Legal Aspects of Business and Environment

1. Articles of Association
• Section 20 (1), (2), (3) & (4) of Company Act
2063 B.S.B.S. has a provision for AoA
• Regulations or bye-laws for internal
management and conduct of the affairs of the
company
• Subordinate to the MoA
• Can be altered by special resolution in the
general meeting
• Bonafide interest for alteration

2. Articles of Association
MoA
• What is to be done
• Principal document
• Alteration with the
approval of
Company Law
Board
• Ultra vires which
cannot be ratified
by shareholders
AoA
• How it is to be done
• Subordinate to MoA
• Can be altered by
special resolution in
the general meeting
• Ultra vires but can be
ratified by
shareholders

3. Effects of MoA and AoA
• Members bound to a company
• Company bound to members
– Obligations towards the members
• Member bound to member
• Member to member

4. Contents of AoA
• Procedure for calling general meeting
• Procedure for conducting general meeting
• Number of directors and their tenure
• Qualification shares
• Board of directors and power and duties of
managing director

5. Contents of AoA
• Notices of the board meeting, quorum and procedure
of meeting
• Share transfer
• Reduction and increment of share capital
• Appointment of company secretary
• Auditing of company's account
• Remuneration, allowances and amenities of directors
• Merger of a company
• Any other matters

6. Prospectus
• A public company limited by shares seeking to
float the shares to the public has to issue a
prospectus.
• In Company Act 2063 B.S., there is no
definition of prospectus.

7. Prospectus
• ‘A prospectus means any document described
or issued as prospectus and includes any
notice, circular, advertisement or the document
inviting deposits from the public or inviting
offers from the public for the subscription of
purchases of any shares in or debentures of a
body corporate’.
• Invitation for the subscription of shares

8. Prospectus
• Signed by the directors
• a written application to the Securities
Exchange Board (SEB) for the approval
• After approval from the SEB for the
publication, it has to be registered in the Office
of Company Registrar.
• Then publish in the newspaper

9. Liability
• Directors who have signed the prospectus shall
be personally liable and answerable for all the
written contents in the prospectus.
• Liable to pay compensation to every
subscriber for any loss or damage caused to
him by reason of any untrue statement
included in the prospectus on the faith of
which he had applied for the shares or
debentures.

10. Liability
• Those who resign before
• Those who expose the misleading and untrue
facts
• Those who are not aware