10-31-2011, 05:20 PM
A very good analysis - really appreciable.
Regarding first, justification may be given that, a company is not a listed company since its incorporation. It has to take steps afterwards for getting listed at stock exchange. So there is no need of having seven subscribers at the beginning. Many companies decide to get listed after several years of commencement of business, so law has rightly not imposed the requirement of seven members at the time of incorporation. If any company is certain to go into listing just after incorporation, it is not debarred from having seven subscribers to its memorandum of association. Otherwise, increasing number of members is an option always open for companies.
However, your second objection with respect to s.160(2) is very right. It provides quorum of at least ten members for AGM, but no where in the Ordinance, it has been provided that Listed company should have ten members. In section 160(2) amendment was made in 2002 whereby figure of at least 3 members was substituted with 10. But no corresponding amendment was made in s.47 which provides minimum number of members.
Another interesting conflict, is in s.305(d). It says, that where number of members of a public company is reduced below 7, it may be wound up by the Court. Though, unlisted/unquoted public companies only need three members u/s 15.
Actually minimum number of members required for a public company was seven since 2002. In 2002 amendment was brought in s.15 and this was reduce to three by amendming s.15. But no corresponding amendment was made in s.305.
Conflict remains where amendments are drafted, reviewed and passed by incompetent people.
Regarding first, justification may be given that, a company is not a listed company since its incorporation. It has to take steps afterwards for getting listed at stock exchange. So there is no need of having seven subscribers at the beginning. Many companies decide to get listed after several years of commencement of business, so law has rightly not imposed the requirement of seven members at the time of incorporation. If any company is certain to go into listing just after incorporation, it is not debarred from having seven subscribers to its memorandum of association. Otherwise, increasing number of members is an option always open for companies.
However, your second objection with respect to s.160(2) is very right. It provides quorum of at least ten members for AGM, but no where in the Ordinance, it has been provided that Listed company should have ten members. In section 160(2) amendment was made in 2002 whereby figure of at least 3 members was substituted with 10. But no corresponding amendment was made in s.47 which provides minimum number of members.
Another interesting conflict, is in s.305(d). It says, that where number of members of a public company is reduced below 7, it may be wound up by the Court. Though, unlisted/unquoted public companies only need three members u/s 15.
Actually minimum number of members required for a public company was seven since 2002. In 2002 amendment was brought in s.15 and this was reduce to three by amendming s.15. But no corresponding amendment was made in s.305.
Conflict remains where amendments are drafted, reviewed and passed by incompetent people.
