Introduction

When some people voluntarily construct an organization by investing their money for the
purpose of earning profit according to the rules and regulations of the respective country is called
Joint-Stock Company (JSC).This business is operated by its own Name & Logo and considered
as an artificial being having a separate ownership from management. Thus a company may be
defined as a voluntary association, an incorporated association, legal and invisible artificial
person having an independent, separate legal entity along with perpetual succession and a
common seal, whose liability is ordinarily limited, the capital is divided into transferable shares,
held by shareholders in order to earn profit.

Classification of Joint stock company

Chartered Company: The companies that form by the order of the Head of a country are
called the charter company. These companies were formed before 1844. For example,
East India Company, Chartered Bank of England, the charter of the British South Africa
Company, given by Queen Victoria
Statutory Company: Companies that are formed by the order of the President, or by the
Legislative Committee or by bill of Parliament are called Statutory Company. These
Companies are operated by those laws. For example, municipal councils, universities,
central banks and government regulators, Central Bank.

 Registered Corporation: Companies that are formed under the prevailing law of the
company are called the registered company. The corporation that has filed a registration
statement with the SEC prior to releasing a new stock issue. It is two typesi) Unlimited Company: Unlimited Company is a company where the liabilities of the
shareholders of this company are unlimited. For example, British all-terrain vehicle manufacturer
Land Rover, GlaxoSmithKline Services Unlimited.
ii) Limited Company / Limited Corporation: Limited company is a company where the
liabilities of the shareholders are limited. For example, Charitable organizations, Financial
Services Authority. This liability of a company can be of two types.
a) By Guarantee
b) By share value. The company limited by share can be of two types

Private Limited Company A company where the number of shareholder ranges from
two to fifty members and which are formed by at least two individuals having minimum
paid up capital are called the private limited company. The shares allotted to its members
are also not freely transferable between them and these companies are not allowed to
raise money from the public through open invitation. I.e. a type of company that offers
limited liability to its shareholders but that places certain restrictions on its ownership.
Public Limited Company Public Limited Company is company where the number of
shareholder ranges from seven to share limitation. The share of the public limited
company is traded in the stock market.

Differences between Private Limited Company and Public Limited

Company
1. Membership

Private Limited Company

Minimum
membership2,Maximum
membership50

Public Limited Company

Minimum
membership7,Maximum
membership unlimited

2.Formation

Comparatively
simple, Comparatively difficult as
certificate of incorporation the procedure is lengthy.
is adequate

3. Number of Directors

It must have at least two It must have at least three

directors
directors
2

4.Transfer of Shares

The shares are not freely Shares

are
transferable
transferable.

5. Issue of Prospectus

It is allowed
prospectus

6.
Commencement
Business

to

freely

issue It can issue prospectus

of It can start the business It requires trading certificate

after
the
receipt
of for starting business
certificate of incorporation.

7. Suitability

Suitable for business on a Suitable for

small scale
business.

largescale

8. Invitation

It cannot invite public to It invites public to purchase

subscribe for securities of securities of the company.
the company

9. Allotment

It
can
allot
immediately
incorporation

10. Qualification shares

The directors need not hold The directors have to

qualification shares
purchase some qualification
shares to become the
director.

11. Directorship

There is no restriction on A director cannot be a

the number of directorship
director of more than 20
companies

shares Shares cannot be allotted

after unless
minimum
subscription is collected.

12. Subscription of Shares Public limited company can

and Debentures
subscribe to public to sell
its shares and debentures. It
can collect huge amount of
capital from the public by
selling shares.
14.Minimum Subscription
Public limited company
cannot sell shares in the
share market until minimum
subscription is collected
15. Company Name
Public limited company

Private limited company by

its Articles of Association
cannot subscribe shares and
debentures to the public

Private limited company has

no provision to collect
minimum subscription.
Private

limited

company
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16. Statutory Meeting

17. Qualified Shares

18.Retirement of Directors

19. Scope of Business

20. Financial Strength

must add the word Limited must add the words Private
as the last word after its limited (Pvt. Ltd.) As the
name
last words after the name of
the company
Public limited company Private limited company
must convene statutory does not have to convene
meeting. It is compulsory to statutory meeting. As a
hold statutory meeting and result, there is no need to
statutory report must be submit statutory report
submitted
In public limited company To become directors of
the directors must purchase private limited company it
the number of qualified not mandatory to purchase
shares to become directors
minimum qualified shares
At least 2/3 of the directors The directors of a private
of public limited company limited company not retire
must retire by rotation.
The scope of public limited The scope of private limited
company and company company is limited in
ownership is wide and known people and places
expanding
nearby.
Since
public
limited Private limited company
company can subscribe cannot subscribe capital by
huge amount of capital from selling shares. So, its
the public, it is financially financial position compared
strong and can take large to public limited company is
projects
less

Methods of Forming Joint Stock Company

Company is an artificial and legal person.It is invented by law and is also dissolute by law.These
companies are being got registration by the companies act,1994. For the companies of
bangladesh have one register. He has given registration to those companies that are formulated
and established by law and upon law.He also gave certificate of incorporation on the basis of
these.The formalities, in case of public companies, are more as compare to other companies.The
steps and activities that are needed for formulation of public companies are show below
gradually.

1.TAKING INITIATIVE:
The first step of formulation of a company is taking initiative.He or they who takes/take the first
proposal is called initiators.According to the companies act 1994 section 5 for private limited
company minimum 7 people are required for taking initiative.In these steps the initiators need to
go through a few steps:
a.Thinking about the business and its possibility.
b.The shape,characteristics,region,capital etc of the business.
c.The risk,problems,potentiality and success of the business.
d.At the fourth step,the initiators need to select a name for the organization.

2.PREPARATION OF DOCUMENTS:
After conducting the first steps,the initiators prepare the important and the legal documents for
the company.Among these documents the memorandum of association ,article of association are
very much important.The description about these are placed below:

a.MEMORANDUM OF ASSOCIATION:
It is a real or legal document,certificate or status of the company.The description about the
company,address of the registered building,motto and objective,amount of the capital,description
about the responsibility of shareholders and their contribution etcare written down and the
signature of the initiators are put down in the memorandum.In the company act 1994,section
6(A)mentioned;
i.The name of the company at the end of the name the word
LIMITEDis to be added.
ii. Addressed of the registered office.
iii.Objectives of the company and for non business organization the objective and the region of
activity required to be indicated.
iv.The number of shares and the face value of each share.

v.The interpretation of the liability of shareholders are confined by their bought shaers is
required to be written.

b.ARTICLE OF ASSOCIATION:
The second more important document for joint tock company is article of association.The
documents that contains all rules and regulations regarding daily activity and internal
management of the company is called article of association for the joint stock
company.Generally to implement the objectives properly that are mentioned in the memorandum
of association are written in the article of association. Generally,article of association is adopted
for the folloing purposes:
i.To operate the daily activity of the company properly.
ii.To explain the rules and regulations regarding companies internal functions.
iii.To distribute the companies capital on the basis of the classification of the companies shares.
iv.To discribe and explainthe sections and clauses of the memorandum of association.
v.To determine and explain the power,duty,responsibility,right and mitual relationship of the
directors.
vi.To determine the recruitment,salary,power and responsibility of the responsibility of the
executives.
vii.To integrate the rules regarding meetings held by the company.
viii.To reserve the security of the companies seal or logo.
ix.To explain and estimate the dividend policy of the company.
x.To explain the method of the dissolution of the company etc.

3.SUBMISSION OF DOCUMENTS:
In this stage the initiators collect the form from the register of joint company and by adding some
documents they submit the form.These document are as follows:
a.Copy of memorandum of association.
b.Copy of articles of association.In cotext of public limited company if table A is accepted in lieu
of articles of association then the initiators must submit a declaration with the signature.
c.The initiators who want to be the directors they must submit their name,address,and
occupation.
d.Directors must submit the letter of agreements.
e.Directors have to submit the agreement of qualification shares.
f.Description of the total capital of joint stock company.With the registration form thes
documents must be submitted to the register as well as the required fee must be given to the
register.

4.COLLECTION OF CERTIFICATE OF INCORPORATION:

In the company act 1994 it is said that after submission of registration form with required
documents to the register ,the register will check the form and if he satisfied then he reserve the
information and after 30 days of submission of registration form the register will register the
company.If the register will not satisfied with the information then after period the register will
inform the initiators within 10 days.According to compny act 1994,ection24 fter the regitrtion of
the memorndum of assocition the register will provide the registration of the company.After
getting the regitration the private limited company can its activities but the public limited
company needs to collect the certificate commencement after getting the registration from the
register for starting the activities.

5.COLLECTION OF CERTIFICATE OF COMMENCEMENT:

According to the company act 1994 the directors of the joint stock company have to collect the
certificate of commencement after registration of the company.The directors of the company will
apply to the register in the certified form provided by the register.In the 150(1)section of the
company act 1994 it is said that,there are some clauses that determine that the company will start
its activities or take loan from the financial institution.After getting the certificate of
commencement joint stock company starts its activities.

6.PROSPECTUS:
Propectus is an important document for public limited company.By using this
document,promoters makes invitation to the mass people to buy the initial public offering of the
respective company.Generally it refers to that informative document that the registered
organization uses for the purpose of informing respective company to collect required capital and
to start the proposed organization.The different definitions of prospectus are given below.
1.COMPANIES ACT 1994:
Document containing offer of shares or debentures for sell to be deemed as prospectus.
2.DICTIONERY OF TRADE AND COMMERCE:
Prospectus is an invitation to the public to subscribe to the shares capital of the company. The
prospectus is generally circulated to the public in printed pamphlets.When a person is not issued
a statement in lieu of prospectus must be issued.

7. STATEMENT IN LIEU OF PROSPECTUS:

It is mandatory for the public limited company to distribute the prospectus but it is not
compulsory in all aspects.It is also possible to adopt an alternative of prospectus.It is not
necessary to distribute prospectus for the company if the directors are able to raise the required
funds by selling the shares and debentures to their friends and relatives.If the company used the
alternative of prospectus,it will be necessary to submit that copy to the register.It is called
substitute prospectus or substitute circular.This substitue holds all the items that are being
required in the original prospectus and it needs to be signature or attested by the directors.

Memorandum of Association
The Memorandum of Association is the basic or most important document for the incorporation
or registration of every Joint Stock company. The Memorandum of Association is the life-giving
document of the company. In other words, it is the document which brings the company into
existence. It is the charter or constitution of the company containing the fundamental conditions
upon which the company is incorporated. It is the foundation on which the structure of the
company is built. It contains the objects or purposes of the incorporation of the company and
defines or determines the external operations of the company (i.e. company's relationship or
dealing with the creditors & other outsides).
Memorandum of association can be defined as,'' The purpose of the memorandum is to enable
the shareholders, creditors and those who deal with the company to know what is its permitted
range of enterprise"
The Memorandum has to be divided into-suitable paragraphs, constructively numbered and
printed. It must be signed by every one of the subscribers in the presence of a witness who shall
attest the signature. Every subscriber must give his address and descriptions and must take at
least one share. The Memorandum of a company limited by shares must contain the following
clauses:

Name clause
Address clause
Object clause
Liability clause
Capital clause
Association clause

The Memorandum of association of every company must contain the following clauses:
1. Name Clause:
This clause states the name of the company.
In the context of the name clause, the following points may be borne in mind:
1) A name is considered undesirable, when it includes words like 'Government', 'State',
'Municipality', etc., implying patronage or support of the Government, State or
Municipality, without the express permission of such authority.
2) A name is considered undesirable when it is identical with or too closely resembles
the name of an existing company.
3) The name of the company must end with the word "Limited" in the case of a public
company or the words "Private Limited" in the case of a private limited company.
4) The purpose of adding the word "Limited" or the words "Private limited" is to enable
all those dealing with the company to know that the liability of the members of the
company is limited.
5) Once a company is registered with a name, the name of the company must be painted
on signboards and displayed outside every office or place of business of the company.
The name must also be engraved in legible characters on the seal-of the company, on
its letter heads, notices, invoices, receipts, bills of exchange, advertisements, etc, .
However, if a company is 'formed not with the object of declaring dividends, but to promote
science, culture, etc, .The Central Government may permit the company to drop the word
'limited'.
2. Object clause:
1) Of all the clauses in the memorandum, the object clause is the most important.
This clause states the objects or purposes and powers of the company. It should
specify in unambiguous languages the objects for which the company is formed.
Great care should be taken in drawing up this clause, as the company will not be
allowed to do any business, which is not specifically mentioned here.
2) The objects stated in this clause must not be contrary to the provisions of the
Companies Act and the general law of the country. The objects stated should be as
wide as possible because a company cannot carry out objects which are not
included in this clause.

3) As it is difficult to alter the object clause later, it is necessary that promoters

should include in this clause all possible types of business (activities) in which a
company may engage in the future.
4) According to the amendment to the Companies Act made in 1965, the object
clause of a company formed after the commencement of the Amendment Act,
must contain:
i. (a) Main objects of the company and objects incidental or ancillary, to the
attainment of these main objects.
(b) Other objects of the company not included above
ii. In case the objects are not to remain confined to one state, states whose
territories the objects extend.
3. Address Clause:
1) This clause states the state in which the registered office of the company is to be
situated.
2) The name of the State, in which the registered office of the company is to be
situated, is stated in the Memorandum.
3) The provision insisting on the mere 'State has been made to avoid any
unnecessary legal formalities and expenses, if there is a subsequent change in the
address of the company.
4) It determines even the nationality of the company, i.e., whether the company is an
Indian company or a foreign company.
4. Capital Clause
1) The capital clause states the registered, authorized or nominal capital of the
company (i.e. the minimum capital with which the company is proposed to be
registered) and the division of the authorized share capital into shares of fixed
amount.
2) In case the capital of the company consists of different classes of shares, then, the
division of the total authorized capital into different classes of shares and the face
value of shares of each class are also stated in this clause.
3) The rights and privileges attached to the different classes of shares are specified in
the Articles of Association.
4) It is better to fix the authorized capital at a sufficiently higher figure so that there
would be adequate provision for further issue of shares later on to finance the
extension or expansion of the company's business.
5. Liability Clause
10

This clause states that the liability of members is limited to the face value of the shares
held by them. If a member has already paid some amount on the shares, he can be called
upon to pay only the unpaid amount on the shares.
6. Association Clause:
1) This clause contains a declaration by the subscribers to the memorandum that they
are desirous of forming themselves into a company in pursuance of the
memorandum and agreed to take up and pay for the number of shares in the
capital of the company noted against their names. The subscribers should sign
their names and state their full addresses and the number of shares taken up by
them.
2) The declaration clause should be signed by at least seven persons in the case of
a public company, and by two persons in the case of private company.
3) Further, the signatures of the subscribes must be witnessed by at least one who
should give his signature, name, full address, description and occupation.

Alteration of Memorandum of Association

According to the companies Act, section 12(1), if there are urgent need of any change or
rectification of any clause/s of the Memorandum of Association; those will be done by the
decision of the members in the special meeting. Because any change in various clauses of
memorandum may have an adverse effect on any of the parties connected with the company. In
this regard, Company Law has prescribed a particular procedure for making a change in the
memorandum, which varies from clauses. Here we are describing the procedure followed for
carrying out a change in the memorandum:
1. Alternation of name clause: A company may change its name by passing a special
resolution and with the prior approval of the government. The government can also direct
the company within 12 months of its registration to change its name and this will have to
be done within three months. The change of the company name is to be done by the
special decision of shareholders meeting and also by the permission of the court [Section,
11(6)]. But the copy of the court order and the letter of the meetings decision have to be
submitted to the registrar. After getting those documents the registrar will go to issue a
new registration letter on the basis of the New Name of the company. [Section, 11(7)].
2. Alteration of situation clause: The alteration of the situation clause is to be done
by the special decision and the court order [Section, 12(1)]. The change in registered
11

office place from one state to another requires a change in memorandum also. Later, it is
needed to inform the registrar by written form. The reasons behind the change of situation
clause are place below;
a) To achieve more frugality.
b) To enhance efficiency of management.
c) To earn more profit etc.
It has to send a notice to the registrar regarding any change of the situation clause of the
registered office of the company within 28 days. [Section, 77(2)].
3. Alternation of object clause: The object clause can be changed by passing a special
resolution and by getting the permission of the company law board. A copy of the
resolution should be send to the registrar within 30 days of passing the resolution. A
petition is also made to the company law board for issuing a confirmation. The change is
necessary to allow the company to carry on its business more economically or efficiently.
There are some provisions for getting the courts permission as place below:
a) It will have to inform each creditor and person interference with the change.
b) It will have to repay all the amount of the anti-change creditors
c) Court will hear the opinion of the registrar. It has to submit the letter of courts
permission and the changed or altered memorandum to the registrar.
4. Alternation of capital clause: A change in capital clause involving an increase in
the authorized capital can be affected by passing an ordinary resolution in the general
meeting whether there is an option to alter the portion of capital in the Articles of
Association or not. Then it is needed to get the permission of court regarding change or
alternation of capital. According to the Companies Act, Section 53 (2, 3), it is said that
companies have to enforce their power of change only by their general meeting and the
decision about the alternation of change of capital is to inform the registrar within five
days.
5. Alteration of liability clause: According to the Companies Act, 1994 Section 76 (1)
Any company, holding limited liability, has to bring any change in the Articles of
Association by special decision for the purpose of converting the limited liability of its all
or a few number of directors into the unlimited liability

From above discussion we can say that any type of alteration of the Memorandum of Association
is prior to fulfill some provisions and conditions. These provisions are to be followed properly if
any change is to be done.

12

Articles of Association
"The Articles of Association are the regulations for the internal arrangements and management of
the company"

Contents of the Articles of Association

1. Direction: It contains the rules and regulations of the company's daily activities and
management.
2. Information regarding capital: Authorized amount of capital, minimum payment of
capital and rules and regulation about the alteration of the capital.
3. Taking loans: It contains the power, ability and the systems of taking loan of the
company.
4. Dividend: It contains the dividend policy and the retain earnings policy of the company.
From this the policy of reserved fund and capitalization.
5. Recruitment and selection: It describes the method of recruitment and selection of the
managers, executives, employee, personnel etc.
6. Seal: It holds the using system and security of the seal and logo.

Distinction between Memorandum of Association and

Articles of Association
subjects of Memorandum-of
Articles of Association(AOA)
differences Association(MOS)
1.Contents
It is a constitution of the It includes the rules and regulations of
company.
It
includes
the the company for internal operations.
standard, motto and power of the
activity of the company.
2.Nature of Memorandum of
Explanation includes general
regarding
the
objectives.

Association Articles of Association include the

explanation descriptive explanations of the all
company aspects about the company.

13

3. Necessity It is mandatory for all company to

of
prepare
memorandum
of
Preparation association separately and getting
registration.
4. Nature of Memorandum of Association is
Control
prepared and regulated according
to the Companies Act.
5. Direction It determines the boundary of the
of Power
overall power of company.
6. Limits
The Memorandum limits the area
beyond.
7. Registered Memorandum must be registered
at the time of incorporation.

An article of Association is not

mandatory for all types of organization.
Table-A is to. be taken for public
limited company instead of Articles of
Association.
It is regulated by both of the
Companies Act and the Memorandum
of Association.
It determines the power of the internal
body of the company.
The Articles cannot go. In this sense,
Articles is a Subsidiary to the
memorandum.
Article may or may not be registered.

Shareholders
Shareholders are the ultimate owners as well as the significant members of the company.
Shareholders are the capital and bearer of profit or loss of the company.
Besides these persons comes a right of partaking in the AGM of the company.

Right of the shareholders:

There are two types of rights of the shareholders which are:
1. Individual Rights of Shareholders.
2. Collective Rights of Shareholders

Individual Rights of Shareholders:

1. Dividend from profit.
2. Share certificate at right time.
3. Transfer of share.
14

4. Get Annual Report, Prospectus, and Memorandum of Association etc.

5. Take legal action.
6. Take asset of the company.

Collective Rights of Shareholders:

1. Elect the board of the company.
2. Select the rules and regulation of the shareholders.
3. Approve legal activity that is good for the company.
4. GM (General Meeting) at some special purpose.
5. Convert the stock into share.
6. Give resignation of any director.

Liability of the Shareholders:

Shareholders have some liabilities for the company which as follows
1. Collection of Share: Shareholders have to collect their issued share at right time.
2. Transferred Unpaid Share: If any shareholder transfer share to another, transferor is
liable for the payment of the share.
3. Enlisting in the book of share: Shareholders have to be enlisted in the book of share to
know the liabilities and responsibilities as a shareholder.
4. Liability by agreement: The most common way that a shareholder becomes liable for
the companys debts is by guarantying the debt.
5.

Governmental entities: In some cases the state or federal law makes the shareholders
liable for the companys employment taxes, sales taxes or for uninsured workers
compensation claims.

Qualifications of the Directors

Though there are no specific qualification of the directors described in the company act
but the directors should have following qualifications:
15

1.
2.
3.
4.
5.
6.
7.

Directors have to buy specific amount of share

Directors have to be neutral
Directors should have the eligibility to make agreement
Directors must be wealthy
Directors must have normal mentality as a director
Directors should be eligible to pay the debt
Directors should possess a variety of knowledge and experience while being a
professional with an ethical mind
8. Directors should fully understand his obligations and practices with a commitment to
create long term values to the business and the shareholders
9. Directors should have enough time to perform his duties effectively
10. Directors should be able to assess himself and is ready to notify the Board of
Directors upon change or if there is anything that prevents him from performing his
job effectively
11. Director must not be announced as a bankrupt by the court
If an eligible person has the above discussed qualities then he/she can be elected as a director of
the company. Except these qualifications directorship will not to be provided anyone.

Functions of Board of Directors

Board of directors is a committee that responsible for all activities of the company. Different
segment of the company are controlled by each of the directors, individually directors have no
power make the decisions about the company. The board of directors selects their functions and
responsibilities in the meeting of board of directors. Functions of board of directors are two
types-1) Statutory activities 2) Executor activities. According to companies Act and the
constitutions of the company board of directors selects their functions. Functions of board of
directors are given below.
1. Trustee of all concerned: Board of directors works as the trustee of the company
for all concerns parties. It keeps the benefit for all stakeholders. Maintaining supplies
according to the demand and keeping balance between company and shareholders. It
takes basic decisions approve the decision of managers, give advice to managers, validate
the activities and functions for future.
2. Formulation of Objective and Policies: Every company has specific objective
and mission. Policies are the standards for planning. Board of Directors selects the
objectives and policies for the company in general meeting. Board of Directors selects the
strategy and activities to reach those objectives.

16

3. Appointment of Employee: Board of Directors appoints chief executive for the

daily activities. Existing employee or one of the directors can be appointing as chief
executive. In spite of that executives are appointed in different level of management.
4. Approval of Budgets and Planning: Budgets and programs are known as master
program for a company. It is basically approved by chief executive. Chief executive
determines the budgets and future programs by consulting with heads of the departments.
Then those plans are presented in general meeting in front of board of directors. Board of
directors then approves those budgetary plans.
5. Evaluation of Executive Performance: It is one of the vital duties of board of
directors to evaluate the performance of executives. Activities of the company must be
done by the pre-planned programs. Board of directors controls the activities of all
executives.
6. Declaration of Dividend: Board of directors determines what percent of dividend is
to be paid to shareholders? And what amount is to be transferred as reserve for the
company?
7. Preserving Companys continuity: Board of directors is the trustee of the
company. Flexibility of the company is to be maintained for the development of the
company. Directors keep careful concentration on the current economic situation. To keep
management development plan and market standard, directors have to be cautions about
new technology and ideas.
8. Delegation of Authority: Policies and plans are taken by the authority. According to
those duties and responsibilities are delegated to those subordinates.
9. Statutory Function: Directors have to perform following statutory activities Selling of share and debentures by prospectus.
Distribution of shares
Collect of share price
Closing of share on default
Announcing different meetings
Appointment of additional director alternative director and casual director
Receiving of credit on behalf of the company
Investing of the fund of the company appropriately etc.
10. Financial Function: Financial function is one of the main duties of directors.
Essential capital of the firm and other financial needs have to be maintained by directors.
For these they issue shares and debentures.
17

11. Management Development Program: Manpower and material power are kept in
the hand of directors. They have to take necessary steps in developments of management
program. For this purpose directors have to appoint eligible executives and delegates
them in perfect position

Power of Directors
1. According to the Articles of Associations: In every company, directors enjoy
following power:
Insurance of share
Demanding for payment
Calling of general meetings
Conversion of profit into capital
Make reserve from profit etc.
2. Announcement of AGM: In annual general meeting power of directors are
presented as follows
Selling and leasing of the assets of the company
Taking loan for the company
Expenses for welfare purposes etc.
3. Government Approval Power: Directors can enjoy following power under the
approval of government:
Give loan to any director
Appointment of whole time director or managing director etc

In spite of above all discussion, powers of the directors have some executive powers,
To determine vision, mission and objective of the company
Leading and controlling subordinates
Preparation of frame work of the company
Planning, programming and making budget of the company etc.
Whenever the authority of the company think to reduce the power of directors then it would be
possible in AGM or by special order of the company or government.

18

Rights of Directors
Like the shareholders, directors of the company have some rights to the company. Generally
directors of the company enjoy following rights.
1. Right to direct and control activities of the company.
2. Right to take office after appointment.
3. Right to issuance of share.
4. Right to call general meetings.
5. Right to take seat in general meeting of the BOD.
6. Right to fill the vacant post of the company.
7. Right to determine salaries of the executives.
8. Right to appoint and release the employees.
9. Right to discharge their duties without interference from co directors.
10. Right to determine duties and responsibilities of the executives.
11. Right to select business policies, plans, programs etc.
12. Right to distribute dividends among shareholders.
13. Right to claim reimbursement for expenses incurred.
14. Right to receive reasonable notice for meetings.
15. Right to make agreement on behalf of the company.

Retirement of the directors

There are some steps which the company follows to give resignation to any director. By the
following ways director will be retired.
1. Retirement at first in AGM: Generally initial directors have to retire on the day of first
AGM. It is mandatory but they can re-elect by the vote of the shareholders.
2. Annual retirement: According to the companies act, one third of directors mandatorily get
retirement. If they wish they can compete again in the election.
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3. Retirement of assistant directors: Sometimes some directors are removed for unexpected
incidents. Then new directors are replaced on those positions.
4. Resign: Any director can resign voluntarily. In this purpose he/she have to submit
resignation letter to the registers office of the company.

Removal of directors
Directors are retired in natural ways or sometimes are removed for some reasons. Fr the
following reasons directors of the company are to be removed.
1. Removal by the shareholders: According to the companies act, directors will be removed
by the agreement of all shareholders in the AGM.
2. Removal by the Government: Government can also remove directors for the following
reasons.
If any director ignores rules and regulations.
If any director rules the business thats not similar t the given objectives of the
company.
If any director makes a great loss for the company.
If any director drive the company to any wrongful act etc.
3. Compulsory removal: According to the companies act, compulsory removal will happen
for the following reasons.
If directors will not purchase the minimum share requirements as for the
directorship.
If anyone is proved insane.
Announcement of the bankruptcy by the court.
Punished by court for any illegal or unethical activities.
Presenting in the AGM without the permission f the BOD.
Announced unfit for directorship by the court etc.
In the conclusion of the description, we can say that court can announce any directors as unfit if
it is proved. Then these directors will be removed from the companies.

Managing Director
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Managing director is the person with the most senior position in a company and with the
responsibility for managing all the activities of a company. S (he) is the chief executive to whom
all the power and responsibilities are handed over. MD means the director who can perform all
kinds of activities on behalf of directors, someone who controls resources and expenditures. In
general meeting controlling powers of managing directors are presented and agreed by the
directors.
Managing directors is the chief executive and a full time paid employee. S (he) maintains
relations among the parties of the company. He has to perform duties as director of the board of
directors, has the overall responsibility for the companys day to days operations and bound to do
it.

Dissolution of company
Dissolution of the company means the termination of the activities of the company. On the
termination, the company determines its rights and responsibilities and liabilities and then steps
ahead to meet them all.
Dissolution f the company is a provision in the companies act-1994 to allow the removal of the
company form the companies register if certain conditions are not made. A company can only be
dissolved if the following conditions are made.
a) The company has not traded for three months. This must be a genuine cessation of trade.
b) The company has no assets or property in the bank.
c) The creditors must be circulated requesting their permission fr the company t be
dissolved under this process.
d) Creditors are given three months to consider the request t dissolve the company and can
reject such request.
e) The company can not have changed name in this period.
f) The company may not have disposed of any property or assets.
Company closes the accounts of debtors and creditors and pays the shareholder partially or
wholly at the dissolution. By its termination, company loses its legal entity.

Methods of dissolution of a company:

To terminate the activities of the company management have to follow some procedures.
Companies sometime make termination voluntary or compulsorily. According to the companies
act, three processes of dissolution of the company are discussed below.
1) Compulsory dissolution by the court: Companies act 1994 describes some situation for
which compulsory dissolution will occur.
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A. If the court gives special order to terminate the company.

B. If Company ignores its statutory conditions that are to be fulfilled.
C. If Company does not start its operation within 1 year after the registration r if it closes
for one year.
D. If the members are reduced at 7 and 2 for public and private limited company
respectively.
E. If the company is unable to pay its due.
2) Voluntary dissolution of the company: In the companies act 1994, voluntary
dissolution of the company will occur in the following section.
Heads of the companies can pass bills for voluntary dissolution for
a. Ending of the working time of the company according to the Articles of Association.
b. Happening of any special incident described in Article of Association.
c. If the company meet up its objectives.
d. If the company become defaulted.
e. If the company frequently incur losses etc.
3) Voluntary dissolution under the supervision of the court: after the decision of
voluntary dissolution, court can give order to dissolute under its supervision. Court keeps
the pecuniary interest of the debtor and the creditor.
At last we can say that, a company that is established by legal steps and also dissolute
following some legal steps. From above procedure it becomes clear.

Conclusion
From our above brief discussion we can easily say that, a joint stock company combines both
public limited company and private limited company. The formation of the joint stock
company in our country is bit complicated. This is why Joint Stock Company is not very
popular in Bangladesh but it is very popular to the developed world. One more reason behind
less popularity of joint stock Company in our country can be: much less industries
(companies), less capital of general people and so on. Our economy is not as big as the
developed country economy. There are many complicacies as well we have to face for
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forming a joint stock company. The requirements and complicacies are so many to form a
joint stock company that general people usually feel demotivated to form these companies.
As one of the biggest and most popular form of business, Bangladesh as a nation should
make the procedure to form a joint stock company easier so that people feel interested to
form joint stock companies. The cost to form a joint stock company should also be decreased
so that joint sock company formation can make sense to people and they feel interested to
form this type of business.

Reference
1. www.wikipedia.com
BOOKS:
1. Introduction to Business.
Writer Dr. M. Ataur Rahman & MD. Rabihul Islam.
2. Business for the 21st century.
Writer Steven J. Skinner & John M. Lvanncevich.

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