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8/12/2019 Company Law Made Easy Quick Revision
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Quick Revision Notes
Companies Ordinance 1984 (1-262)
Atif Abidiwww.canotes.net
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The Examinations of ICAP are a demanding test of students ability to master the wide range ofknowledge and skills required of the modern professionals. Subject of Company Law is one of theefforts made by ICAP in this context for enhancing students knowledge about detailed overview of
corporate laws prevailing in Pakistan.
The best and most recommended source for this subject is Companies Ordinance 1984. The basicproblems faced by the students is that the Companies Ordinance 1984 is sometimes too difficult tounderstandor too lengthy to digest & reviseat final prep for the ICAP Exam.
There are also more than 30 books compiled by different authors across Pakistan for this subject (Morefamous books are notes by PAC and notes by Petiwala. These books serves the purpose in easylanguage but ignoring the fact that all sections are important in the eye of ICAP examiner. Hence thesebooks omit many sections, subsections, clauses and provisio.
For these reasons there arise needs to have some comprehensive and easy notes for this subject thatshall be serving both purposes
Completeness of Companies Ordinance 1984 Smartness and easiness of the notes book
For this purpose after the continues efforts of 2 years, I am being able to develop these notes as beingquick revision summaries of Companies Ordinance 1984 covering each and every section, sub-section,clauses, sub-clauses, provisio and explanations. The notes contain all sections presented in bullets formmaking it easy to remember and cram the points (just like ICAP examiner wants).
How To use:
It is strongly recommendedthat first of all you should thoroughly read from the Companies Ordinanceor from the notes book you are consulting. Then you may either consult these notes as guideline forpreparation of your own notes or you may select these notes for your revision, Its totally upto you. Thesenotes are not meant for first source (These are for revision purposes)
I have tried to ensure completeness in these notes and have made amendments on the basis of feedbackfrom my students of company law in last 3 sessions. However human error is expected in these notes, soif you find anything missing or some spell / logical mistakes in these notes please mail me about sucherrors by referring to the section number at my mail id [email protected].
In most cases fines & penalties are not incorporated in these notes. Moreover sub-sections that weretransitional and relevant only for 6 month after coming Companies Ordinance 1984 in force are skipped.
I am especially thankful to my colleagues for effective coordination in making of these notes
Hope these notes could serve you.
May ALLAH bless all of you with success in every exam of both lives.
Please also remember me in your prayers
Atif Abidiwww.canotes.netAugust 11, 2012
For notes & other study
material for ICAP subjects
www.canotes.net
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Talib e Doa : Atif Abidi - 1 - Company Law (Quick Revision) Notes
ec Section Title Quick Revision of the Section
PRELIMINARY
Short title, extent andcommencement
- Name: Companies Ordinance 1984- Extends to Whole Pakistan
Meaning of subsidiary and holdingcompany
One Co is subsidiary of other Co, if that other Co Directly/indirectly controls or holds >50% of its voting securities
Has power to elect and appoint >50% of its directors; or Is holding of its holding Co
(50% holding condition not applicable to CDC)
Ordinance not to apply to certaincorporations
Trading corporation owned/controlled by Province (business only within that Province) Co-operative society University.
Application of ordinance to non-trading companies with purelyprovincial objects
Powers conferred by this Ordinance on FG or SECP shall, in relation to companies which are nottrading corporations (confined to single Province), be the powers of the Provincial Government.
Ordinance to overridememorandum, articles, etc.
Hierarchical series:Ord.>MOA>AOA>Agreement>Resolution.
JURISDICTION OF COURTS
Jurisdiction of courts - High Court having Jurisdiction over place of registered office- FG may empower any civil court to exercise powers- For w/up place which was reg. office of Co for longest duration during preceding 6months.
Nothing in this section shall invalidate proceeding taken in Court other than High Court or civil courtConstitution of company benches One or more by company benches constituted by Chief Justice of High Court.
Procedure of the court - Day to day hearing (As expeditiously as possible)- Final judgment not later than 90 days from petition- Adjourned not for > 14 days at one time or > 30 days in total.
0 Appeals against court orders - Appeal to Supreme Court- If Co ordered to be wound up has Capital < 1 Million; Appeal shall lie only if supreme court
grants leave to appeal (in other cases no approval required).- Judgment within 90 days of appeal.
SECURITIES AND EXCHANGE COMMISSION OF PAKISTAN
2 Powers and functions of thecommission
- Such Functions as conferred by this ordinance- FG may authorize SECP to exercise some of its powers (with limitations/conditions)
3 Reference by federal government orcommission to the court
- FG of SECP may refer to court for any matter/question regarding affairs of Co- Court may make just & Equitable order on such reference
INCORPORATION OF COMPANIES AND MATTERS INCIDENTAL THERETO
4 Obligation to register certainassociations, partnerships, etc, ascompanies
- No association/partnership/company of >20 persons shall be formed for carrying on anybusiness without registration as Co under Ordinance.
- All Liable person -----Fine = 5000 + personally liable for all liabilities incurred
Exceptions
any society, body or association, other than a partnership, formed or incorporated underany other Pakistan law; or
a joint family carrying on joint family business; or a partnership of two or more joint families where the total number of members of such
families, excluding the minor members, does not exceed twenty; or a partnership formed to carry on practice as lawyers, accountants or any other
profession where practice as limited liability Co not permitted under relevant laws /regulations
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Talib e Doa : Atif Abidi - 2 - Company Law (Quick Revision) Notes
ec Section Title Quick Revision of the Section
MEMORANDUM OF ASSOCIATION
5 Mode of forming a company - Subscribe to MOA & comply with requirements.- Min Members (Public = 3, Private = 2, SMC = 1)- May be Limited by shares, guarantee or unlimited.
6 Memorandum of company limited byshares
Contents of MOA
Name of Co with Last word ("limited" for public & "(Private) Limited" for private) Reg.Office (Province/part of Pakistan not forming part of Province) Objects of Co and territories to which they extend (except in the case of a trading Co.) Liability of the members is limited; and Amount of share capital and division into shares of a fixed amount
- No subscriber of the memorandum shall take less than one share; and- Each subscriber shall write opposite to his name number of shares he takes.
Single Member Companies Rules 2003Single Member Companies should have last words (SMC Private) Limited
7 Memorandum of company limited byguarantee
Contents of MOA
Name of Co with Last word "(Guarentee) Limited Reg.Office (Province/part of Pakistan not forming part of Province) Objects of Co and territories to which they extend (except in the case of a trading Co.)
Liability of the members is limited; and Amount each member undertake to contribute in winding up (not > specific amount)
Additional Contents (if Co also has a share capital)
Amount of share capital and division into shares of a fixed amount No subscriber of the memorandum shall take less than one share; and Each subscriber shall write opposite to his name number of shares he takes.
8 Memorandum of unlimited company Contents of MOA
Name of Co Reg.Office (Province/part of Pakistan not forming part of Province) objects of Co and territories to which they extend (except in the case of a trading Co.)
If Co has share capital
- No subscriber of the memorandum shall take less than one share; and- Each subscriber shall write opposite to his name number of shares he takes.
9 Printing, signature, etc. ofmemorandum
Printed, divided into paragraph numbered consecutively, signed by subscribers, dated(Deemed power to borrow and issue non interest bearing securities to financial institutions)
>In addition to the general particulars to be added on signing MOA a subscriber shall specify his NIC number or hispassport number in the case of foreign national Provided that in case of a person other than a natural person, theaddress of its registered office or principal office shall be specified and the authorized representative signing thedocuments shall also add his particulars as stated in this rule
0 Restriction on alteration ofmemorandum
Cannot be altered, except to the cases, mode & extent provided in Ord.
1 Alteration of Memorandum ** By special resolution alter the registered office or objects clause to enable it to:
Carry on its business more economically/efficiently Attain its main purpose by new or improved means Enlarge or change the local area of its operations Carry on some business, not being a business specified in its MOA, in addition to existing Restrict or abandon any of the objects specified in the MOA Sell or dispose of the whole or any part of the undertaking of Co Amalgamate with any other company or body of persons.
** Confirmation by the SECP on petition required:
(No confirmation required if moving from Punjab to Islamabad Capital Territory or vice verca)
** Before confirming SECP must be satisfied that
Sufficient notice given to every holder of debentures & persons whose interest will beaffected
Consent of Every creditor, entitled to object (and signifies his objection in manner
directed by SECP) has been obtained or his debt or claim has been discharged or secured
>Application for confirmation of alteration be submitted to SECP by a responsible officer not later than 60 days from date ofspecial resolution. Application shall contain following information correct as on the day immediately preceding date ofspecial resolution and signed by a responsible officer
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Talib e Doa : Atif Abidi - 3 - Company Law (Quick Revision) Notes
ec Section Title Quick Revision of the Section Name and address of company; Number and date of incorporation; Subscribed and paid-up capital; Redeemable capital; Business actually being carried on and the clause in the memorandum justifying it Reasons for the proposed alteration
Following documents correct as on day immediately preceding date of special resolution and certified by responsibleofficer shall be submitted with application
A copy of memorandum and the articles; A copy of special resolution; Minutes of meeting at which special resolution was adopted; Particulars of dissenting shareholders or creditors together with their objections; A copy of the latest audited balance sheet; Statement in comparative form showing existing provisions of memorandum as are proposed to be altered and
the provisions as would appear after the proposed alterations have been made, indicating the reason for change Pattern of holding of its shares in Form 34; Names and addresses of each of its creditors to whom an amount exceeding 50,000 rupees is due with the
amount mentioned against each along with their consent to alteration; and Names and addresses of the persons likely to be affected along with their consent to the alteration
2 Power of commission whenconfirming alteration
Either wholly or in part, on such terms & conditions deemed appropriate by commission.
3 Exercise of discretion by commission SECP may adjourn the proceedings of alteration so that an arrangement may be made for thepurchase of the interests of dissident members.(No part of the capital of Co may be expended in such purchase.)
4 Procedure on confirmation of the
alteration
Certified copy of order of SECP + altered MOA filed with registrar for registration
Within 90 days of passing of order by SECP. The registrar shall register and shall certify the registration under his hand. Certificate shall be conclusive evidence that all requirements complied Extension (in 90 days) may be granted by SECP.
5 Effect of failure to register within90 days
- Alteration become null & void if order of SECP not filed within 90 days (or extended time).- Application for revival order may be filed within further 90days.
ARTICLES OF ASSOCIATION
6 Registration of Articles Ltd. By shares may adopt Table A; Mandatory for others to register AOA with MOA For Guarantee Ltd. Or Unlimited Co AOA shall state:
If have share capital : the amount of share capital at time of registration If not having share capital : number of members at time of registration
List & enumerate voting & other rights attached to different classes of shares andsecurities issued or to be issued by the Co.
7 Printing, signature, etc., of articles Printed, divided into paragraph numbered consecutively, signed by subscribers and dated
>In addition to the general particulars to be added on signing MOA a subscriber shall specify his NIC number or hispassport number in the case of foreign national Provided that in case of a person other than a natural person, theaddress of its registered office or principal office shall be specified and the authorized representative signing thedocuments shall also add his particulars as stated in this rule
8 Alteration of articles Co by special resolution alter AOA (as valid as originally contained in AOA) If alteration affects the rights/liabilities of members / class of members, it shall be
carried out only by approval of 3/4th Majority of those.
FORMS OF MEMORANDUM AND ARTICLES
9 Forms of memorandum and articles Company Type First Schedule- Co Ltd by Shares AOA Table A- Co Ltd by Shares MOA Table B- Co Ltd by Guarentee (Not having Sh.Cap) - MOA+AOA Table C- Co Ltd by Guarentee (Having Sh.Cap) - MOA+AOA Table D- Unlimited Co - MOA+AOA Table E
GENERAL PROVISIONS WITH RESPECT TO REGISTRATION OF MEMORANDUM AND ARTICLES
0 Registration of memorandum andarticles
- MOA & AOA+ Declaration of compliance with req. of ordinance filed with registrar.- Registrar if satisfied may register the MOA & AOA- If registrar refused to register; subscribers shall supply deficiency or appeal within 30days to.
Registrar; If refusal passed by Additional/Joint/Deputy/Assistant Registrar SECP; If refusal passed by Registrar; SECP decision shall be final & not be challenged
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Talib e Doa : Atif Abidi - 4 - Company Law (Quick Revision) Notes
ec Section Title Quick Revision of the Section
>MOA and AOA filed for registration to registrar, shall be properly stamped as required by Stamp Act, 1899, and shallbe accompanied by 3 copies duly subscribed and witnessed along with specified declarationDeclaration shall be made in Form 1 by a person engaged in formation of the company who is
1. An advocate, entitled to appear before any High Court in Pakistan or the Supreme Court; or2. A member of the ICAP or the ICMA practicing in Pakistan;3. A person named in the articles as a director or other officer of the company.
Registrar may require any person making declaration or is a promoter or director of proposed Co or is a witness tosignatures of subscribers to memorandum to furnish such information, clarification or document as deem necessary.
1 Effect of memorandum and articles - On registration Bind the Co. & members just as it is signed by each member- All money payable by any member to Co under MOA/AOA shall be debt due from him to Co.
2 Effect of registration - The registrar shall certify the incorporation of a company.- From the date of incorporation subscribers of AOA become members of Co- Company shall start by name contained in MOA as separate legal person.
3 Conclusiveness of Certificate ofIncorporation
Evidence of compliance with all requirements of Co.Ord 1984 in respect of registration.
4 Effect of alteration in memorandumor articles
Members are not bound by the alteration which increases their liability or require them tosubscribe for more shares unless he agrees in writing.
5 Copies of memorandum and articles
to be given to members.
Within 14 days of request on payment of prescribed amount.
6 Alteration of memorandum orarticles to be noted in every copy
Every copy of MOA & AOA issued after alteration shall confirm with altered MOA & AOA.
PROVISIONS WITH RESPECT TO NAMES OF COMPANIES
7 Prohibition of certain names - No company shall be registered by a name which is Inappropriate or deceptive (in the opinion of the SECP) Designed to exploit or offend the religious susceptibilities of the people. Identical with name of a company already registered Nearly resembling that name of a company already registered
(except where Existing Co is in course of being dissolved & signifies its consent)
- Prior approval of SECP required if name suggests The patronage of any, past or present, Pakistani or foreign, Head of State Any connection with the Federal Government or a Provincial Government or any
department or authority of any such Government; Any connection with any corporation set up by or under any Federal or Provincial law The patronage or any connection with foreign Government/international organisation
- Decision of the SECP regarding validity of name shall be final
>Promoters of Co desirous of having Co registered, or a responsible officer of company intending to change itsname, may make an application to registrar concerned asking for information as to whether proposed name is or isnot available for adoption,and registrar shall, furnish information ordinarily within 2 days of receipt of application.
8 Rectification of name of a company If wrong name selected by Co, it may change name with the approval of registrar &shall if registrar directs within 30days of direction.
Registrar shall, before issuing direction for change of name, afford Co an opportunityto make representation against proposed direction
Registrar cannot bound Co to change name after expiration of 3 yrs from registration
9 Change of name by a company Special Resolution +Approval of registrar.- No approval required if addition or deletion of word (Private)
0 Registration of change of name andeffect thereof
- Registrar shall issue a new certificate of incorporation altered to meet the circumstances- Continue to mention is former name along with its new name on the outside every businessplace and in all the documents (for 1 year from date of issue of new certificate)- Change of name shall not affect the rights & obligations of Co.- Legal proceeding may be continued against the Co in new name(Addition or deletion of word (Private) not deemed as a change of name)
1 Alteration of names ofcommencement of ordinance andchange of status of company
Every existing company deemed to include, before last word "Limited", "(Private)" forprivate company and the "(Guarantee)" in the case of a company limited by guarantee
Conversion of a public company into private company registrar shall add "(Private)" Conversion of a private company into public company registrar shall delete "(Private)"
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Talib e Doa : Atif Abidi - 5 - Company Law (Quick Revision) Notes
ec Section Title Quick Revision of the Section
ASSOCIATIONS NOT FOR PROFIT
2 Power to dispense with Limited inthe name of charitable and othercompanies
If an association formed for promoting commerce, art, science, religion, sports, social services,charity or any other useful object, and applies / intends to apply its profits/income inpromoting its objects, and to prohibit the payment of any dividend to its members,
SECP may grant license & direct its registration as Co with limited liability, withoutaddition of words "Limited", "(Private) Limited" or "(Guarantee) Limited", to its name.
License granted on such conditions and subject to such regulations as SECP thinks fit Association enjoy all privileges of limited Co and be subject to all its obligations,
except using the words "Limited", "(Private) Limited" or "(Guarantee) Limited", License may at any time be revoked by SECP; the registrar shall again add the above
words to name and association cease to enjoy exemptions & privileges Before revocation SECP give association an opportunity of submitting representation.
>Promoters or members of such association shall make an application to SECPin writing duly singed by them or byany person authorized by association accompanied by
3 copies of draft memorandum and articles of proposed association; A list of promoters of the association with their occupations and addresses; Declaration by a person specified in rule 4 (sec 30) that he has scrutinized application and accompanying
documents, and is satisfied about compliance with provisions of ordinance & fulfillment of conditions Names of companies, associations and other institutions in which promoters of proposed association hold
any office stating the office held in each case;
If association is already in existence, a copy of audited BS, I&E a/c and annual report on working ofassociation for the financial year immediately preceding the date of application
Estimate of future annual income & expenditure of proposed Co, specifying sources of income & objects Brief statement of work already done by the association or proposed to be done after registration.
Besides others the following conditionsshall also be fulfilled and shall be included in MOAThe association shall be formed as a public company;Payment of remuneration for services or otherwise to its members, whether holding an office in thecompany or not, shall be prohibited;No change in the MOA and the AOA shall be made except with the prior approval of SECPThe limit of liability of its members shall not be less than a reasonable amountPatronage of any government or authority, express or implied, shall not be claimed unless suchgovernment or authority has signified its consent thereto in writing.
COMPANIES LIMITED BY GUARANTEE
3 Provisions as to companies limitedby guarantee
Any provision in MOA/AOA/Resolution of Co Ltd by Guarantee (not having Sh.Cap)giving any non member right to participate in the divisible profits of Co shall be void.
Every provision in MOA/AOA/Resolution of Co Ltd by Guarantee purporting to divideundertaking of Co into shares/interests shall be treated as a provision for share capital
PROVISIONS RELATING TO CONVERSION OF PUBLIC COMPANY INTO PRIVATE COMPANY AND
VICE VERSA AND OTHER MATTERS
4 Conversion of public company intoprivate company
Prior approval of SECP in writing, and subject to such conditions as may be imposed by SECP
>Where the alteration of articles has effect of converting a public Co into a private Co, the Co shall, not later than
60 days from date on which special resolution was passed, make application in Form 2 to SECP for its approval.
5 Prospectus or statement in lieu ofprospectus to be filed by privatecompany ceasing to be a privatecompany
- Within 14 days of such change File Prospectus or SILOP to registrar.- Prospectus or SILOP shall comply with prescribed conditions (Part V of Co.Ord 1984)
6 Consequences of default incomplying conditions constituting acompany a private company
Cessation of privileges & exemptions availed by a Pvt. Co. May be relived of the consequences of such non compliance on an application made to
SECP by Co or interested persons
CARRYING ON BUSINESS WITH LESS THAN THE LEGAL MINIMUM OF MEMBERS
7 Liability for carrying on businesswith less than three or, in case of aprivate company, two members
Co carries on business > 6 months with less than minimum members, every member of Co(knowing the fact) during that time shall be severally liable for payment of the whole debts ofthe Co contracted during that time
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Talib e Doa : Atif Abidi - 6 - Company Law (Quick Revision) Notes
ec Section Title Quick Revision of the Section
SERVICE AND AUTHENTICATION OF DOCUMENTS
8 Service of documents on company Sending it to Co / officer at Reg. Office of Co by Post under a certificate of posting or Registered post, or Leaving it at Reg. Office of Co
9 Service of documents on registrar Sending it to Registrar at his office by Registered post, Delivering it to him, Leaving it for him at his office, against an acknowledgment of receipt.
0 Service of notice on members, etc. Personally Sending it by post to him to his registered address or, If has no registered address in Pak, to address, if any, within Pakistan supplied by him
- Where a notice is sent by post, notice deemed to have been effected at the time at whichthe letter would be delivered in he ordinary course of post.
- If a member has no registered address in Pakistan, nor supplied any other address;advertisement in newspaper circulating in province of registered office deemed to benotice duly given to him on the day on which the advertisement appears
- For listed Co, also publish notice in 1 English + 1 Urdu newspaper having circulation in
province of stock exchange- Notice to joint-holders of share may be given to joint-holder named first in the register- Notice in case of death/insolvency given to legal representative/assignee of insolvent- Notice of every general meeting shall be given to every member, legal representative (in
case of death) or assignee (in case of insolvent) and auditors.
1 Authentication of documents andproceedings
Document/proceeding requiring authentication by Co- May be signed by CE or a director, secretary or other authorised officer of Co; and- Need not be under its common seal
>
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Talib e Doa : Atif Abidi - 7 - Company Law (Quick Revision) Notes
ec Section Title Quick Revision of the Section
REGISTERED OFFICE, PUBLICATION OF NAMES, ETC
42 Registered office of company - Have a registered office within earlier of 28 days of incorporation or beginning of business- Notice of location or change be communicated to registrar within 28 days of incorporation
or change- Inclusion in the annual return / other document of Co of the address of its registered office
shall not be taken to meet the requirements of this section
43 Publication of name by a limitedcompany
Paint or affix, name outside every office / place of business, in a conspicuous position,in letters easily legible and in English or Urdu characters,
If the registered office is situated beyond the local limits of civil jurisdiction of a HighCourt; In the characters of one of the vernacular languages used in that place;
Shall have its name engraved in legible English or Urdu characters on its seal; Mention its name in legible English or Urdu characters, in all bill-heads and letter
papers and in all documents, notices bills of exchange, hundis, promissory notes,endorsements, cheques, orders for money or goods, all bills of parcels, invoices,receipts and letters of credit of Co.
44 Penalties for non-publication ofname
- Not painted/affixed Fine = 200/day- Name not engraved on the seal or not printed on documents
(Fine = 2000 + personal liability of person who authorizes the use of seal or document.)
45 Publication of authorized as wellas paid-up capital
If any notice/advertisement/official publication of Co contains amount of the Authorisedcapital; that document shall also contain in equally prominent position + equally conspicuouscharacters the amount of Subscribed & Paidup capital
COMMENCEMENT OF BUSINESS BY A PUBLIC COMPANY
46 Restrictions on commencement ofbusiness
- A company shall not commence any business or exercise any borrowing powers unless: Shares have been allotted in cash not less than the minimum subscription Every director of Co has paid to Co in cash full amount on each of the shares taken or
contracted to be taken by him No money is or may become liable to be repaid to applicants for any shares or
debentures which have been offered for public subscription by reason of any failure to
apply for / obtain permission for shares or debentures to be dealt on stock exchange Filed with the registrar a duly verified declaration by the chief executive or one of the
directors and the secretary in the prescribed form that conditions complied with Registrar has issued a certificate of commencement of business (conclusive evidence) Co has filed a prospectus or SILOP.
- Any contract made by a company before the date at which it is entitled to commence businessshall be provisional only, and shall not be binding on Co until that date
- Section shall not apply to Private Co, or Co Ltd by guarantee and not having share capital.- Nothing in this section shall prevent the simultaneous offer for subscription or allotment of any shares anddebentures or the receipt of any money payable on application for debentures.
REGISTER OF MEMBERS AND DEBENTURE-HOLDERS
47Register of members and index
Name, Father name, description, nationality, occupation & addresses of members Amount & no of shares held by these Date of acquiring shares Amount paid on the shares Date of entering a member in register Date of ceasing + reasons for ceasing
- For married woman or widow, name of husband or deceased husband also required.- Co having more than 50 members shall keep an index of names of members- Within 14 days after alteration in register, make alteration in the index
48 Trusts not to be entered onregister
No notice of any trust, expressed, implied or constructive, shall be entered on the register ofmembers, or sent to registrar
49 Register and index of debenture
holders
Name, Father name, description, nationality, occupation & addresses of Deb.Holder
Date of entering a Deb.Holder in register Date of ceasing
- For married woman or widow, name of husband or deceased husband also required.- Co having more than 50 Deb.Holders shall keep an index of names of such- Within 14 days after alteration in register, make alteration in the index
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Talib e Doa : Atif Abidi - 8 - Company Law (Quick Revision) Notes
ec Section Title Quick Revision of the Section50 Inspection of registers - These registers shall be kept at Reg.Office
- Open to inspection by members at least 2 hours during business hours- Certified copy of registers to be provided within 10 days (excluding non-working days) [Rs.200]
51 Power to close register Co may close register by a notice of not less than 7day by way of advertisement innewspapers of province of Reg.Office (For listed : Also in province of Stock Exchange).
Closure not exceeding 30 days at one time and not exceeding 45 days in whole year.
52 Power of court to rectify register Where name fraudulently entered / omitted; or default / unnecessary delay in entering
or removing name of member; Person aggrieved may apply to court for rectification. Court may either refuse or order rectification of registers Court may decide any question relating to title of any person (party to application).
54 Notice to registrar of rectificationof register
Court shall cause a copy of order to be forwarded to Co and shall direct Co to file notice ofrectification with the registrar within 15 days from the receipt of the order.
55 Register to be evidence Prima Facie evidence of any matter (which by this ordinance) is directed or authorized to beinserted therein.
56 Annual list of members, etc. - Company with Share Capital Form A- Company without Share Capital Form B
As on date of AGM or last day of calendar year (Dec 31,if AGM not held / held but not concluded)prepare and file with the registrar a return on Form A / Form B
Listed co. = Within 45 days (extension may be granted for not > 15days) Other co. = Within 30days
All particulars required to be submitted shall have been previously entered in 1 or more Cos Register(s)
MEETINGS AND PROCEEDINGS
57 Statutory meeting of company Every Public Co (including Private Co converted into Public Co within 1 year of incorporation)and every Co Ltd by guarantee & having Sh.Cap must hold "statutory meeting" not less than 3 andnot more than 6 months from commencement of business.
Statutory Report- The directors shall 21 days before meetings circulate statutory report to all members.- Signed by not less then 3 directors, 1 of which will be chief executive.- Statutory report shall include:
Total No of shares issued, distinguishing shares allotted for cash & other then cash Total consideration received against shares allotted Abstract of receipts and payments made upto a date within 7 days of report, showing
Receipts from issue of shares and debentures and other sources Payments made Balance remaining on hand Estimated amount of preliminary expenses including discount or commission paid
Names, addresses and occupation of directors, chief executive, secretary, legal advisorsand auditors or changes therein from the date of incorporations
Details of any contract to be presented before meeting for approval / modification Extent of carrying or not carrying out underwriting contracts + reasons for not carrying Details of any brokerage paid to any private Co for shares issued to any directors
- Report shall briefly state affairs of Co since incorporation + its business plan + any changes- Shall contain auditors certificate for correctness of allotment of shares & receipt of money
- Co shall send 5 copies,duly verified, to registrar for registration after sending to membersProceedings of Statutory Meeting- Directors shall cause list of members (& their particulars) to be produced at
commencement of meeting & shall be open for inspection by any member during meeting.- Members may discuss anything at meeting regarding incorporation and its operations- No resolutions can be passed without notice being given to members in specified manner.- Meeting may be adjourned from time to time and any resolution passed in the adjourned
meeting will be as effective as the original one.(provided notice given in specified manner)- If petition is filed for winding up of the Co for not holding the statutory meeting, Court may
give directions to hold a meeting or file a report or make such orders as it think fit.58 Annual general meeting - 1stAGM; Within 18 months of incorporation
- Subsequent AGM; - Once in every year- Within earlier of
a) 4 months from close of its financial year
b) 15 months from previous AGM.- Extension of 30 days can be granted by SECP for listed Co & registrar for any other case- No extension in 1st AGM- AGM of listed Co shall be held in town of Reg. office, unless allowed otherwise by SECP.- Notice of AGM shall given to members 21 days before meeting. For listed Co notice also be
published in 1 Urdu & 1 English newspaper having circulation in province of stock exchange
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Talib e Doa : Atif Abidi - 9 - Company Law (Quick Revision) Notes
ec Section Title Quick Revision of the Section>Application for extension in time for holding any AGM (not being first AGM) or laying before AGM a BS and P&L a/cor I&E a/c shall be submitted to SECP/Registrar not less than 30 days before last date on which such generalmeeting required to be held (For special reasons to be recorded, an application submitted less than 30 days beforelast date on which AGM is required to be held can also be entertained)
The application of extension (accompanied by last audited balance-sheet and profit and loss account) shall state - The registration number, name and address of the company; Date on which the last general meeting was held and the financial year for which the financial statements
and reports relating to accounts were laid at such meeting; Date up to which AGM is required to be held and financial statements & reports laid therein Reasons for not being able to hold AGM or laying financial statements & reports at the general meeting by
the required date and justification for extension in period to the extent appliedWhen delay is attributed to non-completion of books of accounts / non-finalization of audit, theexact state of books of accounts with reasons for such with certificate of Cos auditor as to state ofits accounts, reasons for delay and minimum time required for it.
59 Calling of extraordinary generalmeeting
- All meetings other than AGM and Statutory meeting shall be called EOGM.- Notice of EOGMshall given to members 21 days before meeting. For listed Co notice also be
published in 1 Urdu & 1 English newspaper having circulation in province of stock exchange- In emergency; directors may apply to registrar for allowing a shorter notice.- The directors may call an EOGM at anytime for taking approval of members on any matter.
Meeting on requisition of members- Also can be called on requisition of members > 1/10thof voting power at date of requisition- Requisition shall state the objects of meeting + signed + deposited at Reg.Office of Co- On such requisition directors shall call the EOGM. If directors do not call EOGM within 21
days of requisition; members shall call within 3 months of requisition.- Meeting shall be caused in same manner as would have been called by directors.- All expense incurred by member for such meeting shall be reimbursed by Co and same
amount shall be retained from amounts payable to directors who defaulted calling meeting
60 Provisions as to meetings and votes Notice- Shall state time, place and day of the meeting + business to be transacted.- Given to every member/nominee of member in case of members death and auditor of Co.- Notice shall be given in accordance with the section 50 of Co. Ordinance 1984.- Failure to forward notice to any member will not invalidate the proceedings of meeting.
Special Business- If any special business is to discussed at meeting; notice shall include statement of all the
facts about the business and shall disclose full the interests of any directors, if any,- If the meeting involves approval of some document then the place and time at which the
document may be inspected should be stated in the statement.- All businesses other then the following are special businesses
Consideration of accounts, auditors' and directors' reports Appointment of auditors and fixing their remuneration Declaration of dividends Election or appointment of directors
Quorum- Unless larger number fixed by AOA, quorum shall be:
Listed Co: 10 members personally present > 25% voting powers present in person/proxy Others : 2 members personally present > 25% voting powers present in person/proxy SMC : 1 person either present in person or through proxy.
- If Quorum not complete within half hour of meeting, if called by requisitionists; it shall be dissolved. If called by the Co; it shall be adjourned to same day, time and place in next week.
- If quorum not present within half hour at adjourned meeting, quorum shall be not less thentwo members (unless the articles provide otherwise)
Chairman- The chairman of the board shall chair every General Meeting- If there is no such chairman or chairman not present within 15 minutes of start of meeting
or is unwilling to chair meeting then any director can chair.- If no director is present or is unwilling, then members can select any person as chairman.
Voting- Every member shall have voting rights proportional to paid up value of securities held- Fractional votes shall not be accounted for.- No member can be debarred from using his voting rights.- All members may participate in the meeting either personally or through proxy- On show of hands every person shall have 1 vote- In case of Co Ltd by guarantee and having no Sh.Cap every member shall have one vote
- On poll votes may be given either personally or through proxy60
A
Circumstances in whichproceedings of a general meetingmay be declared invalid
Where material defects or omission in the notice or irregular proceedings of the meeting...- On a petition filed by members having 10% or more voting rights to court- Within 30 days of the meeting- Court may declare such proceedings/part invalid & direct holding of fresh general meeting
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ec Section Title Quick Revision of the Section61 Proxies - Every member entitled to attend the meeting is entitled to appoint a proxy
- Members of Co not having Sh.Cap cannot appoint proxies.- No member shall be entitiled to appoint more then 1 proxies
If appoints more then 1 proxies all instruments of proxies submitted shall be invalid- A proxy must be the member of the Co unless AOA provide otherwise.- Every notice of the Co shall set out the member's right to appoint proxy + proxy form- Proxy instrument shall be filed in writing and signed by appointer
If appointer is a body corporate then also need to be under its seal.- Proxy instrument shall be filed not later then 48 hours before the meeting
Anything contained in AOA providing lesser period shall be void.- Proxy shall have all the rights as the original appointer.- Members / proxies can do anything in meeting like demanding a poll on some matter or
abstaining from voting on some matter [Anything contrary to it in AOA shall be void]- Every member entitled to inspect all proxies filed with Co during normal business hours.- Provisions of this section apply to all general meetings & meetings of any class of members.
62 Representations of corporations atmeetings of companies and ofcreditors
A Co being a member of other Co by resolution of its directors authorizes any of itsofficials or any person to act as companys representative.
-A creditor may authorize any of its officials to represent it at the creditors meeting
63 Representation of federalgovernment, etc, at meetings ofcompanies
Where FG or PG as a member appoints a proxy, he shall be a deemed member and shall alsohave the same rights and powers including right to appoint proxy.
64 Notice of resolution Along with notice to members, a draft resolution other than routine resolutions. Member >10% voting power may also give notice of resolution to Co along with
statement of resolution. Such notice shall reach Co
Along with the requisition of EOGM; if the meeting called by members Before 15 days of the meeting; Any other case
Co shall circulate the notice forthwith to all members.
65 Voting to be by show of hands infirst instance
Unless a poll is demanded voting shall be done by show of hands.
66 Chairmans declaration of result ofvoting by show of hands to be
evidence
- Declaration by Chairman shall be evidence that voting by show of hands has passed aresolution or not, or whether or not has passed unanimously or with particular proportion.
- It shall be entered in the books of minutes and unless contrary is proved Chairman'sdeclaration will be valid.
67 Demand for poll Before or on declaring result of voting by show of hands, a poll may be taken by the chairman ofthe meeting on his own or may be demanded by the following persons:- Public company: At least 5 persons entitled to vote, either present in person / proxy- Private company: 1 person (if no more then 7 persons are present in the meeting)- Private company: 2 person (if more then 7 persons are present)- Member(s) having > 10% voting power in the meeting personally / proxy- Members holding paid up shares >1/10 of total paid up capital of Co present person/proxy
The demand of poll may be withdrawn anytime by the person demanding the poll.68 Time of taking poll - Immediately ; For election of chairman or adjournment
- Any other case; Within time not more then 14 days from the day poll was demanded asthe chairman may direct.
After polling; chairman/his nominee and a representative of party demanding poll shallscrutinize resultsChairman shall declare the result and has power to regulate manner in which polls may beconducted and the results of poll shall be final.
69 Resolution passed at adjournedmeeting
Date of passing a resolution = Date on which it was in fact passed and not the earlier date
70 Power of commission to callmeetings
- If Co fails to hold statutory meeting, AGM or EOGM requested by members, SECP on its ownmotion or on application of any director or any member
- SECP may direct Co to hold such meetings in directed manner + ancillary directionsincluding direction that 1 person present personally / proxy shall be deemed a meeting.
- Deemed to meeting called normally by Co in accordance with the provisions- All costs borne by Co unless SECP directs same to taken from some defaulting official of Co.
72 Filing of resolution, etc. - Printed/typed copy of Special Resolution duly authenticated by CEO or secretary of Co tobe filed with the registrar within 15 days of passing thereof.
- Copy of every Special Resolution to be annexed to every copy of (registered) AOA issuedafter date of resolution.
- Copy of Special Resolution to be forwarded to members on his request on payment of a fee.
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ec Section Title Quick Revision of the Section73 Minutes of proceedings of general
meetings and directors- A company shall keep books containing fair & accurate minutes of every general meeting
and meetings of BOD/committee of BOD. Minutes shall include names of attendees.- Copy of minutes of BOD meeting shall be provided to all directors with 14 days of meeting- Unless proved contrary, every meeting for which minutes have been made shall be deemed
to be called, held & conducted in accordance with Ord. and all proceedings deemed valid.- Every minutes signed by chairman shall be evidence of the proceedings in that meeting.- Books of minutes of the meetings shall be kept at the registered office of Co.- Books open for inspection by members free of cost during normal business hours (not less
than 2 hours each day) with such restrictions as may be imposed by the AOA
- Any member shall at any time after 7 days from meeting be entitled to have, within 7 daysafter request to Co, with certified copy of minutes of any general meeting (prescribed fee)
DIRECTORS
74 Minimum number of directors of acompany
SMC At least 1Other private At least 2Public(unlisted) At least 3Public(Listed) At least 7
75 Only natural persons to bedirectors
- Only natural persons to be directors- No director shall be the variable representative of a body corporate.
76 First directors and their term - Number & names of first directors determined in writing by majority of subscribers of MOA- If not determined all subscriber shall be deemed to be the directors of the company- Term: Till 1st AGM.
77 Retirement of directors First directors: 1stAGM.Subsequent: 3 years- Retiring directors shall continue to perform functions until successors are elected; and- Shall take immediate steps to hold the election of directors and in case of any hurdle
report circumstances to registrar within 15 days of expiry of term of directors.
78 Procedure for election of directors - Directors of Co shall, fix No of elected directorsnot later than 35 days before generalmeeting at which directors are to be elected
Number so fixed shall not be changed except prior approval of general meeting- Notice of meetingshall expressly state:
No of elected directors fixed; and
Names of retiring directors.- Any person who seeks to contest in election of director shall (whether he is a retiringdirector or otherwise), file with Co a notice of his intention atleast 14 days before meeting
Notice may be withdrawn at any time before holding of election All such notices received by Co shall be transmitted to the members atleast 7
days before meeting For listed Co: Notice also published in 1 Urdu & 1 English newspaper having
circulation in province of relevant stock exchange- For Co having share capital (where No of contestants > No of directors fixed)
Votes = No of voting shares/securities held x No of directors to be elected. Member may give all votes to 1 candidate or divide them between more than 1 Candidate getting highest votes elected as director and then candidate getting
next highest votes shall be so declared and so on until total directors elected.- For Co not having share capital
Elected by members of Co in general meeting in manner as provided in AOA
78
A
Fresh election of directors onrequest of substantial acquirer
- Where a person acquires 12.5% voting shares of listed Co, in his own name, he may applyto SECP for requiring the company to hold fresh election of directors in forthcoming AGM.
- SECP may, if deems appropriate in interest of Co, its minority shareholders or capitalmarkets generally, direct Co to hold fresh election.
- That person shall not sell/dispose shares of Co for atleast 1 year from date of election
79 Circumstances in which election ofdirectors may be declared invalid
- On application of members 20% voting power- Within 30 days of the date of electionCourt may, declare election of all directors or any one or more of them invalid if satisfied thatthere has been material irregularity in election procedures.
80 Term of office of directors Elected Directors:3 years unless he earlier resigns, disqualified or otherwise ceases to hold officeCasual Vacancy: Remainder of the term of the director in whose place he is appointed
81 Removal of directors By Resolution in General Meeting: Provided; resolution for removal not deemed to have beenpassed if No of votes casted against resolution (i.e. in favor of director) is equal to or exceedsElected Directors:Minimum No of votes casted at immediately preceding election of directors.First / Casual Directors: Total votes [u/s 178(5)] divided by No of directors for the time being.
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ec Section Title Quick Revision of the Section82 Creditors may nominate directors By creditors or other special interest holders by virtue of contractual arrangement.
83 Certain provisions not to apply todirectors representing specialinterest
Provisions of Election; Term of Office; Removalnot applicable on following directors:- Directors nominated by company or corporation (by virtue of investment or credit facilities)
owned or controlled by FG(Federal Govt) or PG (Provincial Govt)- Directors nominated by FG or PG or SECP- Directors nominated by foreign equity holders on BOD of PICIC or any other company set up
under a regional co-operation or other co-operation arrangement approved by FGVotes available to authority/person nominating him at election of directors shall exclude those
minimum votes which would have been sufficient to elect such director if he had contested electionTerm: shall hold office during pleasure of Corp/Co/Govt/Authority nominating him
84 Consent to act as director to befiled with registrar
- No person shall be appointed/nominated as director / CE of Co or represent such positions,nor shall any person name any other person as a director/CE or proposed director/CE,without giving his consent in writingfor such appointment or nomination.
- Within 14 days from date of appointment/nomination Co shall file with registrar a list ofpersons who hv consented to act as director/CE alongwith their consent (prescribed forms)
Section not applicable to Pvt Co (not being subsidiary of a Public Co)
85 Validity of acts of directors - Any act of a director, or of a meeting of directors attended by him, shall not be invalidonly due to any defect (subsequently discovered) in his appointment
- Director shall not exercise right of his office till the defect has been rectified
87
Ineligibility of certain persons tobecome director Ineligibilities of Directors- Minor;- Unsound mind;- Has applied to be adjudicated as an insolvent and his application is pending;- Undischarged insolvent;- Has been convicted by a court of law for an offence involving moral turpitude;- Has been debarred from holding such office under any provision of this Ordinance;- Has betrayed lack of fiduciary behaviour (u/s 217) at any time during preceding 5 years;- Not a member except
Person representing Govt / Institution / Authority which is a member; Whole-time director who is an employee of the company; Chief Executive Person representing a creditor
Additional Ineligibilities only for Listed Co
- Declared by Court of competent jurisdiction as defaulter in repayment of loan to afinancial institution, exceeding amount as may be notified by SECP time to time (1 Million)
- Engaged in the business of brokerage, or is spouse of such person or is sponsor, director orofficer of a corporate brokerage house (not applicable if Co itself is a Stock Exchange)
88 Vacation of office by directors - Becomes ineligible u/s 187- Absents himself (without leave of absence from the directors) for longer of
3 consecutive meetings of BOD; or From all meetings of BOD for continuous period of 3 months
- He or any firm (of which he is a partner) or any private company (of which he is a director) Without sanction of general meeting accepts or holds any office of profit under
Co other than chief executive or a legal or technical adviser or a banker; or Accepts a loan or guarantee from the company in contravention of sec 195
[Any additional grounds may be specified in AOA for vacation of office by directors]
91 Restriction on directorsremuneration, etc.
For performing extra services (including holding of office of chairman)- Determined by directors / Co in general meeting in accordance with AOA
For attending meetings,- Shall not exceed scale approved by directors/Co in general meeting accordance with AOA
92 Restriction on assignment of officeby director
- A director cannot assign his office to any person without the power given by companythrough AOA or any agreement and approved by a special resolution.
- Appointment by director (with approval of BOD) of an alternate directorduring absence
from Pakistan of 3 months shall not be deemed to be assignment of office. Alternate director shall vacate office as soon as actual director arrives.
93 Proceedings of directors Quorum of Listed Co: Higher of4 or 1/3rd.
Directors of Public Coshall meet atleast once in every quarter of a year.
SECP circular
BOD meeting can also be done through tele/video conferencing. Meeting shall be valid if subsequently all directorssigns and approve the minutes of said meeting
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ec Section Title Quick Revision of the Section94 Liabilities, etc., of directors and
officersAny provision in AOA/Contract with Co for exempting any Director/CE/Officer or any person(whether an officer or not), employed by Co as auditor, from, or indemnifying him against, anyliability that would otherwise attach to him in respect of any negligence, default, breach ofduty or breach of trust of which he may be guilty in relation to the company, shall be void- Exemption: Co may indemnify any such Director/CE/Officer/Auditor against any liability
incurred by him in defending any proceedings(civil or criminal), in which judgment is givenin his favor or in which he is acquitted, or in connection with any application in whichrelief is granted to him by the court.
95 Loans to directors, etc. - No Co shall directly/indirectly, make any loan to, or give any guarantee or provide anysecurity in connection with loan made by any other person to, or to any other person by
any director of that Co or of a Co which is its holding company or any partneror relative of any such director
any firm in which any such director or relative is a partner any private company of which any such director is a director or member
any body corporate at a general meeting of which 25% of total voting powermay be exercised or controlled by any such director or his relative, or by twoor more such directors together or by their relatives
any body corporate whose directors/CE are accustomed to act in accordancewith directions or instructions of CE, or of any director or directors, of that Co
- Co may, with approval of SECP, make loan or give any guarantee or provide any security inconnection with loan made by any other person to whole-time employee directorof Co for
acquisition or construction of a dwelling house or land; or
defraying the cost of any conveyance for personal use or house-hold effects defraying any expense on his or any relatives (spouse and minor children)
medical treatment as are ordinarily made or provided by Co to its employees- This restriction shall not apply to
Private Co, not being subsidiary of Public Co Banking company; Any loan made by a holding company to its subsidiary or any guarantee given or
security provided by holding company in respect of any loan to its subsidiary.- Every person shall within 14 days of his appointment as director/CE of Co file with registrar
particulars of any loan taken, or guarantee or security obtained, prior to his appointment.- This section shall apply to any transaction represented by a book-debt which was from its
inception in the nature of a loan or an advance.
96 Powers of directors Directors may exercise all such powers of Co as are not by Ordinance/AOA/special resolution,
required to be exercised by Co in general meeting. Directors of Co shall exercise followingpowerson behalf of Co by means of a resolution passed at their (BOD) meeting- make calls on shareholders in respect of moneys unpaid on their shares- issue shares- issue debentures or any instrument in the nature of redeemable capital- borrow moneys otherwise than on debentures- invest the funds of the company- make loans
For Banking Co: Acceptance of deposits from public not be deemed a borrowing or placing ofdeposit with another banking company not be deemed making of loans
- authorise a director or firm (of which he is a partner) or any partner of such firm or aprivate company (of which he is a member or director) to enter into any contract with Cofor making sale, purchase or supply of goods or rendering services with Co
- approve annual/half-yearly/other periodical accounts requiring circulation to members- approve bonus to employees
- incur capital expenditure on any single item or dispose of a fixed asset in accordance withgiven limits prescribed by SECP(See Rule 14Abelow)
- undertake obligations under leasing contracts exceeding one million rupees;- declare interim dividend; and- having regard to such amount as may be determined to be material (as construed in the
Generally Accepted Accounting Principles) by the Board to write off bad debts, advances and receivables; write off inventories and other assets of the company; and determine terms and circumstances in which a law suit may be compromised
and a claim / right in favour of Co may be released/extinguished/relinquishedThe directors of Public Co or subsidiary of Public Co shall not except with consent of generalmeetingeither specifically or by way of an authorisation, do any of the following things- Sell, lease or otherwise dispose of the undertakings or a sizeable part thereof, unless main
business of the company comprises of such selling or leasing
- Remit, give any relief or give extension of time for repayment of any debt outstandingagainst any person specified in section 195
>Amount of capital expenditure to be incurred on any single item shall be exceeding 1 million rupeesAmount of book value for disposal of a fixed asset, shall be exceeding 100 thousand rupees
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ec Section Title Quick Revision of the Section97 Prohibition regarding making of
political contributionsA company cannot make any contribution to any political party or for any political reasons
97
A
Prohibition regarding distributionof gifts
No distribution of gifts (in any form) to members in meetings.
CHIEF EXECUTIVE
98 Appointment of first chiefexecutive
- Every Co (other than Co managed by managing agent) shall have CEO- Appointed by the directors within earlier of
15 days of incorporation or date of its commencing business- Hold office till 1st AGM (unless resigns earlier) or shorter period (if any; fixed by directors)
99 Appointment of subsequent chiefexecutive
- Appointed by the directors within 14 days of election of directors or casual vacancy- Term; Not more than 3 years from the date of appointment.- Retiring CE eligible for re-appointment.- Retiring shall continue to perform until successor appointed unless non-appointment of his
successor is due to any fault on his part or his office is expressly terminated.
00 Terms of appointment of chiefexecutive and filling up of casualvacancy
- To be determined by directors or Co in general meeting in accordance with AOA.- CE deemed to be director (if not already a director) and entitled to all rights & liabilities
01 Restriction on appointment ofchief executive
- If he is ineligible on the grounds mentioned u/s 187 for directors.
02 Removal of chief executive - By 3/4th of total number of directors in their meeting; or- Co by special resolutions.
03 Chief executive not to engage inbusiness competing withcompanys business
- Whether directly or indirectly (carried on by spouse or minor children).- If he is engaged in any business at the time of appointment in a public company, he shall
disclose in writing nature of business and his interest therein.
04 Penalty - Fine of 10,000- May be debarred from becoming director or C.E.O. of Co for not exceeding 3 years.
04A
Certain companies to havesecretaries
- Listed Co - Whole time secretary with prescribed qualifications- Listed Co - Independent Share Registrar with prescribed qualifications- SMC - Secretary with prescribed qualifications (not a whole time secretary)
>Directors of public listed company shall take reasonable steps to ensure that company secretaryis a person whoappears to them having requisite knowledge & experience to discharge his functions & who is
A member of, - A recognized body of professional accountants; or A recognized body of corporate or chartered secretaries; or
An MBA/M.COM/law graduate from university recognized by HEC, having 2 years relevant experience A retired government servant in BS-19 or equivalent or above with at least 15 years service
A person already engaged by a Listed Co as company secretary before 26october, 2002, may continue in that
capacity if he has an experience of 5 years.
Co secretary of a single member Coshall be person holding bachelor degree from university recognized by HEC.
REGISTER OF DIRECTORS AND OTHER OFFICERS
05 Register of directors, officers, etc. - Every company shall keep at its Reg. office a register of its directors, CE, managing agent,secretary, legal advisors and its auditors which shall contain the particulars prescribed.
- Persons file particulars with Co within 10 days of his appointment/any change therein.- Co shall file the same to registrar within 14 days of its incorporation or any change therein.- Register shall be open to inspection (>2 hours daily) to every member free of charge with
restrictions as Co may impose. Other persons may also inspect register on prescribed fee.- If inspection is refused by the Co; the registrar may direct Co for immediate inspection to
be provided to person to whom it was refused.
>Following shall be particulars of directors and officers, including the CE, managing agent, secretary, chiefaccountant, auditors and legal adviser, for the purpose of Register of directors and other officers
- For individual, his present name in full, his fathers name, in the case of a married woman or a widow, the
name of her husband or deceased husband, his NIC number and in case of foreign national passport number,his usual residential address, nationality and, if that nationality is not the nationality of origin, nationality oforigin and his business occupation, if any, and if he holds any other directorship or other office theparticulars of such directorship or office;
- For person other than natural person, along with its name and address of registered or principal office, allparticulars (motioned above) of its directors/office bearers,
- For firm, full name, address & (above mentioned) particulars of each partner, and date of becoming partner.
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ec Section Title Quick Revision of the Section
BAR ON APPOINTMENT OF MANAGING AGENTS,SOLE PURCHASE AND SALES AGENTS, ETC
06 Bar on appointment of managingagents, sole purchase, salesagents, etc.
- No company (incorporated in Pakistan or outside) shall appoint any managing agent(Person, firm or company entitled to the management of the affairs of a company, byvirtue of an agreement or contract with Co)
- Not applicable to Co managed by a managing agent wholly owned or controlled by FG/PG.- FG may, by notification in the official Gazette, exempt any of the following classes of
agreements or contracts from this restriction
With an investment adviser in relation to investment company registered under rulesmade under the SECP Ordinance,1969
Approved by the FG, with a Foreign Collaborator in relation to company which owns ahotel in Pakistan; and
Approved by FG in relation to a company formed for setting up (in collaboration with1/more public sector financial institutions) an industrial undertaking which in opinionof the said Government, is likely to contribute to economic development of Pakistan
With an NBFC licensed to undertake asset management services in relation to aninvestment Co registered with SECP
With an NBFC licensed as a venture capital company in relation to a fund Coregistered with SECP
- No company (incorporated in Pakistan or outside) which is carrying on business in Pakistanshall, without the approval of SECP, appoint any sole purchase, sale or distribution agent:Except; Where Co incorporated, or person ordinarily residing, outside Pakistan, unless the
major portion of the business of such Co or person is conducted in Pakistan
TERMS OF APPOINTMENT OF MANAGING AGENT
07 Terms and conditions ofappointment of managing agent
Where managing agent appointed in pursuance of any exemption available u/s 206, suchappointment shall be subject to such terms and conditions as FG may deem fit to impose
MISCELLANEOUS PROVISIONS REGARDING INVESTMENTS, CONTRACTS, OFFICERS ANDSHAREHOLDINGS, TRADING AND INTERESTS
08 Investment in associated
companies and undertakings
- No investment in Associated Co/undertakings except special resolution
- No change in nature or terms & conditions madeexcept with Special Resolution- SR shall indicate nature, period and amount of investment and terms & conditions attached
- Return on investment borrowing cost of lending Co.- [Investment includes loans/advances/equity/amount not in nature of normal trade credit]- SECP may by notification in official Gazette, specify class of Co/undertakings to which this
restriction not apply; & through regulations, specify conditions & restrictions on nature,period & amount of investment and terms & conditions attached + other ancillary matters
>A copy of every resolution passed for investment in associates, together with information & documents specified inForm 30 shall be filed with SECP & registrar concerned in case of a listed company, and with registrar concerned inthe case of any other company within 14 days from the passing of resolution.
Exemption from requirements of sec 208 by SECP
Banking Co licensed by SBP for investment made in ordinary course of business,excluding equity investments DFI licensed by SBP for investment made in ordinary course of business,excluding equity investments NBFC licensed by SECP for investment made in ordinary course of business,excluding equity investments NBFC licensed by SECP to carry out Investment Advisory Services or Asset Management Services for
investments made in collective investment scheme being managed by such NBFC Modarba management Co for investments in modarba being managed by it Holding Co for investment in wholly owned subsidiary (Disinvestment of > 25% made by special resolution) Co whose principal business is such investments
Associates of NBFC licensed by SECP to carry out Asset Management Services for investments made in openend scheme being managed by such NBFC
09 Investment of company to be heldin its own name
All investment made by a Co on its own behalf shall be made and held by it in its own name;
Exceptions- Where Co has a Nominee director on any other Co, shares in that Co Qualification shares
required to be held by a director, may be registered/ held by such Co jointly in its ownname and in name of such person/nominee, or in name of such person/nominee alone
- Holding company may hold any shares in its subsidiary Co in name of its nominee/nomineesif necessary to ensure No of members of subs Co not reduced below minimum members
- Investments made by investment Co whose principal business is purchase&sale of securities
Certificates/letter of allotment relating to shares/securities in which investments made by Coshall be in custody of Coor such scheduled bank/financial institution as approved by SECP
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ec Section Title Quick Revision of the SectionExceptions- Depositing with a bank, being banker of Co for collection of any dividend/interest payable- Depositing with/transferring/holding in name of scheduled bank/financial institution
approved by SECP to facilitate transfer (if no transfer take place within 6 months from dateof deposit/transfer, Co shall as soon as practicable after 6 month have same retransferred)
- Depositing with/transferring to any person by way of security for the repayment of loan- Depositing with/transferring to/holding/registering in name of a central depository
Where any such shares/securities not held by it in its own name
- Co shall forthwith enter in register maintained for the purpose at registered office Nature, value & other particulars necessary to identify such shares/securities; and Bank or person in whose name or custody such shares/securities are held.
- Register shall be open to inspection by any member/debenture-holder/creditor withoutcharge, during business hours (not less than 2), subject to reasonable restrictions imposedby AOA/general meeting
- if any inspection is refused, Registrar may on an application direct immediate inspection
10 Form of contract - Contracts on behalf of a company (by any person acting under its authority, express orimplied ) may be made in writing or by parol only (not reduced into writing)
- All such contracts shall be effectual in law and shall bind the company and its successorsand all other parties thereto, their heirs, or legal representatives as the case may be
11 Bills of exchange and promissorynotes
Deemed to have been made / drawn / accepted / endorsed on behalf of Co if made / drawn /accepted / endorsed in name of / by / on behalf / on account of, Co by any person acting underits authority (express/implied)
12 Execution of deeds - Co may, by writing under common seal, empower any person (generally/specified matters)as its attorney, to execute deeds on its behalf at any place either in or outside Pakistan
- Every deed signed by such attorney under his seal shall bind Co as if it were common seal
13 Power of company to have officialseal for use abroad
- If authorized by AOA, co. may have separate official seal for any territory outside Pakistan- official seal shall be a facsimile of common seal of Co with addition on its face of name of
every territory where it is to be used- Co may, by writing under its common seal, authorise any person appointed in any territory
not situate in Pakistan to affix the same to any deed or other document to Co is party- Authority of agent shall continue during period mentioned in instrument authorizing him;- If no period mentioned, shall continue until notice of revocation/determination of agents
authority has been given to person dealing with him.- The person affixing official seal shall certify the date and place of affixing.- Official seal duly affixed shall bind Co as if it was common seal of Co
14 Disclosure of interest by directors - Every director (himself/spouse/minor children) who is (directly/indirectly) concerned orinterested in any contract or arrangement entered into, or to be entered into, by or onbehalf of company shall disclose nature of his concern or interest at a meeting of directors:
- Time of Disclosure In case of a contract or arrangement to be entered into, at meeting of BOD at which
the question of entering into contract or arrangement is first taken into consideration If director was not concerned or interested on date of that meeting; at first meeting
of BOD held after he becomes concerned/interested In case of any other contract/arrangement, at first meeting of BOD held after director
becomes concerned or interested- A general notice given to directors if a director of Co is a director/member of a specified
body corporate or firm and is concerned/interested in any contract/arrangement Which may, after date of notice, be entered into with that body corporate or firm,
shall be deemed to be sufficient disclosure of concern/interest General notice shall expire at end of financial year in which it is given, but may be
renewed for further 1 financial year by giving notice in last month of year of expiry General notice/renewal shall be effective only if given at meeting of BOD or takes
reasonable steps ensuring it is brought up & read at first meeting of BOD after it[Nothing in this section shall restrict a director from having any such concern or interest]
15 Interest of other officers, etc. No other officer shall enter into any contract or arrangement with Co in which he is directly orindirectly concerned or interested, unless he makes a disclosure & obtains approval of directors.
16 Interested director not toparticipate or vote in proceedings
of directors
Over the approval of matter where he is interested director, cannot take part in discussion, orvote. Nor to be counted for purpose of quorum.
Exceptions: Private Co (neither subsidiary nor holding of Public Co). Contract of indemnity against any loss which all or any of director(s), may suffer by
reason of becoming or being sureties or a surety for Co Directorship contract with Public Co and interest of director is only due to himself
being a nominated director on such Co (doesnt hold enough shares for being elected)
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17 Declaring a director to be lackingfiduciary behavior
By the court if he contravenes section 214, 215(1) & 216. (Opportunity of show cause provided)
18 Disclosure to members ofdirectors interest in contractappointing chief executive,managing agent or secretary
Where Co appoints/enters into contract for appointment of, CE, managing agent, whole-timedirector or secretary of Co, in which any director of Co is concerned or interested ; or makechanges in any such existing contract- Co shall make out and attach to directors report an abstract of terms of appointment or
contract or variation, together with memorandum specifying nature of concern or interest
- Co shall send such abstract + memorandum (only if director interested) to every memberwithin 21 days from date of appointment/contract/variation (or date of interest; if later)
- All such contracts shall be kept at registered office and shall be open to inspection by anymember at such office; (Rules for taking extracts same as sec 150 i.e. Members Register)
- Provisions shall same apply in relation to any resolution of BOD for such contracts
19 Register of contracts,arrangements and appointments inwhich directors, etc., areinterested
- Register shall be kept containing separate particulars of all such contracts, arrangementsor appointments u/s 214,215,216,218 including following particulars (whichever applicable)
Date of contract, arrangement or appointment; Names of parties thereto; Principal terms and conditions; Date on which it was placed before the directors; Names of the directors voting for and against contract, arrangement or appointment
and names of those remaining neutral; Name of director or officer concerned/ interested in such + extent/nature of interest
- Particulars shall be entered in relevant register within 7 days of Meeting of the directors at which contract, arrangement or appointment is approved
(in case of a contract, arrangement, or appointment requiring directors' approval) Receipt of particulars at registered office (or within 30 days of date of such other
contract etc; If later) and register shall be placed before next meeting of BOD andshall be signed by all directors present at meeting. (in case no approval required)
- Register shall also specify, in relation to each director, the names of firms and bodiescorporate of which general notice has been given by him under sec 214.
- This section shall not apply to any contract or arrangement For sale, purchase or supply of any goods, materials or services, if value of such
goods and materials or the cost of such services Rs.2000 in aggregate in any year By a banking Co for collection of bills in ordinary course of its business.
- Register shall be kept at registered office and shall be open to inspection by any member
at such office; (Rules for taking extracts same as sec 150 i.e. Members Register)
20 Register of directorsshareholdings, etc.
- Every listed Co shall keep a register showing in respects of each Director/CE/ManagingAgent/Chief Accountant/Secretary/Auditor(For Firm: All Partners) & person who is
beneficial owner(directly/indirectly) 10% of listed equity securities: Following Particulars No, description & amount of any shares/debentures of Co / Subsidiary Co/ Holding Co
/ Subsidiary of Cos Holding Co, held by or in trust for him, or of which he has right tobecome holder (whether on payment or not).
Register shall also show date of, and price or other consideration for, transactions Where date of agreement and completion are different; note date of agreement Nature & extent of any position/interest/right on any shares/debentures recorded in
relation to director/other person in register shall (if he requires so) be indicated in it- Co shall not be affected with notice of, or put upon inquiry as to, rights of any person in
relation to any shares/debentures (by complying this section).
- Register shall be kept at registered office and shall be open to inspection during businesshours subject to reasonable restrictions by AOA/general meeting ( 2 hours/day) during 14 days before date of the AGM and to 3 days after its conclusion, it shall be open to
inspection of any member/debentures holder; and Same/other period, be open to inspection of any person acting on behalf of SECP.
- SECP and registrar may at any time re quire a certified copy of register or any part thereof.- Register shall also be produced at commencement of AGM and remain open and accessible
during the meeting to any person attending the meeting.- If Co refuse to allow inspection or supply a copy; Registrar may direct so immediately
21 Duty of directors, etc, to makedisclosure of shareholdings, etc.
For the purpose of section 220, persons mentioned above shall give written notice of disclosurewithin 15days of acquisition or change of interest.
22 Submission of statements ofbeneficial owner of listedsecurities
To registrar & SECP (prescribed form & prescribed particulars), by persons mentioned u/s 220 Within 30 days of occupying position, acquisition or listing Within 15days of change of interest. Within such period as specified in order by SECP (if so requires)
23 Prohibition of short selling On Director/CE/Managing Agent/Chief Accountant/Secretary/Auditor of listed Co (For Firm:All
Partners) & person who is beneficial owner(directly/indirectly) 10% of listed equity securities
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24 Trading by directors, officers andprincipal shareholders
- Where any person mentioned in sect 223 makes any gain by purchase & sale, or sale &purchase of any security within a period < 6 months, such person shall make a report andtender amount of gain to Co + send intimation of this to registrar and SECP
[Not applicable to security acquired in good faith in satisfaction of debt previously contracted]- Where such person neglects to tender gain or Co fails to recover gain within (later of) 6
months of its accrual or 60 days of demand by Co, such gain shall vest in SECP and if gainnot deposited in prescribed account, SECP may direct recovery as an arrear of land revenue
[Gain= Highest price of 6months (Sale Price) minus Lowest price of 6months (purchase price)]
Explanation:-- For section 222 & 224; beneficial ownership of securities of any person deemed to include:
Securities beneficially owned, held or controlled by him or his spouse or by any of hisdependent lineal ascendants or descendants
If such person is a partner in a firm, securities beneficially held by such firm If such person is a shareholder in private Co, securities beneficially held by such Co
[Gain in above cases shall be prorated according to his relative interest in firm/Pvt Co]
>Any gain made shall be computed in the following manner Purchase at lowest rates shall be matched against Sales at highest rates prevailing within the 6 months, and
recoverable amount calculated with respect to every individual transaction disregarding any other transaction,that is to say, lowest in rate & highest out rate of purchases and sales or sales and purchases shall be matched
Purchases & sales shall be matched if securities involved in purchase & sale are of same class & same listed Co
Distribution of bonus shares & allotment of right shares by listed Co to existing shareholder either on basis ofhis entitlement or on account of purchase of right allotment letters from market shall not constitute purchaseAny loss from any transaction in listed security not be set off against gain from such securityAmount of brokerage, stamp duty and other expenditure incurred in making gain may be deducted subject toproduction of such documentary evidence in support of expenditure incurred as may be acceptable to Co.
25 Contracts by agents of company inwhich company is undisclosedprincipal
- Agent or officer of such a contract shall make a memorandum of terms of such contract,specify person with whom it has been made, & shall deliver it to Co & copies to directorswhich shall be laid before directors at their next meeting.
- If default is made in requirements of this section, contract shall, at option of Co, be void asagainst Co; and such officer/agent shall be liable to a fine 2000[ Not applicable to Private Co (not being subsidiary of a Public Co) ]
26 Securities and deposits, etc. - No company, officer of agent shall receive or utilize securities / deposits except inaccordance with a contract in writing, & all moneys received shall be deposited in aseparate bank account.
- Not applicable where money received is in nature of an advance payment for goods to bede livered or sold to an agent, dealer or sub-agent in accordance with contract in writing
27 Employees provident funds andsecurities
Moneys/securities deposited with Co by its employees in pursuance of their contract of service- Shall be kept or deposited by Co within 15 days from date of deposit in
Special account to be opened by Co for the purpose in a scheduled bank; or National Saving Schemes
- No portion utilized by Co, except breach of contract of service by employee(after giving notice to him)
Provident fund has been constituted by Co for its employees or any class of its employees- All moneys (Employer contribution + Employer contribution + Interest) receipt/accrual
Be deposited in a National Savings Scheme; Special account to be opened by Co for the purpose in a scheduled bank; or
(Where Co itself is a scheduled bank) Special account to be opened by Co forthe purpose either in itself or in any other scheduled bank; or
Be invested in Government securities; or In bonds, redeemable capital, debt securities or instruments issued by Pakistan Water
and Power Development Authority (WAPDA) and in listed securities subject toconditions as may be prescribed by SECP.
Where a trust has been created by a company with respect to any provident fund- Co shall be bound to collect contribution of employees concerned and pay such
contributions + its own contributions to trustees within 15 days from date of collection- Obligations of Co shall devolve on trustees and shall be discharged