Joint Stock Company

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Software Engineer at Padandas

Published: 2024-01-01 Last updated: 2024-01-01

A sole trading and partnership business could not meet the requirement of the large-scale organization. Both of them have limited fund and unlimited liability. There is a lack of managerial ability in sole trading and partnership firm. So, the joint stock company was established. A joint stock company is established under the Company Act, 2053.

Meaning and Definition of Joint Stock Company

The joint stock company is an association of person having a separate legal existence, perpetual succession, common seal, common capital etc. The joint stock company divides its capital into a large number of parts with each value where each part of capital is called share. The person who holds the share is called shareholders of the company.

The company is managed by the board of directors who are the representative of shareholders. The member of the board is elected by the shareholders.

According to L.H. Haney, “A joint stock company is a voluntary association of individuals for profit, having a capital divided into transferable shares, the ownership of which is the condition of membership. Again a company is an artificial person created by law having a separate legal entity with a perpetual succession and a common seal."

Therefore, a joint stock company is a corporate organization having a separate legal existence, perpetual succession, common seal, common capital etc. managed by the representatives.

Types of Joint Stock Company

On the basis of Incorporation

A joint stock company formed on the basis of incorporation can be classified as follow:

Chartered company:
A company which is incorporated under Royal Charter issued by the king or Head of the state is known as a chartered company. Under this charter, certain exclusive rights and privilege are granted to the company for undertaking certain commercial activities. The Bank of England, the East India Company, the charter bank of Australia are some of the examples of the chartered company. These companies are no longer formed in any country.
Statutory Company:
A company which is formed under a special act of Parliament is known as a statutory company. A Parliament passes a special act to form such a company. The objects, powers, rights, and responsibilities are clearly defined in the Act. When a company requires special rights and power these type of companies are established. Generally, companies for public utility services are formed. In our country, several such Acts have been passed. For example, Nepal Rastra Bank, Nepal Industrial Development Corporation, RNAC, Karmachari Sanchaya Kosh, etc.
Registered Company:
A company which is established by registering in the office of Company Registrar under the Company Act 2053 is known as a registered company. Every activity and formation is governed by the provisions of the Company Act. Himal Cement Company, Bhirkuti Paper and Pulp Limited, etc. are some examples of the registered company.

On the basis of Liability

According to the liability, the companies are classified into three groups:

Limited Liability:
Under this type of company, the liability of shareholders is limited to the extent of the value of shares held or the amount guaranteed by them. Hence, the shareholder is not responsible for paying beyond the face value of shares. This type of company is common in actual practice.
Unlimited Liability:
The company which is registered without limiting the liability of shareholders to the value of shares are called unlimited liability company. In this company, the liability of the shareholders is unlimited like the partner in partnership company. The shareholder's personal properties can be used to meet the obligations. This type of company is found in the present world.
Limited Liability by Guarantee:
The Company where a shareholder is limited to pay a specific amount as a guarantee at the time of winding up is called a limited liability by guarantee. The guarantee amount is specified in Memorandum of Association. They may or may not have share capital. It gives the written guarantee that members will pay up to a certain fixed amount in the event of the liquidation of the company. This type of company promotes art, literature, sports, education and other non-business activities.

On the basis of Number of Members

Private Limited Company:
According to the Company Act, a private limited company is one which,

restricts the right to transfer its shares
limits the member of shareholders to 50 only
prohibits any invitation to the public to subscribe for any shares or debentures

A private limited company must always follow this articles. A private company can be formed with one member but the maximum number of shareholders cannot exceed fifty. It cannot issue share to the public for subscription. A private company must use the words ‘Private Limited’ (Pvt. Ltd.) in its name.

Public Limited Company:
According to Section 2 of the Company Act 2053, a public limited company means any company incorporated under this act. The minimum number for formation is seven but there is no restriction on the maximum number. It must issue the prospectus for inviting people to purchase their shares. It must have a certificate of commencement and certificate of incorporation before starting its business. The shareholders are free to sell their shares in the market. A public limited company must use the words 'Limited' (Ltd.) in its name.

Differences between Private and Public Company

Basis of differences	Private company	Public company
Number of shareholders	A private limited company limits the number of the member to 50.	A public company requires at least 7 members but there is no upper limit.
Prospectus	It cannot issue a prospectus for inviting people to purchase their shares.	It can issue the prospectus for inviting people to purchase their shares.
Transfer of shares	There is a restriction to transfer its share.	There is no restriction to transfer its shares.
Commencement of business	It must only have a certificate of commencement.	It must have a certificate of commencement and a certificate of incorporation as well.
Publication	It does not need to publish its annual statements.	It needs to publish its annual statements.
Statutory meeting	It is not required to hold a statutory meeting.	It is required to hold a statutory meeting.
Statutory report	It does not need to file a statutory report.	It needs to file a statutory report.
Use of word	It must use the word ‘Private Limited’ (Pvt. Ltd.) in its name.	It must use the word 'Limited' (Ltd.) in its name.

On the basis of Ownership

Government Company:
A government company is a company in which not less than 51% of the paid-up share is held by the Central or State Government or partly by both central and state governments. Since the government has the majority of the share so all the management of the company is taken over by the government authority. Nepal Dairy Development Corporation, Janakpur Cigarette factory, Birgunj Sugar Mill Ltd. etc. are some example of the government companies.
.
Non-government Company:
The company is owned, managed and controlled by the private sector. It needs to follow some legal formalities from registration of the company. The government does not interfere in the regular managerial activities. Kumari Bank Limited, General Finance Company are some example of the non-government company.

Main Documents of Joint Stock Company

The main documents for incorporation of a joint-stock company are as follows:

Memorandum of Association
Article of Association
Prospectus

Memorandum of Association

Memorandum of Association is the constitution of the joint stock company. It directs or instructs joint stock company. The joint stock company runs in accordance with the memorandum of association. Activities of the joint stock company are directed by the Memorandum of Association. Memorandum of Association is regarded as a blueprint as it is needed for the incorporation of the joint stock company. Memorandum of association is submitted to Company Registrar Office. Basic information and provision of the company are clearly mentioned in the memorandum of association. It defines scopes, objectives, functions of the joint stock company.

Main Clauses/ Contents of Memorandum of Association

Name clause:
In the clause, a name of the company is clearly stated. Generally, the unique, attractive, short name is selected by promoters to attract the attention of the general public. Name of the company must be registerable. The name of the company should not match with some other registered company.
Address clause:
Address of the company is clearly stated in the address clause. Basically, an address of the head office must be mentioned in the address clause. The address must be same as mentioned at the time of registration of the company.
Objective clause:
Plans, policies, and objectives are formulated by the top level management. Major objectives/goals are clearly stated in this clause. The pointwise arrangement should be made if there are many objectives and goals. The objective of the company must be stated in this clause properly.
Functional clause:
The organization has to perform different functions and activities. Those functions and activities are performed by different level staffs. Functions and activities are performed to achieve pre-determined goals. Functions and activities to be performed by the organization are clearly mentioned in this clause.
Capital clause:
There must be an appropriate capital structure to run the activities of an organization. Authorized capital, issued capital, debt capital, equity capital, working capital, fixed capital etc. are mentioned in this clause.
Liability clause:
Provision of liability is clearly mentioned in this clause. Basically, the joint stock company has a provision of limited liability which is clearly stated in this clause.
Restriction on transfer of share clause:
In public company, shares are fully transferable whereas in private company shares are not transferable to outsiders. In this clause, the provision of transfer of share is clearly mentioned.

Article of Association

Different activities are performed in a joint stock company. Harmony and coordination are needed for the effective operation of business activities. The joint stock company is rigidly observed by the government so it must follow rules and regulations of a company. An article of association contains rules and regulations of a company. It regulates the management of the company. The article of association must be submitted to Company Registrar Office for the incorporation of business organization. The article is the outcome of mutual consent of the promotion. When promoters sign in this article then it is submitted to the concerned department of Nepal Government for legal validity.

Contents of Article of Association

Director related particulars:
Number of directors to be elected in the company must be mentioned in this particular. Remuneration, appointment, facility of directors are clearly mentioned in this content. Here, the right of a number of directors, a role of directors and promoters, delegation of authority are also mentioned.
Meeting related particulars:
The annual general meeting of the joint stock company is a very important meeting. In this particular quorum of a meeting is clearly stated and provision of conduction of the meeting is also mentioned. Basically, in the public company before the 21 days of conduction of meeting, shareholders are informed about the meeting. Agenda is also attached while informing shareholders about the meeting. Majority shareholders are needed to pass the agenda of the meeting.
Shares related particulars:
Nature of share, transfer of share, an issue of share etc. are clearly depicted in the share related particulars. The way of transferring share related particulars and the way of transferring share is also stated.
Other particulars:
In this procedure of appointment of an auditor, use, and formation of the common seal, the way of taking loan are clearly stated.

Prospectus

A prospectus is an invitation to the general public for purchasing the share of the public company. There is no any legal obligation to publish a prospectus in a private company. The prospectus provides a summary of past history. It helps to convert potential shareholders into existing shareholders. In a competitive market, a business must be able to draw the attention of the public.

Prospectus plays the role of advertisement. It plays a vital role to promote the activities of the company. General people/ outsiders observe the prospectus then decide to purchase a share.

In conclusion, a document which is issued to public people for informing about the company is called prospectus.

According to the Company Act, 2053, the prospectus must contain the following matters:

The main objectives of the company and other important matters mentioned in the Memorandum of Association and Article of Association.
A minimum number of share required to be subscribed to become the director and their salaries and allowances.
Description of cash receipt as the remuneration of share or reward by the promoters and directors.
The provision relating to bonus shares.
Provision if any regarding reservation of shares for any shareholder, employee or other persons.
Name and address of the directors and number of the shares subscribed.
A number of shares to be issued to the general public on par or premium.
A minimum number of shares to be subscribed advance payment along with the application.
Brokerage on shares and debentures.
Estimated expenditure for the company and estimated income at least for coming 3 years.
The net worth of the company.
Name and address of the auditors and the audit report, if any.
Date of opening and closing of the subscription list.
The balance sheet and profit and loss account of the company and time and place for inspecting the same.
Details of the underwriting of shares and commission of their earning.
Other necessary particulars.

Company Meetings

Meeting conducted under joint stock company is of two types: a general meeting and BOD meeting. A general meeting is consist of Statutory general meeting, Annual general meeting, and Special general meeting. Board of Directors Meeting is the gathering of directors in connection with the business and management of the company.

A company meeting is defined as an assembly of persons who are connected with the company for discussing the matters relating to different activities of the company. The following are the main types of company meetings:

General Meeting

Following are the types of general meeting:

Preliminary / Statutory General Meeting

This is the first official meeting of shareholder after its incorporation. The main aim of this meeting is to give details of a company to all shareholders about the number of shares issued and to provide information about the prospectus to its members. According to the Company Act, it must be conducted within a year after receiving the certificate of commencement of business. Shareholders must be pre-noticed about the place, time, date, and agenda in advance of 21 days of conducting the meeting.

A preliminary report must be signed by at least two directors and that report should be sent to all the shareholders. The report must be certified by the authority and should be sent to the Company Registrar. This report must contain the following details:

Total number of share allotted
Number of paid-up shares
Total amount received from shares
Report on income and expenditure till 35 days before the meeting
Name and address of directors, managers, company secretary, accountants and auditors and their appointment and terms and condition of services.
Details of agreements which are required for meetings
Report on underwriting of shares
Share money due from directors
Other necessary information

Annual General Meeting

Annual General Meeting is the meeting of a shareholder of the company which is held every year. The main objective of this meeting is to inform shareholder about the progress of the company, about the ongoing performance and future plans of the company. The annual general meeting should be held each year within six months from the expiry date. The shareholders must be pre-noticed about the place, time, date, and agenda about the meeting in advance of 21 days of conducting a meeting. In the case of a public company, the notice must be published in a popular national newspaper by inviting all the shareholder to attend the meeting. The matter to be presented by the chairman of the board in the annual general meeting are as follows:

Auditing financial statement consisting balance sheet, income statements, profit and loss, and annual report
Appointment and remuneration of directors and auditors
Report of directors and auditors
Declaration of the rate of dividend
Other particulars presented by shareholders representing a minimum 5% of total votes

Special / Extraordinary General Meeting

A special general meeting is the meeting of shareholders of the company except preliminary and annual general meeting. If any important matter arise and it needs to be discussed sooner and it cannot wait until the annual general meeting then this meeting is held. It is also called special circumstances and is held when special and urgent decisions have to be made. The shareholder must be pre-noticed about the place, time, date, and agenda about the meeting in advance of 15 days of conducting a meeting.

The following matter is discussed at the special general meeting:

Alteration in the Memorandum and the Articles of Association
Change in the name or main objective of the company
Increase in authorized capital
Reduction of share capital
Issuing of bonus shares
Conversion of a private limited company into a public limited company

The special general meeting is conducted by the following authorities:

By the board of directors:
In the case of an emergency, if the board of director feels necessary to call a special general meeting then it is held. The board of directors held this meeting in an urgent matter. However, it cannot be conducted before the preliminary general meeting.

By auditors:
In auditing the account there can be need of shareholder's idea and so auditor calls this meeting with a reasonable cause. The auditor requests the board of directors to call the meeting and if the board of director fails to call then the auditor can request to the office of Company Registrar for the same. In such a situation, the office of Company Registrar calls the special general meeting.

By shareholders:
The shareholders with 10% paid-up capital or at least 25% of total shareholders demand to call this meeting with reasonable cause then they can call the meeting. They request to the board of director and submit an application to call the meeting. If the board of director is unable to call this meeting then the shareholders can complain to Company Register with reasonable reasons and the Office of Company Registrar will call the special general meeting.

By Office of Company Registrar:
If the office of Company Registrar finds any reasonable cause then it can call the special general meeting through inspecting the company.

Board of Director (BOD) Meeting

When the board of directors comes together to determine the company policy and to take decisions according to the act then this meeting is held. It is held in regular interval. Its main objective is the management of the company about share, the recommendation of dividend, appointment of officers and fixation of data. More than 51% of total directors must be presented at this meeting. The decision is taken by passing the resolution. The board of director meeting of a public limited company must be held six times a year. If any directors are not satisfied with the decision then s/he can write the note of dissent proof of his rejection.

Characteristics and Merits & Demerits of Joint Stock Company

Characteristics of Joint Stock Company

An artificial person:
A joint stock company is an artificial person which is created by the law. It has no physical shape as a natural person but has almost all the rights of a natural person. It can sue others and can be sued.
Perpetual existence:
A joint stock company is established by the law and the law brings it to an end. So, many shareholders may transfer their share and the new person may come in their place but it does not affect the existence of the company.
Limited liability:
The liability of the shareholder is limited to the extent of the value of shares held or the amount guaranteed by them. If the company is unable to pay to the creditors then the shareholder won't pay anything more than what is to be paid to the company.
Common seal:
A joint stock company is an artificial person. So, it cannot sign any contract in its name. Therefore, all the documents and contract papers require the affixing of the seal. Any documents with the common seal are only taken into consideration.
Democratic management:
A joint stock company is a democratic organization. The important decisions are taken by following the principles of democracy in the annual general meeting and the board of director meeting.
Transferability of shares:
The shares of the joint stock company can be transferable from one person to another without prior permission of the company management. They are free to transfer their shares.
Capital is divided into shares:
A joint stock company divides its capital into a large number of parts with each value where each part of capital is called share. These shares are purchased by the general public as well as the promoters to be the shareholders of the company.
Publication of financial statements:
A joint stock company should publish the audited financial statements yearly in a renowned national newspaper. This statement helps to provide information to the general public and other stakeholders.
Separate legal entity:
A joint stock company is an artificial company so it has its own separate legal entity from its members. It can own assets, property, enter into contracts, sue or can be sued by anyone in the court by the law. Its shareholders cannot be held liable for any conduct of the company.

Merits of Joint Stock Company

Huge capital:
A joint stock company has an association with various persons. It has the merits of huge capital because different member invests a large amount of capital. When there is a lack of capital in a joint stock company it can issue the shares to the public. Hence, huge capital can be collected when shares are issued.
Perpetual existence:
A Joint stock company has a separate legal existence. The life of a joint stock company is not affected by death, lunacy, and insolvency of the members. Therefore, a joint stock company has a long-term life. Even if there are any changes in management, the board of directors or some member may come or go, the function of the company is not affected.
Limited Liability:
Limited liability is the significance of a joint stock company. The shareholders should not pay the excess debt of the company by selling their private/personal property. Shareholders are liable up to the invested amount. Due to the provision of limited liability potential investors are attracted by a joint stock company.
Transfer of shares:
A joint stock company has the provision of free transfer of shares. No one is compelled to join and leave the company. Permission or mutual consent is not needed to transfer the shares of a joint stock company.
Democratic management:
A joint stock company has democratic management. It is managed by the majority of shareholders who elect the board of directors. They are responsible for managing the activities of a joint stock company. Competent members are elected from election to manage the company. Thus, democratic management can be seen in a joint stock company.
Public faith:
People have faith in a joint stock company. It has an obligation to disclose the financial documents to the Annual General Meeting. The banks and the financial institutions believe in a joint stock company because of the accounts disclosed.
Large-scale operation:
A Joint stock company has an association with different managerial skill because different members are associated with it. Due to the sufficient capital and competency of the members (directors)joint-stock company has the possibility of a large-scale operation. Hence, a joint stock company has a large-scale operation.
Social importance:
A joint stock company is also a social creature. So, it invests amount for the betterment of society. It invests its capital in various sectors such as health, education, sports and so on. Hence, a joint stock company has a responsibility to society.

Demerits of Joint Stock Company

Difficult legal formalities:
A joint stock company has demerits of difficult legal formalities. It is difficult to establish and run. It has to follow difficult legal formalities in comparison to sole trading and partnership firm. It is rigidly observed by rules, regulations or laws of government because it collects capital from the general public.
Lack of secrecy:
A Joint stock company has an obligation to disclose the accounts to insider as well as an outsider. The planned policies and strategies of the joint stock company are transparent because they are discussed in the Annual General Meeting. The company has to publish its statements of financial affairs every year. So, it has demerits of lack of secrecy.
Delay in decision making:
Sometimes a business organization has to take the quick decision but the quick decision is not possible in a joint stock company. The major decision of the company must be passed from the Annual General Meeting. So, long time is required to pass the decision. Thus, business delays grabbing the opportunities of an external environment.
Speculation of share:
There is the possibility of speculation of share in a joint stock company. Some shareholders have an inside approach with directors. Those shareholders can take undue advantage when they misuse the inside approach with directors.
Management of oligarchy:
Management oligarchy means the rule of the minority. The shareholders elect few directors in annual general meeting. Those few directors rule/control over the activities of a large number of shareholders. This is known as oligarchy.
Conflict of interest:
Different parties are involved in a joint stock company. They are shareholders, creditors/bankers, and employees. Different parties have different interest. If the interest of one party is addressed, it negatively impacts the interest of others. Therefore, a joint stock company has demerits of conflict of interest.
Neglect the minority:
A joint stock company gives priority to majority shareholders. Minority shareholders are neglected in Annual General Meeting and election. Only majority shareholders are given priority to take the decision of the joint stock company. Minority shareholders are boycotted to run productive business activities.
Groupism:
Unhealthy groups can be seen in the joint stock company in the period of election. Constructive groups are fruitful but destructive groups is harmful to the company. Unhealthy groups lead to the failure of the company. So, a joint stock company should be able to minimize unhealthy groups.

Incorporation and Winding Up Of Joint Stock Company

Incorporation of a joint-stock company means recognition. The joint stock company must be registered in the office of the Company Registrar under the provision of the Company Act, 2063 B.S. for its legal recognition.

Incorporation of Joint Stock company

Incorporation of the joint-stock company means recognition. The joint stock company must be registered in the office of the Company Registrar under the provision of the Company Act, 2063 B.S. for its legal recognition. The interested people must gather and prepare a plan and concept of the business and apply to Company Registrar. The people who prepare framework and who carry the responsibility of the business is known as promoters. They decide about the activities of the business. The following things are to be observed for incorporation of a joint-stock company:

File an Application:
It is the first step of incorporation. The promoters have to file an application in company Registrar with the application form. The application must be signed by at least 1 promoter in the case of a private company and at least 7 promoters in the case of a public company. The following documents and detail must be attached with the application:

Name and address of the proposed company
Name and address of the promoters
Description of the company's share
Copies of Memorandum and Articles of Association (2 copies)
Copy of the citizenship certificate of the promoters
Copy of agreement if any among promoters
Copy of unanimous agreement if any
Deposit voucher the of registration fee
Other Particulars

Payment of registration fee:
The promoters of the proposed company must pay a prescribed registration fee. The prescribed registration fee should be deposited in Nepal Rastra Bank or paid in cash or should provide the deposit voucher to the office of Company Registar. The amount of registration fee depends on the amount of authorized capital. The current amount of registration fee is presented below:

For Private Limited Company

S.N.

Authorized Capital

Registration fee

10.

11.

12.

13.

14.

Up to Rs.1,00,000

Rs.1,00,001 to Rs.5,00,000

Rs.5,00,001 to Rs.25,00,000

Rs.25,00,001 to Rs.1,00,00,000

Rs.1,00,00,001 to Rs.2,00,00,000

Rs.2,00,00,001 to Rs.3,00,00,000

Rs.3,00,00,001 to Rs.4,00,00,000

Rs.4,00,00,001 to Rs.5,00,00,000

Rs.5,00,00,001 to Rs.6,00,00,000

Rs.6,00,00,001 to Rs.7,00,00,000

Rs.7,00,00,001 to Rs.8,00,00,000

Rs.8,00,00,001 to Rs.9,00,00,000

Rs.9,00,00,001 to Rs.10,00,00,000

Above Rs.10,00,00,000

Rs.1,000

Rs.4,500

Rs.9,500

Rs.16,000

Rs.19,000

Rs.22,000

Rs.25,000

Rs.28,000

Rs.31,000

Rs.34,000

Rs.37,000

Rs.40,000

Rs.43,000

Rs.30 per 1 lakh

For Public Limited Company

S.N.

Authorized Capital

Registration fee

Up to Rs.1,00,00,000

Rs.1,00,00,001 to Rs.10,00,00,000

Rs.10,00,00,001 to Rs.20,00,00,000

Rs.20,00,00,001 to Rs.30,00,00,000

Rs.30,00,00,001 to Rs.40,00.00,000

Rs.40,00,00,001 to Rs.50,00,00,000

Above Rs.50,00,00,000

Rs.15,000

Rs.40,000

Rs.70,000

Rs.1,00,000

Rs.1,30,00

Rs.1,60,000

Rs.3000 per 1 crore

Receiving certificate of incorporation:
After submitting the application form along with necessary documents and registration fee, the office of Registrar examine all these documents submitted by the promoters. If the office is satisfied by the documents then the office will Registrar the company name within 15 days of the receipt of the application. After registering the office, the Registrar will issue the certificate of incorporation to the company and the company becomes legal.

Certificate of Commencement of Business:
After receiving the certificate of incorporation, the private limited company can run its business. But in the case of a public limited company, it can run business only after receiving the certificate of commencement of business. To obtain a certificate of commencement of business, the company need to submit the report of at least 25% of issued capital already paid by the promoters with duly signed by at least one director must be filled with the Registrar. Then, the office of Registrar will examine the report. If the report satisfies the office of Registrar then, it will issue a certificate of Commencement of Business. After receiving the certificate of Commencement of Business, the public limited company can legally run its transaction and can issue prospectus also.

Winding up of a Joint Stock Company in Nepal

The process of bringing the existence of the company to the end is known as winding up of a company. It is also called liquidation. It collects all the assets to pay the total liabilities in order to close the company permanently. If the assets of the company exceed the liabilities the shareholders share the surplus amount in the ratio of their shareholding and if the assets are not insufficient to meet the liabilities, the creditors will get in proportion to their dues in order of priority.

According to the Company Act, 2053, the joint stock company can be wind up by the following way:

Voluntary Liquidation:
The agreement of all the shareholders at a special general meeting to wind up the company is known as voluntary liquidation. A public company can liquidate itself by a special resolution under the following conditions:

If the time-frame prescribed in the Article of association for the operation of the company has expired.
If the company has excess liabilities to fulfill and it becomes impossible to continue the business.

A private limited company can be liquidated according to the provisions of the Memorandum and Articles of Association. The company must publish the decision of liquidation of the company in the national newspaper twice within a week from the date of such resolution. It must send its effect to the office of the Registrar. This meeting appoints the liquidator and the auditor to complete the liquidation process and to audit the accounts of the company.

Compulsory liquidation:

The liquidation of the company made by the office of the Registrar is known as compulsory liquidation. Under this , two-third part of the creditors can apply to the office of the Registrar for the liquidation of the company to recover the credit amount. When the application is received, the Registrar can place an order for the liquidation of the company. The Registrar appoints liquidate and auditor to complete the process of liquidation. Under the following conditions, the compulsory liquidation is made:

If an application is submitted to the Company Registrar to liquidate the company as passed by a special resolution.
If the company does not submit the required reports and documents to the Office of the Company Registrar in time.
If the company is in default in submitting office return notice, information and facts to pay fine as required by the act.
If the promoters of the company make application showing the reason for failure to commence the business of a company.

Agenda and Resolutions

The subject which is to be discussed to come to a final decision is called Agenda. Its main objective is to conduct the meeting in a systematic way without missing any item. All the decisions that are taken in the meeting are in the form of resolution. A resolution must be clearly written.

Agenda

The word 'agenda' literally means things to be done. The subject which is to be discussed to come to a final decision is called Agenda. Its main objective is to conduct the meeting in a systematic way without missing any item. It includes the list of things to be done and subject to be discussed in the meeting. According to the Company Act, 2063 B.S. it is necessary to send agenda to the shareholders before the meeting. It helps the shareholders to get ready and be prepared for the meeting. An agenda must be clear and systematic.

Resolutions

An organization has to make different decisions to run the transaction and activities of the business in a systematic way. So, the decisions are made after discussing various problems or agendas. All decisions that are taken in the meeting are in the form of resolution. The resolution must be clearly written. A copy of the resolution must be submitted to the office of Company Registrar. When any proposal is accepted by required majority in the meeting then the proposal becomes the resolution. Resolution is passed for formulating plans and policies, raising funds, for electing the director, appointment of the auditor and declaration of dividend. There are two types of resolution. They are as follows:

Ordinary Resolution

A resolution taken by a simple majority which is presented in a board meeting or annual general meeting and decision is known as ordinary resolution. This resolution is passed by the shareholder holding 50% of the total share and at least 3 shareholders should be presented. General activities of the company are carried out by the ordinary resolution. The following matters are presented and passed in ordinary resolutions:

Audited profit and loss account
Balance Sheet of the previous year
Appointment of directors and auditors
Declaration of dividend
Salary and facility for directors and auditors

b) Special Resolution

A resolution taken by the special majority which is presented in a special issue of the company is known as special resolution. This resolution is passed by the shareholder holding 75% of total share who are presented in the meeting. This resolution is not adopted regularly. The important matter which cannot be decided by the simple majority is adopted in special resolution. This resolution is passed in annual general or special general meeting. A copy of the ordinary resolution should be submitted to the office of the Company Registrar. The following matters are presented and passed in special resolution:

Decreasing the share capital of the company
Altering the name or objective of the company
Issuing a bonus share
Selling shares at a discount
Converting a private company into a public company and vice-versa