History Companies
11th to 16th-century
The idea of the
corporation was laid by Roman Law. During, 11th and 16th-century
merchants had a Merchant Guild (group of people with the same thoughts or
interests) in England who securing their right to a monopoly from the Crown
through the charters. They were having joint accounts for their trades and the
members were bound to follow rules made by the Guilds. Their model of trade was
working in two forms. Commenda and
Societas. In the Islamic world, Sharikah and Mudarabah.
Commenda:
In
commenda the liability of the workers was unlimited and of the investor was
limited to his investment amount which means he lost just his investment in
case of the total loss. In the Islamic world, the Sharikah similar to the
commenda had contrary rule the liability of the worker was limited. Later on, the commenda developed into a
limited liability partnership.
Societas:
In
societas, all the members were participating in the business. The societas
developed into modern partnerships.
The trading merchant
members used the word company for overseas trade for the first time.
16th – 1825
In the 16th
century associations named as companies formed in a real sense in England,
after the Tudor monarch granted charters of incorporations to many companies.
In the 17th century companies started trading on behalf of merchants
each contributing as a part of the merchandise. Such corporation was known as
Joint Stock Trading and by the end of the century; these companies had
developed permanently fixed capitals portrayed by the freely tradable shares.
Yet, the property of the company was in the exclusive control of the board of
governors. Method of incorporation at this time was made by Royal Charter and
by Act of the Parliament.
1720
The Bubble Act brought
severity against the companies during
1720. The reason to bring this Act was the occurrence of the South Sea
Bubble. The South Sea Company assumed Britain’s national debt and received in
return a monopoly over the British trade with the South Sea Islands in South
America, also gained an annual interest payment. The shares of the company were
driven up by speculation and fraud was exposed.
The Bubble Act as a consequence was introduced that curtailed the use of
Joint Stock Companies for hundred of years. Due to this fraud and collapse
organizations resembling corporations were regarded with suspension in England
as well as in the USA. This era is called fear of companies.
The restrictions were made on the use of corporations unless confirmed by royal Charter or Parliamentary Act.The Act did not lead to the suppression
of the form of the companies. Unincorporated associations started forming that
were not more than large partnerships whose constitution was introduced in
their deeds of settlement and much use was made of it in the formation of the
trust. The members of such companies had unlimited liability.
1825 to 1844
With the year 1825, the
modern form of companies started forming when the Bubble Act was repealed. During
the two-decade of this century, the civil proceeding started brought by the
defendant sought to escape liability under the deed of settlement of an
unincorporated company by relying on the Bubble Act that manifested the
uncertainties and the unfair results of the Act. Thereby the Act was repealed
in 1825. After repealing the Act there wasn’t any cheap and speedy method for
the establishment of the companies. It was according to the laws made by the
courts that made unincorporated companies lawful associations in the common law
and shares could have been transferring freely. To get the factor of limited
liability the companies were entering into contracts that provided that only
the capital contributed would be liable for the debts.
1844
The Joint Stock Company
Act, 1844 prohibited the large incorporated companies and allowed joint-stock
companies by registration. Later on, limited Liability of the companies was
declared by the Limited Liability Act,
1855. The first Indian Company Act for the Subcontinent was also legislated
in this Decca, 1850. In 1857 an Act was passed that extended the privileges of
limited liability to joint-stock companies, except banking and insurance
companies. However, the problem arose whether a company can be sue?
1856-1910
The Companies Act 1862
was the first Act that consolidated with the earlier Acts. It was given shape
in India in the form of the Company Act of 1860 that was recast in 1882.
Amendments were made to Act in 1891 and 1895. The most beneficial amendment in
this Act was brought in the form of introduction to the private companies.
1913-1984
In India Companies Act
1913 was introduced which was followed by furthermore Acts such as The companies
(Foreign Interest) Act, 1918, and the Companies (Amendment)Act, 1930.
History
of Companies Legislation in Pakistan
After the partition,
Pakistan followed the Companies Act, 1958 for a long period. Then it enacted
the Exchange Ordinance, 1969, the Securities and Exchange Ordinance, 1969, the
Companies (Managing Agency and Election of Directors) order, 1972, and the
Companies (Shifting of Registered Office) Ordinance 1972. The Commission
establishes a report on Company Law Reforms in 1961 that was mostly based upon
Indian reports. All previous laws were repealed by the Companies Ordinance,
1969 only Securities and Exchange Ordinance, 1969 was left (its 1-15 sections
were repealed). The ordinance allowed single-member companies. The process of
law reform was commenced with the publication of a concept paper and after a long
debate and drawn process a new Act is legislated named; the Companies Act,
2017.
Jurisdiction
of the Court and the Company Law
Section
5 of
the ordinance deals with the jurisdiction of the court to deal with the matters
relayed to the company. The section gives the jurisdiction to the High Court
which has its original jurisdiction. The High Court has the jurisdiction even
to the matters of the company where the question of jurisdiction is not clear.
The civil courts do have jurisdiction related to the matters of companies which
the High Court is empowered to determine.
Section
6 of
the Companies Ordinance, empowers the Chief Justice of the High Court to
constitute a Company Bench that will exercise the jurisdiction conferred on the
High Court. This section fixes time for the expeditious disposal of cases that
should not extend beyond 120 days. 6(11)
subsection also provides a detailed procedure for all petitions including the
electronic serving process. The section also permits the courts to take the
proceedings on a day-to-day basis and has also allowed the court to fines one
thousand rupees per day or higher as the court feels fit for any delay causing
by the parties. 6(15) Except the
court determined in its discretion, the Qanun-e-Shahadat ordinance and Code of
Civil Procedure shall not apply to the proceeding related to the company. 6(14) The appeals related to the
matters of the companies will be applied to the Supreme Court within 60 days
after the final decision of the High Court yet no appeal can lie against the
interlocutory order of the court.
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