forms by logging through his/her User ID.

Click Submit to SECP button. After your process is submitted, you will see a submitted process reference number on the screen. Please print a copy of this page for future reference.

Print the Challan from “Submitted Processes” and pay this Challan in the designated branch of MCB.

After you have submitted the process and paid the challan, your process will be assigned to the concerned officer for processing. You will receive an email letting you know about the status of your case whether it is accepted, rejected or further information is required for issue resolution. Please note that Company Incorporation Cases are processed at the concerned Company You may also consult the User Guide on the SECP website

How private company is different form Public company in term of ‘requirements after incorporation’? Provide table of analysis for differentiation. (08 Marks)

Private Limited Any one or more persons formed for a lawful purpose by subscribing to the memorandum of association, a private company. (“Companies Ordinance, 1984)

Public Co., Ltd.Any three or more persons may form a public limited liability company, and in the same manner and purpose of any seven or more people can form a listed company. (“Companies Ordinance, 1984)

Private Company Public Company
Its minimum number of persons is two and the maximum is 50.

It makes the use of private limited after its name.

It can commence its business operation after getting certificate of incorporation.

The memorandum of association and the articles of association is signed by at least two persons.

The filling of both memorandum and article of association is obligatory.

It does not require the filling of the prospectus or statement-in-lieu of prospectus.

It cannot sell shares to the general public in the open market.

Transfer of share is restricted in the articles of association.

There are of least two directors and they need not retire by rotation.

There is no legal restriction on director’s remuneration.

 

Its minimum number of persons is seven and the maximum is unlimited.

It makes the use of the word limited after the name.

It requires both the certificate of incorporation and the certificate of commencement for its commencement.

Its memorandum and articles of association is signed by at least seven persons

It may not have its own articles of association because it may adopt table ‘A’

 

It must file prospectus or statement in lieu of prospectus before allotment of shares.

it sell shares to the general public in the open market

Transfer of shares is not restricted and as such shares are freely transferable and are quoted in the stock exchange.

it has at least 3 directors and they are subject to retire by rotation.

The directors cannot draw remuneration more than 11 percent of the net profit of the company

 

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