Slides of Agency & business organization

1.  The person appointed to perform duties on behalf.
 A contract between agency and principal.
 agent is appointed by principal on his behalf to established
legal relationship between him and third persons.
 According to Nepalese contract act 2056 “Section 56 ”. “A
man to do something on his behalf, except the one, which is
related to his personal efficiency or to carry on business by
being his representative or to carry on transaction with some
third persons or to established legal relationship between him
and the third person, may employ another person as his
representative and if the person is employed is this way, it is
said to be the contract of agency.”
CONTRACT OF AGENCY

2.  Appointment of agent by principal:
 Delegation of authority:
 Principal is responsible:
 Contractual capacity:
 Consideration is not compulsory:
 Purpose:
 Good faith:
 Expressed or implied:

3.  Agency by expressed agreement: either
by words or verbal or in written form
 Agency by implied agreement: due to
conduct of the parties or forms the
circumstance of case or from the
relationship
 Agency by ratification: agent act on
behalf of principal without instruction,
knowledge, consent or authority

4.  Agency by estoppels:
 Agency by holding out:
 Agency by necessity:

5.  On behalf of other:
 Existence of principal
 The principal must be competent to contract:
 Expressed or implied ratification:
 Ratification must not cause loss to a third
person
 Full knowledge of all the material facts:
 No partial ratification:
 Communication of ratification:
 Ratification within fixed and reasonable time:
 Lawful act:
 Must be unconditional:

6.  Right to receive remuneration:
 Right to claim reimbursement
for expenses:
 Right to indemnity:
 Right to lien:
 Right to stoppage of goods in
transit:
RIGHTS OF AN
AGENT

7.  To follow the principal’s instruction:
 To act with reasonable care, skills and
diligences:
 To render proper account:
 To communicate the principal:
 Not to deal on his own account:
 Not to make secret profit:
 Not to disclose the confidence
 To pay the sum received from third
party:
 Not to delegate his authority and
responsibility
 Duty at principal’s death:

8.  G e n e r a l a g e n t :
 S p e c i a l a g e n t :
 U n i v e r s a l a g e n t :
 M e r c a n t i l e a g e n t :
i . B r o k e r :
i i . F a c t o r :
i i i . A u c t i o n e e r :
 N o n m e r c a n t i l e
a g e n t : ( a d v o c a t e s , i n s u r a n c e
a g e n t , w i f e e t c . )

9.  Meaning
 Delegation
 Direction
 Remuneration
 Privity of Contract
 Liabilities
 Rights

10.  To ask for an account
 demand payment of secret or
illusive profit
 To seek damage
 Right to resist the claim of the
agent for commission and
indemnity
 Right to instruct
RIGHT
S

11.  To pay to the agent expenses incurred
by him:
 To pay to the agent his share of
remuneration:
 To indemnify the agent:
 Not to terminate the agency
wrongfully:

12. A. Termination by act of parties:
i. By mutual agreement
ii. By revocation of agency by the
principal:
iii.By renunciation of business by
agent:
iv.By performance of the contract:

13. B. Terminated by Operation of Law
i. By expiry of time:
ii. By death or unsound mind of a particular agent
or principal
iii. By insolvency of the principal
iv. By destruction of subject matter:
v. By dissolution or winding up of a company:
vi. By principal or agent becoming alien enemy:
vii. On change of law:
viii.Disloyalty

14.  Agency act 2014 and Agency rules 2019
 Definition: Any person taking an agency of in land
or foreign business firms to act throughout the
Nepal or in any part of Nepal is called the agent and
this word includes distribution and representatives
of the person appointing them. (Section 2(a)
Agency Act 2014)
 Registration: apply department of commerce .
Application in prescribed form. application fee of
Rs. 5 and registration fee of Rs. 100.

15.  Renewal of agency: agency is valid for one year. renewal of
agency within baisakh by attaching a fee of Rs. 20.
 Submission of account: in every 3 month
 Transfer of agency:
 Effect of non-registration:
i. Violating the contract - punishment or fine up to Rs. 500 or
restriction to act as agent for up to 5 years.
ii. Agent acting without registration- punishment of fine
up to Rs 1000.
iii. Acting contrary to legal provision of the act- fine
of Rs. 200 or prohibition to act as agent for up to 2 years.

16.  An association or a group of persons involved in
commercial business.
 An organization that sells goods or services in order
to earn profit.
 An artificial person or legal person.
 A voluntary association formed and organized to
carry on a business.
 A business organization that makes, buys, or sells
goods or provides services in exchange for money.

17.  “A company as an association of a number of
persons for a common object that object normally
being the economic gain of its member.”
-Gower
 “Company is a society or association of persons
in considerable number, interested in common
objects and united themselves for the prosecution
usually of some commercial or industrial
undertaking or other legitimate business.”
-Black’s Law Dictionary

18.  formation of a company by law.
 Company cannot come into existence without it.
 It creates rights and obligation or liabilities of company.
 “A person desirous of undertaking an enterprise with profit motive may
singly or jointly with others, incorporate a company for the fulfillment of
one or more objectives as stated in the memorandum of association.”
-Section-3 of the Nepalese company act 2063

19.  Company may be incorporated either singly or collectively:
 Application for incorporation:
 Incorporation of company by registration:
 Refusal to register a company
 Refusal information
 Issue of certificate of incorporation
 Issue of certificate of commencement of business:
 Registered company regarded as a corporate body:
 Conditions to be complied with an incorporated company

20.  The capital or money provided by the members for operation of company.
 A portion of capital of a company owned by shareholder
 One of the equal parts in which company’s capital is divided ,entitling the holder to a
proportion of the profit.
 Capital of company is divided in to shares, each share forms a unit of ownership.
 It is a unit of ownership interest in a corporation or financial asset.
 Share is the interest of a shareholder in the company measured by sum of money for the
purpose of liability in the first place and of interest in the second place.
 It is stock of a corporation.
 Each unit of share is divided which has a definite face value

21. 1. Equity share
i. Promoter share:
ii. Allotted share
iii. Rights shares:
iv. Bonus share:
v. Debenture share:
vi. Premium share

22.  Preferential share
 Redeemable share:
 Buy-back of share:
 Convertible share:
 Employees share

23.  A medium of long term debt format that is used by
large companies to borrow money.
 It is a type of loan often used by companies to raise
capital.
 a loan capital which is the money borrowed for the
purpose of operating business from creditors.
 It is a document which creates debt or acknowledges it.
 A loan certificate issued by a company for a fixed pd of
time and interest rate.
 Debenture can be purchased and sold in same way as
shares.

24. 1. Secured loan stock
i. Fixed charge
ii. Floating charge
2. Unsecured loan stock
i. Redeemable debenture
ii. Perpetual debenture
iii. Registered debenture
iv. Unregistered debenture
v. Convertible debenture

25.  THE POWERFUL ORGAN OF COMPANY.
 ALSO CALLED BRAIN OF COMPANY.
 A GROUP OF PERSONS ELECTED BY THE SHAREHOLDERS TO RUN
DAY-TO-DAY MANAGEMENT OF THE COMPANY.
 IT IS THE EXECUTIVE BODY TO APPLY THE DECISION MADE BY
THE GENERAL MEETINGS AND AS ACCORDANCE TO
MOASSOCIATION ARTICLE OF ASSOCIATION AND COMPANY
ACT.
 RESPONSIBLE TO EACH AND EVERY ACTIVITIES CONDUCTED BY
THE COMPANY.
 MAKING PROGRAMS AND POLICIES OF COMPANY.

26. 1. Number of directors
2. Qualification of directors:
i. Natural person
ii. Competent person to contract
iii. Prescribed share must be taken
iv. Not to be punished in the fraud, theft, etc.
v. Not to be bankrupted
vi. Not to have been personal interest in the
contract

27.  Below 21 years of age, Unsound minded, insane and
insolvent
 punished in fraud, theft, cheating, etc, personal
interest in such company
 not paid complete amount of share
 director, shareholder, and employee of another
company with similar objective.
4. Independent director: section 89(2)
5. Tenure of directors

28.  Appointment by promoter of a
company:
 Appointment of BOD
 Appointment of institutional body
and corporate body
 Appointment of general meeting

29.  Time of the meeting of BOD
 Attendance of the directors
 Quorum of the BOD
 Chairman’s vote to be decisive

30.  make arrangement of all the transaction of the
company
 take benefit as provided in the memorandum of
association and article of association.
 appoint the director among themselves or employees
of the company.
 terminate the director or employees.
 not do anything yielding personal benefits to him
through the company.
 shall act honesty and in good faith.

31.  is meeting of shareholders and BOD
 helps to make major decisions like formulation of
rules and policies, objectives, amendment of
objectives, election of directors, distribution of
dividend increase in share capital etc
 decisions related to daily administration and
activities of the company.
 it gives legitimacy to the decisions.

32. Annual general meeting
[AGM)
Extra-ordinary general
meeting:

33.  AGM is held every year
 to elect the BOD
 inform their members of previous and
future activities
 for the shareholders and partners receive
copies of the company’s accounts
 fiscal information for the past year
 the directions the business will take in the
future.

34.  To appoint the directors and fix their remuneration.
 To appoint the auditor and fix their remuneration.
 To discuss on the report of BOD and pass it.
 To discuss and pass company’s audited annual financial
statement.
 To discuss and pass audit report.
 To inform the company’s condition to shareholders.
 To amend memorandum of association and article of
association.
 To pass the general and special resolutions.
 To fix the distribution of dividend to shareholders.
 To dissolve the company.
 To merge the company.

35.  First annual general meeting
 AGM
 Matters from shareholders
 Preparation of document for the AGM:
 Report of AGM to be sent to the registrar
 Directors to be present at general meeting
 Provision to keep minute

36.  for special case in an organization.
 When company’s BOD feels to convene EOGM.
 Auditor while examining books of accounts of a public
company feels to convene EOGM requesting BOD.
 If BOD does not convene auditor can submit application
to registrar office and office may convene the meeting.
 Shareholders holding at least 10% of shares of the
company paid up capital or at least 25% of the total
number of shareholders think it necessary to call EOGM,
can convene by requesting BOD.

37.  Meaning
 Time of notice
 Resolution
 Time of meeting
 Discussion of subject matter of
meeting
 Call of meeting

38.  the examination of books of account of
the company
 the examination of balance sheet, cash
flow statement and other financial
statement
 let shareholders to acquiring true
financial position of the company
 result transparency in the company

39.  Appointment of auditor by AGM
 . Appointment of auditor by BOD
 Appointment of auditor by the
registrar’s office

40.  Director, advisor, employee or worker involved in the
management of the company or partners or close
relative of any one of them.
 Debtor of the company or this close relative.
 A person who has been declared insolvent.
 A person who has been convinced on any charge
pertaining to audit and a period of 3 years has not
elapsed after punishment.
 A person convinced for the offence of corruption or fraud
or criminal offence and a period of 5 years has not
elapsed from the date of such conviction.

41.  When auditor himself gives resign from his
past.
 If before the end of tenure he dies.
 If he becomes unsound minded.
 If AGM decided to remove the auditor.
 if an auditor branches the code of conduct of
the auditor, or act against the law in force

42.  Right to get remuneration
 Right to demand account for audit purpose
 Right to ask classification to the directors or officials of company
 Right to complete auditing independently
 Right to request for calling special general meeting
 Right to attend general meeting of the shareholders
 Right to correct the wrong financial statement submitted by directors
 Right to get legal or technical advice

43.  to prepare the audit report
 to check whether accounts record has been properly maintained in
accordance with company law or not.
 to reflect the economic situation of the company
 to submit the audit report in time
 to attend AGM if necessary.
 affix his signature on the books of accounts and the records audited by
him on the data on which the audited.
 To mention in the report regarding irregularity or any action against law
of BOD or employees.
 To give suggestion if necessary

44.  the process of where by the life of company is ended
 end of company in the eye of law
 termination of legal existence of a company.
 It is the process in which property used for the benefit of
its creditors and members.
 The process of liquidation and winding up of the
company leads to its dissolution by the legal way
 liquidated company cannot continue its transaction
 According to Black’s law dictionary, “Winding up means
the process of setting the accounts and liquidating the
assets of partnership or corporation for the purpose of
making distribution of net asset to shareholders or
partners and dissolving the concern.”

45. 1. By office of company registrar:
a. By application company promoters
b. On failure to submit audit report
c. the company is not in operation
d. If number of promoters fall below seven in the case of public
company.
e. If the operation of the company is against the prevailing act.
f. If the company unable to commence its business within a year from
its incorporation.
g. If the company or its shareholders or creditors file petition to be
winded up by the court.

46.  To run the company if specific period is
mentioned in the company’s article of association
and memorandum of association is expired.
 If the company suffer from loss continuously for
several years and there are few ways to recover
such loss.
 If the company is solvent and has capacity to pay
its liquidity.
 If in the general meeting shareholder passed the
resolution regarding the dissolution.

47.  The Office may cancel the registration of a company in the following
circumstance:
i. If the promoter of the company makes an application
ii. If the company is in default in submitting to the Office the returns for
three
consecutive financial years
iii. the company is not carrying on its business or the company is not in
operation.
iv. passing the resolution of liquidation in general meeting of the company
v. before dissolution of a company prior notice to the company stating the
reasons for dissolving it
vi. notice in national daily newspaper
vii. objection against the action of registrar’s office of deregistering

48.  While adopting a resolution to liquidate
a company pursuant to Section 126, the
company shall appoint a liquidator.
 preparation of audit report after
examining financial statements of the
company

49.  Person Aquired power to dissolve the
company.
 Prepares reports of financial condition of
company
 An administrator who takes control of
the company
 Person authorized to collect company’s
assets

50.  Enjoys all the powers of directors and officials.
 Continue or recruit employees
 Possession over assets and documents
 File case
 Sell the movable and immovable assets
 Right to remuneration
 Dd the remaining installment of shares
 Settle the loan
 Do all the necessary works related to dissolution

51.  Prepare the account of income and expenditure.
 To present the progress report inform the shareholders of the company
about the progress on the liquidation proceedings in every six months
 Act within the boundary
 repay and
 discharge the debts and other liabilities of all the creditors of the company;
 Distribute the amt to shareholder if resolution passed by 75% of
shareholders
 Prepare real report