1a.

Define Partnership according to Partnership Act of 1932

The Partnership Act of 1932 Section 4 of the Partnership Act defines a
partnership as follows: "Partnership is the relation between persons who
have agreed to share the profits of a business carried on by all or any of
them acting for all. A partnership, as defined in the Act, must have three
essential elements:
1. There must be an agreement entered into by two or more persons.
2 The agreement must be to share the profits of a business.
3. The business must be carried on by all or any of them acting for all.
Can a minor become a member of a partnership firm? If so,
discuss his rights and liabilities.
No, A minor cannot enter into a contract of partnership because an
agreement by a minor is void. But if all the partners agree, a minor may
be admitted to the benefits of an existing firm. The rights and liabilities
of such a minor partner are governed by the following rules. (Sec. 30):
1. The minor has a right to such share of the property and of the profits
of the firm as may be agreed upon by the partners.
2. The minor may have access to and inspect and copy any of the
accounts of the firm.
3. The share of the minor in the profits and in the assets of the firm are
liable for the acts of the firm but the minor is not personally liable for
any such act. (His personal properties are not liable).
4. So long as the minor continues to be a member of the firm, he cannot
file a suit against the other partners for an account or for the payment of
his share of the property or profits of the firm. He can file such a suit
only when he wants to sever his connection with the firm.
5. A minor can announce their decision to become or not to become a
partner within six months of attaining majority or obtaining knowledge
of their partnership benefits. If they do not give notice, they will become
a partner upon the expiry of the six-month period.
6. The Following rules apply when a minor elect to become a partner or
becomes, a partner by failing to notify otherwise:
(a) His rights and liabilities as a minor continue up to the date on which
he becomes a partner, but he also becomes personally liable to third
parties for all acts of the firm done since he was admitted to the benefits
of partnership.
(b) His share in the property and profits of the firm shall be the share to
which he was entitled as a minor.
7. The following rules apply when the minor elects not to become a
partner:
(a) His rights and liabilities continue to be those of a minor up to the
date on which he gives public notice.
(b) His share is not liable for any acts of the firm done after the date of
the notice.
(c) He is entitled to use the partners for his share of the property and
profits of the firm.
b. Distinguish between the following:
(a) Partnership. firm and a Hindu joint family firm.
The points of difference between such a firm and a contractual
partnership can be enumerated as follows:
1. Method of creation: A partnership is formed through agreement,
while a joint family firm is established by law, and membership is
determined by the individual's position within the joint family.
2. Authority of members: In a joint family firm, the manager or Karta
has authority to bind members through all acts within the business, while
in a partnership, every partner has authority to bind the firm and
participate in its business.
3. Liability of members: Partnerships have unlimited liability for debts,
while joint family firms have Karta's unlimited liability, with other
members liable based on their share in the business.
4. Position of minors: Minor members in joint families are firm
members from birth, while in partnerships, they cannot be members
except in a special case where a partnership is the result of an
agreement.
5. Position of women: A woman can be a partner under the Act, but not
in a Joint Hindu Family firm.
6. Number of members: In a contractual partnership, the number of
members must not exceed 10 in a banking firm and 20 in other kind of
firms. There is no limit on the number of members in joint family firms.
7. Death of members: The death of a partner in a joint family firm does
not affect the firm, while in a partnership, it dissolves unless agreed
upon.
8. Registration: In a partnership registration is optional. A joint family
firm does not require registration.
9. Dissolution and accounts: A joint family firm member cannot
request past profit and loss accounts upon severing their connection,
while a firm partner can.
10. Law: A partnership is governed by the Partnership Act; a joint
family firm is governed by Hindu law.
11. A floating body: A Hindu undivided family is a floating body. Its
composition changes by births, deaths, marriages and divorce.
12. Unity of ownership: Joint Hindu family business focuses on unity
of ownership and community of interest, with members' shares not
defined, ensuring no one can claim ownership of a specific part.
13. A precarious existence: A partnership is likely to have a precarious
existence, because a partnership can be ended at any time.
(d) Active partner and Sleeping partner.
1. Active or working partner: An active partner is the one who
contributes capital and also takes an active part in the management of
the firm. He bears unlimited liability for the firm’s debts. Active partners
take actual part in carrying out the business of the firm on behalf of
other partners.
2. Sleeping or dormant partner: Partners who just contribute the
capital and do not take part in the day-to-day activities of the business
are called sleeping Partners. He shares in the profits or losses of the firm.
C. What are the grounds of dissolution of a partnership
firm?
A firm may be dissolved on any of the following grounds:
1.Agreement (Sec. 40): A firm may be dissolved any time with the
consent of all tile partners of the firm. Partnership is created by contract;
it can also be terminated by contract.
2.Compulsory Dissolution (Sec. 41): A firm is dissolved-
(a) by the adjudication of all the partners or of all the partners but one as
insolvent, or
(b) by the happening of any event which makes the business of the firm
unlawful.
But if a firm has more than one undertaking, some of which become
unlawful and some remain lawful, the firm may continue to carry on the
lawful undertakings.
3. On the happening of Certain Contingencies (Sec. 42): Subject to
contract between the partners, a firm is dissolved-
(a) if constituted for a fixed term, by the expiry of that term;
(b) if constituted to carry out one or more adventures or undertakings, by
the completion thereof:
(c) by the death of a partner; and
(d) by the adjudication of a partner as an insolvent.
The partnership agreement may provide that the firm will not be
dissolved in any of the aforementioned cases. Such a provision is valid.
4. By notice (Sec. 43): Where the partnership is at will, the firm may be
dissolved by any partner giving notice in writing to all other partners of
his intention to dissolve the firm. The firm is dissolved as from the dale
mentioned in the notice as the date of dissolution, or, if no date is
mentioned, as from the date of communication of the notice.
5. solution by the Court (Sec. 44): At the suit of a partner, the court
may dissolve a firm on anyone of the following grounds:
(a) Insanity: If a partner has become of unsound mind. The suit for
dissolution in this case can be filed by the next friend of the insane
partner or by any other partner.
(b) Permanent Incapacity: If a partner becomes permanently
incapable of performing his duties as a partner. Permanent incapacity
may arise from an incurable illness like paralysis. The suit for
dissolution in this case must be brought by a partner other than the
person who has become incapable.
(c) Guilty Conduct: A partner's misconduct can lead to dissolution if it
negatively impacts the business's operations. The court must consider
the business's nature and whether the misconduct affects credit and
custom. The dissolution suit must be brought by a partner other than the
partner responsible for the misconduct, and the nature of the business
must be considered.
(d) Persistent Breach of Agreement: If a partner breaches the
partnership agreement or conducts themselves in a way that prevents
other partners from doing business with them, a dissolution suit must be
brought by a partner other than the partner responsible for the breach.
(e) Transfer of whole Interest: A partner's transfer of their entire
interest in a firm does not dissolve the firm by itself. However, other
partners may request the court to dissolve the firm if such a transfer
occurs. The formation of a sub-partnership is not a ground for
dissolution, as it does not provide any ground for action.
(f) Loss: If the business of the firm cannot be carried on except at a loss.
Since the motive, with which partnerships are formed, is acquisition of
gain, the courts have been given discretion to dissolve a firm in cases
where it is impossible to make profits.
(g) Just and Equitable clause: If the court considers it just and
equitable to dissolve the firm. This clause gives a discretionary power to
the court to dissolve a firm in cases which do not come within any of the
foregoing clauses but which are considered to be fit and proper cases for
dissolution.
2a. What is meant by the word ‘Company’? Describe
its characteristics.
A company is an incorporated association, which is an artificial person
created by law, having separate entity, with a perpetual succession and a
common seal. Characteristics of Company-
(i) Incorporated Association: When an organization is formed by any
existing law of the country, that organization is called an "incorporated
association." Section 11 provides that an association of more than 10
people carrying on business in banking or an association of more than 20
people carrying on any other type of business must be registered under
the company acts; otherwise, they are considered illegal.
(ii) Artificial Person: A company is a legal person, like a natural
person. It has the right to acquire and dispose of the property, to enter
into contracts with third parties in its own name, and to sue and be sued
in its own name.
(iii) Separate Legal Entity: A company is a legal entity that is
independent and separate from its management, shareholders, and board
of directors. The company is not responsible for anything done by the
management, shareholders, or board of directors, just as they cannot be
liable for anything done by the company.
(iv)Perpetual Existence: A company has perpetual succession and is
independent of the life of its members. Its existence is not affected in
any way by the death, insolvency, or exit of any shareholder.
(v) Limited Liability: A company's limited liability can be achieved
through shares or guarantees. In a company limited by shares, members'
liability is limited to the nominal value of their shares, while in a
company limited by guarantee, each member contributes a specific
amount to the company's assets in the event of winding up.
(vi) Transferability of Shares: In a public company, the shares are
freely transferable. The right to transfer shares is a statutory right, and it
cannot be taken away by a provision in the articles. In the case of a
private company, the articles shall restrict the rights of members to
transfer the shares.
(vii)Common Seal: All contracts entered into by the directors must be
under the common seal of the company. The common seal cannot be
used at will. The common seal must be used in the presence of at least
two directors.
(viii) Separate property: A company, being a legal person, is capable
of owning, enjoying, and disposing of property in its own name. The
property of the company to be used for the company's business and not
for the personal benefit of its shareholders.
(ix) Capacity to sue and being sued: The company is a legal
person, and it can enforce its legal rights. similarly, it can be sued for
breach of its legal duty.
b. Elaborate the doctrine of lifting the corporate veil. Under
what circumstances is lifting of corporate veil possible by
court?
The doctrine of "lifting the corporate veil" is a legal principle that allows
courts to disregard the separate legal personality of a company in certain
circumstances. The courts will lift the corporate veil where it is essential
to secure justice, where it is in the public interest to do so or where it is
for the benefit of revenue. this case may be divided in two:
1.under express statutory provisions
2.under judicial interpretation
the following instances may be included under express statutory
provisions:
1.reduction of membership below the statutory minimum: If a
company operates for over six months after reducing its members below
seven in public and two in private companies, then the court will lift the
corporate veil and see who is behind it. All members are jointly liable
for all debts contracted during that time (Section 45).
2.fraudulent trading: If someone engages in any fraudulent activity or
contract on behalf of the company, the court will lift the corporate veil
and see who is behind it.
3. misdescription of the company: If someone writes the company
name, company address, or company seal wrongly, the person who
committed the act or made the contract shall be personally liable for it.
4. for establishing the relationship of a holding and subsidiary
company: If the holding company is managing the subsidiary company
in such a way that it loses its separate legal entity, then the court may lift
the corporate veil and look behind the person who controls the
companies.
5.in case of an investigation of the affairs of the company:
When an inspector is appointed to investigate the affairs of a company,
he shall also have the power to investigate the affairs of any other body
corporate in the same management or group.
6. in case of investigation of an ownership of the company: In
any situation, if the central government wants to know who owns the
company, then the court will lift the corporate veil.
the following instances may be included under judicial interpretation:
1.for determining the character of the company: If a company
is suspected of being owned or controlled by enemies, the court may lift
the corporate veil and examine the character of the person constituting it,
as the company cannot be loyal or disloyal.
2. in case of fraud or misconduct: The corporate veil will be lifted
where the company has been formed for any fraudulent or unlawful
purpose.
3.for the benefit of revenue: The court may also lift the corporate
veil in the interest of revenue. The court will not hesitate to look behind
the corporate facade, where it is found that the company has been
formed for the purpose of evidencing taxes.
c. M is the holder of nearly all the shares, except one, of a
timber company. He is also a substantial creditor of the
company. He insured the company's timber in his own name.
The timber having been destroyed by fire, he claimed the
loss from the insurance company. Is the company liable to
M?
No, the insurance company is not liable to M as he does not have.
insurable interest in the company's property.
3a. What is a memorandum of association of a company
a 'memorandum of association' is the charter or constitution of the
company. It lays down the objects and scope of activities of the
company and also defines the relationship of the company with the
outside world.
what is memorandum of association Contents?
Section 13 of the Companies Act lays down that the memorandum of
association of every company shall contain the following clauses:
1. Name Clause: In this clause the name of the company, with
"Limited" as the last word of the name in the case of a public company
and "Private Limited" as the last words in the case of a private company,
must be stated. It may be noted here that a company has a separate legal
entity and is recognized by its name. Ordinarily, a company is free to
adopt any name it likes. But the name should not be one which, in the
opinion of the Central Government, is undesirable. A name which is
identical with or which closely resembles the name of an existing
company may be considered undesirable by the Central Government.
(Sec. 20
2. Registered office clause: This clause states the name of the State in
which the registered office of the company will be situated. All
communications and notices to the company shall be addressed to its
registered office. All-important books and statutory register shall be kept
at its register office
3. Objects clause: This is the most important clause in the
memorandum. It defines the sphere of the company's activities, the aims
that its formation seeks to achieve and the kind of activities or business
that it proposes to conduct. The object clause should not include
anything illegal or against the general law of the country, anything in
contravention of the act itself, or anything that is against public policy.
4. Liability clause: This clause states the nature of the liability of
members. The memorandum of a company should state whether the
company is limited by shares or by guarantee.
5. Capital clause. This clause states the amount of share capital with
which the company is proposed to be registered. This is known as the
authorized or nominal capital of the company. A company cannot issue
more shares than are authorized for the time being by the memorandum.
6. Association or subscription clause. In this clause the
subscribers declare that they desire to be formed into a company and
agree to take shares stated against their names. No subscriber will take
less than one share. The memorandum has to be subscribed to by at least
seven persons in the case of a public company and by at least two
persons in the case of a private company. The signature of each
subscriber must be attested by at least one witness who cannot be any of
the subscribers.
What are the requirements for alteration of the objects
clause in the memorandum of association with special
reference to the Companies (Amendment) Act, 1974?
The following procedure must be followed for altering the objects
clause:
(i) Special resolution. A special resolution authorizing the alteration
must passed at a general meeting of the company. (Sec. 17)
(ii) Registration of alteration. A copy of the special resolution
authorizing the alteration together with a copy of the altered
memorandum shall be filed with the Registrar within one month from
the date of such resolution. Alteration takes effect when it is so
registered. (Sec. 18)
B. Explain the doctrine of ultra vires.
any act done or any contract made by the company which goes beyond
the memorandum or which is not expressly or implicitly warranted by it,
is the doctrine of ultra vires the company. The result is that such an act or
contract is wholly void and will not be binding upon the company. It
cannot be ratified even by the unanimous vote of all the members of the
company.
What are the effects of ultra vires transactions?
(1) Injuction. A company is established for its stated objectives,
ensuring shareholders' investments are not risked in unspecified business
ventures. Whenever a company has committed an ultra vires act or is
likely to do so, any member of the company may restrain it by getting an
injuction against it.
(2) Personal liability of directors for ultra vires payments.
Directors must ensure company funds are used for authorized business,
and if a director makes an ultra vires payment, they can be compelled to
make good the used funds.
(3) Liability for breach of warranty of authority. Directors
entering into ultra vires may be liable to the third party for breach of
warranty of authority, but the company will not take any liability.
4) Ultra vires acquired property. If the funds of the company have
been spent ultra vires in purchasing some property, its right over the
property will be protected.
(5) Ultra vires contracts. A contract which is ultra vires the
company will have no legal effect. It. is absolutely void. Such contracts
are not binding upon the company and it can neither sue nor be sued on
them.
6) Ultra vires torts. A company will be liable for any tort of its
employees if (a) the tort is committed in pursuance of its stated objects;
and (b) it is. committed by employees within the course of their
employment.
C. The memorandum of association of a public company was
signed by two adult persons and the other five signatories to
the memorandum were minors. The Registrar, however,
registered the company and issued under his hand certificate
of incorporation. Can the certificate of incorporation be
challenged?
The certificate of incorporation is conclusive for all purposes and it
cannot be challenged. Though there were no seven subscribers to the
memorandum and the Registrar ought not to have granted the certificate,
the certificate is conclusive for all purposes.
4a. Define the term 'share.
A share has been defined as an interest measured by a sum of money and
made of various rights contained in the articles of association. The
shares of any member in a company are movable property and they can
be transferred in the manner provided in the articles of the company.
Explain the difference between the nominal, subscribed and
paid-up capital of company.
the difference between the nominal, subscribed and paid-up capital of
company are given below:
1. Nominal Capital: This refers to the total authorized capital of a
company as specified in its memorandum of association. It represents
the maximum amount of capital that a company is authorized to issue.
Nominal capital is also known as authorized capital or registered capital.
2. Subscribed Capital: This is the portion of the nominal capital that
shareholders have agreed to subscribe or purchase. It represents the
amount of capital that shareholders have committed to contributing to
the company.
3. Paid-up Capital: This is the actual amount of capital that
shareholders have paid for their subscribed shares. It represents the
portion of the subscribed capital that shareholders have already
contributed in cash or assets to the company. Paid-up capital can be less
than or equal to the subscribed capital, depending on how much
shareholders have actually paid for their shares.
State the circumstances in which and the conditions under which, further
issue of capital may be made a company.
b. Define a prospectus. / What is a prospectus?
“A prospectus may be defined as an invitation to the general public to
subscribe to a company's shares or debentures and the shares or
debentures must be taken for cash.
Discuss the consequences of misstatements in a
prospectus.
If a prospectus includes untrue statements, it shall give rise to several
rights which may be grouped in two categories: (i) rights of the
aggrieved shareholder against the company, and (ii) rights of the
aggrieved shareholder against the directors, promoters and experts.
(1) Remedies against the company. The aggrieved shareholder has
two remedies against the company: (a) rescission of the contract, and (b)
damages for fraud.
(A) Rescission of the contract: If a prospectus contains
misstatements, whether innocent or fraudulent, individuals who were
induced by such misstatements to subscribe for shares or debentures
have the right to rescind the contract. This means the contract to buy
shares becomes voidable. If he chooses to rescind, he must surrender the
allotted shares, have his name removed from the register, and receive a
refund of the money paid to the company.
(B) Damages for fraud: under this right the subscriber can recover
damages from the company if there is a fraudulent misrepresentation in
the prospectus. If the shareholder can prove fraudulent activity, he can
claim full compensation for the loss resulting from the fraudulent
statement in prospectus.
2. Remedies against directors, promoters and experts . The
directors, promoters and experts, who subscribes for shares or
debentures on the faith of the prospectus for any loss or damage he may
have sustained by reason of an untrue statement.
A) Damages for misrepresentation under Section 62 . Under
this section, once the statement in the prospectus is proved to be untrue
the directors or the promoters are liable to compensate the allottees who
took shares on the faith of the prospectus. The subscriber need not prove
fraud to claim compensation.
b) Damages for fraud under general law. Under this right the
subscriber can recover damages from all or any of the persons
responsible for the issue of the prospectus but it shall be necessary to
establish that there is fraudulent misrepresentation in the same. If the
shareholder can prove fraudulent activity, he can claim full
compensation for the loss resulting from the fraudulent statement in
prospectus.
c) Criminal liability for misstatement in a prospectus. Section
63 provides that where a prospectus contains any untrue statement, every
person who authorized the issue of the prospectus shall be punishable
with imprisonment for a term which may extend to two years or with a
fine which may extend to five thousand taka, or with both.
c. what is statutory meeting? what are the consequence of
not holding a statutory meeting?
The first meeting of the shareholders of a public company is known as a
statutory meeting. every company limited by Shares & guarantee held
statutory meeting within a period of not less than one month and not
more than six months from the date on which the company is entitled to
commence business. This meeting is held only once in the life-time of a
company. A private limited company, an unlimited company or a public
guarantee company having no share capital are not to hold statutory
meetings. The directors are required to send notice of the meeting to
every member of the company at least 21 days before the date of the
meeting stating that it is the statutory meeting of the company. The
object of holding a statutory meeting is to acquaint shareholders of the
progress of the company since incorporation and to discuss matters
arising out of the promotion and formation of the company. Default in
holding a statutory meeting shall make every director or other officer of
the company liable to a fine of up to five thousand TK. Besides, the
company may be wound up the court under Section 433.
d Difference them?
1. Cumulative& non-cumulative preference shares:
Cumulative preference shares entitle shareholders to receive unpaid
dividends from past years if the company couldn’t pay them. Non-
cumulative preference shares don’t accumulate unpaid dividends; if a
company skips a dividend, shareholders with non-cumulative shares
won’t receive those missed payments.
2. participating and non-participating preference share:
Participating preference shares give their owners the chance to get extra
dividends based on how much profit the company make along with the
fixed rate dividends. non-participating preference shares pay dividends
at a fixed rate, no matter how much profit the company makes.
3.Convertible and non-convertible preference shares: When
the holders of preference shares are given a right to get their shares
converted into equity shares within a certain period, the preference
shares are known as convertible preference shares. non-convertible
preference shares, the holders are not given the right to convert their
shares into equity shares.
4.Transfer and Transmission of Shares
1. When shares pass from one person to another by a voluntary act, it is
called a transfer. Where shares pass from one person to another by
operation of law, it is called transmission.
(2) Transfer is a general method of transferring property in shares,
whereas transmission takes place under special circumstances such as
death, insolvency or lunacy.
(3) In the case of transfer, an instrument of transfer duly stamped and
executed by the transferor and transferee is essential. In the case of
transmission, only proof of the title of the legal representative to the
shares and letter of request are required. There is no instrument of
transfer.
(4) The transfer of shares is generally against consideration, but to
transmission there is none.
5a.How can a private company be converted into a public
limited company
1.Conversion by default: When the company does not seek voluntary
conversion but violates the Articles of Association, then a private
company is converted into a public company through conversation by
default. (Sec. 43)
2.Conversion under Section 43 A (Deemed to be public companies):
a. A private company is considered a public company if 25% of its paid-
up share capital is held by public companies [Sec. 43A (1)].
b. If the private limited company borrows a large amount of money or
collateral from the public limited company, then it will convert into a
public company. [Sec. 43A (1A)]
c. A private company holding 25% of a public company's paid-up share
capital will become a public company upon its holding of such shares
[Sec. 43A (IB)].
3. Conversion by alteration of articles of association: Voluntarily, the
private limited company becomes a public company by changing the
articles of association to eliminate the provisions relating to a private
company.
b. what are the different modes of winding up a joint
stock company?
Modes of Winding Up
A company can be wound up in any of the following three way:
(i)compulsory winding up under order of the court,
(ii)voluntary winding up, and
(iii) winding up subject to supervision of the court.
1. WINDING UP BY THE COURT: Section 433 lays down that a
company may be wound up by an order of the court. This is also known
as compulsory winding up. A company may be wound up by the court in
the following cases:
1. Special resolution: A company may be wound up by the court if the
company itself has passed special resolution to that effect. A resolution
shall be a special resolution when the number of vote cast in favors of
the resolution is 3 times the number cast against it.the court may refuse
to pass an order for winding up if it finds that this would be against the
public interest or the interest of the company as a whole. Such a large
number of shareholders want the company to be wound up, they would
prefer the mode of voluntary winding up which is far speedier and
cheaper than compulsory winding up.
(ii)Default in holding statutory meeting or in delivering a statutory
report to the Registrar: statutory meeting should be held within a
period of not less than one month and not more than six months from the
date of which the company is entitled to commence business. If default
is on the statutory meeting or in delivering a statutory report to the
Registrar the court may order the company to be wound up.
(iii) Failure to commence business within one year of incorporation,
of suspending business for a whole year: If the company does not
commence its business within one year of its incorporation or if it has
suspended business for a whole year, it may be wound up by order of the
court. The court may refuse to pass such an order where suspension of
business for a whole year was sufficiently accounted for and the
company had intention to start business within a reasonable time.
(iv) Reduction in membership. If the number of members is reduced,
in the case of a public company, below seven, and in the case of a
private company, below two, the company, may be wound up by an
order of the court.
(v) Inability to pay debts: The court will order the company to be
wound up if it is unable to pay its debts. If a creditor receives more than
5,000 TK from the company but the company is failing to pay the
money, then the creditor goes to the court, and if, after seeing the court,
the company cannot afford the money of five thousand TK, then it gives
a notice of winding up.
(vi) Just and equitable: If the court is of the opinion that it is just and
equitable that the company should be would up, it may order company to
be wound up. The following cases, are worth noting where the court has
ordered the company to be would up under the just and equitable clause:
a. Loss of substratum. Where the main object of the company has
failed to materialize or the substratum of the company is gone, it is just
and equitable that the court should order winding up.
b. deadlock in the management of the company: where there is a
complete deadlock in the management of the company, the court may
order the company to be wound up under this clause. However, a
winding up order cannot be made on the mere possibility of friction and
deadlock in future. Similarly, incompatibility of good relations between
rival factions in the directorate is not a sufficient ground for winding up.
c. Aggressive or oppressive policy towards minority shareholders:
The company's directors, who had dominating influence, managed to
retain business ownership among family members. Complaints included
lack of balance sheet access, auditor's report reading, and declining
dividend payments, which led to the company's winding up.
d. Company having no property: Where the company was a bubble
having no property or not doing any business and it is obvious that the
company will never have resources to commence business, it was held
that there was sufficient ground for winding up.
e. Fraudulent or illegal purpose: Where the whole object of the
company was fraudulent or illegal or when the business of the company
becomes illegal, the court will pass an order for winding up under this
clause.
f. Losses: Where the business of a company cannot be carried on except
at a loss and its insolvency is inevitable, it is considered just and
equitable to wind up the company.
2. voluntary winding up: voluntary winding up is the most
common and popular form of winding up. In voluntary winding up, the
company and its creditors are left free to settle their affairs without going
to the court. The members and creditors of a company sit together and
put an end to the difficulties and disputes which may have arisen in
connection with the running of the company's business. Voluntary
winding up of a company in the following two ways:
(a) By ordinary resolution. A company may be wound up voluntarily by
passing an ordinary resolution when the period, if any, fixed for the
duration of the company by the articles has expired.
(b)By special resolution. In other cases, a company may be wound up
voluntarily at any time and for any reason if a special resolution has
been passed to that effect in a general meeting of the company.
3. WINDING UP SUBJECT TO SUPERVISION OF THE
COURT: a company has passed a resolution for voluntary winding up;
the court may make an order that the voluntary winding up shall
continue but subject to such supervision of the court. The object of
irregularities or fraud in the voluntary winding up. The court itself
appoints the liquidator.
who is an Official Liquidator? Explain his duties and
powers.
The official liquidator is an authorized person who proceeds the
liquidation process. The Official Liquidator may be a full-time or part-
time officer depending upon the volume of work. only an official
liquidator can act as a liquidator in a winding up by the court.
Duties of the Official Liquidator
1. To conduct proceeding in winding up: The liquidator shall
conduct the proceedings in winding up of the company and perform such
duties as the court may impose.
2.To make a report: As soon as practicable after receiving a
statement of affairs but not later than six months from the date of the
orders, the Official Liquidator shall submit a preliminary report to the
court showing: (a) the amount of capital issued, subscribed and paid up
and the estimated amount of assets and liabilities; (b) if the company has
failed, the causes of the failure.
3. Custody of company's property: the liquidator or the
provisional liquidator shall take into his custody or under his control all
the property, effects and actionable claims to which the company is
entitled.
4.To summon meetings of creditors and contributories: The
liquidator may summon general meeting of creditors or contributories
for the purpose of ascertaining their wishes.
5. Directions from the court: The liquidator shall use his own
discretion in the administration of the assets of the company and in the
distribution of such assets among the creditors but he shall always be
working subject to the control of the court.
6.Books to be kept by liquidator: The liquidator shall keep proper
books in which he shall cause entries or minutes to be made of
proceeding at meetings and of such other matters as may be prescribed.
7. Audit of liquidator's accounts: The liquidator shall present to
the Court, twice a year, an account of his receipts and payments in the
prescribed from in duplicate.
8. Central Government's control of liquidators: Section 463
requires liquidators to perform their duties faithfully and observe all the
requirements imposed on them by this Act.
9. Information as to a pending winding up: If the winding up of
a company is not concluded within one year of its commencement, the
liquidator shall file a statement in the prescribed from the containing the
prescribed particulars daily audited by a person qualified.
Powers of the Liquidator
Section 457 defines the powers of a liquidator in a winding up by the
court. These powers have been classified under two heads: (a)Powers
exercisable with the sanction of court& (b)Power exercisable without the
sanction of court.
(a)Powers exercisable with the sanction of court: The
liquidator in a winding up by the court shall have the power, with the
sanction of the court are as follows:
1. To institute or defend any suit, prosecution, or other legal proceeding,
civil or criminal, in the name and on behalf of the company.
2. To carry on the business of the company so far as may be necessary
for the beneficial winding up of the company.
3. To sell the immovable and movable property of the company by
public auction or by private contract.
4. To raise money on the security of the assets of the company.
5. To do all such other things as may be necessary for winding up the
affairs of the company and distributing the assets.
6. To appoint an advocate, attorney or pleader entitled to appear before
the court to assist him in the performance of the duties.
7. To pay any classes of creditors in full or to make any compromise or
arrangement with the creditors.
8. To compromise any call or liability to call, debt and liability capable
of resulting in a debt.
(b)Power exercisable without the sanction of court: The
liquidators may exercise the following powers without the sanction of
the court:
1. Do all acts and execute all deeds, receipts and other documents in the
name and on behalf of the company and use the company's seal.
2. Inspect the records and returns of the company on the files of the
Registrar without payment of any fee.
3. Prove, rank and claim in the insolvency of any contributory for any
balance against his estate and to receive dividends in the insolvency.
4. Draw, accept, make and endorse any bill of exchange, hundis and
promissory notes in the name of the company.
5. Take out, in his official name, letters of administration to the estate of
a deceased contributory and to do necessary things to obtain payment.
6. Appoint an agent to do any business which he is unable to do himself.
4.Distinguish between members' voluntary winding up and creditors'
voluntary winding up
6.a) What is the definition of workers? 2(65)
Worker as per section 2(65) means any person including an in any
establishment or person including any or through an apprentice
employed contractor, by whatever name he is called, to do any skilled,
unskilled, manual, technical, trade promotional or clerical work for hire
or reward, whether the terms of employment are expressed or implied,
but does not include a person employed mainly in a managerial,
administrative or supervisory capacity.
Discuss the classification of workers and probation
period. Section-4
1. in accordance with Section-4 Workers are classified in the following
types:
a) apprentice;
(b) substitute;
(c) casual;
d. temporary;
e) probationer;
(f) permanent; and
(g) seasonal worker.
2. A worker may be called an apprentice if he is employed in an
establishment as a trainee and paid allowances during the period of his
training.
3. A worker may be called a substitute if he is employed in an
establishment in the post of a permanent worker or of a probationer for
the period of his temporary absence.
4. A worker may be called a casual worker if he is employed on ad-hoc
basis in an establishment for work of a casual nature.
5. A worker may be called a temporary worker if he is employed in an
establishment for a work which is essentially of temporary nature and is
likely to be finished within a limited period.
6. A worker may be called a probationer if he is employed for the time
being in an establishment in a permanent post and the period of his
probation is not ended.
7.A worker may be called a permanent worker if he is employed in an
establishment on a permanent basis or if he has completed the period of
his probation satisfactorily in the establishment.
8. A worker may be called a seasonal worker if he is employed in an
establishment for seasonal works during any work season and remain in
employment up to the end of that season.
b) Discuss the provisions relating to the appointment
of child & Adolescent according to the Labor Act-
2006. (Sec-34,39,40,41)
According to section 34
(1) No child shall be employed or permitted to work in any occupation
or establishment.
(2) No adolescent shall be employed or permitted to work in any
occupation or establishment unless-
(a) a certificate of fitness in the form prescribed by rules, and granted to
him by a registered medical practitioner is in the custody of the
employer and
(b) he carries, while at work, a token containing a reference to such
certificate.
(3) Nothing of sub-section (2) shall apply to the employment of any
adolescent. in any occupation or establishment either as an apprentice or
for receiving vocational training.
(4) The Government may, if it thinks that an emergency exists and it is
necessary in the public interest, by notification in the official Gazette,
suspend the application of sub-section (2) for such period as may be
specified therein.
In accordance with section 39
(1) The Government shall, by notification in the official Gazette,
declare, from time to time, a list of hazardous work.
(2) No adolescent shall be employed in any work declared by the
Government as hazardous.
(3) No adolescent shall be allowed to clean, lubricate or adjust any
machinery of any establishment while it is in motion or to work between
moving parts or between the fixed and moving parts of such machinery.
As per section 40
1) No adolescent shall work at any machine, unless-
(a) he has been fully instructed as to the dangers arising in connection
with such machine and the precautions to be observed in this respect;
and
(b) he has received sufficient training to work at the machine, or is under
supervision of a person who has thorough knowledge and experience of
the machine.
(2) This provision shall apply to such machines as may be notified by
the Government to be of such a dangerous character that an adolescent
should not work at them unless the requirements of sub-section (1) are
complied with.
As per section 41
(1) No adolescent shall be allowed to work in any factory or mine for
more than 5 (five) hours in any day and 30 (thirty) hours in any week.
(2) No adolescent shall be allowed to work in any other establishment
for more than 7 (seven) hours in any day and 42 (forty-two) hours in a
week.
(3) No adolescent shall be allowed to work in any establishment between
7.00 O'CLOCK in the evening and 7.00 O'CLOCK in the morning.
(4) If an adolescent works overtime, the total number of hours worked
including overtime shall not exceed-
(a) in any factory or mine, 36 (thirty-six) hours in a week
(b) in any other establishment, 48 (forty-eight) hours in a week.
(5) The period of work of an adolescent employed in an establishment
shall be limited to 2 (two) shifts, and the period of any shift shall not
exceed more than seven and a half hours.
(6) An adolescent may be employed in one relay only and this shall not,
except with the previous permission, in writing, of the Labour Inspector,
be changed more than once in a period of 30 (thirty) days.
7) The provisions relating to weekly holidays under this Act shall apply
also to the adolescent workers and the operation of this provision shall
not be suspended in respect of the adolescent workers.
8)No adolescent shall be allowed to work in more than one
establishment in a day.
c.Discuss the provisions relating to deduction from
wages. (sec-125)
As per section 125
(1) Except the cases for deduction authorized by this Act, no deduction
shall be made from the wages of a worker.
(2) Deductions from the basic wages of a worker may be made only in
accordance with the provisions of this Act, and such deduction shall be
of the following kinds only, namely: -
(a) fines imposed under section 25,
(b) deductions for unauthorized absence from duty;
(c) deductions for damage to or loss of any goods given under the
custody of a worker or for loss of money for which he is liable to
account, where such damage or loss is directly attributable to his neglect
or default;
(d) deductions for house-accommodation provided by the employer,
(e) deductions for facilities and service approved by the Government and
provided by the employer,
(f)deductions for recovery of advances or loans or adjustment of
overpayments of wages;
(g) deductions of income-tax payable by the worker,
(h) deductions by order of a Court or deduction by order of any
authority competent to make such order of deduction;
(I)deductions for subscriptions to and for payment of advances from any
provident fund to which the Provident Funds Act, 1925
(j)deductions for payment to any co-operative society approved by the
Government or to an insurance scheme maintained by the Bangladesh
Postal Department or any Government Insurance Company:
(k) deductions made with the written consent of the workers for the
contribution to any fund or scheme constituted or framed by the
employer with the approval of the Government for the welfare of the
workers or the members of their families; and
(L) deduction of subscription for the CBA Union through check-off
system.
7a. What is the calculation of wages and payment
thereof during the period of leave or holiday? (sec119)
As per section119
(1) For the leave or holidays allowed to a worker under this Act, he shall
be paid at the rate equal to the daily average of his full-time wages,
dearness allowances, and ad-hoc or interim wage, if any, except any
overtime allowance and bonus for the days on which he worked during
the month immediately preceding his leave:
(2) If an adult worker is allowed annual leave for a period of not less
than 4 (four) days and an adolescent worker for period of not less than 5
(five) days, at a time, he shall, in so far as it is practicable, be paid his
wages for the period of the leave so allowed, before his leave begins.
b. what are the provisions regarding Employees’
Provident Fund under Labor Act-2006? (Sec-264)
as per section 264
An establishment in the private sector shall be required to constitute a
provident fund for the benefit of its workers, if at least three-fourths of
the total number of workers employed therein so demand to the
employer by an application in writing. Every permanent worker shall,
after completion of 1 (one) year of his service in the establishment,
where the provident fund is constituted, subscribe to the provident fund,
unless otherwise agreed upon, in every month a sum, not less than seven
percent and not more than eight per cent of his monthly basic wages; and
the employer shall contribute to it an equal amount. Provident fund shall
be administered by a Board of Trustees. Such Board of Trustees shall
consist of equal number of representatives of the employer and workers
employed in the establishment concerned; and a person nominated by
the Government shall be its Chairman. All members of the Board of
Trustees shall hold office for a period of 2 (two) years. A statement of
accounts of income and expenditure of the provident fund, together with
the audit report relating thereto, shall be forwarded to the Director
General within 1 (one) month of the submission of audit report. At least
half of the total accumulations in such provident fund shall be invested
for any of the following purposes, namely: - (a) I.C.B, Mutual Fund
Certificate;(b) I.C.B, Unit Certificate; and (c) any government securities
including defense and postal saving certificate.
c.Discuss the provisions relating to deduction from
wages. (sec-125)
As per section 125
(1) Except the cases for deduction authorized by this Act, no deduction
shall be made from the wages of a worker.
(2) Deductions from the basic wages of a worker may be made only in
accordance with the provisions of this Act, and such deduction shall be
of the following kinds only, namely: -
(a) fines imposed under section 25,
(b) deductions for unauthorized absence from duty;
(c) deductions for damage to or loss of any goods given under the
custody of a worker or for loss of money for which he is liable to
account, where such damage or loss is directly attributable to his neglect
or default;
(d) deductions for house-accommodation provided by the employer,
(e) deductions for facilities and service approved by the Government and
provided by the employer,
(f)deductions for recovery of advances or loans or adjustment of
overpayments of wages;
(g) deductions of income-tax payable by the worker,
(h) deductions by order of a Court or deduction by order of any
authority competent to make such order of deduction;
(I)deductions for subscriptions to and for payment of advances from any
provident fund to which the Provident Funds Act, 1925
(j)deductions for payment to any co-operative society approved by the
Government or to an insurance scheme maintained by the Bangladesh
Postal Department or any Government Insurance Company:
(k) deductions made with the written consent of the workers for the
contribution to any fund or scheme constituted or framed by the
employer with the approval of the Government for the welfare of the
workers or the members of their families; and
(L) deduction of subscription for the CBA Union through check-off
system.
Write down the provisions relating to the settlement
and appeal of claims arising out of the deduction from
wages. (sec 132)
1.As per Section 132 Any deduction made from the wages of any worker
or non-payment of wages or other dues of arrears or delayed wages may
apply to the court.
2.The Labor Court shall decide within twelve months from the date of
deduction of wages or from the date of payment of wages as the case
may be.
3. After the receipt of an application under sub-section (1), the Labour
Court shall give the applicant and the employer or any other person
responsible for the payment of wages under this Chapter an opportunity
of being heard, and shall take necessary evidence, and may direct the
employer or the person responsible for payment of wages to pay the
wages which was deducted or was not paid or being delayed in the
payment thereof to the applicant.
5. The Labour Court passing an order under sub-section (3) may also
direct the employer or the person responsible for payment of wages to
pay 25% (twenty-five per cent) of the wages as compensation to the
applicant. 7. If the Labour Court, while hearing any application under
this section, is satisfied that such application is malicious or vexatious,
the Court may impose a fine on the applicant of an amount not
exceeding taka 200 (two hundred) and direct to pay the same to the
employer or the person responsible for the payment of wages.
8.a)What is the prohibition of engagement of women
worker in work in certain cases?
As per section 45
1) No employer shall knowingly engage a woman in his establishment
during the 8 (eight) weeks immediately following the day of her
delivery.
(2) No woman shall work in any establishment during the 8 (eight)
weeks immediately following the day of her delivery.
(3) No employer shall employ any woman for doing any work which is
of an arduous nature or which involves long hours of standing or which
is likely to adversely affect her health, if-
(a) he has reason to believe or if the woman has informed him that she is
likely to deliver a child within 10 (ten) weeks;
(b) to the knowledge of the employer the woman has delivered a child
within the preceding 10 (ten) weeks
b. Discuss in brief the procedures regarding payment
of maternity benefit.
According to section 46
1) Every woman worker shall be entitled to maternity benefit from her
employer for the period of 8 (eight) weeks1 preceding the expected day
of her delivery and 8 (eight) weeks. immediately following the day of
her delivery, and her employer shall be bound to give her this benefit.
Provided that a woman shall not be entitled to such benefit unless she
has worked under her employer for a period of not less than 6 (six)
months immediately preceding the day of her delivery.
(2) No such benefit shall be payable to a woman if at the time of her
delivery she has 2 (two) or more surviving children, but in that case she
may enjoy any leave which is due to her.
According to section 47
(1) If a pregnant woman is entitled to maternity benefit under this Act,
she shall, on any day, give notice either orally or in writing to her
employer that she expects to be confined within 8 (eight) weeks next
following and the name of the person who shall receive the payment of
the benefit in case of her death shall also be included in the notice.
(2) If a woman has not given any such notice, she shall inform her
employer about her giving birth to a child by giving such notice within 7
(seven) days of her giving birth to child.
(3) After receipt of a notice under sub-section (1) or (2), the employer
shall permit the concerned woman to absent herself from work,-
(a) in the case of a notice under sub-section (1), from the day following
the date of notice;
(b) in the case of a notice under sub-section (2), from the day of delivery
until 8 (eight) weeks after the day of delivery.
(4) An employer shall pay maternity benefit to a woman in any of the
following ways as that woman may desire, namely:
(a) A registered medical practitioner's certificate stating a woman is
expected to be confined within eight weeks will result in maternity
benefits payable for eight weeks prior to delivery, and for the remaining
period, within three working days of proof of childbirth.
(b)The maternity benefit, payable for eight weeks before and after
delivery, will be paid within three working days of providing proof of
childbirth to the employer, and the remaining benefit will be paid within
eight weeks.
(c) maternity benefit payable for the whole of such period shall be paid
within three working days following the production of proof that she has
given birth to a child;
(5) The proof which is required to be produced under sub-section (4)
shall be either an attested extract from a birth register maintained under
the Births and Deaths Registration Act, 2004 or a certificate given by a
registered medical practitioner or such other proof as may be acceptable
to the employer.
What are the rules regarding payment of maternity
benefit in case of death of a woman worker?
In accordance with 49
(1) If a woman entitled to maternity benefit under this Chapter dies at
the time of her delivery during 8 (eight) weeks following thereof, the
employer shall pay the amount of maternity benefit, if the newly born
child survives, to the person who takes. care of the child, and if the child
does not survive to the person nominated by her under this Chapter, or if
there is no such nominee, to her legal representative.
(2) If a woman dies during the period for which she is entitled to
maternity benefit but before giving birth to a child, the employer shall be
liable to pay such benefit for the period preceding and including the day
of her death, provided that if any such benefit already paid to her
exceeds the amount of such benefit now payable shall not be
recoverable, and if any amount in this regard is due to the employer till
the time of death of the woman, he shall pay it to the nominee of the
woman under this Chapter, or if there is no nominee, to her legal
representative.
c.Define wages. (Sec-2(45), 120)
As per section 45: wages" means all remuneration, expressed in terms of
money or capable of being so expressed, which would, if the terms of
employment, expressed or implied, were fulfilled, be payable to a
worker in respect of his employment or of work done in such
employment, and includes any other additional remuneration of the
nature aforesaid which would be so payable, but does not include the
following money, namely:
(a) the value of any house accommodation, light, water, medical
facilities or other amenity or the value of any service excluded by
general or special order by the Government,
(b) any subscription paid by the employer to any pension fund or
provident fund;
(c)any travelling allowance or the value of any travelling concession;
(d)any sum paid to a worker to defray special expenses entitled to him
by the nature of his employment.
Again, as per section 120wages" means the wages as defined in section.
2(45), and also includes the following dues, namely: -
(a) any bonus or other additional remuneration payable under the
terms of employment;
(b) any remuneration payable for leave, holiday or overtime work;
(c) any remuneration payable under order of any Court or any award or
settlement between the parties;
(d) any sum payable under any agreement or this Act for the reason of
termination of employment, whether by way of retrenchment, discharge,
removal, resignation, retirement, dismissal or by whatever means; and
(e) any sum payable due to lay-off or suspension.
When, how and in which currency wages should be
payable? (Sec122, 123, 124)
Asper section 122
1) Every person liable for the payment of wages under section 121 shall
fix wage periods in respect of such payment.
(2) No wage period shall exceed 1 (one) month.
According to section 123
(1) The wages of a worker shall be paid before the expiry of the seventh
working day following the last day of the wage period in respect of
which the wages are payable.
(2) Where the employment of a worker is terminated by retirement or by
his retrenchment, discharge, removal by the employer or by termination
of employment by the worker or otherwise, all wages payable to him
shall be paid before the expiry of the thirtieth working day following the
day of termination of his employment.
(3) All wages shall be paid on the working day.
As per section 124
(1) All wages shall be paid in current coin or currency notes or bank
cheque.
(2) Besides the manner mentioned in sub-section (1), where applicable,
as per demand of a worker the wages may be paid directly through
electronic transfer or any other digital manner to the bank account of
such worker.
 Chapter 21
define statement of affairs
statement of affairs is a document in which the assets of the company, its
debts and liabilities, the names, residences and occupations of its
creditors, and the debts due to the company. Statement of affairs made
by directors for liquidation. The company's current status can be
understood by the official liquidator through the statement of affairs at a
glance.
Difference between Members' Voluntary Winding Up and
Creditors' Winding Up
(1) In the case of a members' winding up the directors file a "Declaration
of Solvency" with the Registrar which states that the company has no
debts or that it will be able to pay its debts in full. In the case of a
creditors' voluntary winding up, no such declaration is filed with the
Registrar. In fact, the creditors' voluntary winding up is resorted to by
insolvent companies which are unable to meet their liabilities in full.
(2) In the case of a members' voluntary winding up, there is no meeting
of creditors. Only a meeting of members is called to pass an ordinary or
special resolution requiring the company to be wound up. In the case of
a creditors' voluntary winding up, the company shall call a meeting of
creditors either on the same day or the day next to the day when the
company passes a resolution for voluntary winding up.
(3) There is no committee of inspection in a members' voluntary
winding up, whereas in a creditors' voluntary up the creditors may
appoint a committee of inspection.
(4) In a members' voluntary winding up, the members have dominating
control over the winding up proceedings and the creditors do not
participate directly, as the company is deemed to be solvent. In the case
of a creditors' voluntary winding up, the creditors have dominating
control over winding up proceeding as the company is deemed to be
insolvent.
(5) In a members' voluntary winding up, the members appoint the
liquidator in general meeting. In a creditors' voluntary winding, up the
liquidator is appointed in a different way. If the members and creditors
nominate two different persons as liquidators, the creditors' nominee
shall become the liquidator. if no person is nominated by the creditors,
the person nominated by the company shall be the liquidator.
(6) In a members voluntary winding up, the liquidator can exercise some
of his powers with the sanction of a special resolution of the company.
In a creditors' voluntary winding, up he can do so with the sanction of
the court or the committee of inspection or of meeting of creditors.