824-Business and Labour Laws Assignement

8/9/2019 824-Business and Labour Laws Assignement

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contracts on behalf of the other partners.

(12) Duration of Partnership: Duration of the partnership is decided in the Partnershipagreement. The duration may be for a definite or indefinite period.

(13) Tax payment: Every partner pays tax on his / her individual profit.

(14) No Audit Requirement: There no legal requirement of audit in case of partnership.

(15) Dissolution of Partnership: This type of business has a very limited life. The

partnership dissolve as and when there is retirement, death, insanity or insolvency of

a partner.

Dissolution of Partnership/Firm:Khuzaima and Waleed were very good friends. They were running a business as a partnerhsip firmThey were very successful. People were jealous of their relations. But one day people came to know

that they have closed the business. Some dispute had arisen between the two on a trivial issue.

Similarly, firm may come to an end because of dispute among the partners or firm running losses forlast few years or because of order of the court and so on. We can say that the partnership firm is

dissolved.

According to section 39 of partnership act 1932 dissolution of partnership between all the partners of

the firm is called Dissolution of the Firm

Dissolution of Partnership:

When one or more partners set aside from partnership due to death, retirement, insanity or insolvency

and the other continue the business in partnership, it is called dissolution of partnership.

Dissolution of Firm:

On the other hand when one or more partners set aside from partnership due to death, retirement,insanity or insolvency and the others decided to discontinue the business in partnership, it is called

dissolution of Firm.

Modes of Dissolution of Partnership:A partnership firm can be dissolved by many modes like by agreement on the happening of certain

contingencies, or judicially. There are basically five modes of dissolution given under Sections 40 -

44 of the Indian Partnership Act.

Dissolution by Agreement Sec. 40

Compulsory Dissolution Sec 41

Dissolution on the happening of certain contingencies Sec.42

Dissolution by notice of partnership at will Sec.43

Dissolution by the Court Sec.44

These are now being discussed in detail as follows-

1 Dissolution by Agreement Sec. 40A firm may be dissolved with the consent of all the partners or in accordance with a contact

between the partners

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Any circumstance such as unsoundness of mind, physical incapability, incompatibility oftemperament, or dishonesty (even outside the business) may by an express clause, in the articles, be a

ground for dissolution of partnership without the intervention of the court.

2 Compulsory Dissolution Sec 41According to section 41, compulsory dissolution of a firm may take place on the following two

grounds:

a. By the Insolvency of Partner

A firm is dissolved by the declaration of all the partners or of all the partners but one as insolvent.

Reference may also be made here to section 34(1) which provides, where a partner in a firm is

adjudicated an insolvent, he ceases to b e a partner on the date on which the order of adjudication is

made, whether or not the firm is thereby dissolved. Thus a partner is adjudicated an insolvent; heceases to be a partner. One of the main reasons, inter alias, for this is that when he adjudicated an

insolvent he becomes incompetent to contract. Similarly when all the partners but one are adjudicated

an insolvent, the firm is compulsorily dissolved, because for partnership, there must be at least twopersons competent to contract. Similarly where there are only two partners in a firm, and one of them

dies, the firm is dissolved and it cannot be said to be in wishes of deceased partner, the remaining

partner admits a new partner, in law it is a new partnership.

b. By Unlawful Business

A firm is dissolved by the happening of any event, which makes it unlawful for the business of thefirm to be carried on or for the partners to carry on in partnership.

Proviso to section 41(b), however provides that, where more than one separate adventure or

undertaking is carried on by the firm, the illegality of one or more shall not of itself cause thedissolution of the firm in respect of its lawful adventures and undertakings.

3 Dissolution on the happening of certain contingencies Sec.42As otherwise provided in the contract between the partners a firm is dissolved

i. If constituted for a fixed term, by the expiry of that term;

It may be noted here that Sections 42(a) and 42(b) relating to completion of one or more adventures

or undertakings are subject to sections 42(c) relating to death of a partner and 42(d) regarding

adjudication of a partner as an insolvent. If a partner dies or is adjudicated as an insolvent, there in

the absence of contrary contract between partners, the partnership firm is dissolved. The term of thepartnership being fixed is clearly not a contrary provision under section 42. It may also be noted here

that even after the expiry of a fixed term, by mutual consent partners may continue the partnership

But if there is no such mutual consent, the partnership is dissolved on the expiry of thefixed term.

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ii. If constituted to carry out one or more adventures or undertakings, by the

completion thereof;

Section 42 (b) applies in such cases where the partnership firm has been constituted for one or more

adventures or undertaking although no period has been fixed. In such cases the nature of theundertakings and the conduct of the partners are considered. If it is found that the firm was

constituted for one or more undertakings, the firm is dissolved on the completion of one or more

undertakings, as the case may be. But when the partners install flourmill, oil mill etc, the question of

completion of undertaking does not arise and Section 42(b) will not apply.iii. By the death of a partner; and

The main reason for this rule is that a law firm is not a person, it is only a group of persons and the

name of the firm is only the collective name of the persons who constitute the firm.

In other words, the name of the firm is a mode of describing the persons who have agreed to carry on thebusiness. Law also recognizes the distinction between the continuation of business and member of the

firm who carry on the business. For limited purposes of section 37, the firm is dissolved on the death of a

partner. If the surviving or remaining partners, a new partnership comes into existence. So is the case

when a new partner is admitted into partnership or a partner retires or is allowed to retire. In all such cases

a new group and a new form comes into existence.

iv. By the adjudication of a partner as an insolvent.

By the insolvency of a partner the firm is dissolved

4 Dissolution by notice of partnership at will Sec.43According to section 43 of the Partnership Act, 1932:

1. Where the partnership is at will the firm may be dissolved by any partner giving

notice to all the other partners of his intention to dissolve the firm.

2. The firm is dissolved as form the date mentioned in the notice as the date of

dissolution or, if no date is so mentioned, as from the date of communication of the

notice.

This again is familiar law, except that notice is required to be in writing. A notice contemplated under

this provision must, in order to be effectual, be explicit and be communicated to all the partners. If

before such notice becomes operative an event occurs which dissolves the partnership, the noticewould become redundant since there would then exist no partnership on which it can operate. If

however there is an agreement that the partnership shall be terminated by mutual agreement only, this

right stands excluded.

Under section 43(1), if the partnership is at will, any partner may dissolve the firm by giving notice.

But in order to dissolve the firm the following conditions must be fulfilled:i. Notice must be in writing;

ii. Notice must express the intention of the partner to dissolve the firm; and

iii. Written notice must be given to all the other partners.

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5 Dissolution by the Court Sec.44

According to Section 44, Partnership Act, 1932, the court may dissolve a firm on any of the

following grounds, namely:

a. A Partner Becoming o f Unsound Mind

At the suit of a partner, the court may dissolve a firm on the ground that a partner has become of

unsound mind, in which case the suit may well be brought as well by the next friend of the partner

who has become of unsound mind as by any other partner.

Since a person of unsound mind cannot perform the works of a partnership firm, it is in the interest ofsuch a person as well as other partners that the firm be dissolved. Hence the next friend of unsound

partner or any other partner may through a suit request the court to dissolve the firm.

b. A Partner Becoming Permanently Incapable

At the suit of a partner, the court may dissolve a firm on the ground that a partner, other than the

partner suing, has become in any way permanently incapable of performing his duties as partner.

If the incapacity is temporary or is such that does not affect the duties of a partner, the firm cannot bedissolved on this ground. For example there is fracture of the bone of leg or hand and there is every

likelihood of it being rectified or where a partner suffers from paralysis or he is improving speedily bytreatment, the firm cannot be dissolved on this ground. In order to dissolve the incapacity must be

permanent.

d. Breach Of Agreement

At the suit of a partner, the court may dissolve a firm on the ground that a partner, other than the

partner suing, willfully or persistently commits breach of agreements relating to the management ofthe affairs of the firm or the conduct of its business or otherwise so conducts himself in matters

relating to the business that it is not reasonably practicable for the other partners to carry on the

business in partnership with him.

Under section 44(d) it is necessary that there is willful or persistent breach of agreements relating to

the business of the firm or the conduct of the partner is such that it is not reasonably practicable for

other partners to carry on business with him. If the breach of agreement is not willful, a single breach

shall not be sufficient to dissolve a firm. Constant or continuous behavior of enmity between thepartners making the cooperation between them impossible, persistent refusal by one partner to

perform his duties, one partner habitually accusing the other partner of gross misconduct in the

business, and to maintain wrong accounts and not to enter the receipts, are the examples of some ofthe grounds on which the firm may be dissolved under this section.

In the end it may be noted that the firm may be dissolved by the court on the suit of a partner otherthan the one who is guilty.

e. Transfer Of The Whole Interest In The Firm By A Partner To A Third Party

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At the suit of a partner the court may dissolve a firm on the ground that a partner other than the

partner suing has in any way transferred the whole of his interest in the firm to a third party has

allowed it to be sold in the recovery of arrears of land revenue or of any dues recoverable as arrearsof land revenue due by the partner.

If a partner transfers whole of his interest to a third party he will have no interest left in the firm and

therefore, any other partner can get the firm dissolved by filing a suit in court on this ground. Such a

third party or transferee does not thereby become a partner in the firm. It does not entitle thetransferee, during the continuance of the firm to interfere in the conduct of the business, or to require

account or to inspect the books of the firm, but entitles the transferee only to receive share of profits

of the transferring partner and the transferee shall accept the account of profits agreed to by thepartners.

If the firm is dissolved or if the transferring partner ceases to be a partner, the transferee is entitled, asagainst the remaining partners, to receive the share of the assets of the fir to which the transferring

partner is entitled, and for the purpose of ascertaining the share, to an account as from the date of the

dissolution.f. Perpetual Loss

At the suit of a partner, the court may dissolve a firm on the ground that the business of the firm

cannot be carried on save at a loss.

According to the definition of the partnership as given in Section 4, the chief objective of partnership is to

acquire profit. If the circumstances are such that this chief objective cannot be attained and the business ofthe firm cannot be carried on the court on this ground may dissolve save at loss, firm. Every partnership

firm is established to attain a particular objective and if the circumstances are such that it is not possible toattain that objective, the remedy in such cases is to dissolve the firm.

For example, in a case partnership firm was established for the exploitation of mica from mines, one of

the partners filed a suit for the dissolution of the firm on the ground that the firm is suffering losscontinuously. Other partners opposed the suit on the ground that the partnership was for a fixed period

and that the plaintiff had no valid reasons to resolve the firm before the expiry of the period. The courtheld that Section 44(f) will apply in this case and that the plaintiff is entitled to sue for dissolution and

accounts.

#2Discuss with example how companies can beregistered with Security and Exchange Commission of

Pakistan (SECP).Q

Securities and Exchange Commission of Pakistan

SECP is an organization whose purpose is to develop a modern and efficient corporate sector and a

capital market based on sound regulatory principles, in order to foster economic growth andprosperity in Pakistan.

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The Securities and Exchange Commission of Pakistan was created to succeed the Corporate Law

Authority, which was an attached Department of the Ministry of Finance.

The process of restructuring the Authority was initiated in 1997 under the Capital Marke

Development Plan of theAsian Development Bank(ADB). A Securities and Exchange Commission

of Pakistan Act was passed by the Parliament and promulgated in December 1997. In pursuance of

this Act, the Securities and Exchange Commission of Pakistan, having autonomous status, becameoperational on January 1st 1999. The Act gave the organization the administrative authority and

financial independence to carry out the reform program of Pakistans capital market with theassistance of the Asian Development Bank (ADB). Powers of the Commission have been delegatedto the individual Commissioners and Appellate Benches, as envisaged in the Act.

The scope of the authority of the Commission has been extensively widened since its creation. The

insurance sector, non-banking financial companies, and pension funds have been added to the

purview of the Commission. Now the Commission's mandate includes investment financial servicesleasing companies, housing finance services, venture capital investment, discounting services

investment advisory services, real estate investment trust and asset management services, etc. The

Commission also regulates various external service providers that are linked to the corporate sectorlike chartered accountants, rating agencies, corporate secretaries and others.

Registration of a Company with Security Exchange Commission of

Pakistan

Legal regime for establishment and regulation of companies in Pakistan is given in the CompaniesOrdinance, 1984. Whereas the function of administration of these companies is vested in the

Securities and Exchange Commission of Pakistan and the Registrar of Companies appointed by the

Securities and Exchange Commission of Pakistan for a Province of Pakistan where such company isto be registered.

Provision Of The Companies Ordinance

Under the provisions of the Companies Ordinance, 1984 a company is a corporate body with separate

legal entity and a perpetual succession and a company may be formed by persons associating for any

lawful purpose by subscribing their names to the Memorandum of Association and complying withother requirements for registration of a company under the provisions of the Ordinance.

The Companies Ordinance, 1984 provides three different types of companies:

A company limited by shares

A company limited by guarantee

An unlimited liability company

Further, under the Companies Ordinance, 1984 two types of limited liability companies are providednamely,

a) a private limited company and

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b) a public limited company (which may be listed or unlisted).

Any one or more persons associated for any lawful purpose by subscribing their name(s) to theMemorandum of Association and complying with other registration specific requirements of the

Companies Ordinance, 1984 may incorporate a private limited company. Provided that where a

company has only one subscriber to the Memorandum of Association then such a company is called a

Single Member Company, however, a Single Member Company remains a private limited companyfor all intents and purposes of the Ordinance. Whereas any three or more persons so associated may

form a public limited company. A company limited by shares whether a private company or a publiccompany is the most common vehicle for carrying out a business enterprise in Pakistan.

Prior approval of the relevant Ministries/Departments is required to be obtained before incorporationof the following companies:

A banking company

A non-banking finance company

A security service providing company

A corporate brokerage house

A money exchange company

An Association not for profit u/s42 of the Companies Ordinance, 1984

A trade organisation u/s 42 of the Companies Ordinance, 1984

Procedure for Registration of a Company:

A Public Company or a Private company may be formed by a group of persons, associated for anylawful purpose, by subscribing their names to the Memorandum of Association and complying with

the requirements of the Companies Ordinance, in respect of the registration. The minimum

requirement for the number of persons for private company is one or more persons while for Public

Company three or more person.

Prior Approval of the respective Ministries is required for incorporation of companies. A list of such

companies with concerned organizations noted against each is as under:

Banking CompanyMinistry of Finance,

State Bank of Pakistan

Insurance Company Ministry of Commerce

Investment Finance Company(Investment Bank)

Ministry of Finance,State Bank of Pakistan

Leasing Company Securities and Exchange Commission of Pakistan

Venture Capital Securities and Exchange Commission of Pakistan

Assets Management Company Securities and Exchange Commission of Pakistan

Arms and AmmunitionMinistry of IndustriesBoard of Investment

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Securities Printing, Currency and MintMinistry of IndustriesBoard of Investment

High ExplosivesMinistry of IndustriesBoard of Investment

Radioactive SubstancesMinistry of IndustriesBoard of Investment

Following are the requirements for registration of a company in Pakistan:

Step No. 1 Availability of Name

The first step with regard to incorporation of a company is to seek availability of the proposed name

for the company from the Registrar. For this purpose, an application is to be made and a fee ofRs.200 is required to be paid for seeking availability certificate.

Step No. 2 Filing of documents required for registration of a private limited

company in Pakistan

The following documents are required to be filed with the registrar concerned for registration of aprivate limited company in Pakistan:

Copy of national identity card or passport, in case of foreigner, of each subscriber andwitness to the memorandum and article of association.

Memorandum and articles of association - Four printed copes of Memorandum andArticles of Association duly signed by each subscriber in the presence of one witness.

Form 1 - Declaration of compliance with the pre-requisites for formation of the company.

Registration/filing fee - A copy of the original paid Challan in the authorized branches ofHabib Bank Limited or a Bank Draft/ Pay Order drawn in favour of the Securities and Exchange

Commission of Pakistan of the prescribed amount.

Authorisation by sponsors - The authorisation of sponsors in favour of a person to makegood the deficiencies, if any, in memorandum and articles of association as may be pointed out by theregistrar concerned and to collect the certificate of incorporation

Documents required for registration of a Single Member Company in

Pakistan

Any person may form a single member company and would file with the registrar at the time of

incorporation a nomination in prescribed form indicating at least two individuals to act as nominee

director and alternate nominee director, of the company in the event of his death. All requirements forincorporation of a private limited company shall mutatis mutandis apply to a single member

company.

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Documents required for registration of an association not for profit in

Pakistan

All the documents meant for incorporation of a limited company alongwith a licence issued by the

SEC. In case of a trade body, a licence issued by the Ministry of Commerce would also be submittedto the registrar concerned. The application for obtaining the requisite licence from the Commission

should be accompanied by draft memorandum and Articles of Association, list of promoters, bio-data

of each promoter, declaration, names of companies in which the promoters of the proposedassociation hold any office, estimates of annual income and expenditure and brief statement of work

already done or to be done.

#3a)Highlight and briefly discuss the salient featuresof various kinds of contracts?

QContract A contract is a legal agreement between two or more people for an exchange of goods orservices. Contracts are enforceable by contract law.

There are many different types of contracts and they vary between industry and according to thetype of goods supplied or services performed. Contracts are usually categorized according to the type

of payment but can be tailored to incorporate common elements from several different contract types.Some of the common forms of contract are examined below.

1. Fixed Price Or Lump Sum Contract

A fixed price or lump sum contract is an agreed price for the performance of work, supply of labor, or

supply or goods at a designated time. This type of contractprovides a degree of certainty for both

parties because the contract scope clearly spells out what is involved. They can be short term orongoing in duration.

2. Unit Rate Contract

Unit rate contract types are an agreed to rate for the performance of specified work. Monetary

exchange takes place when work is performed and is directly proportional to the volume and range ofwork.

These types of contract are most prevalent in the building industry.

EXAMPLE: The supply of timber where the monetary amount would be defined by the volume of

units supplied.

3. Reimbursable Contract

A reimbursable contract type (cost plus) is an upfront payment by the client party to the contractor.

These types of contracts are used when the scope of the work is difficult to define.

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EXAMPLE: The procurement of specialized services to solve a problem that may take an indefinite

period of time. The upfront payment covers the contractor's commitments to the projectRenegotiation for increased tenure or reimbursement may take place if the contract comes to an

abrupt end. These types of contract sometimes contain a fixed cost component.

4. Financing Contracts

Financing contracts are a type of contract that involves the raising of debt and equity during the

project duration by the contracted party. The financing contractor ultimately bares the risk oprofitability in this type of agreement. Financing contracts are used in the mining, building, oil and

gas, transportation and infrastructure projects.

Project management contracts are a supply type of contract where the contractor agrees to manage thecontract, as defined by the scope of the agreement, for a specified duration of time for monetary

consideration. This type of contract can be short term or long term.

a. Contracts under Seal

Traditionally, a contract was an enforceable legal document only if it was stamped with a seal. The

seal represented that the parties intended the agreement to entail legal consequences. No legal benefitor detriment to any party was required, as the seal was a symbol of the solemn acceptance of the legal

effect and consequences of the agreement. In the past, all contracts were required to be under seal in

order to be valid, but the seal has lost some or all of its effect by statute in many jurisdictions.Recognition by the courts of informal contracts, such as implied contracts, has also diminished the

importance and employment of formal contracts under seal.

b. Express Contracts

In an express contract, the parties state the terms, either orally or in writing, at the time of itsformation. There is a definite written or oral offer that is accepted by the offeree (i.e., the person to

whom the offer is made) in a manner that explicitly demonstrates consent to its terms.

c. Implied Contracts

Although contracts that are implied in fact and contracts implied in law are both called implied

contracts, a true implied contract consists of obligations arising from a mutual agreement and intentto promise, which have not been expressed in words. It is misleading to label as an implied contract

one that is implied in law because a contract implied in law lacks the requisites of a true contract. The

term quasi-contract is a more accurate designation of contracts implied in law. Implied contracts areas binding as express contracts. An implied contract depends on substance for its existence; therefore

for an implied contract to arise, there must be some act or conduct of a party, in order for them to be

bound.

A contract implied in fact is not expressed by the parties but, rather, suggested from facts andcircumstances that indicate a mutual intention to contract. Circumstances exist that, according to the

ordinary course of dealing and common understanding, demonstrate such an intent that is sufficient to

support a finding of an implied contract. Contracts implied in fact do not arise contrary to either thelaw or the express declaration of the parties. Contracts implied in law (quasi-contracts) are

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distinguishable in that they are not predicated on the assent of the parties, but, rather, exist regardless

of assent.

The implication of a mutual agreement must be a reasonable deduction from all of the circumstances

and relations that contemplate parties when they enter into the contract or which are necessary to

effectuate their intention. No implied promise will exist where the relations between the parties

prevent the inference of a contract.

A contract will not be implied where it would result in inequity or harm. Where doubt and divergenceexist in the minds of the parties, the court may not infer a contractual relation-ship. If, after an

agreement expires, the parties continue to perform according to its terms, an implication arises that

they have mutually assented to a new contract that contains the same provisions as the old agreement.

A contract implied in fact, which is inferred from the circumstances, is a true contract, whereas a

contract implied in law is actually an obligation imposed by law and treated as a contract only for the

purposes of a remedy. With respect to contracts implied in fact, the contract defines the duty; in thecase of quasi-contracts, the duty defines and imposes the agreement upon the parties.

d. Executed and Executory Contracts

An executed contract is one in which nothing remains to be done by either party. The phrase is, to a

certain extent, a misnomer because the completion of performances by the parties signifies that a

contract no longer exists. An executory contract is one in which some future act or obligation remainsto be performed according to its terms.

e. Bilateral and Unilateral Contracts

The exchange of mutual, reciprocal promises between entities that entails the performance of an act

or forbearance from the performance of an act, with respect to each party, is a BILATERAL

CONTRACT. A bilateral contract is sometimes called a two-sided contract because of the two

promises that constitute it. The promise that one party makes constitutes sufficient consideration (seediscussion below) for the promise made by the other.

A unilateral contract involves a promise that is made by only one party. The offeror (i.e., a personwho makes a proposal) promises to do a certain thing if the offeree performs a requested act that he

or she knows is the basis of a legally enforceable contract. The performance constitutes an acceptance

of the offer, and the contract then becomes executed. Acceptance of the offer may be revokedhowever, until the performance has been completed. This is a one-sided type of contract because only

the offeror, who makes the promise, will be legally bound. The offeree may act as requested, or may

refrain from acting, but may not be sued for failing to perform, or even for abandoning performance

once it has begun, because he or she did not make any promises.

f. Unconscionable Contracts

An UNCONSCIONABLE contract is one that is unjust or unduly one-sided in favor of the party

who has the superior bargaining power. The adjective unconscionable implies an affront to fairness

and decency. An unconscionable contract is one that no mentally competent person would accept andthat no fair and honest person would enter into. Courts find that unconscionable contracts usually

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result from the exploitation of consumers who are poorly educated, impoverished, and unable to shop

around for the best price available in the competitive marketplace.

The majority of unconscionable contracts occur in consumer transactions. Contractual provisions that

indicate gross one-sidedness in favor of the seller include limiting damages or the rights of the

purchaser to seek court relief against the seller, or disclaiming aWARRANTY (i.e., a statement of

fact concerning the nature or caliber of goods sold the seller, given in order to induce the sale, andrelied upon by the purchaser).

Unconscionability is ascertained by examining the circumstances of the parties when the contract was

made. This doctrine is applied only where it would be an affront to the integrity of the judicial system

to enforce such a contract.

g. Adhesion Contracts

Adhesion contracts are those that are drafted by the party who has the greater bargaining advantage,

providing the weaker party with only the opportunity to adhere to (i.e., to accept) the contract or to

reject it. (These types of contract are often described by the saying "Take it or leave it.") They arefrequently employed because most businesses could not transact business if it were necessary to

negotiate all of the terms of every contract. Not all adhesion contracts are unconscionable, as theterms of such contracts do not necessarily exploit the party who assents to the contract. Courts,however, often refuse to enforce contracts of adhesion on the grounds that a true meeting of the

minds never existed, or that there was no acceptance of the offer because the purchaser actually had

no choice in the bargain.

h. Aleatory Contracts

An aleatory contract is a mutual agreement the effects of which are triggered by the occurrence of anuncertain event. In this type of contract, one or both parties assume risk. A fire insurance policy is a

form of aleatory contract, as an insured will not receive the proceeds of the policy unless a fire

occurs, an event that is uncertain to occur.

i. Void and Voidable Contracts

Contracts can be either void orVOIDABLE. A void contract imposes no legal rights or obligations

upon the parties and is not enforceable by a court. It is, in effect, no contract at all.

A voidable contract is a legally enforceable agreement, but it may be treated as never having been

binding on a party who was suffering from some legal disability or who was a victim of fraud at thetime of its execution. The contract is not void unless or until the party chooses to treat it as such by

opposing its enforcement. A voidable contract may be ratified either expressly or impliedly by the

party who has the right to avoid it. An express ratification occurs when that party who has becomelegally competent to act declares that he or she accepts the terms and obligations of the contract. An

implied ratification occurs when the party, by his or her conduct, manifests an intent to ratify a

contract, such as by performing according to its terms. Ratification of a contract entails the same

elements as formation of a new contract. There must be intent and complete knowledge of allmaterial facts and circumstances. Oral ACKNOWLEDGMENT of a contract and a promise to

perform constitute sufficient ratification. The party who was legally competent at the time that a

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voidable contract was signed may not, however, assert its voidable nature to escape the enforcement

of its terms.

#3b) How do you evaluate performance of the contractbetween two companies?

QIn the following pages the experience of Armenia with management contracts has been discussed and it shows that this is

not an easy and straightforward process. Implementation of performance-based contracts requires strong politica

consensus and support from the whole government. Altogether, the experience with these contracts is particularly

valuable and has helped the Armenian government to improve the quality of every new performance-based contract it has

launched.

Objectives of the review of the contract between 2 organizations.

The major objective of the Review was to conduct an independent and objective evaluation of all important aspects of themanagement contract signed between SAUR S.A. (France) and the Armenia Water and Wastewater Company in line with

good international practices, such as those contained in the OECDs Guidelines for Performance-Based Contracts. The

report analyses the strengths and weaknesses of the contract and proposes a set of recommendations for further improving

the contracts effectiveness and efficiency. These recommendations are particularly relevant given the governments

intentions to arrange other performance-based contracts in the future. Thus, the review aims to support the Armenian

Government in its efforts to improve the design of such contracts. These recommendations do not pretend to becomprehensive; instead they are focused on selected issues which were identified as particularly important with regard to

the smooth implementation of the contract. Through this analysis, the review also seeks to identify good practices and

draw conclusions which can then be used to further improve the relevance of the Guidelines with regard to specific

EECCA experience. This experience was largely missing in the first version. In this context, the Armenian experience is

extremely useful and it demonstrates how other EECCA countries can implement performance-based contracts in the

water sector.

2. Performance review process and methodology

The methodology developed to evaluate the contract is based on the good practices identified in the Guidelines. It consists

of a detailed questionnaire coupled with direct interviews. The questionnaire was sent to all major stakeholders involvedin the process. The review involves three stages: preparatory activities, review and drafting mission, and preparation of

the final report. A comprehensive set of background documents concerning and relevant to the management contract were

examined by the review team prior to and after the review mission (see the Section on References). The review mission

took place from 15 to 18 September 2007 when the team visited Yerevan. During that time the team engaged in extensive

discussions with the operators staff, the State Water Committee, the World Bank CMU, experts from other ministries

and state institutions, who were all directly or indirectly involved in the preparation of the contract (See Annex V). Theresults and recommendations presented in the report were discussed at a meeting with the participation of major

stakeholders in December 2007 in Yerevan. In addition, the main lessons learnt from this review will be presented at

other international fora and will be disseminated through other meetings and mechanisms. This report provides an

opportunity and is a basis for discussion within the Armenian Government to further strengthen the design of such

performance-based contracts.

Major good practices identified in the Guidelines for Performance-Based Contracts

1. Project scope

(i) Definition of contractual objectives and responsibilities The contract should define as precisely as possible the

objectives to be achieved; establish the rights, obligations and responsibilities of each contractual party as well as joint

responsibilities; identify a clear, reliable and efficient mechanism allowing the parties to quickly and efficiently respond

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to any new circumstances that may arise in the course of contract implementation. (ii) Service area The service area

should be clearly identified early in the process and preferably before Due Diligence is conducted. The extent of the

service area has a direct impact on the costs and revenues of the operator. A proper evaluation of the costs and revenues

should be carried out in order to establish adequate contractual objectives and consequent performance indicators.

2. Legal and institutional framework

(i) Legal framework Before entering into a performance-based contract, the applicable legal framework, including all

relevant laws and regulations should be carefully studied and assessed. Based on this analysis (as part of the Due

Diligence process), the best contractual model should be selected. If changes in the law are needed, these should be made

before the contract is finalised. The selected type of contract should be tailored to the needs of the utility while making

the best possible use of the legal framework.

(ii) Institutional framework The institutional set-up should provide for proper regulation and monitoring of the contract

implementation. The regulatory authority should be given a sufficient level of independence in order to ensure that all theparties interests are well balanced and protected.

3. Performance indicators

(i) Initial evaluation Before selecting the performance indicators, the parties to the contract should conduct detailed

evaluation of the technical and financial conditions of the water utility in order to fully assess its pre-contractua

performance. Such an evaluation will allow the parties to agree on realistic performance indicators given the existing state

of the utility.

(ii) Selection of performance indicators The contract should clearly specify all performance indicators that will be

monitored during contract implementation and the mechanisms for their adjustment. If the operators remuneration is

based on the achievement of selected indicators, these should also be clearly identified. Performance indicators could be

linked to the financial performance of the utility (e.g. operating ratio, collection efficiency), efficiency of operations

(unaccounted-for-water, pipe breaks), operating performance (average hours of service, population served). The

performance indicators should be few, simple, realistic and easy to measure to be able to properly monitor thei

achievement.

4. Tariffs and financial obligations of the contracting authority

(i) Tariffs setting and adjustment A sound tariff policy should balance considerations related to the utilitys financia

viability, its social objectives and economic efficiency. The contract should allow for tariffs to be adjusted over time(tariff revision mechanisms) both in relation to inflation and improvement of services as well as in response to force

majeure events or changes in the legal regime. Cross-subsiding should be avoided and replaced, if necessary, by

transparent subsidy schemes targeted at well-identified poor households.

(ii) Financial obligations of the contracting authority When public authorities are fully (e.g. service or management

contracts) or partially (e.g. lease contracts) responsible for financing the investment programmes of the water utility, theseobligations should be clearly defined in the contract, both in terms of amounts and timeframe of investments. In order to

avoid conflicts during the implementation phase, the contract should draw a clear distinction between maintenance works

replacement works and emergency situations.

5. Financial penalties, bonuses and incentives

(i) Financial penalties In the context of EECCA water utilities, which often face significant financial difficulties,penalties should be used with utmost prudence. In order to avoid putting at risk the general financial health of the utilityand consequently its operational capacity, penalties should be used only when utilities are operated by private contractors

Imposing a penalty would directly affect the ability of the utility to meet the performance levels specified in the contract.

(ii) Bonuses and incentives If properly designed, bonuses and incentives could contribute significantly to the

achievement of the level of services provided by a contractor. When the utility is run by a publicly-owned contractor,

bonuses should be provided directly to individuals and not to the utility because no individual will benefit directly from

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higher performance levels of the utility. When the utility is run by a private operator, incentives should reflect the

productivity gains of the utility.

6. Monitoring Setting an effective system to monitor contract implementation is crucial for evaluating if parties meet

their obligations and achieve specified targets. Monitoring provisions should focus on the contractors success to mee

the targets rather than on how it meets these targets. In countries where governments face limited monitoring andregulatory capacity, the monitoring function should be outsourced to an auditing company. The government should then

reconfigure its task as monitoring the auditor.

7. Contract enforcement / Contract resolution mechanisms Performance-based contracts should include forma

dispute resolution procedures (e.g. judicial, quasi-judicial, administrative, arbitral). Arbitration should be the preferred

dispute resolution mechanism in contracts that include a foreign private entity. The main advantages of arbitration include

confidentiality (as it relates to commercial secrets); expertise (arbitrators are selected on the basis of their technica

expertise); neutrality (arbitrators are chosen from among individuals unrelated to the parties in the dispute); integrity(arbitrators are chosen from among individuals of high moral repute).

8. Risks Any long-term contractual relationships involve risks such as: operation and maintenance risks, revenue risksregulatory risks, political risks. The allocation of key risks should be carefully considered when designing performance-

based contracts. Risks should be fairly allocated among parties. The risks should be allocated to the party that is best

suited to assume them both in terms of technical expertise and the possibility to mitigate the risk at least cost.

9. Costs In considering implementing performance-based contracts, the public authorities should be aware of all costs

both direct and indirect, that such contracts may entail to the public sector. Apart from traditional costs, (overheads or

expenditures inherent to the project), there are costs incurred due to indirect losses (e.g. costs of hiring consultants to

prepare the contract, un-monitorable performance targets). Usually, the contract does not include provisions related toindirect costs. However, during the negotiation stage, the parties should always consider all actual and potential costs

inherently and indirectly associated with performance contracting.

Challenges to contract implementation and related recommendations

Despite the good intentions and the good practices while entering into contract some challenges emerge during thecontract implementation stage.

The contract requirements should be better harmonised with the countrys legal and regulatory acts. A legal consultant (a

firm or an individual) with sufficient qualifications and good reputation could be hired to carefully review the contract

and identify any potential legal contradictions before the contract is actually signed.

If the operator is granted exemptions or postponement of the payment of certain charges or taxes, the contract should spel

out the conditions under which such derogations are made. If payments have to be made anyway, the contract should

clearly specify whose responsibility these payments should be. As a matter of principle and to the extent possibleexemptions should be avoided as they may create perverse incentives.

Whenever possible, the baseline values should be determined in close cooperation with the previous operator. As the

previous operator has the best knowledge of the technical and economic situation of the company prior to the start of the

new contract, it should be able to advise on the most appropriate methodology that should be used to determine the

baseline values.

To minimise some of the problems related to both baseline values and further calculations, the performance indicatorsshould be more carefully selected. Two major selection criteria may be applied: easy measurement and the existence of

sufficiently reliable data for the calculations (in terms of completeness, accuracy, consistency of data).

The methodologies used to calculate the baseline values and the performance indicators at a later stage should be exactly

the same in order to avoid any methodological discrepancy.

Development of a mechanism to help prepare a sound financial basis for the new contractor (through creating a new

company with the sole responsibility to manage bad debts and unusable assets) which has actually resulted in havoc in the

customer database and led to problems with accounting. Related to this is the lack of robust evaluation of assets and in

particular, customer debts, before the start of the contract.

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Before a contract is signed, an inventory of all assets and liabilities should be carried out. The valuation of assets should

be as accurate and comprehensive as possible. Such a review could be financed with donors/IFIs support. This task is

particularly important to implement as it can also be beneficial for determining investment needs.

With regard to unusable assets, the government should aim to set up a public commission (consisting of representatives odifferent relevant public institutions) which will decide which assets to classify as unusable (including the selection

criteria for defining such assets) and their selling price. This will ensure the transparency of the process.

The split and transfer of customer debts to a new company should be carefully considered against all potential costs that

will be incurred by the operator, the contracting authority and the public purse. The creation of a new company is more

appropriate in lease contracts than in management contracts.

Accumulated operational deficit of the contractor as a result of not being fully compensated by the Ministry of Financeand Economy (in accordance with the contract):

In order to cover initial operational expenses (salaries, energy expenses, etc.) at the start of the contract, the government

should create an Initial Costs Fund. This fund could be financed by IFIs/donors involved in the financing of the

investments. Part of this fund could be allocated to the payment of initial operational costs as in the case of salary arrears.

Alternatively, other donors support could be sought.

In order to reduce the companys operational deficit and ensure access of socially vulnerable people to water services, the

government could put in place a targeted programme for poor families who cannot afford water tariffs. The issue of water

tariff increases should not be confused with the issue of social protection. The two issues should be dealt with separately.

Performance of the contract monitoring function by a Project Implementation Unit instead of a Contract Monitoring Uni

(CMU) (in accordance with the contract) which has led to confusion over the responsibilities of different stakeholders

involved in the procurement process and related delays with the implementation of the investment programme:

The Government and the World Bank should work jointly to seek to improve the efficiency of the procurement

procedures when performance-based contracts are involved. They should ensure that the CMU comply with the relevant

contractual obligations. Slowdown of the contractors operating activities due to administrative obstacles.

In general, in cases of disagreements which are largely caused by administrative contradictions, the Company

Management Board should be actively involved in the solution of the problem. The Board is a very useful body which

can and should provide support in resolving administrative conflicts.

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#4a)Discuss various provisions related to right of unpaidseller against the goods.

Q

UNPAID SELLER

The seller of goods is deemed to be unpaid (Sec. 45-1)

1. When whole of the price has not been paid of tendered.2. When the bill of exchange or negotiable instrument has been received as a condition

of payment and the condition on which it was received has not been fulfilled by the

reason on dishonor of the instrument or otherwise.

Features of the unpaid seller

i. He must sell goods on the cash basis and must be unpaid.

ii. If he sells on credit basis, he is not an unpaid seller during the period of credit.iii. The term of credit has expired and the price has not been paid to him.

iv. He must be unpaid wholly or partially. If a part of price remains unpaid, he is unpaid.v. When the price is paid in the form of negotiable instruments and it has been

dishonored.

vi. If buyer offers payment and seller refuses to accept, the seller is not an unpaid seller.

Example:

i. Party A sells a car on cash basis to party B and the price has not been received yet.

ii. A sells good to B on 5 months credit period and B turns insolvent after 2 months.iii. A sells TV set to B on the same day cheque basis, the cheque is dishonored due to

insufficient funds. A is an unpaid seller.

Rights of an unpaid seller

The unpaid seller has following rights.

1) Rights against the goods.

i. Rights of lien

ii. Right of stoppage of goods in transit

iii. Right of rescale

2) Rights against buyer personally

i. Suit for price

ii. Suit for damages for non-acceptance

iii. Suit for special damages and interest

a) Rights of lien

The right of lien means lawfully right to retain the goods possession until the full price is received

An unpaid seller can exercise his right of lien in following cases. Sec 47-49

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i. Where the goods have been sold on the cash basis.ii. Where the goods have been sold on credit basis and the term of credit has expired.

iii. Where the buyer has become insolvent even if the period of credit has not been

expired.

Other rules to satisfy the conditions for this right are

i. The unpaid seller must be in actual possession of the goods sold.ii. It can be exercised even If the documents of title have been delivered to the buyer.

iii. It can be exercised for the price and not for other expenses

iv. If the seller delivers some goods, it can be exercised on the remaining.

Termination of right of lien

Sellers right of lien is terminated in following cases.

i. When he delivers the goods to the carrier or other bailey for transmission to the buyer

ii. When the buyer or his agent lawfully obtains the possession of the goodsiii. When seller waives his right of lien on the goods

iv. The right of lien once lost will not be restoredv. When the buyer further sells the goods and the seller agrees

Example:

A seller S sells a TV set to B and delivers it to B and since the TV set was not functioning

properly, B delivered it back to S for the repairs. It was held that S can not exercise his right oflien over TV set.

b) Right of stoppage of goods in transit

It means stoppage of goods while they are in transit to take possession until the price is paid (sec. 50-

52)

Unpaid seller can stop the goods in transit in the following cases.

i. While the buyer becomes insolventii. While the goods are out of actual possession of seller, but have not reached buyers

possession i.e. goods are in transit with career.

iii. The unpaid seller can stop the goods in transit only for payment of the price of thegoods and not for any other charges.

The unpaid seller can not stop goods in transit in following cases.

i. When the goods reaches the destination.

ii. While the buyer or his agent takes possession of delivery even if it is not reached

destination.iii. In case the carrier is agent of the buyer, the transit comes to an end the instance carrier

receives

iv. the goods and seller can not stop the transition

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v. Carriers wrongful refusal to deliver goods to the buyer.

Example: A sells TV set to B. A delivers the TV to the carrier to carry it to B. Later on gets

news that B has become insolvent; A can stop delivery.

c) Right of resale

If a buyer fails to pay or offer the price within a reasonable time, the unpaid seller has the right to

resell the goods in the following circumstances.

i. Where the goods are of perishable nature.

ii. Where the unpaid seller has exercised his right of lien or stoppage in transit and givesa notice to buyer of his intension of resell the goods.

iii. Where the unpaid seller has expressly reserved his right of resale.

iv. Where seller gives notice to the buyer of his intension to resell and the buyer does notpay within a reasonable time, he can

a. Recover loss on resale of the goods, if anyb. Retain any surplus on resale of goods, if any

However if the seller sells with out the notice to the buyer, he can not

a. Recover any loss of the goods, if any

b. Retain any surplus on the resale of the goods, if any

Example:

i. X sells vegetable to Y on credit, Y does not pay, X can resell to any other

person.ii. M sells 100 blankets to N and gives him one week for payment. N does not pay

M can resell those to any other person.

Q#4b) Explain the principle of holding out.

Holding out:

(1) Any one who by words spoken or written or by conduct represents himself, or knowingly permits

himself to be represented, to be a partner in a firm, is liable as a partner in that firm to any one who

has on the faith of any such representation given credit to the firm, whether the person representinghimself or represented to be a partner does or does not know that the representation has reached the

person so giving credit.

(2) Where after a partner's death the business is continued in the old firm name, the continued use of

that name or of the deceased partner's name as a part thereof shall not of itself make his legal

representative or his estate liable for any act of the firm done after his death.

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Q#5 Discuss the following, taking examples from any organization:

Q#5a) Differentiate between Guarantee Company and Unlimited

Company

Guarantee Company

It means a company having the liability of its members limited by memorandum to such amounts asthe members may respectively undertake to contribute to the capital of the company in the event of its

closure. A company limited by guarantee is usually formed on a 'non profit basis'. Companies limited

by guarantee use the words "(Guarantee) Limited" as the last words of their names.

The technical name of a Guarantee Company is a company limited by guarantee but without a share

capital

Members guarantee to contribute to the company a definite amount in the event of the same being

wound up during the time he is a member or within one year afterwards such companies may or maynot have a capital divided into shares. This is left to their option. Social , athletic and other non-profit

making societies register themselves into companies limited by guarantee.

In addition, a guarantee company provides a clear legal identity, the ability to own property in its ownname and a democratic structure where its participants are required to adhere to the strict laws and

regulations governing limited companies generally.

A guarantee company is often referred to as a not-for-profit organisation, meaning that its profits

are not distributed to its members but are retained to be used for the purposes of the guaranteecompany. Of course this does not mean that the guarantee company cannot make a profit, as indeed it

is almost paramount that it can and does so. It would therefore be better called a non-profit-distributing organisation.

Example of a company limited by Guarantee

MAMOONA (GUARANTEE) LIMITED.CEO Name: MAMOONA HASHMI

Company Address: 32-A, GULGAST COLONY, MULTAN

CEO Address: 50-B, QASIM ROAD, CANTT MULTAN

Authorized Capital: 0

Paid up Capital: 0

Incorporate Date: 4/24/1999

Authorized Capital Shares: 0

Paid up Capital Shares: 0

Paid up other Shares: 0

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Unlimited Company

A company whose shareholders will lose all their money if the company goes bankrupt, and also risklosing their own property in order to pay the company's debts. It means that they are liable to

contribute whatever sums are required to pay the outstanding debts (if any) of the company should it

ever go into formal liquidation and its assets are insufficient to pay its debts and liabilities and theexpenses of liquidation. In that situation, the members or shareholders are liable for the shortfall

An unlimited company has the benefit and status of incorporation same as its limited company

Situations where an unlimited company will be preferred to an alternative business model or its

limited company counterpart include:

secrecy concerning financial affairs is desired, effectively shielding its financial affairsfrom its competitors and making them non-public information including shareholder

dividend payments:

the company will not trade (e.g. might only be used to hold titleto property).

the company is trading but in an area where limited liability is not acceptable, vital or

practical.

there is a low risk of insolvency.

the company or its trading activities has or generates sufficient capital, funds or

financing without need to approach general lenders such as high-street retail banks.

developing more advantageous company and business capital strategies in an ever

increasing irreversible trend of bankdisintermediation by companies and theirmanagement.

a focused higher standard ofboard of directors and executive managementlevel

behaviour andbusiness model forrisk management.

Once formed or incorporated, an unlimited company can in some jurisdictions also re-register anddesignate itself to limited company status at any time with few formalities, the same also extends to a

limited company which may at any time re-register and designate itself to an unlimited company

status.

Q#5b) Differentiate between Public Limited Company and private

Limited Company.

Private Company Public Companyi. It must have one or more members

ii. The maximum number of its

members is fifty exclusive of

present employees.

iii. It may allot shares immediately after

its incorporation

iv. It can commence businessimmediately after its

i. It must have at least three members

ii. There is no maximum number of its

members fixed in law.

iii. It cannot allot shares unless i

complies with the requirement of

Section 101.

iv. It cannot commence business unlessit complies with the requiremen

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http://en.wikipedia.org/wiki/Liquidationhttp://en.wikipedia.org/wiki/Title_(property)http://en.wikipedia.org/wiki/Title_(property)http://en.wikipedia.org/wiki/Disintermediationhttp://en.wikipedia.org/wiki/Disintermediationhttp://en.wikipedia.org/wiki/Board_of_directorshttp://en.wikipedia.org/wiki/Board_of_directorshttp://en.wikipedia.org/wiki/Senior_managementhttp://en.wikipedia.org/wiki/Senior_managementhttp://en.wikipedia.org/wiki/Business_modelhttp://en.wikipedia.org/wiki/Risk_managementhttp://en.wikipedia.org/wiki/Liquidationhttp://en.wikipedia.org/wiki/Title_(property)http://en.wikipedia.org/wiki/Disintermediationhttp://en.wikipedia.org/wiki/Board_of_directorshttp://en.wikipedia.org/wiki/Senior_managementhttp://en.wikipedia.org/wiki/Business_modelhttp://en.wikipedia.org/wiki/Risk_management


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incorporation.

v. It is not legally required to hold the

Statutory meeting and file the

Statutory Report.

vi. It is not legally required to file with

the Registrar copies of its annualbalance sheet and profit and lossaccount.

vii. It cannot issue a prospectus and it is

not required to file a statement in

lieu of prospectus.

viii. Its articles must impose restrictions

on the transfer of its share.

of Section 103.

v. It is legally required to hold theStatutory meeting and file the

Statutory Report within the

prescribed time.

vi. It is legally required to file with the

Registrar copies of its annuabalance sheet and profit and los

account.

vii. If a public company does not file a

prospectus, it must file with th

Registrar a statement in lieu oprospectus.

viii. This provision is not necessary in the

case of a public company.

Q#5c) Debentures

A Debenture is a unit of loan amount. When a company intends to raise the loan amount from the

public it issues debentures. A person holding debenture or debentures is called a debenture holder. A

debenture is a document issued under the seal of the company. It is an acknowledgment of the loan

received by the company equal to the nominal value of the debenture. It bears the date of redemptionand rate and mode of payment of interest. A debenture holder is the creditor of the company.

Types of debentures

Debenture can be classified as under :

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1. From security point of view

(i) Secured or Mortgage debentures : These are the debentures that are secured by a charge on theassets of the company. These are also called mortgage debentures. The holders of secured debentures

have the right to recover their principal amount with the unpaid amount of interest on such

debentures out of the assets mortgaged by the company. In India, debentures must be securedSecured debentures can be of two types :

(a) First mortgage debentures : The holders of such debentures have a first claim on the assetscharged.

(b) Second mortgage debentures : The holders of such debentures have a second claim on the assets

charged.

(ii) Unsecured debentures : Debentures which do not carry any security with regard to the principal

amount or unpaid interest are called unsecured debentures. These are called simple debentures.

2. On the basis of redemption

(i) Redeemable debentures : These are the debentures which are issued for a fixed period. Theprincipal amount of such debentures is paid off to the debenture holders on the expiry of such period.

These can be redeemed by annual drawings or by purchasing from the open market.

(ii) Non-redeemable debentures : These are the debentures which are not redeemed in the life time

of the company. Such debentures are paid back only when the company goes into liquidation.

3. On the basis of Records(i) Registered debentures : These are the debentures that are registered with the company. The

amount of such debentures is payable only to those debenture holders whose name appears in the

register of the company.

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(ii) Bearer debentures : These are the debentures which are not recorded in a register of the

company. Such debentures are transferrable merely by delivery. Holder of these debentures is entitledto get the interest.

4. On the basis of convertibility

(i) Convertible debentures : These are the debentures that can be converted into shares of the

company on the expiry of predecided period. The term and conditions of conversion are generallyannounced at the time of issue of debentures.

(ii) Non-convertible debentures : The debenture holders of such debentures cannot convert theirdebentures into shares of the company.

5. On the basis of priority

(i) First debentures : These debentures are redeemed before other debentures.(ii) Second debentures : These debentures are redeemed after the redemption of first debentures.

Q#5d) Annual Return

Every company, whether trading or not, is obliged to file an annual return each year at the

Companies Registration Office not later than 28 days from its statutory annual return date. A

company director must ensure that an annual return on behalf of the company is delivered to the

COMPANIES REGISTRATION OFFICE at least once in every calendar year. The annual return

sets out certain prescribed information in respect of the company.

A companys annual return is required to be made up to a date every year which is no later than the

companys Annual Return Date and to be filed with the COMPANIES REGISTRATION OFFICE

within 28 days of the date to which it has been made up.

A new companys Annual Return Date is the date six months from its date of incorporation.

Although not statutorily required to do so, the COMPANIES REGISTRATION OFFICE has a

policy of sending an ANNUAL RETURN DATE reminder to each company at its registered office

in advance of the companys ANNUAL RETURN DATE every year.

Where accounts are required to be attached to the annual return, the return filing deadline is either:

i. The company's ANNUAL RETURN DATE plus 28 days

ii. The company's financial year end plus 9 months and 28 days - whichever is the earlier

The annual return shows details of the authorised and issued share capital, members, directors and

the company secretary. The annual return is made up to fourteen days after the AGM and must be

filed with the Registrar with the accounts.

Should a company fail to file its annual return and accounts, the Registrar of Companies may have

the company struck off. Then the company ceases to exist and any assets become the property of the

State.

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The documents generally required to be attached to an annual return of a limited company are the

following:

i. A copy of the balance sheet

ii. A copy of the profit and loss account

iii. A copy of the directors report

iv. A copy of the auditors report

The annual return is required to cover the period up to a date not later than the company's 'annua

return date'.

The penalties for failure to file an annual return or late filing include late filing fines, prosecution

and the striking off the register of the company. Where a company is struck off as a consequence of

failing to file an annual return the liability, if any, of every director, officer and member of the

company continues and may be enforced as though the company had not been dissolved.

The following information must be provided to the Registrar in companies' annual returns:

i. Company Nameii. Company registration number- provided by the Registrar on incorporation

iii. Date that the return is made up to

iv. The date up to which the annual return covers

v. Financial period covered by the return

vi. Registered office address

vii. Other addresses are required if statutory registers are not kept at the registered office

viii. Company secretary's name and address

ix. Details of any political donations made by the company

x. Authorised share capital

xi.Issued share capitalxii. An analysis of issued share capital between shares paid for in cash and shares paid forotherwise than in cash

xiii. List of members

xiv. List of persons who have ceased to be members since the last return

xv. Details of shares transferred since the last return

xvi. Directors' names

xvii. Directors' dates of birth

xviii. Directors' nationality

xix. Directors' addresses

xx. Directors' occupations

xxi. Details of directors' other directorships

The following information must be annexed to the annual return by companies:

i. Profit and loss account

ii. Balance sheet

iii. Notes to the financial statements

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iv. Directors' report

Where a company does not qualify for audit exemption the following additional accounting

information is required.

i. An auditor's report

ii. Certification that the financial statements and the auditor's report submitted are a truecopy of those presented to the members of the company

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