NEW UPDATES JOINT STOCK EXCHANGE 2024

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NEW UPDATES JOINT STOCK EXCHANGE 2024

Definition 

Is a cooperative association of a person formed to a certain specific function

Or

Is cooperative body is created under the law and has an entity of its own quite separately from the members that comprises.

TYPES OF COMPANIES 

  1. Statutory company
  2. Registered company 

STATUTORY COMPANY 

Is a company created by act of parliament.

REGISTERED COMPANY 

Are those formed and registered under the companies act 1962 cap 486.

TYPES OF REGISTERED COMPANY 

Registered companies can be further classified into the following groups

  1. According to the member
  2. Private company 2-50
  3. Public companies

Characteristics of private companies 

  1. Can have two to fifty members
  2. Shares are not transferable or sold
  3. Owned by family
  4. Can start business soon after owning a trading certificate
  5. It is not required to publish its account

PUBLIC COMPANIES 

Are companies owned by the public [government]

Characteristics of public companies 

  1. Can be any number starting from 7 no maximum
  2. Owned by the public
  3. Shares can be transferred
  4. Can start business soon after given certificate incorporate and certificate of trading.
  5. Must publish its accounts

According to liabilities:

  1. limited companies 

Is the liability of those members in limited resources do not involve in serious firm debt

     2. Unlimited liability 

Is the one of the liability of those members is limited

Or

Private person resource are involved in serious from debt

Liabilities quaintest 

Is the company which do not issue share or own because its debt with business e.g. Simba sports limited

PUBLIC LIMITED COMPANIES 

Is the company which is owned by the government where by the liability of the members is limited to a stated amount

IMPORTANCE /FEATURES OF PUBLIC LIMITED COMPANIES 

-Owned by public

-Legal personality

-They have an entity of them own quite separately from members that constitute them

-Limited liabilities

-The liabilities of share holder is limited should be published to the a/c in government media

-Capital is divided into transferable share

-The capital of the company is divided into a number of shares each share is transferable

-Perpetual succession

-The company exist identity fill its dissolved does not affect by death or insanity

-They have minimum of seven members to the maximum

-Common seal/law

-Since the companies are separate entity it will be necessary for it to sign papers and documents

-The owners have no direct contact with the employees or customers

FORMATION OF COMPANIES 

The person who want to establish company he is required to fill the following documents to the legislator of the companies

  • Memorandum of association
  • Article of association
  • List of directors
  • A statement signed by director stating that they agree to act on behalf of the company
  • A declaration that the necessary requirements
  • Certificate of trading /start business
  • Certificate of incorporation

MEMORANDUM OF ASSOCIATION 

Is the document to be prepared when forming a company which define the power and limitation of the company with outsiders.

CONTENTS OF THE MEMORANDUM OF ASSOCIATION 

Name clause 

This clause states the name of the company the last word of the name should be limited to serve as a reminder to the people dealing with the company that the liability of its members is limited.

Situation clause 

State the location of a place where the company has been allocated OR Every company must have a registered office, where its office is situated and notice can be put.

Objective clause 

This clause states the purpose of establishment of the company

Capital clause 

This clause states the share capital which the company wishes to have

Liability clause 

This clause states that the liabilities of the members shall be limited

Declaration clause 

This is the last clause which states the desire for members to engage themselves into a public limited company.

ARTICLE OF ASSOCIATION 

Is the document which lays down the rules and the requirements of the company internal organization of the company.

CONTENTS OF ARTICLES OF ASSOCIATION

  • The rights and powers of each type of shareholder.
  • The powers of directors.
  • The methods of conducting meetings.
  • The issue and transfer of shares.

CERTIFICATE OF TRADING 

Is the document issued by the register who allows the company to commence its operation.

CERTIFICATE OF INCORPORATION

This documents are presented to the registrar of companies and everything found satisfactory, a certificate of incorporation may be issued. This brings the company into the existence as a separate legal entity.

SHARES 

A share is a unit of capital of Joint Stock Company.

Types of shares 

  • Ordinary shares
  • Preference shares

ORDINARY SHARES 

Is the kind of share which do not occurs or carry a fixed rate of returns

PREFERENCE SHARES 

Is the kind of share which carry fixed rate of return preference share holder have a first right dividend

DIVIDEND

Is the profit distributed to share holders in the limited company [only for those who joint /share the capital]

Types of reference shares 

  1. Accumulative preference shares 

Those shares are entitled to a fixed rate dividend till they are paid.

     2. Non accumulative preference shares

These are entitled to a fixed rate of dividend but only for the year for which a dividend is declared.

    3. Redeemable preference shares 

Are shares which are brought back by the company after a stated period

Irredeemable preference shares 

Shares can’t be brought back by the company

DEBENTURES 

Is a unit of loan of a limited company

Types of debentures 

Classification according to the security pledged against them

  1. Naked debentures 

Are debentures which do not have security pledge against them

Classification according to the redemption 

Redeemable debenture 

Are never refunded the money borrowed against them remains outstanding of the full company is liquidated

Debentures differ from shares in the following aspects;

  1. Share is a unit of capital while debenture is a unit of loan
  2. Share is paid a dividend while debenture is paid interest
  3. Most share holders have the right to vote or favours the company while debenture holders they don’t have the right to vote.
  4. Return on share is not restricted while debenture rules is restricted to a certain percentage

ADVANTAGES OF PUBLIC COMPANIES 

  1. The liabilities of the members is limited
  2. Raise capital

-Company is better placed to raise amount of capital through high profit

  1. Large scale production

-Large sum of money enable large production hence high profit

  1. High dividend cause share increase

-It is value share in the market

  1. Shares are freely transferable

-Members can sell shares to another person

  1. Employees may be allowed to buy shares hence become share holder
  2. Management is controlled by directors who expect to lead efficient cooperation
  3. Perpetual succession

The company has a continuous existence and are not affected by

  • Death
  • Bankrupt
  • Insanity

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