Company Law ..... Some Queries.

[nabeelanwer]

AOA Friends!
I have some queries in Company Law (Mod D).

1) What are underwriters?
2) What is underwriter contract?

3)
U/S 178 if number of persons contesting the election for the office of Director<b> exceeds </b> the number fixed by directors before the election, the directors of the company shall be elected by the members in prescribed procedure.

<b>if number of candidates and number of directors to elected equal</b>, then all candidates shall stand elected unopposed.

<u>Question</u>
How the remaining directors shall be elected if number of candidates constesting election is less than the number of directors to be elected?

Let me elaborate through example
Dirctors to be elected as fixed by directors= 10
candidates applied=8
how remaing two shall be selected?

Waiting for prompt response.
Regards!

[Abdur.Rehman]

Underwriters are normally banks or other financial institutions, who at the time of issue of shares of a listed company, undertake to purchase the shares of that company if not purchased by the public. for example the minimum subscription is 1 million and 0.7 million is purchased by public. in this case the underwriter has to take 0.3 million shares. For this purpose they charge some commission which is called underwriting commission.
And the other question is somewhat common sense. If the number of directors set is equal to number who applied, then all will be selected as directors...
And it is quite rational that everybody wants to be a director. So, it is quite rare.
But if this happens the company in the general meeting will have to change the number of directors. Remember that the directors cannot change the number of directors, only members can...

[Abdur.Rehman]

the articles of the company may also provide for a procedure, that should be followed in this case. As the ordinance is silent here...

[nabeelanwer]

Thank you Rehman Bhai!

I got the answer of the first two questions but i am quite doubtful about 3rd one.

One More Question
What are fractional shares and fractional votes?

Regards!

[Abdur.Rehman]

First clear the third one
The articles of the company will give the procedure for election, if the number of directors who give application are less than the number set by directors...
If no procedure is given in articles, then the directors will call a general meeting to reduce the number of directors and elect all giving application...
Please specify, that in what perspective u r asking abt fractional shares. Regarding election of directors or any other perspective...
I will then give u a relevant example...

[nabeelanwer]

'Fractional Shares' in context of nominee directors and 'Fractional Votes' in context of voting at meetings?

[Abdur.Rehman]

Ok take this example
A person has cumulative preference shares, which carry voting rights lesser than the ordinary shares. Say, for every 3 preference shares, he has got voting option of 2 ordinary shares. Now this person holds 10,000 preference shares. So he has the voting right of 6,666.66 shares. Now he will be able to poll only 6,666 votes and 0.66 votes will not be considered.
This is the example with reference to voting. Fractional shares may also arise when assessing the right to bonus shares or right issue of shares...

[nabeelanwer]

thanks Rehman Sb.