Ch # 1 …………….
Introduction to
Company &
Incorporation
Wholly owned subsidiary
A company shall be deemed to be a wholly owned subsidiary of
another company or the statutory body if all its shares are
owned by that other company or the statutory body.
Wholly owned subsidiary
A company shall be deemed to be a wholly owned subsidiary of
another company or the statutory body if all its shares are
owned by that other company or the statutory body.
FEATURES OF A COMPANY
Sole Trader
An individual who owns and runs his or her own business.
The law does not recognize the business as a separate person
The person is personally liable for the debts of the business
Partnership
Group of individuals who own and run their own business.
A partnership business is not recognized as a ‘person’ by the law.
Partners are personally liable jointly with other partners for debts
Company
Capital of a company is represented by shares
Ordinary shareholders are its owners.
Created by a process established by Companies Act 2017
Company is a legal person, separate from its owners. (doctrine of corporate personality)
Companies are managed by their directors
Distinguishing FEATURES OF A COMPANY
Separate legal personality
Company can enter into contracts with other persons
A company owns its own assets
A company is personally liable to pay tax on its income (profits).
Limited liability
The liability of the owners of a company for the debts of the company is limited to the
amount of their investment in the company.
Transfer of ownership and perpetual succession
Any legal person can own shares in a company (even another company can own shares)
Shareholders can transfer their share in the ownership of the company to someone else,
It does not affect the legal status or legal existence of company.
Company continues to exist (unaffected by change in ownership)
Company Company law
A Company formed and
registered under this Act The repealed Companies Act,
or the company law. Companies Ordinance, 1984,
Companies Ordinance, 2016
and also includes this Act
unless the context provides
otherwise
Body corporate “or”
Corporation but does not include
Body corporate or corporation A co-operative society registered
includes under any law relating to the
a company incorporated under registration of co-operative
this Act or company law; societies; or
a company incorporated Any other entity, not being a
outside Pakistan, or company as defined in this Act or
a body corporate declared as any other law for the time being
body corporate in the relevant which the concerned Minister of
statute the Federal Government may, by
notification, specify in this behalf.
Means any company or body
corporate incorporated outside
Pakistan, which:
has a place of business or liaison
office in Pakistan whether by itself
or through an agent, physically or
through electronic mode; or
conducts any business activity in
Pakistan in any other manner as
may be specified.
TYPE OF COMPANIES
Type of
Companies
Company Ltd Company Ltd by Unlimited
by Shares Guarantee Company
Liability of owners is limited to the
Liability of its members is amount member guarantees to
limited by the memorandum contribute in the event that the company
goes into liquidation
This has all advantages of a
to the extent of amount, if any, - The company may or may not have
normal company except
remaining unpaid on the share capital that, liability of its
shares respectively held by - If Company has share capital; Liability members is not limited
them. shall also include amount unpaid on
shares (if any)
TYPE OF COMPANIES
Private company and public company
Public Company
A company which is not a private company
Listed Company.
Whose securities are listed on stock exchange and are traded on it
Unlisted Company.
Whose securities are not listed on stock exchange
Private Company
Single Member Company
Which consists of a single member who is director of the company.
[In these companies (SMC-PVT) Limited is added to the name]
Other Private Company
Company can be registered by at least two members and it restricts
Maximum number of members to 50
(members jointly holding shares shall be counted as 1 member)
Right to transfer the shares by its members, (save as otherwise provided in act)
Invitation of subscriptions from general public for its shares debentures or Redeemable capital.
Holding Company & Subsidiary Company
Wholly owned subsidiary
A company shall be deemed to be a wholly owned subsidiary of
another company or the statutory body if all its shares are
owned by that other company or the statutory body.
TYPE OF COMPANIES
Holding Company & Subsidiary Company
Holding Company
Means a company which is another company‘s holding company if, but only if, that other
company is its subsidiary.
Subsidiary company
In relation to any other (holding) company, it means company in which the holding company:
Holds the Composition of the Board; or
Exercise or controls more than one-half of its voting securities either by itself or together
with one or more of its subsidiary companies
Notes
Subsidiary of a subsidiary company would also be considered subsidiary company of the
main holding company
Composition of board is normally controlled by another company if it can appoint or remove
all or a majority of directors (by exercise of power available to it)
TYPE OF COMPANIES
Private company and public company (Conti)
Public sector company
A company, whether public or private, which is directly or indirectly controlled, beneficially
owned or not less than 51% of the voting securities or voting power of which are held by the
Government or any agency of the Government or a statutory body, or in respect of which
the Government or any agency of the Government or a statutory body, has otherwise power
to elect, nominate or appoint majority of its directors and includes a public sector
association not for profit, licenced by the SECP:
Provided that nomination of directors by the Commission on the board of the securities
exchange or any other entity or operation of any other law shall not make it a public sector
company.
Wholly owned subsidiary
A company shall be deemed to be a wholly owned subsidiary of another company or the
statutory body if all its shares are owned by that other company or the statutory body.
SECP
SECP was operationalized SECP has been given
on 1st January 1999. lot of powers under
SECP replaced Corporate Companies Act
Law Authority
SECP regulate the affairs
of Companies, Insurance
SECP’s head office is at Companies, Banking
Federal Capital, Islamabad Companies, Modarbas &
SECP has 8 regional offices Non-Banking Finance
1 at Federal Capital Companies
4at provincial capitals In addition to Companies Act
3 in other major cities 2017, SECP is also empowered
i.e. Multan, Faisalabad Law has vested various by SECP Act, 1997 to exercise
and Sukkur. powers to SECP many powers and functions
AUTHORITIES, OFFICIALS, MEMBERS AND RESOLUTIONS
Registrar
Registrar
Means a registrar, an additional registrar, an additional joint registrar, a joint registrar, a
deputy registrar, an assistant registrar or such other officer as may be designated by SECP,
performing duties and functions under this Act.
Powers and duties
Registration of companies
Receiving various documents under the Act.
Keeps track of company routine documents
He keeps the record of mortgages and charges (explained in a further chapter)
Can call the officers of company for information and explanations
Empowered to inspect the books and records of the company.
May seize the books and records, if think necessary
ASSOCIATION NOT FOR PROFIT
Wholly owned subsidiary
A company shall be deemed to be a wholly owned subsidiary of
another company or the statutory body if all its shares are
owned by that other company or the statutory body.
ASSOCIATION NOT FOR PROFIT
ASSOCIATION NOT FOR PROFIT
SECP shall grant license if following conditions are fulfilled
Such association may be set up for any of the following purposes
Commerce
Arts
Science
Religion
Health,
Education,
Research,
Environment Protection
Social Welfare
Charity
Any other useful object
It shall apply its profits (if any) in promoting its objects
It shall prohibit the payment of any dividend to its members and
Its objects and activities are not and shall not, at any time, be against the laws, public order,
security, sovereignty and national interests of Pakistan
ASSOCIATION NOT FOR PROFIT
ASSOCIATION NOT FOR PROFIT (Conti)
SECP shall grant license on such conditions and subject to such regulations as it thinks fit.
Association shall enjoy all privileges of a limited company and be subject to all its
obligations, except using the ending word(s) "Limited" or "(Guarantee) Limited"
License may be revoked at any time by SCEP
SECP shall give a notice in writing to Co, of its intention to do so
SECP shall provide an opportunity to be heard to the association.
On revocation, registrar shall again add the ending words and it shall cease to enjoy
exemptions and privileges granted by license.
ASSOCIATION NOT FOR PROFIT
Conditions for Revocation of the License
Company/management has failed to comply with any terms or conditions of licence;
Any of the requirements of this section or any connected regulations are not met;
Affairs of company are conducted in a manner prejudicial to public interest; or
Company has made a default in filing with registrar its financial statements or annual returns
for immediately preceding 2 consecutive financial years;
Company has acted against the interest, sovereignty and integrity of Pakistan, the security of
the State and friendly relations with foreign States;
Number of members is reduced, below 3;
The company is
Conceived or brought forth for unlawful or fraudulent activities;
Run and managed by persons who fail to maintain proper and true accounts or they commit fraud,
misfeasance or malfeasance in relation to the company;
Run and managed by persons involved in terrorist financing or money laundering;
Managed by persons who refuse to act according to MOA or AOA or provisions of this Act or failed to carry
out directions or decisions of SECP or the registrar; or
Not carrying on its business or is not in operation for 1 year; or
It is just and equitable that the licence should be revoked:
ASSOCIATION NOT FOR PROFIT
Effect of revocation of Licence
Company shall stop all its activities except the recovery of money owed to it, if any;
Company shall not solicit or receive donations from any source; and
All the net assets of the company shall, in a specified manner, be transferred to another company
licensed u/s 42, preferably having similar or identical objects, within 90 days of revocation or any
extended period (if allowed by the SECP)
A reasonable amount to meet expenses of voluntary winding up or making an application to the
registrar for striking off the name may be retained by the company.
After such transfer, the members and officers of the first company or any of their family members
shall not be eligible to hold any office in later company for next 5 years.
After compliance of above requirements, BOD shall file within 15 days, a report to registrar
containing such information and documents as may be specified.
Within 30 days of acceptance of the report by registrar BOD shall
Initiate necessary proceedings for voluntary winding up; or
Make an application to registrar for striking the name of company off the register
(if it has no assets and liabilities)
If requirements not complied with on a timely basis; SECP may appoint an administrator to manage
affairs of company and initiate proceedings for winding up.
