Q.17. What are the main authorities that control and manage the affairs of the Joint stock company?
Ans. MANAGEMENT AUTHORITY
Company Management has become one of the most difficult and demanding tasks in the modern world. When the word ‘Company’ is used, we take it as a Joint Stock Company, i.e., company which is registered under the Companies Act. But this is not true always in practice. Sometimes it also happens that the number of persons may exceed the prescribed limit of the number of members of the Partnership Act. In that case the company is formed, and the management of the company and that of the liability of the concern arc solely upon the shareholders of the company. Then each shareholder of such company is individually and collectively responsible to outsiders for the overall activities of the concern. However, this type of company is very rare in our country.
For our present discussion of the company management, we shall limit our discussion to the management of Joint Stock Companies registered under the Companies Act.
A company being an artificial body cannot manage its business itself. The shareholders are that actual proprietors of the company; but their role in the control and management of the company’s affairs is very negligible and nor worth mentioning.
These are the owners of the public limited company. But all the shareholders do not are in management. Because they are in large number and some shares are transferable. Majority of the shareholders are ignorant about the operation of the company. Generally those shareholders who are the relatives and friends of the promoter they take interest in the affairs of the company and use their votes.
BOARD OF DIRECTORS
A company is an artificial person. Therefore, its ownership is separated from the management. The shareholders who are the owners of the company do not participate in the affairs of management directly, but they elect their representatives to run the business. These elected representatives are called “Director of the Company’ and elected directors are collectively known as “Board of Directors”.
NUMBER OF DIRECTORS
According to Section 174 of Companies Ordinance, 1984, a private company shall not have Less than two directors and a public company shall not have less than seven directors.
TERM OF OFFICE OF DIRECTOR
According to Section 198 of Companies Ordinance, 1984, an elected director shall hold office for a period of three years unless he resigns earlier or becomes disqualified from being a director.
The board of directors appoints one of its directors as an executive chief. He is also called the managing director of the company. As a director he shares the responsibilities of the board and’ as chief executive he carries of the management of the company. He is appointed for a period not more than 3 years. He acts upon the policies framed by the board of directors. He cannot engage himself in any business, which is like the business of a company.
The secretary performs the secretarial work. He has a full time job. The most confidential matters of the company are associated with the secretary. A secretary of the company should be honest, efficient sensible and a man of charter. He keeps the record of the meetings. He helps in the preparation of prospectus memorandum and articles of association. He is very useful in the selection of officers of the company. He files the documents to registrar for registration.
To look after the business affairs of a company managing agents are appointed. According to company ordinance, no company inPakistanor outsidePakistanshall appoint any managing agent, by whatever named call by virtue of an agreement or contract with the company.
Note on Underwriters, Dividends And Managing Agents Next Post:
Functions and responsibilities of directors