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Unit 4: Formation of Company

The company explained that the commission for non-executive directors was upped to Notes
20 lakh a year in 2004, effective for a five-year period starting December 2003.

Shareholders should be part of the good and bad times of the company, said a shareholder
who has been holding a Pfizer share since the beginning, when the multinational sent
letters to shareholders inviting them into their fold.
He, along with some other shareholders, were expressing their unhappiness over the
dividend. The dividend for the year ended 2008 was 12.50 per share, as compared with
the previous year’s 27.50 per share. However, Pfizer’s Chairman, Mr. R.A. Shah, clarified
that there were no motives behind the company’s actions and dividends were generous
when the circumstances warranted it.
On Pfizer Inc’s recently announced plan to raise stake in its Indian subsidiary to 75 per
cent, from the present 41 per cent, he said, that there was no intention to delist, “at this
time”.
Unlike info-tech companies, he said, the applicable milestone for Pfizer for reverse book
building was 75 per cent. Creeping acquisition and buy-back was allowed only till 75 per
cent, he clarified. Also, he said, Pfizer was also evaluating the possibility of merging
Duchem (that has pharma and animal health businesses) with itself.
Detailing Pfizer’s plans to expand its domestic reach, Mr. Handa said that they would
increase the product portfolio and value offerings from the company. The company was
planning to increase its field force by 300 people, including 100 for just retail sales.
Question

Discuss LIC’s role in Pfizer. (Hint: Summarize the LIC responsibilities in Pfizer)

4.7 Summary

The formation of a company, shall state the matters specified in Part I of Schedule II and set
out the reports specified in Part II of that Schedule; and the said Parts I and II shall have
effect subject to the provisions contained in Part III of that Schedule.
A condition requiring or binding an applicant for shares in or debentures of a company to
waive compliance with any of the requirements of this section, or purporting to affect him
with notice of any contract, document or matter not specifically referred to in the prospectus,
shall be void.
Expert to be unconnected with formation or management of company.

4.8 Keywords

Floatation: When a company has been registered and has received its certificate of incorporation,
it is ready for ‘floatation’; that is to say, it can go ahead with raising capital sufficient to commence
business and to carry it on satisfactorily.
Pre-incorporation contract: A pre-incorporation contract never binds a company since a person
cannot contract before his (or its) existence and a company before incorporation has no legal
existence.
Promoters: Promoters have been described to be in fiduciary relationship (relationship of trust
and confidence) with the company.

Promotion: ‘Promotion’ is a term of wide import denoting the preliminary steps taken for the
purpose of registration and floatation of the company.

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