Updated: Wednesday October 18, 2017/AlArbia'a
Muharram 28, 1439/Budhavara
Asvina 26, 1939, at 07:51:33 PM
The Companies Act, 2017
ACT NO. XIX OF 2017
PART I Acts, Ordinances, President’s Orders and Regulations
NATIONAL
ASSEMBLY SECRETARIAT
ACT NO. XIX OF 2017
AN ACT to reform and re-enact the law relating to companies and for matters connected therewith
WHEREAS it is expedient to reform company law with the objective of facilitating corporatization and promoting development of corporate sector, encouraging use of technology and electronic means in conduct of business and regulation thereof, regulating corporate entities for protecting interests of shareholders, creditors, other stakeholders and general public, inculcating principles of good governance and safeguarding minority interests in corporate entities and providing an alternate mechanism for expeditious resolution of corporate disputes and matters arising out of or connected therewith; It is hereby enacted as follows:—
PART I PRELIMINARY
1. Short title, extent and commencement.—(1) This Act may be called the Companies Act, 2017.
(2) It extends
to the whole of
(3) This Act shall come into force at once, except section 456 which shall come into force on such date as the Federal Government or an authority or person authorized by it may, by notification in the official Gazette, appoint.
2. Definitions.—(1) In this Act, unless there is anything repugnant in the subject or context,—
(1) “advocate” shall have the same meaning as assigned to it in section 2 of the Legal Practitioners and Bar Councils Act, 1973 (XXXV of 1973);
(2) “alter” or “alteration” includes making of additions or omissions without substituting or destroying main scheme of the document;
(3) “articles” mean the articles of association of a company framed in accordance with the company law or this Act;
(4) “associated companies” and “associated undertakings” mean any two or more companies or undertakings, or a company and an undertaking, interconnected with each other in the following manner, namely:—
(a) if a person who is owner or a partner or director of a company or undertaking, or who, directly or indirectly, holds or controls shares carrying not less than twenty percent of the voting power in such company or undertaking, is also the owner or partner or director of another company or undertaking, or directly or indirectly, holds or controls shares carrying not less than twenty percent of the voting power in that company or undertaking; or
(b) if the companies or undertakings are under common management or control or one is the subsidiary of another; or
(c) if the undertaking is a modaraba managed by the company; and a person who is the owner of or a partner or director in a company or undertaking or, who so holds or controls shares carrying not less than ten percent of the voting power in a company or undertaking, shall be deemed to be an “associated person” of every such other person and of the person who is the owner of or a partner or director in such other company or undertaking, or who so holds or controls such shares in such company or undertaking:
Provided that—
(i) shares shall be deemed to be owned, held or controlled by a person if they are owned, held or controlled by that person or by the spouse or minor children of the person;
(ii) directorship of a person or persons by virtue of nomination by concerned Minister-in-Charge of the Federal Government or as the case may be, a Provincial Government or a financial institution directly or indirectly owned or controlled by such Government or National Investment Trust; or
(iii) directorship of a person appointed as an “independent director”; or
(iv) shares owned by the National Investment Trust or a financial institution directly or indirectly owned or controlled by the Federal Government or a Provincial Government; or shares registered in the name of a central depository, where such shares are not beneficially owned by the central depository; shall not be taken into account for determining the status of a company, undertaking or person as an associated company, associated undertaking or associated person;
(5) “authorised capital” or “nominal capital” means such capital as is authorised by the memorandum of a company to be the maximum amount of share capital of the company;
(6) “banking company” means a banking company as defined in clause (c) of section 5 of the Banking Companies Ordinance, 1962 (LVII of 1962);
(7) “beneficial ownership of shareholders or officer of a company” means ownership of securities beneficially owned, held or controlled by any officer or substantial shareholder directly or indirectly, either by—
(a) him or her;
(b) the wife or husband of an officer of a company, not being herself or himself an officer of the company;
(c) the minor son or daughter of an officer where “son” includes step-son and “daughter” includes step-daughter; and “minor” means a person under the age of eighteen years;
(d) in case of a company, where such officer or substantial shareholder is a shareholder, but to the extent of his proportionate shareholding in the company:---
Provided that “control” in relation to securities means the power to exercise a controlling influence over the voting power attached thereto: Provided further that in case the substantial shareholder is a non-natural person, only those securities will be treated beneficially owned by it, which are held in its name.
Explanation.—For the purpose of this Act “substantial shareholder”, in relation to a company, means a person who has an interest in shares of a company-
(a) the nominal value of which is equal to or more than ten per cent of the issued share capital of the company; or
(b) which enables the person to exercise or control the exercise of ten per cent or more of the voting power at a general meeting of the company;
(8) “board”, in relation to a company, means board of directors of the company;
(9) “body corporate” or “corporation” includes—
(a) a
company incorporated under this Act or company law; or
(b) a
company incorporated outside
(i) a
co-operative society registered under any law relating to cooperative
societies; or
(ii) any
other entity, not being a company as defined in this Act or any other law for
the time being which the concerned Minister-in-Charge of the Federal Government
may, by notification, specify in this behalf;
(10) “book
and paper” and “book or paper” includes books of account, cost accounting records, deeds,
vouchers, writings, documents, minutes and registers maintained on paper or in
electronic form;
(11) “books
of account” include
records maintained in respect of—
(a) all
sums of money received and expended by a company and matters in relation to
which the receipts and expenditure take place;
(b) all
sales and purchases of goods and services by the company;
(c) all
assets and liabilities of the company; and
(d)
items of cost in respect of production, processing, manufacturing or mining
activities;
(12) “central
depository” shall
have the same meaning as assigned to it under the Securities Act, 2015 (III of
2015);
(13) “chartered
accountant” shall
have the same meaning as assigned to it under the Chartered Accountants
Ordinance, 1961 (X of 1961);
(14) “chief
executive”, in
relation to a company means an individual who, subject to control and
directions of the board, is entrusted with whole, or substantially whole, of
the powers of management of affairs of the company and includes a director or
any other person occupying the position of a chief executive, by whatever name
called, and whether under a contract of service or otherwise;
(15) “chief
financial officer” means
an individual appointed to perform such functions and duties as are customarily
performed by a chief financial officer;
(16) “Commission” shall have the same
meaning as assigned to it under the Securities and Exchange Commission of
Pakistan Act, 1997 (XLII of 1997);
(17) “company” means a company formed and
registered under this Act or the company law;
(18) “company
law” means
the repealed Companies Act, 1913 (VII of 1913), Companies Ordinance, 1984(XLVII
of 1984), Companies Ordinance, 2016 (VI of 2016) and also includes this Act
unless the context provides otherwise;
(19) “company
limited by guarantee” means a
company having the liability of its members limited by the memorandum to such
amount as the members may respectively thereby undertake to contribute to the
assets of the company in the event of its being wound up;
(20) “company
limited by shares” means a
company; having the liability of its members limited by the memorandum to the
extent of amount, if any, remaining unpaid on the shares respectively held by
them;
(21) “company
secretary” means
any individual appointed to perform secretarial and other duties customarily
performed by a company secretary and declared as such, having such
qualifications and experience, as may be specified;
(22) “cost
and management accountant” shall
have the same meaning as assigned to it under the Cost and Management
Accountants Act, 1966 (XIV of 1966);
(23) “Court” means a Company Bench of a
High Court having jurisdiction under this Act;
(24) “debenture” includes debenture stock,
bonds, term finance certificate or any other instrument of a company evidencing
a debt, whether constituting a mortgage or charge on the assets of the company
or not;
(25)
“director”
includes any person occupying the position of a director, by whatever name
called;
(26) “document” includes any information
or data recorded in any legible form or through use of modern electronic
devices or techniques whatsoever, including books and papers, returns,
requisitions, notices, certificates, deeds, forms, registers, prospectus,
communications, financial statements or statement of accounts or records
maintained by financial institutions in respect of its customers;
(27) “e-service” means any service or means
provided by the Commission for the lodging or filing of electronic documents;
(28) “electronic
document”
includes documents in any electronic form and scanned images of physical
documents;
(29) “employees’
stock option” means
the option given to the directors, officers or employees of a company or of its
holding company or subsidiary company or companies, if any, which gives such
directors, officers or employees, the right to purchase or to subscribe for
shares of the company at a price to be determined in the manner as may be specified;
(30) “expert” includes an engineer, a
valuer, an actuary, a chartered accountant or a cost and management accountant
and any other person who has the power or authority to issue a certificate in
pursuance of any law for the time being in force or any other person notified
as such by the Commission;
(31)
“financial institution”
includes—
(a) any
company whether incorporated within or outside Pakistan which transacts the
business of banking or any associated or ancillary business in Pakistan through
its branches within or outside Pakistan and includes a government savings bank,
but excludes the State Bank of Pakistan;
(b) a
modaraba or modaraba management company, leasing company, investment bank,
venture capital company, financing company, asset management company and credit
or investment institution, corporation or company; and
(c) any
company authorised by law to carry on any similar business, as the concerned
Minister-in-Charge of the Federal Government may by notification in the
official Gazette, specify;
(32) “financial
period” in
relation to a company or any other body corporate, means the period (other than
financial year) in respect of which any financial statements thereof are
required to be made pursuant to this Act;
(33) “financial
statements” in
relation to a company, includes—
(a) a
statement of financial position as at the end of the period;
(b) a
statement of profit or loss and other comprehensive income or in the case of a
company carrying on any activity not for profit, an income and expenditure
statement for the period;
(c) a
statement of changes in equity for the period;
(d) a
statement of cash flows for the period;
(e)
notes, comprising a summary of significant accounting policies and other
explanatory information;
(f)
comparative information in respect of the preceding period; and
(g) any
other statement as may be prescribed;
(34) “financial
year” in
relation to a company or any other body corporate, means the period in respect
of which any financial statement of the company or the body corporate, as the
case may be, laid before it in general meeting, is made up, whether that period
is a year or not;
(35) “foreign
company” means
any company or body corporate incorporated outside Pakistan, which—
(a) has
a place of business or liaison office in Pakistan whether by itself or through
an agent, physically or through electronic mode; or
(b)
conducts any business activity in Pakistan in any other manner as may be
specified;
(36) “Government” includes Federal
Government or, as the case may be, Provincial governments unless otherwise
expressly provided in this Act;
(37) “holding
company”, means
a company which is another company‘s holding company if, but only if, that
other company is its subsidiary;
(38) “listed
company” means a
public company, body corporate or any other entity whose securities are listed
on securities exchange;
(39) “listed
securities” means
securities listed on the securities exchange;
(40) “memorandum” means the memorandum of
association of a company as originally framed or as altered from time to time
in pursuance of company law or of this Act;
(41) “modaraba”
and “modaraba company” shall
have the same meaning as assigned to it in the Modaraba Companies and Modaraba
(Floatation and Control) Ordinance, 1980 (XXXI of 1980);
(42) “mortgage
or charge” means
an interest or lien created on the property or assets of a company or any of
its undertakings or both as security;
(43) “net
worth” means
the amount by which total assets exceed total liabilities;
(44) “notification” means a notification
published in the official Gazette and the expression “notify” shall be construed
accordingly;
(45) “officer” includes any director,
chief executive, chief financial officer, company secretary or other authorised
officer of a company;
(46) “ordinary
resolution” means a
resolution passed by a simple majority of such members of the company entitled
to vote as are present in person or by proxy or exercise the option to vote
through postal ballot, as provided in the articles or as may be specified, at a
general meeting;
(47) “postal
ballot” means voting by post or through any electronic mode: Provided that
voting through postal ballot shall be subject to the provision in the articles
of association of a company, save as otherwise provided in this Act;
(48) “prescribed” means prescribed by rules
made by the Federal Government under this Act;
(49) “private
company” means a
company which, by its articles-
(a)
restricts the right to transfer its shares;
(b)
limits the number of its members to fifty not including persons who are in the
employment of the company; and
(c)
prohibits any invitation to the public to subscribe for the shares, if any, or
debentures or redeemable capital of the company:
Provided
that, where two or more persons hold one or more shares in a company jointly,
they shall, for the purposes of this definition, be treated as a single member;
(50) “promoter” means a person—
(a) who
is named as a subscriber to the memorandum of association of a company; or
(b) who
has been named as such in a prospectus; or
(c) who
has control over affairs of the company, directly or indirectly whether as a
shareholder, director or otherwise; or
(d) in
accordance with whose advice, directions or instructions the board of the
company is accustomed to act:
Provided
that—
(i)
nothing in sub-clause (d) shall apply to a
person who is acting merely in a professional capacity; and
(ii)
nothing contained in sub-clause (d) shall
apply to the Commission, registrar or any authorised officer by virtue of
enforcement or regulation of the provisions of this Act or any rules,
regulations, instructions, directions, orders thereof;
(51) “prospectus” shall have the same
meaning as assigned to it under the Securities Act, 2015 (III of 2015);
(52) “public
company” means a
company which is not a private company;
(53)
“public interest company” means a
company which falls under the criteria as laid down in the Third Schedule to
this Act or deemed to be such company under section 216;
(54) “public
sector company” means a
company, whether public or private, which is directly or indirectly controlled,
beneficially owned or not less than fifty-one percent 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 under section 42:
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;
(55) “redeemable
capital”
includes sukuk and other forms of finances obtained on the basis of
participation term certificate (PTC), musharika certificate, term finance
certificate (TFC) or any other security or obligation not based on interest,
representing an instrument or a certificate of specified denomination, called
the face value or nominal value, evidencing investment of the holder in the
capital of the company other than share capital, on terms and conditions of the
agreement for the issue of such instrument or certificate or such other
certificate or instrument as the concerned Minister-in-Charge of the Federal
Government may, by notification in the official Gazette, specify for the
purpose; “sukuk”
represents redeemable investment in-Explanation.
certificates of equal nominal value representing undivided shares in ownership
of tangible assets of a particular project or specific investment activity,
usufruct and services;
(56) “register
of companies” means
the register of companies maintained by the registrar on paper or in any
electronic form under this Act;
(57) “registrar” means 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 the Commission, performing duties and functions under this Act;
(58) “regulations” means the regulations made
by the Commission under this Act;
(59) “rules” means rules made by the
Federal Government under this Act;
(60) “scheduled
bank” shall
have the same meaning as assigned to it under the State Bank of Pakistan Act,
1956 (XXXIII of 1956);
(61) “securities” include the securities as
provided in sub-clauses (a) to (i) of clause (lii) of section 2 of the
Securities Act, 2015 (III of 2015) whether listed or not;
(62) “securities
exchange” means a
public company licenced by the Commission as a securities exchange under the
Securities Act, 2015 (III of 2015);
(63) “share” means a share in the share
capital of a company;
(64) “Shariah
compliant company” means a company which is conducting its business according
to the principles of Shariah;
(65) “single
member company” means a
company which has only one member;
(66) “special
resolution” means a
resolution which has been passed by a majority of not less than three-fourths
of such members of the company entitled to vote as are present in person or by
proxy or vote through postal ballot at a general meeting of which not less than
twenty-one days‘ notice specifying the intention to propose the resolution as a
special resolution has been duly given: Provided that if all the members
entitled to attend and vote at any such meeting so agree, a resolution may be
proposed and passed as a special resolution at a meeting of which less than
twenty-one days notice has been given;
(67) “specified” means specified through
regulations made under this Act;
(68) “subsidiary
company” or
“subsidiary”, in relation to any other company (that is to say the holding
company), means a company in which the holding company,---
(a)
controls the composition of the board; or
(b)
exercises or controls more than one-half of its voting securities either by
itself or together with one or more of its subsidiary companies: Provided that
such class or classes of holding companies shall not have layers of
subsidiaries beyond such numbers, as may be notified, -For the purposes of this clause.
Explanation.
(i) a company shall be deemed to be a subsidiary company of the holding company
even if the control referred to in sub-clause (a) or sub-clause (b) is of
another subsidiary company of the holding company;
(ii) the
composition of a company‘s board shall be deemed to be controlled by another
company if that other company by exercise of power exercisable by it at its
discretion can appoint or remove all or a majority of the directors;
(iii)
the expression “company”
includes any body corporate; (iv) “layer” in relation to a holding company means its subsidiary or
subsidiaries;
(69) “Table” means Table in a Schedule
to this Act;
(70) “turnover” means the aggregate value
of sale, supply or distribution of goods or on account of services rendered, or
both, net of discounts, if any, held by the company during a financial year;
(71) “unlimited
company” means a
company not having any limit on the liability of its members;
(72) “valuer” means a valuer registered
with the Commission;
(73) “voting
right” means
the right of a member of a company to vote on any matter in a meeting of the
company either present in person or through video-link or by proxy or by means
of postal ballot: Provided that attending of meeting through video-link shall
be subject to such facility arranged by the company and in the manner as may be
specified, save as otherwise provided in this Act; and
(74) “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.
(2) The
words and expressions used and not defined in this Act but defined in the
Securities Act, 2015 (III of 2015) or the Securities and Exchange Commission of
Pakistan Act, 1997(XLII of 1997) or the Central Depositories Act, 1997 (XIX of
1997) shall have the meanings respectively assigned to them in those Acts.
3.
Application of Act to non-trading companies with purely provincial objects.—(1)
The powers conferred by this Act on the concerned Minister-in-Charge of the
Federal Government or the Commission, in relation to companies which are not
trading corporations and the objects of which are confined to a single
Province, may be exercised by the Minister-in-Charge of the Provincial
Government:
Provided
that where the licence is issued by the Provincial Government or, as the case
may be, its concerned Minister-in-Charge, in exercise of the powers conferred
by this section, the company shall mention this fact in all its documents.
(2) A
non-trading corporation formed under sub-section (1) extending its operational
activities beyond the territorial limits of its respective province shall be
liable to a penalty of level 3 on the standard scale and be wound up on the
application by the Commission.
4. Act
to override.—Save as otherwise expressly provided herein—
(a) the
provisions of this Act shall have effect notwithstanding anything contained in
any other law or the memorandum or articles of a company or in any contract or
agreement executed by it or in any resolution passed by the company in general
meeting or by its directors, whether the same be registered, executed or
passed, as the case may be, before or after the coming into force of the said
provisions; and
(b) any
provision contained in the memorandum, articles, contract, agreement,
arrangement or resolution aforesaid shall, to the extent to which it is
repugnant to the aforesaid provisions of this Act, become, or be, void, as the
case may be.
PART II
JURISDICTION
OF COURT
5.
Jurisdiction of the Court and creation of Benches.—(1) The Court having
jurisdiction under this Act shall be the High Court having jurisdiction in the
place at which the registered office of the company is situate.
(2)
Notwithstanding anything contained in any other law no civil court as provided
in the Code of Civil Procedure, 1908 (Act V of 1908) or any other court shall
have jurisdiction to entertain any suit or proceeding in respect of any matter
which the Court is empowered to determine by or under this Act.
(3) For
the purposes of jurisdiction to wind up companies, the expression “registered
office” means
the place which has longest been the registered office of the company during
the one hundred and eighty days immediately preceding the presentation of the
petition for winding up.
(4)
There shall be, in each High Court, one or more benches on permanent basis,
each to be known as the Company Bench, to be constituted by the Chief Justice
of the High Court to exercise the jurisdiction vested in the High Court under
this Act:
Provided
that Benches constituted under the Companies Ordinance, 1984 (XLVII of 1984),
shall continue to function accordingly unless otherwise notified by the
respective Chief Justice of the High Court:
Provided
further that provisions of section 6 shall be effective from the date of
notification by the Chief Justice of the respective High Court within one
hundred and eighty days from the date of the commencement of this Act.
(5)
There shall be a Registrar to be known as “Registrar of the Company Bench” duly notified by the Chief
Justice of the respective High Court who shall be assisted by such other
officers as may be assigned by the Chief Justice of the respective High Court.
(6) The
Registrar of the Company Bench shall perform all the functions assigned to it
under this Act including all ministerial and administrative business of the
Company Bench such as the receipt of petitions, applications, written replies,
issuance of notices, service of summons and such other functions or duties as
may be prescribed under section 423.
(7) The
Chief Justice of the respective High Court, if deemed appropriate, may also
establish a secretariat in each Company Bench of the respective High Court in
such form and manner to provide secretarial support and to perform such
functions as may be prescribed under section 423. 6. Procedure of the Court and
appeal.—
1)
Notwithstanding anything contained in any other law for the time being in force
all written submissions to the Court under this Act shall be filed with the
Registrar of the Company Bench.
(2) For
the purposes of this Act, written submissions shall, inter alia, include-
(a) a
petition or application setting out a concise statement of facts, grounds and
the relief claimed;
(b) a
written reply with particulars of set off, if any;
(c) an
affidavit of facts by the petitioner or applicant, or respondent, as the case
may be, including affidavits, if required, of other persons in support of the
case, duly attested by the oath commissioner, or as may be provided under the rules;
d) any
other relevant documents in possession of the petitioner or applicant or
respondent, as the case may be;
(e) any
application for discovery of documents or interim injunction, if required;
(f) a
list of any case law along with a summary of the same on which the petitioner
or applicant is placing reliance;
(g)
address for effecting service, mobile number, email and fax or any other mode
notified by the Court; and
(h) any
other document as may be required by the Registrar of the Company Bench.
(3)
Where any petition or application is filed under any provision of this Act,
summons may be issued by the Registrar of the Company Bench along with a copy
of the petition or application and the documents annexed therewith and the same
shall be served on the respondent through the bailiff or process-server of the
Court, through registered post, acknowledgement due, by courier and by
publication in one English language and one Urdu language daily newspaper and,
in addition, if so directed by the Court through electronic modes, and the
service duly effected through any one of the modes mentioned under this
sub-section shall be deemed to be valid service.
Explanation.
“electronic modes” means
service of summons on a party or other person by electronic transmission
through devices such as, facsimile, email, or in such other form or mode as may
be notified by the Court.
(4) The
respondent shall file a written reply and particulars of set-off, if any, as
set out in sub-section (2) of this section with the concerned Registrar of the
Company Bench within thirty days from the date of first service through any of
the modes as laid down in sub-section (3).
(5)
Where the respondent fails to file the written reply within the time prescribed
in sub-section (4), a report shall be submitted by the Registrar of the Company
Bench before the Court and the Court may pass necessary orders to proceed
exparte and announce the final order on the basis of the documents available on
record.
(6) The
Registrar of the Company Bench, on completion of receipt of all written
submissions and after ensuring that all copies of such written submissions are
duly supplied to the parties as per procedure laid down by the Court, shall
present the case file to the Court on a day fixed under notice to the parties,
within forty-five days of the first service of notices or such extended time as
may be granted by the Court.
(7) The
Court after consulting the counsel of the parties shall fix a date and allocate
time for hearing of the case.
(8) No
adjournment shall be granted once the Court has fixed a date of hearing under
sub-section (7) and it will be duty of the parties to ensure the presence of
their respective counsel or in absence of the counsel make alternate
arrangements:
Provided
that only in exceptional circumstances beyond control of a party, the Court may
grant another opportunity of hearing subject to the payment of an amount of
rupees ten thousand or such higher amount as may be determined by the Court as
costs to be paid to the Court.
(9) The
Court shall treat affidavits, counter affidavits and other documents filed by
the parties to the proceedings as evidence and decide the matter on the basis
of the documents and affidavits placed before the Court, in a summary manner
and pass final orders within the time stipulated in sub-section (11).
(10) In
exceptional circumstances where the Court is of the view that any issue of
facts requires cross examination, the Court may order attendance of the
relevant deponent or deponents for the purposes of cross examination by such
opposing party or parties as the Court deems fit and for the purposes of this
section the affidavit filed by such deponent shall be considered as his
examination-in-chief:
Provided
that— (i) the Court may refer the matter to the Registrar of the Company Bench
or any other person for recording of cross examination of the deponent who
shall complete recording of cross examination within thirty days from the date
of the order of the Court, or such extended time as may be allowed by the Court
which shall not be more than fifteen days on payment of rupees ten thousand or
such higher amount as may be determined by the Court as costs payable to the
Court and to submit a report accordingly;
(ii) all
questions and answers along with any objections raised by any party shall be
duly recorded in writing; and
(iii)
the Registrar of the Company Bench shall have all the powers of the Civil Court
under the Code of Civil Procedure, 1908 (V of 1908) for the purposes of
execution of service and summoning of deponents and conducting cross
examination in accordance with the directions of the Court.
(11) The
petition presented before the Court shall be decided within a period of one
hundred and twenty days from the date of presentation of the case and for this purpose
the Court may, if it is in the interest of justice, conduct the proceedings on
a day to day basis and if the Court deems fit it may impose costs which may
extend to one hundred thousand rupees per day or such higher amount as the
Court may determine against any party to the proceeding causing the delay.
(12) The
Court may, at any time, take notice of serious misstatements and material
non-disclosure of facts by any party to the proceedings and dismiss the
petition or application or close the right of defence of the respondent with
costs of the proceedings and impose a fine which may extend to one hundred
thousand rupees whichever is higher and pass a final order.
(13)
Notwithstanding anything contained in this section, the Registrar of the
Company Bench shall place any application for interim relief including any
interlocutory order before the Court for adjudication immediately upon its
filing.
(14) Any
person aggrieved by any judgment or final order of the Court passed in its
original jurisdiction under this Act may, within sixty days, file a petition
for leave to appeal in the Supreme Court of Pakistan:
Provided
that no appeal or petition shall lie against any interlocutory order of the
Court.
(15)
Save as otherwise expressly provided under this Act, the provisions of the
Qanun-e-Shahadat (Order)1984 (P.O. No. X of 1984) and the Code of Civil
Procedure, 1908 (Act V of 1908) shall not apply to the proceedings under this
section except to such extent as the Court may determine in its discretion.
PART III
POWERS
AND FUNCTIONS OF THE SECURITIES AND EXCHANGE COMMISSION OF PAKISTAN
7. Powers
and functions of the Commission.—(1) The Commission shall exercise such powers
and perform such functions as are conferred on it by or under this Act.
(2) The
powers and functions of the Commission under this Act shall be in addition to
and not in derogation to the powers and functions of the Commission under the
Securities and Exchange Commission of Pakistan Act, 1997 (XLII of 1997).
8.
Reference by the Federal Government or Commission to the Court.—(1) Without
prejudice to the powers, jurisdiction and authority exercisable by the
concerned Minister-in-Charge of the Federal Government or any functionary
thereof or the Commission under this Act, the concerned Minister-in-Charge of
the Federal Government or the Commission, as the case may be, may make a
reference to the Court, on any question or matter which is considered to be of
special significance requiring orders, determination or action concerning
affairs of a company or class of companies or any action of any officer
thereof. Explanation.—In this sub-section “officer” includes an auditor,
liquidator or agent of the company.
(2)
Where a reference is made to the Court under sub-section (1), the Court may
make such order as it may deem just and equitable under the circumstances.
PART IV
INCORPORATION
OF COMPANIES AND MATTERS INCIDENTAL THERETO
9.
Obligation to register certain associations, partnerships as companies.—(1) No
association, partnership or entity consisting of more than twenty persons shall
be formed for the purpose of carrying on any business that has for its object
the acquisition of gain by the association, partnership or entity, or by the
individual members thereof, unless it is registered as a company under this Act
and any violation of this section shall be an offence punishable under this
section.
(2) A
person guilty of an offence under this section shall be liable to a penalty not
exceeding of level 1 on the standard scale and also be personally liable for
all the liabilities incurred in such business.
(3)
Nothing in this section shall apply to— (a) any society, body or association,
other than a partnership, formed or incorporated under any law for the time
being in force in Pakistan; or
(b) a
joint family carrying on joint family business; or
(c) 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
(d) a
partnership formed to carry on practice as lawyers, accountants or any other
profession where practice as a limited liability company is not permitted under
the relevant laws or regulations for such practice.
PROVISIONS
WITH RESPECT TO NAMES OF COMPANIES
10.
Prohibition of certain names.—(1) No company shall be registered by a name
which contains such word or expression, as may be notified by the Commission or
in the opinion of the registrar is—
(a)
identical with or resemble or similar to the name of a company; or
(b)
inappropriate; or
(c)
undesirable; or
(d) deceptive;
or
(e)
designed to exploit or offend religious susceptibilities of the people; or
(f) any
other ground as may be specified.
(2)
Except with prior approval in writing of the Commission, no company shall be
registered by a name which contains any word suggesting or calculated to
suggest—
(a) the
patronage of any past or present Pakistani or foreign head of state;
(b) any
connection with the Federal Government or a Provincial Government or any
department or authority or statutory body of any such Government;
(c) any
connection with any corporation set up by or under any Federal or Provincial
law;
(d) the
patronage of, or any connection with, any foreign Government or any
international organisation;
(e)
establishing a modaraba management company or to float a modaraba; or
(f) any
other business requiring licence from the Commission.
(3)
Whenever a question arises as to whether or not the name of a company is in
violation of the foregoing provisions of this section, decision of the
Commission shall be final.
(4) A
person may make an application, in such form and manner and accompanied by such
fee as may be specified, to the registrar for reservation of a name set out in
the application for a period not exceeding sixty days.
(5)
Where it is found that a name was reserved under sub-section (4), by furnishing
false or incorrect information, such reservation shall be cancelled and in case
the company has been incorporated, it shall be directed to change its name. The
person making application under sub-section (4) shall be liable to a penalty
not exceeding level 1 on the standard scale.
(6) If
the name applied for under sub-section (4) is refused by the registrar, the
aggrieved person may within thirty days of the order of refusal prefer an
appeal to the Commission.
(7) An
order of the Commission under sub-section (6) shall be final and shall not be
called in question before any court or other authority.
11.
Rectification of name of a company.—(1) A company which, through inadvertence
or otherwise, is registered by a name in contravention of the provisions of
section 10 or the name was obtained by furnishing false or incorrect
information—
(a) may,
with approval of the registrar, change its name; and
(b)
shall, if the registrar so directs, within thirty days of receipt of such
direction, change its name with approval of the registrar: Provided that the
registrar shall, before issuing a direction for change of the name, afford the
company an opportunity to make representation against the proposed direction.
(2) If
the company fails to report compliance with the direction issued under
sub-section (1) within the specified period, the registrar may enter on the
register a new name for the company selected by him, being a name under which
the company may be registered under this Act and issue a certificate of
incorporation on change of name for the purpose of section 13.
(3) If a
company makes default in complying with the direction issued by the registrar
under sub-section (1) or continue using previous name after the name has been
changed by the registrar under sub-section (2), shall be liable to a penalty of
level 1 on the standard scale.
12.
Change of name by a company.—A company may, by special resolution and with
approval of the registrar signified in writing, change its name: Provided that
no approval under this section shall be required where the change in the name
of a company is only the addition thereto, or the omission therefrom, of the
expression “(Private)” or “(SMC-Private)” or “(Guarantee) Limited” or “Limited” or “Unlimited”, as the case may be,
consequent upon the conversion of the status of a company in accordance with
the provisions of sections 46 to 49.
13.
Registration of change of name and effect thereof.—(1) Where a company changes
its name the registrar shall enter the new name on the register in place of the
former name, and shall issue a certificate of incorporation altered to meet the
circumstances of the case and, on the issue of such a certificate, the change
of name shall be complete.
(2) Where
a company changes its name it shall, for a period of ninety days from the date
of issue of a certificate by the registrar under sub-section (1), continue to
mention its former name along with its new name on the outside of every office
or place in which its business is carried on and in every document or notice
referred to in section 22.
(3) The
change of name shall not affect any rights or obligations of the company, or
render defective any legal proceedings by or against the company and any legal
proceedings that might have been continued or commenced against the company by
its former name may be continued by or commenced against the company by its new
name.
14. Mode
of forming a company.—(1) Any— (a) three or more persons associated for any
lawful purpose may, by subscribing their names to a memorandum of association
and complying with the requirements of this Act in respect of registration,
form a public company; or
(b) two
or more persons so associated may in the like manner form a private company; or
(c) one
person may form a single member company by complying with the requirements in
respect of registration of a private company and such other requirement as may
be specified. The subscriber to the memorandum shall nominate a person who in
the event of death of the sole member shall be responsible to—
(i)
transfer the shares to the legal heirs of the deceased subject to succession to
be determined under the Islamic law of inheritance and in case of a non-Muslim
members, as per their respective law; and
(ii)
manage the affairs of the company as a trustee, till such time the title of
shares are transferred: Provided that where transfer by virtue of this
sub-section is made to more than one legal heir, the company shall cease to be
a single member company and comply with the provisions of section 47.
(2) A
company formed under this section may be a company with or without limited
liability, that is to say—
(a) a
company limited by shares; or
(b) a
company limited by guarantee; or (c) an unlimited company.
15.
Liability for carrying on business with less than three or, in the case of a
private company, two members.—
If at
any time the number of members of a company is reduced, in the case of a
private company other than a single member company, below two or in the case of
any other company, below three and the company carries on business for more
than one hundred and eighty days while the number is so reduced, every person
who is a member of the company during the time that it so carries on business
after those one hundred and eighty days and is cognizant of the fact that it is
carrying on business with fewer than two members or three members, as the case
may be, shall be severally liable for payment of whole debts of the company
contracted during that time and may be sued therefor without joinder in the
suit of any other member.
PART I
GENERAL
PROVISIONS WITH RESPECT TO REGISTRATION OF MEMORANDUM AND ARTICLES
16.
Registration of memorandum and articles.—(1) There shall be filed with the
registrar an application on the specified form containing the following
information and documents for incorporation of a company, namely:—
(a) a
declaration on the specified form, by an authorized intermediary or by a person
named in the articles as a director, of compliance with all or any of the
requirements of this Act and the rules and regulations made thereunder in
respect of registration and matters precedent or incidental thereto;
(b)
memorandum of association of the proposed company signed by all subscribers,
duly witnessed and dated;
(c)
there may, in the case of a company limited by shares and there shall, in the
case of a company limited by guarantee or an unlimited company, be the articles
of association signed by the subscribers duly witnessed and dated; and
(d) an
address for correspondence till its registered office is established and
notified.
(2)
Where the registrar is of the opinion that any document or information filed
with him in connection with the incorporation of the company contains any
matter contrary to law or does not otherwise comply with the requirements of
law or is not complete owing to any defect, error or omission or is not
properly authenticated, the registrar may either require the company to file a
revised document or remove the defects or deficiencies within the specified
period.
(3)
Where the applicant fails under sub-section (2) to remove the deficiencies
conveyed within the specified period, the registrar may refuse registration of
the company.
(4) If
the registrar is satisfied that all the requirements of this Act and the rules
or regulations made thereunder have been complied with, he shall register the
memorandum and other documents delivered to him.
(5) On
registration of the memorandum of a company, the registrar shall issue a
certificate that the company is incorporated.
(6) The
certificate of incorporation shall state— (a) the name and registration number
of the company;
(b) the
date of its incorporation;
(c)
whether it is a private or a public company;
(d)
whether it is a limited or unlimited company; and
(e) if
it is limited, whether it is limited by shares or limited by guarantee.
(7) The
certificate under sub-section (5) shall be signed by the registrar or
authenticated by the registrar‘s official seal.
(8) The
certificate under sub-section (5) shall be conclusive evidence that the
requirements of this Act as to registration have been complied with and that
the company is duly registered under this Act.
(9) If
registration of the memorandum is refused, the subscribers of the memorandum or
any one of them authorised by them in writing may, within thirty days of the
order of refusal, prefer an appeal to the Commission.
(10) An
order of the Commission under sub-section (9) shall be final and shall not be
called in question before any court or other authority.
17.
Effect of memorandum and articles.—(1) The memorandum and articles shall, when
registered, bind the company and the members thereof to the same extent as if
they respectively had been signed by each member and contained a covenant on the
part of each member, his heirs and legal representatives, to observe and be
bound by all the provisions of the memorandum and of the articles, subject to
the provisions of this Act.
(2) All
moneys payable by a subscriber in pursuance of his undertaking in the
memorandum of association against the shares subscribed shall be a debt due
from him and be payable in cash within thirty days from the date of
incorporation of the company:
Provided
that in case the share money is not deposited within the prescribed time, the
shares shall be deemed to be cancelled and the name of that subscriber shall be
removed from the register and the registrar shall give such direction to the
company in each case as deemed appropriate for compliance with the provisions
of the company law.
(3) The
receipt of subscription money from the subscribers shall be reported by the
company to the registrar on a specified form within forty-five days from the
date of incorporation of the company, accompanied by a certificate by a
practicing chartered accountant or a cost and management accountant verifying
receipt of the money so subscribed.
(4) Any
violation of this section shall be an offence liable to a penalty of level 1 on
the standard scale.
18.
Effect of registration.—The registration of the company has the following
effects, as from the date of incorporation— (a) the subscribers to the
memorandum, together with such other persons as may from time to time become
members of the company, are a body corporate by the name stated in the certificate
of incorporation;
(b) the
body corporate is capable of exercising all the functions of an incorporated
company, having perpetual succession and a common seal;
(c) the
status and registered office of the company are as stated in, or in connection
with, the application for registration;
(d) in
case of a company having share capital, the subscribers to the memorandum
become holders of the initial shares; and
(e) the
persons named in the articles of association as proposed directors, are deemed
to have been appointed to that office.
COMMENCEMENT
OF BUSINESS BY A PUBLIC COMPANY
19.
Commencement of business by a public company.—(1) A public company shall not
start its operations or exercise any borrowing powers unless—
(a)
shares held subject to payment of the whole amount thereof in cash have been
allotted to an amount not less in the whole than the minimum subscription and
the money has been received by the company;
(b)
every director of the company has paid to the company full amount on each of
the shares taken or contracted to be taken by him and for which he is liable to
pay in cash;
(c) no
money is or may become liable to be repaid to applicants for any shares which
have been offered for public subscription;
(d)
there has been filed with the registrar a duly verified declaration by the
chief executive or one of the directors and the secretary in the specified form
that the aforesaid conditions have been complied with; and
(e) in
the case of a company which has not issued a prospectus inviting the public to
subscribe for its shares, there has been filed with the registrar a statement
in lieu of prospectus as per the Second Schedule annexed to this Act.
Explanation.—”minimum
subscription” means
the amount, if any, fixed by the memorandum or articles of association as
minimum subscription upon which the directors may proceed to allotment or if no
amount is so fixed and specified, the whole amount of the share capital other
than that issued or agreed to be issued as paid up otherwise than in cash.
(2) The
registrar shall, on filing of a duly verified declaration in accordance with
the provisions of sub-section (l) and after making such enquiries as he may
deem fit to satisfy himself that all the requirements of this Act have been
complied with in respect of the commencement of business and matters precedent
and incidental thereto, accept and register all the relevant documents.
(3) The
acceptance and registration of documents under sub-section (2) shall be a
conclusive evidence that the company is entitled to start its operations and
exercise any borrowing powers.
(4)
Nothing in this section shall apply— (a) to a company converted from private to
a public;
(b) to a
company limited by guarantee and not having a share capital. 20. Consequences
of non-compliance of section 19.—
(1) If
any company starts its business operations or exercises borrowing powers in
contravention of section 19, every officer or other person who is responsible
for contravention shall without prejudice to other liabilities be liable to a
penalty not exceeding level 2 on the standard scale.
(2) Any
contract made by a company before the date at which it is entitled to commence
business shall be provisional only and shall not be binding on the company
until that date and on that date it shall become binding.
REGISTERED
OFFICE AND PUBLICATION OF NAME
21.
Registered office of company.—(1) A company shall have a registered office to
which all communications and notices shall be addressed and within a period of
thirty days of its incorporation, notify to the registrar in the specified
manner.
(2)
Notice of any change in situation of the registered office shall be given to
the registrar in a specified form within a period of fifteen days after the
date of change:
Provided
that the change of registered office of a company from— (a) one city in a
Province to another; or
(b) a
city to another in any part of Pakistan not forming part of a Province; shall
require approval of general meeting through special resolution.
(3) If a
company fails to comply with the requirements of sub-section (1) or (2), the
company and its every officer who is responsible for such noncompliance shall
be liable to a penalty not exceeding of level 1 on the standard scale.
22.
Publication of name by a company.—Every company shall— (a) display in a
conspicuous position, in letters easily legible in English or Urdu characters
its name and incorporation number outside the registered office and every
office or the place in which its business is carried on;
(b)
display a certified copy of certificate of incorporation at every place of
business of the company;
(c) get
its name, address of its registered office, telephone number, fax number,
e-mail and website addresses, if any, printed on letter-head and all its
documents, notices and other official publications; and
(d) have
its name mentioned in legible English or Urdu characters, in all bills of
exchange, promissory notes, endorsements, cheques and orders for money or goods
purporting to be signed by or on behalf of the company and in all bills of
parcels, invoices, receipts and letters of credit of the company.
23.
Company to have common seal.—(1) Every company shall have a common seal.
(2) A
company‘s common seal must be a seal having the company‘s name engraved on it
in legible form.
(3) If
any of the provision of this section is contravened or an officer of a company
or a person on behalf of a company uses or authorises the use of another seal
that purports to be the company‘s common seal, shall be liable to a penalty not
exceeding of level 1 on the standard scale.
24.
Penalties for non-publication of name.—(l) If a company does not display its
name in the manner provided for by this Act, it shall be liable to a penalty
not exceeding level 1 on the standard scale and every officer of the company
who authorises or permits the default shall be liable to the like penalty.
(2) If
any officer of a limited company issues or authorises the issue of any
bill-head, letter paper, document, notice or other official publication of the
company, or signs or authorises to be signed on behalf of the company any bill
of exchange, promissory note, endorsement, cheque or order for money or goods,
or issues or authorises to be issued any bill of parcels, invoice, receipt or
letter of credit of the company, wherein its name is not mentioned in the
manner aforesaid, he shall be liable to a penalty not exceeding of level 1 on
the standard scale and shall further be personally liable to the holder of any
such bill of exchange, promissory note or order for money or goods, for the
amount thereof unless the same is duly paid by the company.
25.
Publication of authorised as well as paid-up capital.—(1) Where any notice,
advertisement or other official publication of a company contains a statement
of amount of authorised capital of the company, such notice, advertisement or
other official publication shall also contain a statement in an equally
prominent position and in equally conspicuous characters of amount of the paid
up capital.
(2) Any
company which makes default in complying with the requirements of sub-section
(1) and every officer of the company who is party to the default shall be
liable to a penalty not exceeding of level 1 on the standard scale. 26.
Business and objects of a company.—
(1) A
company may carry on or undertake any lawful business or activity and do any
act or enter into any transaction being incidental and ancillary thereto which
is necessary in attaining its business activities:
Provided
that— (i) the principal line of business of the company shall be mentioned in
the memorandum of association of the company which shall always commensurate
with name of the company; and
(ii) any
change in the principal line of business shall be reported to the registrar
within thirty days from the date of change, on the form as may be specified and
registrar may give direction of change of name if it is in violation of this
section.
Explanation.—”principal
line of business” means
the business in which substantial assets are held or likely to be held or
substantial revenue is earned or likely to be earned by a company, whichever is
higher.
(2) A
company shall not engage in a business which is— (a) prohibited by any law for
the time being in force in Pakistan; or
(b)
restricted by any law, rules or regulations, unless necessary licence,
registration, permission or approval has been obtained or compliance with any
other condition has been made:
Provided
nothing in sub-section (1) shall be applicable to the extent of such companies.
MEMORANDUM
AND ARTICLES OF ASSOCIATION
27.
Memorandum of company limited by shares.—In the case of a company limited by
shares- (A) the memorandum shall state— (i) the name of the company with the
word “Limited” as last
word of the name in the case of a public limited company, the parenthesis and
words “(Private) Limited” as last
words of the name in the case of a private limited company, and the parenthesis
and words “(SMC-Private) Limited” as last words of the name in the case of a single member
company;
(ii) the
Province or the part of Pakistan not forming part of a Province, as the case
may be, in which the registered office of the company is to be situate;
(iii)
principal line of business: Provided that— (a) the existing companies shall
continue with their existing memorandum of association and the object stated at
serial number 1 of the object clause shall be treated as the principal line of
business;
(b) if
the object stated at serial number 1 of the object clause is not the principal
line of business of the company, it shall be required to intimate to the
registrar their principal line of business within such time from commencement
of this Act and in the form as may be specified. A revised copy of the
memorandum of association indicating therein its principal business at serial
number 1 of the object clause shall also be furnished to the registrar; and
(c) the
existing companies or the companies to be formed to carry on or engage in any
business which is subject to a licence or registration, permission or approval
shall mention the businesses as required under the respective law and the rules
and regulations made thereunder;
(iv) an
undertaking as may be specified;
(v) that
the liability of the members is limited; and
(vi) the
amount of share capital with which the company proposes to be registered and
the division thereof into shares of a fixed amount;
(B) no
subscriber of the memorandum shall take less than one share; and
(C) each
subscriber of the memorandum shall write opposite to his name the number of
shares he agrees to take.
28.
Memorandum of company limited by guarantee.—(1) In the case of a company
limited by guarantee the memorandum shall state—
(a) the
name of the company with the parenthesis and words “(Guarantee) Limited” as last words of its name;
(b) the
Province or the part of Pakistan not forming part of a Province, as the case
may be, in which the registered office of the company is to be situate;
(c)
principal line of business:
Provided
that— (i) the existing companies shall continue with their existing memorandum
of association and the object stated at serial number 1 of the object clause
shall be treated as the principal line of business;
(ii) if
the object stated at serial number 1 of the object clause is not the principal
line of business of the company, it shall be required to intimate to the
registrar their principal line of business within such time from the
commencement of this Act and in the form as may be specified. A revised copy of
the memorandum of association indicating therein its principal business at
serial number 1 of the object clause shall also be furnished to the registrar;
and
(iii)
the existing companies or the companies to be formed to carry on or engage in
any business which is subject to a licence or registration, permission or
approval shall mention the businesses as required under the respective law; (d)
an undertaking as may be specified;
(e) that
the liability of the members is limited; and
(f) such
amount as may be required, not exceeding a specified amount that each member
undertakes to contribute to the assets of the company in the event of its being
wound up while he is a member or within one year afterwards for payment of the
debts and liabilities of the company contracted before he ceases to be a member
and of the costs, charges and expenses of winding up and for adjustment of
rights of the contributories among themselves.
(2) If
the company has a share capital, the memorandum shall also state the amount of
share capital with which the company proposes to be registered and the division
thereof into shares of a fixed amount and the number of shares taken by each
subscriber.
29.
Memorandum of unlimited company.—In the case of an unlimited company the
memorandum shall state—
(a) the
name of the company with the word “Unlimited” as last words of its name;
(b) the
Province or the part of Pakistan not forming part of a Province, as the case
may be, in which registered office of the company is to be situate;
(c)
principal line of business:
Provided
that— (i) the existing companies shall continue with their existing memorandum
of association and the object stated at serial number 1 of the object clause
shall be treated as the principal line of business;
(ii) if
the object stated at serial number 1 of the object clause is not the principal
line of business of the company, it shall be required to intimate to the
registrar their principal line of business within such time from the
commencement of this Act and in the form as may be specified. A revised copy of
the memorandum of association indicating therein its principal business at
serial number 1 of the object clause shall also be furnished to the registrar;
and
(iii)
the existing companies or the companies to be formed to carry on or engage in
any business which is subject to a licence or registration, permission or
approval shall mention the businesses as required under the respective law; and
(d) an
undertaking as may be specified; (e) that the liability of the members is
unlimited.
(2) If
the company has a share capital, the memorandum shall also state the amount of
share capital with which the company proposes to be registered and the number
of shares taken by each subscriber.
30.
Borrowing powers to be part of memorandum.- Notwithstanding anything contained
in this Act or in any other law for the time being in force or the memorandum
and articles, the memorandum and articles of a company shall be deemed to
include and always to have included the power to enter into any arrangement for
obtaining loans, advances, finances or credit, as defined in the Banking Companies
Ordinance, 1962 (LVII of 1962) and to issue other securities not based on
interest for raising resources from a scheduled bank, a financial institution
or general public.
31.
Memorandum to be printed, signed and dated.—The memorandum shall be—
(a) printed
in the manner generally acceptable;
(b)
divided into paragraphs numbered consecutively;
(c)
signed by each subscriber, who shall add his present name in full, his
occupation and father‘s name or, in the case of a married woman or widow, her
husband‘s or deceased husband‘s name in full, his nationality and his usual
residential address and such other particulars as may be specified, in the
presence of a witness who shall attest the signature and shall likewise add his
particulars; and
(d)
dated.
32. Alteration
of memorandum.—(1) Subject to the provisions of this Act, a company may by
special resolution alter the provisions of its memorandum so as to—
(a)
change the place of its registered office from.—
(i) one
Province to another Province or Islamabad Capital Territory and vice versa; or
(ii) one
Province or Islamabad Capital Territory to a part of Pakistan not forming part
of a Province and vice versa; or
(b)
change its principal line of business; or
(c)
adopt any business activity or any change therein which is subject to licence,
registration, permission or approval under any law.
(2) The
alteration shall not take effect until and except in so far as it is confirmed
by the Commission on petition: Provided that an alteration so as to change its
principal line of business shall not require confirmation by the Commission.
(3) A
copy of the order confirming the alteration duly certified by an authorised
officer of the Commission shall be forwarded to the company and to the
registrar within seven days from the date of the order.
(4) A
copy of the memorandum of association as altered pursuant to the order under
this section shall within thirty days from the date of the order be filed by
the company with the registrar, who shall register the same and issue a certificate
which shall be conclusive evidence that all the requirements of this Act with
respect to the alteration and the confirmation thereof have been complied with
and thenceforth the memorandum so filed shall be the memorandum of the company:
Provided
that the Commission may by order, at any time on an application by the company,
on sufficient cause shown extend the time for the filing of memorandum with the
registrar under this section for such period as it thinks proper.
(5)
Where the alteration involves a transfer of registered office from the
jurisdiction of one company registration office to another, physical record of
the company shall be transferred to the registrar concerned of the company
registration office in whose jurisdiction the registered office of the company
has been shifted.
(6)
Where the alteration involves change in principal line of business, the company
shall file the amended memorandum of association with the registrar within
thirty days, which shall be recorded for the purposes of this Act.
33.
Powers of Commission when confirming alteration.—The Commission may make an
order confirming the alteration on such terms and conditions as it thinks fit
and make such order as to costs as it thinks proper.
34.
Exercise of discretion by Commission.—The Commission shall in exercising its
discretion under sections 32 and 33 have regard to the rights and interests of
the members of the company or of any class of them, as well as to the rights
and interests of the creditors and may, if it thinks fit, give such directions
and make such orders as it may think expedient for facilitating or carrying
into effect any such arrangement.
35.
Effect of alteration in memorandum or articles.—Notwithstanding anything
contained in the memorandum or articles of a company, no member of the company
shall be bound by an alteration made in the memorandum or articles after the
date on which he became a member if and so far as the alteration requires him
to take or subscribe for more shares than the number held by him at the date on
which the alteration is made or in any way increases his liability as at that
date to contribute to the share capital of or otherwise to pay money to the
company: Provided that this section shall not apply in any case where the
member agrees in writing either before or after the alteration is made to be
bound thereby.
ARTICLES
OF ASSOCIATION
36.
Registration of articles.—(1) There may, in the case of company limited by
shares and there shall, in the case of a company limited by guarantee or an
unlimited company, be registered with the memorandum, articles of association
signed by the subscribers to the memorandum and setting out regulations for the
company.
(2)
Articles of association of a company limited by shares may adopt all or any of
the regulations contained in Table A in the First Schedule to this Act.
(3) In
the case of an unlimited company or a company limited by guarantee, the
articles, if the company has a share capital, shall state the amount of share
capital with which the company proposes to be registered.
(4) In
the case of an unlimited company or a company limited by guarantee, if the
company has no share capital, the articles shall state the number of members
with which the company proposes to be registered.
(5) In
the case of a company limited by shares and registered after the commencement
of this Act, if articles are not registered, or, if articles are registered, in
so far as the articles do not exclude or modify the regulations in Table A in
the First Schedule to this Act, those regulations shall, so far as applicable,
be the regulations of the company in the same manner and to the same extent as
if they were contained in duly registered articles.
(6) The
articles of every company shall be explicit and without ambiguity and, without
prejudice to the generality of the foregoing, shall list and enumerate the
voting and other rights attached to the different classes of shares and other
securities, if any, issued or to be issued by it.
(7) If a
company contravenes the provisions of its articles of association, the company
and every officer of the company shall be liable to a penalty not exceeding of
level 1 on the standard scale.
37.
Articles to be printed, signed and dated.—The articles shall be— (a) printed in
the manner generally acceptable;
(b)
divided into paragraphs numbered consecutively;
(c)
signed by each subscriber, who shall add his present name in full, his
occupation and father‘s name or, in the case of a married woman or widow, her
husband‘s or deceased husband‘s name in full, his nationality and his usual
residential address and such other particulars as may be specified, in the
presence of a witness who shall attest the signature and shall likewise add his
particulars; and
(d)
dated.
38.
Alteration of articles.—(1) Subject to the provisions of this Act and to the
conditions contained in its memorandum, a company may, by special resolution,
alter its articles and any alteration so made shall be as valid as if
originally contained in the articles and be subject in like manner to
alteration by special resolution: Provided that, where such alteration affects
the substantive rights or liabilities of members or of a class of members, it
shall be carried out only if a majority of at least three-fourths of the
members or of the class of members affected by such alteration, as the case may
be, exercise the option through vote personally or through proxy vote for such
alteration.
(2) A
copy of the articles of association as altered shall, within thirty days from
the date of passing of the resolution, be filed by the company with the
registrar and he shall register the same and thenceforth the articles so filed
shall be the articles of the company.
39.
Copies of memorandum and articles to be given to members.— (1) Each company
shall send to every member, at his request and within fourteen days thereof, on
payment of such sum, as the company may fix, a copy of the memorandum and the
articles, if any.
(2) If a
company makes default in complying with the requirements of sub-section (1), it
shall be liable to a penalty not exceeding of level 1 on the standard scale.
40.
Alteration of memorandum or articles to be noted in every copy.—(1) Where an
alteration is made in the memorandum or articles of a company, every copy of
the memorandum or articles issued after the date of the alteration shall
conform to the memorandum or articles as so altered.
(2) If,
where any such alteration has been made, the company at any time after the date
of the alteration issues any copies of the memorandum or articles which do not
conform to the memorandum or articles as so altered it shall be liable to a
penalty not exceeding of level 1 on the standard scale for each copy so issued
and every officer of the company who is in default shall be liable to the like
penalty.
41. Form
of memorandum and articles.—The form of— (a) memorandum of association of a
company limited by shares;
(b)
memorandum and articles of association of a company limited by guarantee and
not having a share capital;
(c)
memorandum and articles of association of a company limited by guarantee and
having a share capital; and
(d)
memorandum and articles of association of an unlimited company having a share
capital, shall be respectively in accordance with the forms set out in Tables
B, C, D and E in the First Schedule or as near thereto as circumstances admit.
42.
Licencing of associations with charitable and not for profit objects.—(1) Where
it is proved to the satisfaction of the Commission that an association is to be
formed as a limited company—
(a) for
promoting commerce, art, science, religion, health, education, research,
sports, protection of environment, social welfare, charity or any other useful
object;
(b) such
company— (i) intends to apply the company‘s profits and other income in promoting
its objects; and (ii) prohibits the payment of dividends to the company‘s
members; and
(c) such
company‘s objects and activities are not and shall not, at any time, be against
the laws, public order, security, sovereignty and national interests of Pakistan,
the Commission may, by licence for a period to be specified, permit the
association to be registered as a public limited company, without addition of
the word “Limited” or the
expression”(Guarantee)
Limited”, to its
name.
(2) A
licence under sub-section (1) may be granted on such conditions and subject to
such regulations as the Commission thinks fit and those conditions shall be
inserted in and deemed part of the memorandum and articles, or in one of those
documents.
(3)
Memorandum and articles of association of a company, licenced under this
section, shall be in accordance with the form set out in Table F in the First
Schedule or as near thereto as circumstances admit and approved by the
Commission.
(4) The
association on registration under this section shall enjoy all the privileges
and be subject to all the obligations of a limited company.
(5) The
Commission may at any time by order in writing, revoke a licence granted under
sub-section (1), with such directions as it may deem fit, on being satisfied
that—
(a) the
company or its management has failed to comply with any of the terms or
conditions subject to which a licence is granted; or
(b) any
of the requirements specified in sub-section (1) or any regulations made under
this section are not met or complied with; or
(c)
affairs of the company are conducted in a manner prejudicial to public
interest; or
(d) the
company has made a default in filing with the registrar its financial
statements or annual returns for immediately preceding two consecutive
financial years; or
(e) the
company has acted against the interest, sovereignty and integrity of Pakistan,
the security of the State and friendly relations with foreign States; or
(f) the
number of members is reduced, below three; or (g) the company is— (i) conceived
or brought forth for, or is or has been carrying on, unlawful or fraudulent
activities; or
(ii) 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; or
(iii)
run and managed by persons who are involved in terrorist financing or money
laundering; or
(iv)
managed by persons who refuse to act according to the requirements of the
memorandum or articles or the provisions of this Act or failed to carry out the
directions or decisions of the Commission or the registrar given in exercise of
the powers conferred by this Act; or
(v) not
carrying on its business or is not in operation for one year; or
(h) it
is just and equitable that the licence should be revoked:
Provided
that before a licence is so revoked, the Commission shall give to the company a
notice, in writing of its intention to do so, and shall afford the company an
opportunity to be heard.
(6)
Notwithstanding anything contained in this Act or any other law, no association
shall be registered as a company with the objects as mentioned in clause (a)
and the conditions provided in clause (b) of sub-section (1) without a licence
granted in pursuance of this section.
43.
Effect of revocation of licence.— (1) On revocation of licence of a company
under section 42, by the Commission—
(a) the
company shall stop all its activities except the recovery of money owed to it,
if any;
(b) the
company shall not solicit or receive donations from any source; and
(c) all
the assets of the company after satisfaction of all debts and liabilities
shall, in the manner as may be specified, be transferred to another company
licenced under section 42, preferably having similar or identical objects to
those of the company, within ninety days from the revocation of the licence or
such extended period as may be allowed by the Commission:
Provided
that a reasonable amount to meet the expenses of voluntary winding up or making
an application to the registrar for striking the name of the company off the
register in terms of sub-section (3), may be retained by the company.
(2)
After compliance of the requirements mentioned in sub-section (1), the board of
the company shall file within fifteen days from the date of such compliance, a
report to the registrar containing such information and supported with such
documents as may be specified.
(3)
Within thirty days of acceptance of the report by the registrar, submitted by
the company under sub-section (2), the board shall initiate necessary
proceedings for winding up of the company voluntarily or where it has no assets
and liabilities make an application to the registrar for striking the name of
the company off the register.
(4) If
the company fails to comply with any of the requirements of this section within
the period specified or such extended period as may be allowed by the
Commission, the Commission may, without prejudice to any other action under the
law, appoint an administrator to manage affairs of the company subject to such
terms and conditions as may be specified in the order and initiate necessary
proceedings for winding up of the company.
(5) The
provisions of section 291, except those of sub-section (1) thereof, shall apply
mutatis mutandis to the administrator appointed under this section.
(6)
Where any assets of the company are transferred, in consequence of revocation
of licence, to another company licenced under section 42, the members and
officers of the first mentioned company or any of their family members shall
not be eligible to hold any office in the later company for a period of five
years from the date of transfer of such assets.
(7)
Where the licence of a company has been revoked before the commencement of this
Act and such company is not in the process of winding up, this section shall
apply as if the licence was revoked immediately after the commencement of this
Act.
44.
Penalty.—If a company licenced under section 42 or any of its officers makes
default in complying with any of the requirements of sections 42 and 43 or the
rules or regulations or the terms or conditions to which the licence is subject
or any directions contained in a revocation order, it shall without prejudice
to any other action be punishable by a penalty not exceeding of level 2 on the
standard scale.
45.
Provision as to companies limited by guarantee.—(1) A company limited by
guarantee may have share capital.
(2) In
the case of a company limited by guarantee and not having a share capital,
every provision in the memorandum or articles or in any resolution of the
company purporting to give any person a right to participate in the divisible
profits of the company otherwise than as a member shall be void.
(3) For
the purpose of the provisions of this Act relating to the memorandum of a
company limited by guarantee and of sub-section (2), every provision in the
memorandum or articles, or in any resolution, of a company limited by guarantee
purporting to divide the undertaking of the company into shares or interests
shall be treated as a provision for a share capital, notwithstanding that the
nominal amount or number of the shares or interests is not mentioned thereby.
CONVERSION
OF A COMPANY OF ANY CLASS INTO A COMPANY OF OTHER CLASS AND RELATED MATTERS
46.
Conversion of public company into private company and vice-versa.—(1) A public
company may be converted into a private company with the prior approval of the
Commission in writing by passing a special resolution in this behalf by the
public company amending its memorandum and articles of association in such a
manner that they include the provisions relating to a private company in the
articles and complying with all the requirements as may be specified:
Provided
that in case of conversion of a listed company into a private company, the
Commission shall give notice of every application made to it, to the securities
exchange and shall take into consideration the representation if any, made to
it by the securities exchange.
(2) On
an application for change in status of a company under subsection (1), if the
Commission is satisfied that the company is entitled to be so converted, such
conversion shall be allowed by an order in writing.
(3) A
copy of the order, confirming the conversion under sub-section (2), duly
certified by an authorised officer of the Commission shall be forwarded to the
company and to the registrar within seven days from the date of the order.
(4) A
copy of the memorandum and articles of association as altered pursuant to the
order under sub-section (2) shall, within fifteen days from the date of the
order, be filed by the company with the registrar and he shall register the
same and thenceforth the memorandum and articles so filed shall be the
memorandum and articles of the newly converted company.
(5) If a
company, being a private company, alters its articles in such a manner that
they no longer include the provisions which, under sub-section (1) of section
2, are required to be included in the articles of a company in order to
constitute it a private company, the company shall—
(a) as
on the date of the alteration, cease to be a private company; and
(b) file
with the registrar a copy of the memorandum and articles of association as
altered along with the special resolution.
(6) If
default is made in complying with the provisions of any of the preceding
sub-sections, the company and every officer of the company who is in default
shall be liable to a penalty not exceeding of level 2 on the standard scale.
47.
Conversion of status of private company into a single-member company and
vice-versa.—(1) A private company may be converted into a single-member company
with prior approval of the Commission in writing by passing a special
resolution in this behalf by the private company amending its memorandum and
articles of association, in such a manner that they include the provisions
relating to a single-member company in the articles and complying with all the
requirements as may be specified.
(2) On
an application for change in status of a company under subsection (1), if the
Commission is satisfied that the company is entitled to be so converted, such
conversion shall be allowed by an order in writing.
(3) A
copy of the order, confirming the conversion under sub-section (2), duly
certified by an authorised officer of the Commission shall be forwarded to the
company and to the registrar within seven days from the date of the order.
(4) A
copy of the memorandum and articles of association as altered pursuant to the
order under sub- section (2) shall, within fifteen days from the date of the
order, be filed by the company with the registrar and he shall register the
same and thenceforth the memorandum and articles so filed shall be the
memorandum and articles of the newly converted company.
(5) If a
company, being a single member company, alters its articles in such a manner
that they no longer include the provisions which are required to be included in
the articles of a company in order to constitute it a single member company,
the company shall—
(a) as
on the date of the alteration, cease to be a single member company; and (b)
file with the registrar a copy of the memorandum and articles of association as
altered along with the special resolution.
(6) If
default is made in complying with the provisions of any of the preceding
sub-sections, the company, and every officer of the company who is in default,
shall be liable to a penalty not exceeding of level 2 on the standard scale.
48.
Conversion of status of unlimited company as limited company and
vice-versa.—(1) An unlimited company may be converted into a limited company
with prior approval of the Commission in writing by passing a special
resolution in this behalf by the unlimited company amending its memorandum and
articles of association in such a manner that they include the provisions
relating to a company limited by shares in the articles and complying with all
the requirements as may be specified.
(2) On
an application for change in status of a company under subsection (1), if the
Commission is satisfied that the company is entitled to be so converted, such
conversion shall be allowed by an order in writing.
(3) A
copy of the order, confirming the conversion under sub-section (2) duly
certified by an authorised officer of the Commission shall be forwarded to the
company and to the registrar within seven days from the date of the order.
(4) If a
company, being a limited company, alters its memorandum and articles in such a
manner that they include the provisions which constitute it as a company having
unlimited liability of its members, the company shall—
(a) as
on the date of the alteration, cease to be a limited company; and
(b) file
with the registrar a copy of the memorandum and articles of association as
altered along with the special resolution.
(5) If
default is made in complying with the provisions of any of the preceding
sub-sections, the company and every officer of the company who is in default
shall be liable to a penalty not exceeding of level 2 on the standard scale.
49.
Conversion of a company limited by guarantee to a company limited by shares and
vice-versa.—(1) A company limited by guarantee may be converted into a company
limited by shares with prior approval of the Commission in writing by passing a
special resolution in this behalf by the company limited by guarantee amending
its memorandum and articles of association in such a manner that they include
the provisions relating to a company limited by shares in the articles and
complying with all the requirements as may be specified.
(2) On
an application for change in status of a company under subsection (1), if the
Commission is satisfied that the company is entitled to be so converted, such
conversion shall be allowed by an order in writing.
(3) A
copy of the order, confirming the conversion under sub-section (2) duly
certified by an authorised officer of the Commission shall be forwarded to the
company and to the registrar within seven days from the date of the order.
(4) A
copy of the memorandum and articles of association as altered pursuant to the
order under sub-section (2) shall within fifteen days from the date of the
order be filed by the company with the registrar and he shall register the same
and thenceforth the memorandum and articles so filed shall be the memorandum
and articles of the newly converted company.
(5) If a
company, being limited by shares, alters its memorandum and articles in such a
manner that they include the provisions which constitute it a company limited
by guarantee, the company shall—
(a) as
on the date of the alteration, cease to be a company limited by shares; and
(b) file
with the registrar a copy of the memorandum and articles of association as
altered along with the special resolution.
(6) If
default is made in complying with the provisions of any of the preceding
sub-sections, the company and every officer of the company who is in default
shall be liable to a penalty not exceeding of level 2 on the standard scale.
50.
Issue of certificate and effects of conversion.—(1) The registrar upon
registration of the memorandum and articles of association as altered by the
company upon conversion under sections 46 to 49, shall issue a certificate to
that effect.
(2) The
conversion of status of a company under sections 46 to 49 shall not affect—
(a) any
debts, liabilities, obligations or contracts incurred or entered into, by or on
behalf of the company before conversion and such debts, liabilities,
obligations and contracts may be enforced in the manner as if such registration
had not been done; and
(b) any
rights or obligations of the company or render defective any legal proceedings
by or against the company and any legal proceedings that might have been
continued or commenced against the company before conversion may be continued
or commenced upon its conversion.
51.
Power of unlimited company to provide for reserve share capital on conversion
of status to a limited company.—An unlimited company having a share capital
may, by its resolution for registration as a limited company in pursuance of
this Act, increase the nominal amount of its share capital by increasing the
nominal amount of each of its shares, subject to the condition that no part of
the amount by which its capital is so increased shall be capable of being
called up except in the event and for the purpose of the company being wound
up.
52.
Consequence of default in complying with conditions constituting a company a
private company.—Where the articles of a company include the provisions which,
under sub-section (1) of section 2, are required to be included in the articles
of a company in order to constitute it as a private company, but default is
made in complying with any of those provisions, the company shall cease to be
entitled to the privileges and exemptions conferred on private companies by or
under this Act and this Act shall apply to the company as if it were not a
private company:
Provided
that the Commission, on being satisfied that the failure to comply with the
conditions was accidental or due to inadvertence or to some other sufficient
cause or that on other ground it is just and equitable to grant relief, may, on
the application of the company or any other person interested and on such terms
and conditions as seem to the Commission just and expedient, make order that
the company be relieved from such consequences as aforesaid.
SERVICE
AND AUTHENTICATION OF DOCUMENTS
53.
Service of documents on a company.—A document or information may be served on
the company or any of its officers at the registered office of the company
against an acknowledgement or by post or courier service or through electronic
means or in any other manner as may be specified.
54.
Service of documents on Commission or the registrar.—A document or information
may be served on the Commission or the registrar against an acknowledgement or
by post or courier service or through electronic means or in any other manner
as may be specified.
55.
Service of notice on a member.—(1) A document or information may be served on a
member at his registered address or, if he has no registered address in
Pakistan, at the address supplied by him to the company for the giving of
notices to him against an acknowledgement or by post or courier service or
through electronic means or in any other manner as may be specified.
(2)
Where a notice is sent by post, service of the notice shall be deemed to be
effected by properly addressing, prepaying and posting a letter containing the
notice and, unless the contrary is proved, to have been effected at the time at
which the letter will be delivered in the ordinary course of post.
(3) A
notice may be given by the company to the joint-holders of a share by giving
the notice to the joint-holder named first in the register in respect of the
share.
(4) A
notice may, in the manner provided under sub-section (1), be given by the
company to the person entitled to a share in consequence of death or insolvency
of a member addressed to him by name or by the title or representatives of the
deceased or assignees of the insolvent or by any like description, at the
address supplied for the purpose by the person claiming to be so entitled.
56.
Authentication of documents and proceedings.—Save as expressly provided in this
Act, a document or proceeding requiring authentication by a company may be
signed either by an officer or a representative authorized by the board.
PART V
PROSPECTUS,
ALLOTMENT, ISSUE AND TRANSFER OF SHARES AND OTHER SECURITIES
57.
Prospectus.—(1) No prospectus shall be issued by or on behalf of a company
unless on or before the date of its publication, a copy thereof signed by every
person who is named therein as a director or proposed director of the company
has been filed with the registrar.
(2) In
case of any contravention of this section, the company and every person who is
a party to the issue, publication or circulation of the prospectus shall be
liable to a penalty not exceeding of level 2 on the standard scale.
58.
Classes and kinds of share capital.—A company having share capital shall issue
only fully paid shares which may be of different kinds and classes as provided
by its memorandum and articles: Provided that different rights and privileges
in relation to the different kinds and classes of shares may only be conferred
in such manner as may be specified.
59.
Variation of shareholders’ rights.—(1) The variation of the right of
shareholders of any class shall be effected only in the manner laid down in
section 38.
(2) Not
less than ten percent of the class of shareholders who are aggrieved by the
variation of their rights under sub-section (1) may, within thirty days of the
date of the resolution varying their rights, apply to the Court for an order
cancelling the resolution: Provided that the Court shall not pass such an order
unless it is shown to its satisfaction that some facts which would have had a
bearing on the decision of the shareholders were withheld by the company in
getting the aforesaid resolution passed or, having regard to all the
circumstances of the case, that the variation would unfairly prejudice the
shareholders of the class represented by the applicant.
(3) An
application under sub-section (2) may be made on behalf of the shareholders
entitled to make it by such one or more of their number as they may authorise
in writing in this behalf.
(4) The
company shall, within fifteen days of the service on the company of any order
made on any such application, forward a copy of the order to the registrar and,
if default is made in complying with this provision, the person making the
default shall be guilty of an offence under this section and be liable to a
penalty not exceeding of level 1 on the standard scale.
(5) The
expression “variation” under
this section includes abrogation, revocation or enhancement.
SHARE
CAPITAL AND NATURE, NUMBERING AND CERTIFICATE OF SHARES
60.
Numbering of shares.—Every share in a company having a share capital shall be
distinguished by its distinctive number:
Provided
that nothing in this section shall apply to a share held by a person whose name
is entered as holder of beneficial interest in such share in the records of a
central depository system.
61.
Nature of shares or other securities.—The shares or other securities of any
member in a company shall be movable property transferable in the manner
provided by the articles of the company.
62.
Shares certificate to be evidence.—(1) A certificate, if issued in physical
form under common seal of the company or under official seal, which must be
facsimile of the company‘s common seal, or issued in book-entry form,
specifying the shares held by any person or shares held in central depository
system shall be prima facie evidence of the title of the person to such shares.
(2)
Notwithstanding anything contained in the articles of a company, the manner of
issue of a certificate of shares, the form of such certificate and other
matters shall be such as may be specified.
SPECIAL
PROVISIONS AS TO DEBENTURES
63.
Issue of debentures.—(1) A company may issue different kinds of debentures
having different classes, rights and privileges as may be specified.
(2) The
rights, privileges and the procedure, for securing the issue of debentures, the
form of debenture trust deed, the procedure for the debenture holders to
inspect the trust deed and to obtain a copy thereof shall be such as may be
specified.
64.
Payment of certain debts out of assets subject to floating charge in priority
to claims under the charge.—(1) Where either a receiver is appointed on behalf
of the holders of any debentures of a company secured by a floating charge, or
possession is taken by or on behalf of these debenture holders of any property
comprised in or subject to the charge, then, if the company is not at the time
in course of being wound up, the debts which in every winding up are under the
provisions of Part-X relating to preferential payments to be paid in priority
to all other debts, shall be paid forthwith out of any assets coming to the
hands of the receiver or other person taking possession as aforesaid in
priority to any claim for principal or interest in respect of the debentures.
(2) The
periods of time mentioned in the said provisions of Part-X shall be reckoned
from the date of the appointment of the receiver or of possession being taken
as aforesaid, as the case may be.
(3) Any
payments made under sub-section (1) shall be recouped, as far as may be, out of
the assets of the company available for payment of general creditors.
65.
Powers and liabilities of trustee.—(1) The trustee nominated or appointed under
the trust-deed for securing an issue of debentures shall, if so empowered by
such deed, have the right to sue for all redemption monies and interest in the
following cases, namely,---
(a)
where the issuer of the debentures as mortgagor binds himself to repay the
debenture loan or pay the accrued interest thereon, or both to repay the loan
and pay the interest thereon, in the manner provided on the due date;
(b)
where by any cause other than the wrongful act or default of the issuer the
mortgaged property is wholly or partially destroyed or the security is rendered
insufficient within the meaning of section 66 of the Transfer of Property Act,
1882 (Act IV of 1882), and the trustee has given the issuer a reasonable
opportunity of providing further security adequate to render the whole security
sufficient and the issuer has failed to do so;
(c)
where the trustee is deprived of the whole or part of the security by or in
consequence of any wrongful act or default on the part of the issuer; and
(d)
where the trustee is entitled to take possession of the mortgaged property and
the issuer fails to deliver the same to him or to secure the possession thereof
without disturbance by the issuer or any person claiming under a title superior
to that of the issuer.
(2)
Where a suit is brought under clause (a) or clause (b) of sub-section (1) the
Court may at its discretion stay the suit and all proceedings therein notwithstanding
any contract to the contrary, until the trustee has exhausted all his available
remedies against the mortgaged property or what remains of it unless the
trustee abandons his security and, if necessary, retransfers the mortgaged
property.
(3) Notwithstanding
anything contained in sub-sections (1) and (2) or any other law for the time
being in force, the trustee or any person acting on his behalf shall, if so
authorised by the trust-deed, sell or concur in selling, without intervention
of the Court, the mortgaged property or any part thereof in default of payment
according to re-payment schedule of any redemption amount or in the payment of
any accrued interest on the due date by the issuer.
Explanation.—”Issuer” for the purpose of this
section, shall mean the company issuing debentures and securing the same by
mortgage of its properties or assets, or both its properties and assets, and
appointing a trustee under a trustdeed.
(4)
Subject to the provisions of this section, any provision contained in a
trust-deed for securing an issue of debentures, or in any contract with the
holders of debentures secured by a trust-deed, shall be void in so far as it
would have the effect of exempting a trustee thereof from, or indemnifying him
against, liability for breach of trust, where he fails to show the degree of
care and diligence required of him as trustee, having regard to the provisions
of the trustdeed conferring on him any power, authority or discretion. (5)
Sub-section (4) shall not invalidate-
(a) any
release otherwise validly given in respect of any act or omission by a trustee
before the giving of the release; or
(b) any
provision enabling such a release to be given— (i) on the agreement thereto of
a majority of not less than threefourths in value of the debenture-holders
present and voting in person or, where proxies are permitted, by proxy, at a
meeting summoned for the purpose; and
(ii)
either with respect to specific acts or omissions or on the trustee dying or
ceasing to act. (6) Sub-section (4) shall not operate-
(a) to
invalidate any provision in force immediately before the commencement of this
Act, so long as any person then entitled to the benefit of that provision or
afterwards given the benefit thereof under sub-section (7) remains as trustee
of the deed in question; or
(b) to
deprive any person of any exemption or right to be indemnified in respect of
any act or omission by him while any such provision was in force.
(7)
While any trustee of a trust-deed remains entitled to the benefit or provision
saved by sub-section (6), the benefits of that provision may be given either—
(a) to
all trustees of the deed, present and future; or
(b) to
any named trustees or proposed trustees thereof; by a resolution passed by a
majority of not less than three-fourths in value of the debenture-holders
present in person or, where proxies are permitted, by proxy, at a meeting
called for the purpose in accordance with the provisions of the deed or, if the
deed makes no provisions for calling meetings, at a meeting called for the
purpose in any manner approved by the Court.
66.
Issue of securities and redeemable capital not based on interest.— (1) A
company may by public offer or, upon terms and conditions contained in an
agreement in writing, issue to one or more scheduled banks, financial
institutions or such other persons as are notified for the purpose by the
Commission either severally, jointly or through their syndicate, any instrument
in the nature of redeemable capital in any or several forms in consideration of
funds, moneys or accommodations received or to be received by the company,
whether in cash or in specie or against any promise, guarantee, undertaking or
indemnity issued to or in favour of or for the benefit of the company.
(2) In
particular and without prejudice to the generality of the forgoing provisions,
the agreement referred to in sub-section (1) for redeemable capital may provide
for, adopt or include, in addition to others, all or any of the following
matters, namely-
(a) mode
and basis of repayment by the company of the amount invested in redeemable
capital within a certain period of time;
(b)
arrangement for sharing of profit and loss;
(c)
creation of a special reserve called the “participation reserves” by the company in the
manner provided in the agreement for the issue of participatory redeemable
capital in which all providers of such capital shall participate for interim
and final adjustment on the maturity date in accordance with the terms and
conditions of such agreements; and
(d) in
case of net loss on participatory redeemable capital on the date of maturity,
the right of holders to convert the outstanding, balance of such capital or
part thereof as provided in the agreement into ordinary shares of the company
at the break-up price calculated in the specified manner.
(3) The
terms and conditions for the issue of instruments or certificates of redeemable
capital and the rights of their holders shall not be challenged or questioned
by the company or any of its shareholders unless repugnant to any provision of
this Act or any other law or the memorandum or articles or any resolution of
the general meeting or directors of the company or any other document.
(4) The
provision of this Act relating to the creation, issue, increase or decrease of
the capital shall not apply to the redeemable capital.
ALLOTMENT
67.
Application for, and allotment of, shares and debentures.—(1) No application
for allotment of shares in and debentures of a company in pursuance of a
prospectus shall be made for shares or debentures of less than such nominal
amount as the Commission may, from time to time, specify, either generally or
in a particular case.
(2) The
Commission may specify the form of an application for subscription to shares in
or debentures of a company which may, among other matters, contain such
declarations or verifications as it may, in the public interest, deem
necessary; and such form then shall form part of the prospectus.
(3) All
certificates, statements and declarations made by the applicant shall be
binding on him.
(4) An
application for shares in or debentures of a company which is made in pursuance
of a prospectus shall be irrevocable.
(5)
Whoever contravenes the provisions of sub-section (1) or subsection (2), or
makes an incorrect statement, declaration or verification in the application
for allotment of shares, shall be liable to a penalty of level 2 on the
standard scale.
68.
Repayment of money received for shares not allotted.—(1) Where a company issues
any invitation to the public to subscribe for its shares or other securities,
the company shall refund the money in the case of the unaccepted or
unsuccessful applications within the time as may be specified.
(2) If
the refund required by sub-section (1) is not made within the time specified,
the directors of the company shall be jointly and severally liable to repay
that money with surcharge at the rate of two percent for every month or part
thereof from the expiration of the fifteenth day and, in addition, shall be
liable to a penalty of level 3 on the standard scale.
69.
Allotment of shares and other securities to be dealt in on securities
exchange.—(1) Where a prospectus, whether issued generally or not, states that
application has been or will be made for permission for the shares or other securities
offered thereby to be dealt in on the securities exchange, any allotment made
on an application in pursuance of the prospectus shall, whenever made, be void
if the permission has not been applied for before the seventh day after the
first issue of the prospectus or if the permission has not been granted before
the expiration of twenty-one days from the date of the closing of the
subscription lists or such longer period not exceeding forty-two days as may,
within the said twenty-one days, be notified to the applicants for permission
by the securities exchange.
(2)
Where the permission has not been applied for or has not been granted as
aforesaid, the company shall forthwith repay without surcharge all money
received from applicants in pursuance of the prospectus, and, if any such money
is not repaid within eight days after the company becomes liable to repay it,
the directors of the company shall be jointly and severally liable to repay
that money from the expiration of the eighth day together with surcharge at the
rate of two percent for every month or part thereof from the expiration of the
eighth day and in addition, shall be liable to a penalty of level 3 on the
standard scale.
(3) All
moneys received as aforesaid shall be deposited and kept in a separate bank
account in a scheduled bank so long as the company may become liable to repay
it under sub-section (2); and, if default is made in complying with this
sub-section, the company and every officer of the company who authorises or
permits the default shall be liable to a penalty of level 2 on the standard
scale.
(4) For
the purposes of this section, permission shall not be deemed to be refused if
it is intimated that the application for it, though not at present granted,
will be given further consideration.
(5) This
section shall have effect— (a) in relation to any shares or securities agreed
to be taken by a person underwriting an offer thereof by a prospectus as if he
had applied therefor in pursuance of the prospectus; and
(b) in
relation to a prospectus offering shares for sale with the following
modifications, that is to say—
(i)
reference to sale shall be substituted for reference to allotment;
(ii) the
person by whom the offer is made and not the company, shall be liable under
sub-section (2) to repay the money received from applicant, and reference to
the company‘s liability under that sub-section shall be construed accordingly;
and
(iii)
for the reference in sub-section (3) to the company and every officer of the
company there shall be substituted a reference to any person by or through whom
the offer is made and who authorises or permits the default.
70.
Return as to allotments.—(1) Whenever a company having a share capital makes
any allotment of its shares, the company shall, within fortyfive days
thereafter-
(a) file
with the registrar a return of the allotment, stating the number and nominal
amount of the shares comprised in the allotment and such particulars as may be
specified, of each allottee, and the amount paid on each share; and
(b) in
the case of shares allotted as paid up in cash, submit along with the return of
allotment, a report from its auditor to the effect that the amount of
consideration has been received in full by the company and shares have been
issued to each allottee:
Provided
that in case, the appointment of auditor is not mandatory by a company, the
report for the purpose shall be obtained from a practicing chartered accountant
or a cost and management accountant;
(c) in
the case of shares allotted as paid up otherwise than in cash, submit along
with the return of allotment, a copy of the document evidencing the transfer of
non-cash asset to the company, or a copy of the contract for technical and
other services, intellectual property or other consideration, along with copy
of the valuation report (verified in the specified manner) for registration in
respect of which that allotment was made;
(d) file
with the registrar— (i) in the case of bonus shares, a return stating the
number and nominal amount of such shares comprised in the allotment and the
particulars of allottees together with a copy of the resolution authorising the
issue of such shares;
(ii) in
the case of issue of shares at a discount, a copy of the resolution passed by
the company authorising such issue and where the maximum rate of discount
exceeds ten per cent, a copy of the order of the Commission permitting the
issue at the higher percentage.
Explanation.—
Shares shall not be deemed to have been paid for in cash except to the extent
that the company shall actually have received cash therefor at the time of, or
subsequent to, the agreement to issue the shares, and where shares are issued
to a person who has sold or agreed to sell property or rendered or agreed to
render services to the company, or to persons nominated by him, the amount of
any payment made for the property or services shall be deducted from the amount
of any cash payment made for the shares and only the balance, if any, shall be
treated as having been paid in cash for such shares, notwithstanding any bill
of exchange or cheques or other securities for money.
(2) If
the registrar is satisfied that in the circumstances of any particular case the
period of forty five days specified in sub-sections (1) for compliance with the
requirements of this section is inadequate, he may extend that period as he
thinks fit, and, if he does so, the provisions of sub-sections (1) shall have
effect in that particular case as if for the said period of forty five days the
extended period allowed by the registrar were substituted.
(3) No
return of allotment shall be required to be filed for the shares taken by the
subscribers to the memorandum on the formation of the company.
(4) Any
violation of this section shall be an offence liable to a penalty of level 1 on
the standard scale.
(5) This
section shall apply mutatis mutandis to shares which are allotted or issued or
deemed to have been issued to a scheduled bank or a financial institution in
pursuance of any obligation of a company to issue shares to such scheduled bank
or financial institution:
Provided
that where default is made by a company in filing a return of allotment in
respect of the shares referred to in this sub-section, the scheduled bank or
the financial institution to whom shares have been allotted or issued or deemed
to have been issued may file a return of allotment in respect of such shares
with the registrar together with such documents as may be specified by the
Commission in this behalf, and such return of allotment shall be deemed to have
been filed by the company itself and the scheduled bank the financial
institution shall be entitled to recover from the company the amount of any fee
properly paid by it to the registrar in respect of the return.
CERTIFICATE
OF SHARES AND OTHER SECURITIES
71. Limitation
of time for issue of certificates.—(1) Every company shall issue certificates
of shares or other securities within thirty days after the allotment of any of
its shares or other securities and ensure delivery of the certificates to the
person entitled thereto at his registered address.
(2) Any
violation of this section shall be an offence liable to a penalty of level 1 on
the standard scale.
72.
Issuance of shares in book-entry form.—(1) After the commencement of this Act
from a date notified by the Commission, a company having share capital, shall
have shares in book-entry form only.
(2)
Every existing company shall be required to replace its physical shares with
book-entry form in a manner as may be specified and from the date notified by
the Commission, within a period not exceeding four years from the commencement
of this Act: Provided that the Commission may notify different dates for
different classes of companies:
Provided
further that the Commission may, if it deems appropriate, extend the period for
another two years besides the period stated herein.
(3)
Nothing contained in this section shall apply to the shares of such companies
or class of companies as may be notified by the Commission.
73.
Issue of duplicate certificates.—(1) A duplicate of a certificate of shares, or
other securities, shall be issued by the company within thirty days from the
date of application if the original-
(a) is
proved to have been lost or destroyed, or
(b)
having been defaced or mutilated or torn is surrendered to the company.
(2) The
company, after making such inquiry as to the loss, destruction, defacement or
mutilation of the original, as it may deem fit to make, shall, subject to such
terms and conditions, if any, as it may consider necessary, issue the
duplicate: Provided that the company may charge fee and the actual expenses
incurred on such inquiry.
(3) If
the company for any reasonable cause is unable to issue duplicate certificate,
it shall notify this fact, along with the reasons within twenty days from the date
of the application, to the applicant.
(4) Any
violation of this section shall be an offence liable to a penalty of level 1 on
the standard scale.
(5) If a
company with intent to defraud, issues a duplicate certificate thereof, the
company shall be punishable with fine which may extend to one hundred thousand
rupees and every officer of the company who is in default shall be punishable
with imprisonment for a term which may extend to one hundred and eighty days,
or with fine which may extend to fifty thousand rupees, or with both.
TRANSFER
OF SHARES AND OTHER SECURITIES
74.
Transfer of shares and other securities.—(1) An application for registration of
transfer of shares and other transferable securities along with proper
instrument of transfer duly stamped and executed by the transferor and the
transferee may be made to the company either by the transferor or the
transferee, and subject to the provisions of this section, the company shall
within fifteen days after the application for the registration of the transfer
of any such securities, complete the process and—
(a)
ensure delivery of the certificates to the transferee at his registered
address; and
(b)
enter in its register of members the name of the transferee:
Provided
that in case of conversion of physical shares and other transferable securities
into book-entry form, the company shall, within ten days after an application
is made for the registration of the transfer of any shares or other securities
to a central depository, register such transfer in the name of the central
depository:
Provided
further that nothing in this section shall apply to any transfer of shares or
other securities pursuant to a transaction executed on the securities exchange.
(2)
Where a transfer deed is lost, destroyed or mutilated before its lodgment, the
company may on an application made by the transferee and bearing the stamp
required by an instrument of transfer, register the transfer of shares or other
securities if the transferee proves to the satisfaction of the board that the
transfer deed duly executed has been lost, destroyed or mutilated: Provided
that before registering the transfer of shares or other securities, the company
may demand such indemnity as it may think fit.
(3) All
references to the shares or other securities in this section, shall in case of
a company not having share capital, be deemed to be references to interest of
the members in the company.
(4)
Every company shall maintain at its registered office a register of transfers
of shares and other securities and such register shall be open to inspection by
the members and supply of copy thereof in the manner stated in section 124.
(5)
Nothing in sub-section (1) shall prevent a company from registering as
shareholder or other securities holder a person to whom the right to any share
or security of the company has been transmitted by operation of law.
(6) Any
violation of this section shall be an offence liable to a penalty of level 2 on
the standard scale.
75.
Board not to refuse transfer of shares.—The board shall not refuse to transfer
any shares or securities unless the transfer deed is, for any reason, defective
or invalid: Provided that the company shall within fifteen days or, where the
transferee is a central depository, within five days from the date on which the
instrument of transfer was lodged with it notify the defect or invalidity to
the transferee who shall, after the removal of such defect or invalidity, be
entitled to re-lodge the transfer deed with the company:
Provided
further that the provisions of this section shall, in relation to a private
company, be subject to such limitations and restrictions as may have been
imposed by the articles of such company.
76.
Restriction on transfer of shares by the members of a private company.—(1)
Notwithstanding anything contained in section 75, a member of a private company
desirous of selling any shares held by him, shall intimate to the board of his
intention through a notice.
(2) On
receipt of such notice, the board shall, within a period of ten days, offer
those shares for sale to the members in proportion to their existing
shareholding:
Provided
that a private company may transfer or sell its shares in accordance with its
articles of association and agreement among the shareholders, if any, entered into
prior to the commencement of this Act:
Provided
further that any such agreement will be valid only if it is filed with the
registrar within ninety days of the commencement of this Act.
(3) The
letter of offer for sale specifying the number of shares to which the member is
entitled, price per share and specifying the time limit, within which the
offer, if not accepted, be deemed as declined, shall be dispatched to the
members through registered post or courier or through electronic mode.
(4) If
the whole or any part of the shares offered is declined or is not taken, the
board may offer such shares to the other members in proportion to their
shareholding.
(5) If
all the members decline to accept the offer or if any shares are left over, the
shares may be sold to any other person as determined by the member, who
initiated the offer.
(6) For
the purpose of this section, the mechanism to determine the price of shares
shall be such, as may be specified.
77.
Notice of refusal to transfer.—(1) If a company refuses to register a transfer
of any shares or other securities, the company shall, within fifteen days after
the date on which the instrument of transfer was lodged with the company, send
to the transferee notice of the refusal indicating reasons for such refusal:
Provided
that failure of the company to give notice of refusal after the expiry of the
period mentioned in this section or section 75, shall be deemed refusal of
transfer.
(2) Any
violation of this section shall be an offence liable to a penalty of level 2 on
the standard scale.
78.
Transfer to successor-in-interest.—The shares or other securities of a deceased
member shall be transferred on application duly supported by succession
certificate or by lawful award, as the case may be, in favour of the successors
to the extent of their interests and their names shall be entered in the
register of members.
79.
Transfer to nominee of a deceased member.—(1) Notwithstanding anything
contained in any other law for the time being in force or in any disposition by
a member of a company of his interest represented by the shares held by him as
a member of the company, a person may on acquiring interest in a company as
member, represented by shares, at any time after acquisition of such interest
deposit with the company a nomination conferring on a person the right to
protect the interest of the legal heirs in the shares of the deceased in the
event of his death, as a trustee and to facilitate the transfer of shares to
the legal heirs of the deceased subject to succession to be determined under
the Islamic law of inheritance and in case of a non-Muslim members, as per
their respective law.
(2) The
person nominated under this section shall, after the death of the member, be
deemed as a member of company till the shares are transferred to the legal
heirs and if the deceased was a director of the company, not being a listed
company, the nominee shall also act as director of the company to protect the
interest of the legal heirs.
(3) The
person to be nominated under this section shall not be a person other than the
relatives of the member, namely, a spouse, father, mother, brother, sister and
son or daughter.
(4) The
nomination as aforesaid, shall in no way prejudice the right of the member
making the nomination to transfer, dispose of or otherwise deal in the shares
owned by him during his lifetime and, shall have effect in respect of the
shares owned by the said member on the day of his death.
80.
Appeal against refusal for registration of transfer.—(1) The transferor or transferee,
or the person who gives intimation of the transmission by operation of law, as
the case may be, aggrieved by the refusal of transfer under section 75 to 79
may appeal to the Commission within a period of sixty days of the date of
refusal.
(2) The
Commission shall, provide opportunity of hearing to the parties concerned and
may, by an order in writing, direct that the transfer or transmission should be
registered by the company and the company shall give effect to the decision
within fifteen days of the receipt of the order.
(3) The
Commission may, in its aforesaid order, give such incidental and consequential
directions as to the payment of costs or otherwise as it deems fit.
(4) If
default is made in giving effect to the order of the Commission within the
period specified in sub-section (2), every director and officer of the company
shall be liable to a penalty of level 3 on the standard scale.
COMMISSION,
DISCOUNT AND PREMIUM
81.
Application of premium received on issue of shares.—(1) If a company issues
shares at a premium, whether for cash or otherwise, a sum equal to the
aggregate amount or the value of the premiums on those shares must be
transferred to an account, called “the share premium account”.
(2)
Where, on issuing shares, a company has transferred a sum to the share premium
account, it may use that sum to write off—
(a) the
preliminary expenses of the company;
(b) the
expenses of, or the commission paid or discount allowed on, any issue of shares
of the company; and
(c) in
providing for the premium payable on the redemption of any redeemable
preference shares of the company.
(3) The
company may also use the share premium account to issue bonus shares to its
members.
82.
Power to issue shares at a discount.—(l) Subject to the provisions of this
section, it shall be lawful for a company to issue shares in the company at a
discount:
Provided
that— (a) the issue of shares at a discount must be authorised by special
resolution passed in the general meeting of the company;
(b) the
resolution must specify the number of shares to be issued, rate of discount,
not exceeding the limits permissible under this section and price per share
proposed to be issued;
(c) in
case of listed companies discount shall only be allowed if the market price is
lower than the par value of the shares for a continuous period of past ninety
trading days immediately preceding the date of announcement by the board; and
(d) the
issue of shares at discount must be sanctioned by the Commission:
Provided
further that approval of the Commission shall not be required by a listed
company for issuing shares at a discount if the discounted price is not less
than ninety percent of the par value;
(e) no
such resolution for issuance of shares at discount shall be sanctioned by the
Commission if the offer price per share, specified in the resolution, is less
than-
(i) in
case of listed companies, ninety percent of volume weighted average daily
closing price of shares for ninety days prior to the announcement of discount
issue; or
(ii) in
case of other than listed companies, the breakup value per share based on
assets (revalued not later than 3 years) or per share value based on discounted
cash flow:
Provided
that the calculation arrived at, for the purpose of subclause (i) or (ii) of
clause (e) above, shall be certified by the statutory auditor;
(f)
directors and sponsors of listed companies shall be required to subscribe their
portion of proposed issue at volume weighted average daily closing price of
shares for ninety days prior to the announcement of discount issue;
(g) not
less than three years have elapsed since the date on which the company was
entitled to commence business;
(h) the
share at a discount must be issued within sixty days after the date on which
the issue is sanctioned by the Commission or within such extended time as the
Commission may allow.
(2)
Where a company has passed a special resolution authorising the issue of shares
at a discount, it shall apply to the Commission where applicable, for an order
sanctioning the issue. The Commission on such application may, if, having
regard to all the circumstances of the case, thinks proper so to do, make an
order sanctioning the issue of shares at discount subject to such terms and
conditions as it deems fit.
(3)
Issue of shares at a discount shall not be deemed to be reduction of capital.
(4)
Every prospectus relating to the issue of shares, and every statement of
financial position issued by the company subsequent to the issue of shares,
shall contain particulars of the discount allowed on the issue of the shares.
(5) Any
violation of this section shall be an offence liable to a penalty of level 3 on
the standard scale.
83.
Further issue of capital.—(1) Where the directors decide to increase share
capital of the company by issue of further share capital, such shares shall be
offered:
(a) to
persons who, at the date of the offer, are members of the company in proportion
to the existing shares held by sending a letter of offer subject to the
following conditions, namely—
(i) the
shares so offered shall be strictly in proportion to the shares already held in
respective kinds and classes;
(ii) the
letter of offer shall state the number of shares offered and limiting a time
not being less than fifteen days and not exceeding thirty days from the date of
the offer within which the offer, if not accepted, shall be deemed to have been
declined;
(iii) in
the case of a listed company any member, not interested to subscribe, may
exercise the right to renounce the shares offered to him in favour of any other
person, before the date of expiry stated in the letter of offer; and
(iv) if
the whole or any part of the shares offered under this section is declined or
is not subscribed, the directors may allot such shares in such manner as they
may deem fit within a period of thirty days from the close of the offer as
provided under sub-clause (ii) above or within such extended time not exceeding
thirty day with the approval of the Commission:
Provided
that a public company may reserve a certain percentage of further issue for its
employees under “Employees Stock Option Scheme” to be approved by the Commission in accordance with the
procedure and on such conditions as may be specified.
(b)
subject to approval of the Commission, to any person, in the case of public
company on the basis of a special resolution either for cash or for a
consideration other than cash: Provided that the value of non-cash asset,
service, intellectual property shall be determined by a valuer registered by
the Commission.
(2) The
letter of offer referred to in sub-clause (ii) of clause (a) of subsection (1)
duly signed by at least two directors shall be dispatched through registered
post or courier or through electronic mode to all the existing members,
ensuring that it reaches the members before the commencement of period for the
acceptance of offer.
(3) A
copy of the letter of offer, referred to in sub-section (2) shall,
simultaneously with the dispatch to the members, be sent to the registrar.
(4)
Notwithstanding anything contained in this section, where loan has been
obtained from any Government by a public sector company, and if that Government
considers it necessary in the public interest so to do, it may, by order,
direct that such loan or any part thereof shall be converted into shares in
that company, on such terms and conditions as appear to the Government to be
just and reasonable in the circumstances of the case even if the terms of such
loan does do not include the option for such conversion.
(5) In
determining the terms and conditions of conversion under subsection (4), the
Government shall have due regard to the financial position of the public sector
company, the terms of the rate of interest payable thereon and such other
matters as it may consider necessary.
(6)
Notwithstanding anything contained in this Act or any other law for the time
being in force or the memorandum and articles, where the authorised capital of
a company is fully subscribed, or the un-subscribed capital is insufficient,
the same shall be deemed to have been increased to the extent necessary for
issue of shares to the Government, a scheduled bank or financial institution in
pursuance of any obligation of the company to issue shares to such scheduled
bank or financial institution.
(7) In
case shares are allotted in terms of sub-section (6), the company shall be
required to file the notice of increase in share capital along with the fee
prescribed for such increase with the registrar within the period prescribed
under this Act: Provided that where default is made by a company in complying
with the requirement of filing a notice of increase in the authorised capital
under this Act as well as the fee to be deposited on the authorised capital as
deemed to have been increased, the Government, scheduled bank or the financial
institution to whom shares have been issued may file notice of such increase
with the registrar and such notice shall be deemed to have been filed by the
company itself and the Government, scheduled bank or financial institution
shall be entitled to recover from the company the amount of any fee paid by it
to the registrar in respect of such increase.
(8) Any
violation of this section shall be an offence liable to a penalty of level 2 on
the standard scale.
INVITATION
OF DEPOSITS
84.
Prohibition on acceptance of deposits from public.—(1) On and after the
commencement of this Act, no company shall invite, accept or renew deposits
from the public:
Provided
that nothing in this sub-section shall apply to a banking company and such
other company or class of companies or such deposits as the Commission may,
notify in this behalf.
Explanation.—For
the purposes of this section, “deposit” means any deposit of money with, and includes any amount
borrowed by, a company, but shall not include a loan raised by issue of
debentures or a loan obtained from a banking company or financial institution
or an advance against sale of goods or provision of services in the ordinary
course of business.
(2)
Where a company accepts or invites, or allows or causes any other person to
accept or invite on its behalf, any deposit, the company shall be punishable—
(a)
where such contravention relates to the acceptance of any deposit, with penalty
which shall not be less than the amount of the deposit so accepted; and
(b)
where such contravention relates to the invitation for any deposit, shall be
liable to a penalty of level 3 on the standard scale.
(3) In
addition to the fine on the company under sub-section (2), every officer of the
company which is in default shall be punishable with imprisonment for a term
which may extend to two years and shall also be liable to fine which may extend
to five million rupees.
85.
Power of company to alter its share capital.—(1) A company having share capital
may, if so authorised by its articles, alter the conditions of its memorandum
through a special resolution, so as to;
(a)
increase its authorised capital by such amount as it thinks expedient;
(b)
consolidate and divide the whole or any part of its share capital into shares
of larger amount than its existing shares;
(c)
sub-divide its shares, or any of them, into shares of smaller amount than is
fixed by the memorandum:
(d)
cancel shares which, at the date of the passing of the resolution in that
behalf, have not been taken or agreed to be taken by any person, and diminish
the amount of its share capital by the amount of the share so cancelled:
Provided
that, in the event of consolidation or sub-division of shares, the rights
attaching to the new shares shall be strictly proportional to the rights
attached to the previous shares so consolidated or sub-divided:
Provided
further that, where any shares issued are of a class which is the same as that
of shares previously issued, the rights attaching to the new shares shall be
the same as those attached to the shares previously held.
(2) The
new shares issued by a company shall rank pari passu with the existing shares
of the class to which the new shares belong in all matters, including the right
to such bonus or right issue and dividend as may be declared by the company
subsequent to the date of issue of such new shares.
(3) A
cancellation of shares in pursuance of sub-section (1) shall not be deemed to
be a reduction of share capital within the meaning of this Act.
(4) The
company shall file with the registrar notice of the exercise of any power
referred to in sub-section (1) within fifteen days from the exercise thereof.
(5) Any
violation of this section shall be an offence liable to a penalty of level 1 on
the standard scale.
86.
Prohibition of purchase by company or giving of loans by it for purchase of its
shares. (1) No company having a share capital, other than a listed company
shall have power to buy its own shares.
(2) No
public company or a private company being subsidiary of a public company shall
give financial assistance whether directly or indirectly for the purpose of, or
in connection with, a purchase or subscription made or to be made, by any
person of any shares in the company or in its holding company.
(3)
Nothing in sub-section (2) shall apply to— (a) the lending of money by a
banking company in the ordinary course of its business;
(b) the
provision by a company of money in accordance with any scheme approved by
company through special resolution and in accordance with such requirements as
may be specified, for the purchase of, or subscription for shares in the
company or its holding company, if the purchase of, or the subscription for,
the shares held by a trust for the benefit of the employees or such shares held
by the employee of the company;
(c) the
provision or securing an advance to any of its employees, including a chief
executive who, before his appointment as such, was not a director of the
company, but excluding all directors of the company, for purchase of shares of
the company or of its subsidiary or holding company.
(4) Any
violation of this section shall be an offence liable to a penalty of level 1 on
the standard scale.
87.
Subsidiary company not to hold shares in its holding company.—(1) No company
shall, either by itself or through its nominees, hold any shares in its holding
company and no holding company shall allot or transfer its shares to any of its
subsidiary companies and any such allotment or transfer of shares of a company
to its subsidiary company shall be void:
Provided
that a subsidiary shall not be barred— (a) from acting as a trustee unless its
holding company is beneficially interested under the trust; and
(b) from
dealing in shares of its holding company in the ordinary course of its
business, on behalf of its clients only subject to nonprovision of any
financial assistance where such subsidiary carries on a bona fide business of
brokerage:
Provided
further that a subsidiary dealing in shares of its holding company in the
ordinary course of its brokerage business, shall not exercise the voting rights
attached to such shares:
Provided
also that the provisions of this section shall not be applicable where such
shares are held by a company by operation of law.
(2) Any
violation of this section shall be an offence liable to a penalty of level 2 on
the standard scale.
88.
Power of a company to purchase its own shares.—(1) Notwithstanding anything
contained in this Act or any other law, for the time being in force, or the
memorandum and articles, a listed company may, subject to the provisions of
this section and the regulations specified in this behalf, purchase its own
shares.
(2) The
shares purchased by the company may, in accordance with the provisions of this
section and the regulations, either be cancelled or held as treasury shares.
(3) The
shares held by the company as treasury shares shall, as long as they are so
held, in addition to any other conditions as may be specified, be subject to
the following conditions, namely—
(a) the
voting rights of these shares shall remain suspended; and
(b) no
cash dividend shall be paid and no other distribution, whether in cash or
otherwise of the company‘s assets, including any distribution of assets to
members on a winding up shall be made to the company in respect of these
shares:
Provided
that nothing in this sub-section shall prevent—
(a) an
allotment of shares as fully paid bonus shares in respect of the treasury
shares; and
(b) the
payment of any amount payable on the redemption of the treasury shares, if they
are redeemable.
(4) The
board shall recommend to the members purchase of the shares. The decision of
the board shall clearly specify the number of shares proposed to be purchased,
purpose of the purchase i.e. cancellation or holding the shares as treasury
shares, the purchase price, period within which the purchase shall be made,
source of funds, justification for the purchase and effect on the financial
position of the company.
(5) The
purchase of shares shall be made only under authority of a special resolution.
(6) The
purchase of shares shall be made within a period as specified in the
regulations.
(7) The
proposal of the board to purchase shares shall, on conclusion of the board‘s
meeting, be communicated to the Commission and to the securities exchange on
which shares of the company are listed.
(8) The
purchase of shares shall always be made in cash and shall be out of the
distributable profits or reserves specifically maintained for the purpose.
(9) The
purchase of shares shall be made either through a tender offer or through the
securities exchange as may be specified.
(10) The
company may dispose of the treasury shares in a manner as may be specified.
(11)
Where a purchase of shares has been made under this section, the company shall
maintain a register of shares so purchased and enter therein the following
particulars, namely—
(a)
number of shares purchased;
(b)
consideration paid for the shares purchased;
(c) mode
of the purchase; (d) the date of cancellation or re-issuance of such shares;
(e)
number of bonus shares issued in respect of treasury shares; and
(f)
number and amount of treasury shares redeemed, if redeemable.
(12) Any
violation of this section shall be an offence liable to a penalty of level 3 on
the standard scale and shall also be individually and severally liable for any
or all losses or damages arising out of such contravention.
REDUCTION
OF SHARE CAPITAL
89.
Reduction of share capital.—Subject to confirmation by the Court a company
limited by shares, if so authorised by its articles, may by special resolution
reduce its share capital in any way, namely—
(a)
cancel any paid-up share capital which is lost or un-represented by available
assets;
(b) pay
off any paid-up share capital which is in excess of the needs of the company.
90.
Objection by creditors and settlement of list of objecting creditors.—(1) Where
the proposed reduction of share capital involves r the payment to any
shareholder of any paid-up share capital, and in any other case if the Court so
directs, every creditor of the company who is entitled to any debt or claim,
shall be entitled to object to the reduction.
(2) The
Court shall settle a list of creditors so entitled to object, and for that
purpose shall ascertain, as far as possible without requiring an application
from any creditor, the names of those creditors and the nature and amount of
their debts or claims, and may publish notices fixing a period within which
creditors not entered on the list are to claim to be so entered or are to be
excluded from the right of objecting to the reduction.
91.
Power to dispense with consent of creditor on security being given for his
debt.—Where a creditor entered on the list of creditors whose debt or claim is
not discharged or determined does not consent to the reduction, the Court may,
if it thinks fit, dispense with the consent of that creditor, on the company
securing payment of his debt or claim by appropriating as the Court may direct,
the following amount, that is to say-
(a) if
the company admits the full amount of his debt or claim, or, though not
admitting it, is willing to provide for it, then the full amount of the debt or
claim; and
(b) if
the company does not admit or is not willing to provide for the full amount of
the debt or claim, or if the amount is contingent or not ascertained, then an
amount fixed by the Court after the like inquiry, and adjudication as if the
company were being wound up by the Court.
92.
Order confirming reduction.—If the Court is satisfied with respect to every
creditor of the company who under this Act is entitled to object to the
reduction that either his consent to the reduction has been obtained or his
debt or claim has been discharged or has been determined or has been secured,
the Court may make an order confirming the reduction on such terms and conditions
as it thinks fit.
93.
Registration of order of reduction.—(1) The registrar on the filing with him of
a certified copy of order of the Court confirming the reduction of the share
capital of the company, shall register the same.
(2) A
resolution for reducing share capital as confirmed by an order of the Court
registered under sub-section (1) shall take effect on such registration and not
before.
(3) The
registrar shall certify under his hand the registration of the order and his
certificate shall be conclusive evidence that all the requirements of this Act
with respect to reduction of share capital have been complied with, and that
the share capital of the company is such as is stated in the order.
94.
Liability of members in respect of reduced shares.—(1) A member of the company,
past or present, shall not be liable in respect of any share to any call or
contribution exceeding in amount the difference, if any, between the amount
paid, or, as the case may be, the received amount, if any, which is to be
deemed to have been paid, on the share and the amount of the share as fixed by
the order:
Provided
that, if any creditor, entitled in respect of any debt or claim to object to
the reduction of share capital, is, by reason of his ignorance of the proceedings
for reduction, or of their nature and effect with respect to his claim not
entered on the list of creditors, and, after the reduction, the company is
unable, within the meaning of the provisions of this Act with respect to
winding up by the Court, to pay the amount of his debt or claim, then—
(a)
every person who was a member of the company at the date of the registration of
the order for reduction shall be liable to contribute for the payment of that
debt, or claim an amount not exceeding the amount which he would have been
liable to contribute if the company had commenced to be wound up on the day
before that registration; and
(b) if
the company is wound up, the Court on the application of any such creditor and
proof of his ignorance as aforesaid, may, if it thinks fit, settle accordingly
a list of persons so liable to contribute, and make and enforce calls and
orders on the contributories settled on the list as if they were ordinary
contributories in a winding up.
(2)
Nothing in this section shall effect the rights of the contributories among
themselves.
95.
Penalty on concealment of name of creditor.—If any officer of the company
conceals the name of any creditor entitled to object to the reduction, or
willfully misrepresents the nature or amount of the debt or claim of any
creditor, or if any officer of the company abets any such concealment or
misrepresentation as aforesaid, every such officer shall be punishable with
imprisonment for a term which may extend to one year, or with fine which may
extend to five million rupees, or with both.
96.
Publication of reasons for reduction.—In the case of reduction of share
capital, the Court may require the company to publish in the manner specified
by the Court the reasons for reduction, or such other information in regard
thereto as the Court may think expedient with a view to giving proper
information to the public, and, if the Court thinks fit, the causes which led
to the reduction.
97.
Increase and reduction of share capital in case of a company limited by guarantee
having a share capital.—A company limited by guarantee may, if it has a share
capital and is so authorised by its articles, increase or reduce its share
capital in the same manner and on the same conditions subject to which a
company limited by shares may increase or reduce its share capital under the
provisions of this Act.
UNLIMITED
LIABILITY OF DIRECTORS
98.
Limited company may have directors with unlimited liability.— (1) In a limited
company, the liability of the directors or of any director may, if so provided
by the memorandum, be unlimited.
(2) In a
limited company in which the liability of any director is unlimited, the
directors of the company, if any, and the member who proposes a person for
election or appointment to the office of director, shall add to that proposal a
statement that the liability of the person holding that office will be
unlimited and the promoters and officers of the company, or one of them shall,
before that person accepts the office or acts therein, give him notice in
writing that his liability will be unlimited.
(3) Any
violation of this section shall be an offence liable to a penalty of level 1 on
the standard scale and shall also be liable for any damage which the person so
elected or appointed may sustain from the default, but the liability of the
person elected or appointed shall not be affected by the default.
99.
Special resolution of limited company making liability of directors
unlimited.—A limited company, if so authorised by its articles, may, by special
resolution, alter its memorandum so as to render unlimited the liability of its
directors or of any director:
Provided
that an alteration of the memorandum making the liability of any of the
directors unlimited shall not apply, without his consent, to a director who was
holding the office from before the date of the alteration, until the expiry of
the term for which he was holding office on that date.
100.
Requirement to register a mortgage or charge.—(1) A company that creates a
mortgage or charge to which this section applies must file the specified
particulars of the mortgage or charge, together with a copy of the instrument,
if any, verified in the specified manner, by which the mortgage or charge is
created or evidenced, with the registrar for registration within a period of
thirty days beginning with the day after the date of its creation:
Provided
that— (a) in the case of a mortgage or charge created out of Pakistan
comprising solely property situated outside Pakistan, thirty days after the
date on which the instrument or copy could, in due course of post, and if
dispatched with due diligence, have been received in Pakistan shall be
substituted for thirty days after the date of the creation of the mortgage or
charge as the time within which the particulars and instrument or copy are to
be filed with the registrar; and
(b) in
case the mortgage or charge is created in Pakistan but comprises property
outside Pakistan, a copy of the instrument creating or purporting to create the
mortgage or charge verified in the specified manner may be filed for
registration notwithstanding that further proceedings may be necessary to make
the mortgage or charge valid or effectual according to the law of the country
in which the property is situate: Provided further that any subsequent
registration of a mortgage or charge shall not prejudice any right acquired in
respect of any property before the mortgage or charge is actually registered.
(2) This
section applies to the following charges—
(a) a
mortgage or charge on any immovable property wherever situate, or any interest
therein; or
(b) a
mortgage or charge for the purposes of securing any issue of debentures;
(c) a
mortgage or charge on book debts of the company;
(d) a
floating charge on the undertaking or property of the company, including
stock-in-trade; or
(e) a
charge on a ship or aircraft, or any share in a ship or aircraft;
(f) a
charge on goodwill or on any intellectual property;
(g) a
mortgage or charge or pledge, on any movable property of the company;
(h) a
mortgage or charge or other interest, based on agreement for the issue of any
instrument in the nature of redeemable capital; or
(i) a
mortgage or charge or other interest, based on conditional sale agreement,
namely, lease financing, hire-purchase, sale and lease back, and retention of
title, for acquisition of machinery, equipment or other goods:
Provided
that where a negotiable instrument has been given to secure the payment of any
book debts of a company, the deposit of the instrument for the purpose of
securing an advance to the company shall not for the purpose of this
sub-section be treated as a mortgage or charge on those book debts.
Explanation.—For
the purposes of this Act “charge” includes mortgage or pledge.
(3) The
registrar shall, on registration of a mortgage or charge under sub-section (1)
issue a certificate of registration under his signatures or authenticated by
his official seal in such form and in such manner as may be specified.
(4) The
provisions of this section relating to registration shall apply to a company
acquiring any property subject to a mortgage or charge.
(5)
Notwithstanding anything contained in any other law for the time being in
force, no mortgage or charge created by a company shall be taken into account
by the liquidator or any other creditor unless it is duly registered under
sub-section (1) and a certificate of registration of such charge is given by
the registrar under sub-section (3).
(6)
Nothing in sub-section (5) shall prejudice any contract or obligation for
repayment of the money thereby secured.
(7)
Where any mortgage or charge on any property or assets of a company or any of
its undertakings is registered under this section, any person acquiring such
property, assets, undertakings or part thereof or any share or interest therein
shall be deemed to have notice of the mortgage or charge from the date of such
registration.
101.
Particulars in case of series of debentures entitling holders pari passu.—Where
a series of debentures containing, or giving by reference to any other instrument,
any charge to the benefit of which the debenture-holders of that series are
entitled pari passu is created by a company, it shall be sufficient for
the purposes of section 100 if there are filed with the registrar within thirty
days after the execution of the deed containing the charge or, if there is no
such deed, after the execution of any debentures of the series, the following
particulars, namely—
(a) the
total amount secured by the whole series;
(b) the
dates of the resolutions authorising the issue of the series and the date of
the covering deed, if any, by which the security is created or defined;
(c) a
general description of the property charged; and
(d) the
names of the trustees, if any, for the debenture-holders; together with a copy
of the deed verified in the specified manner containing the charge:
Provided
that, where more than one issue is made of debentures in the series, there
shall be filed with the registrar for entry in the register particulars of the
date and amount of each issue, but an omission to do this shall not affect the
validity of the debentures issued.
102.
Register of charges to be kept by registrar.—(1) The registrar shall, in
respect of every company, keep a register containing particulars of the charges
registered under this Part in such form and in such manner as may be specified.
(2) A
register kept in pursuance of this section shall be open to inspection by a
person on payment of such fees as may be prescribed.
103.
Index to register of mortgages and charges.—The registrar shall keep a
chronological index, in the form, containing such particulars, as may be
specified, of the mortgages or charges registered with him under the company
law.
104.
Endorsement of certificate of registration on debenture or certificate of
debenture stock.—The company shall cause a copy of every certificate of
registration given under section 100 to be endorsed on every debenture or
certificate of debenture stock which is issued by the company and the payment
of which is secured by the mortgage or charge so registered:
Provided
that in case the certificate of debenture or debenture stock is issued in the
book-entry form, appropriate disclosure in pursuance of this section shall be
made in the manner as may be specified: Provided further that nothing in this
section shall be construed as requiring a company to cause a certificate of
registration of any mortgage or charge so given, to be endorsed on any
debenture or certificate of debenture stock which has been issued by the
company before the mortgage or charge was created.
105.
Duty of company and right of interested party as regards registration.—(1) It
shall be the duty of a company to file with the registrar for registration the
specified particulars of every mortgage or charge created by the company and of
the issue of debentures of a series, requiring registration under section 100,
but registration of any such mortgage or charge may be effected on the
application of any person interested therein.
(2)
Where the registration is affected on the application of some person other than
the company, that person shall be entitled to recover from the company the
amount of any fees properly paid by him to the registrar on the registration.
106.
Modification in the particulars of mortgage or charge.— Whenever the terms or
conditions or extent or operation of any mortgage or charge registered under
this Part are modified, it shall be the duty of the company to send to the
registrar the particulars of such modification together with a copy of the
instrument evidencing such modification verified in the specified manner, and
the provisions of this Part as to registration of mortgage or charge shall
apply to such modification of the mortgage or charge as aforesaid.
107.
Copy of instrument creating mortgage or charge to be kept at registered
office.—Every company shall cause a copy of every instrument creating any
mortgage or charge requiring registration under this Part and of every
instrument evidencing modification of the terms or conditions thereof, to be kept
at the registered office of the company.
108.
Rectification of register of mortgages.—(1) The Commission on being satisfied
that—
(a) the
omission to file with the registrar the particulars of any mortgage or charge
or any modification therein within the time required by section 100 or 101, as
the case may be; or
(b) the
omission or mis-statement of any particular with respect to any such mortgage
or charge was accidental or due to inadvertence or to some other sufficient
cause, or is not of a nature to prejudice the position of creditors or
shareholders of the company, or that on other grounds it is just and equitable
to grant relief, may, on the application of the company or any person
interested and, on such terms and conditions as seem to the Commission just and
expedient, order that the time for filing the required particulars be extended,
or, as the case may be, that the omission or mis-statement be rectified, and
may make such order as to the costs of the application as it thinks fit.
(2) A
copy of the order passed under this section duly certified by the Commission or
its authorised officer shall be forwarded to the concerned registrar within
seven days from the date of the order.
(3)
Where the Commission extends the time for the registration of a mortgage or
charge, the order shall not prejudice any rights acquired in respect of the
property concerned prior to the time when the mortgage or charge is actually
registered.
109.
Company to report satisfaction of charge.— (1) A company shall give intimation
to the registrar in the manner specified, of the payment or satisfaction, in
full, of any mortgage or charge created by it and registered under this Part,
within a period of thirty days from the date of such payment or satisfaction.
(2) The
registrar shall, on receipt of intimation under sub-section (1), cause a notice
to be sent to the holder of the mortgage or charge calling upon him to show
cause within such time not exceeding fourteen days, as may be specified in such
notice, as to why payment or satisfaction in full shall not be recorded as
intimated to the registrar, and if no cause is shown, by such holder of the
mortgage or charge, the registrar shall accept the memorandum of satisfaction
and make an entry in the register of charges kept by him under section 102:
Provided
that the notice referred to in this sub-section shall not be required if a no
objection certificate on behalf of the holder of the mortgage or charge is
furnished, along-with the intimation to be submitted under sub-section (1).
(3) If
any cause is shown, the registrar shall record a note to that effect in the
register of charges and shall inform the company.
(4)
Nothing in this section shall be deemed to affect the powers of the registrar
to make an entry in the register of charges under section 102 or otherwise than
on receipt of an intimation from the company.
(5) If a
company fails to file the particulars of satisfaction of mortgage or charge
within the period specified under this section, the required particulars may be
submitted with the additional fee, as may be specified and imposing the penalty
as specified in this Part.
110.
Power of registrar to make entries of satisfaction and release in absence of
intimation from company.—The registrar may, on evidence being given to his
satisfaction with respect to any registered charge-
(a) that
the debt for which the charge was given has been paid or satisfied in whole or
in part; or
(b) that
part of the property or undertaking charged has been released from the charge
or has ceased to form part of the company‘s property or undertaking; enter in
the register of charges a memorandum of satisfaction in whole or in part, or of
the fact that part of the property or undertaking has been released from the
charge or has ceased to form part of the company‘s property or undertaking, as
the case may be, and inform the parties concerned, notwithstanding the fact
that no intimation has been received by him from the company.
111.
Punishment for contravention.—Any violation of this Part shall be an offence
liable to a penalty of level 1 on the standard scale.
112.
Company’s register of mortgages and charges.—(1) Every company shall maintain a
register of mortgages and charges requiring registration under this Part, in
such form and in such manner as may be specified and any violation under this
section shall be an offence punishable under this Act.
(2) The
register of charges maintained under this section and the copies of instrument
creating any mortgage and charge or modification thereof, kept in pursuance of
this part shall be open to inspection of-
(a) any
member or creditor of the company without fee; and
(b) any
other person on payment of such fee as may be fixed by the company for each
inspection.
(3) The
refusal of inspection of the said copies or the register shall be an offence
under this section and any person guilty of an offence under this section shall
be liable to a penalty of level 1 on the standard scale, and every officer of
the company who knowingly authorises or permits the refusal shall incur the
like penalty, and in addition to the above penalty, the registrar may by order
compel an immediate inspection of the copies or register.
(4) If
any officer of the company authorises or permits the omission of any entry
required to be made in pursuance of sub-section (1), shall be liable to a
penalty of level 1 on the standard scale.
RECEIVERS
AND MANAGERS
113.
Registration of appointment of receiver or manager.—(1) Where in order to
ensure enforcement of security of a company‘s property, a person obtains an
order for the appointment of a receiver or manager, or appoints such a receiver
or manager under any powers contained in any instrument, he shall within seven
days of the order or of the appointment under the powers contained in the instrument,
file a notice of the fact with the registrar.
(2)
Where a person appointed as a receiver or manager under this section ceases to
act as such, the person who had obtained the order or appointed such a receiver
or manager pursuant to the powers contained in any instrument shall on ceasing
of the receiver or manager, give the registrar a notice to that effect within
seven days.
(3) The
registrar shall enter the fact of which he is given notice under this section
in the register of mortgages and charges.
(4) Any
violation of sub-sections (1) and (2) shall be an offence liable to a penalty
of level 1 on the standard scale.
114.
Filing of accounts of receiver or manager.—(1) Every receiver of the property
of a company who has been appointed under the powers contained in any
instrument, and who has taken possession, shall within thirty days of expiry of
every one hundred and eighty days while he remains in possession, and also
within thirty days on ceasing to act as receiver, file with the registrar an
abstract in the form specified of his receipts and payments during the period
to which the abstract relates, and shall also, within fifteen days of ceasing
to act as receiver, file with the registrar notice to that effect, and the
registrar shall enter the notice in the register of mortgages and charges.
(2)
Where a receiver of the property of a company has been appointed, every
invoice, order for goods, or business letter issued by or on behalf of the
company or the receiver of the company, being a document on or in which the
name of the company appears, shall contain a statement that a receiver has been
appointed.
(3) The
provisions of sub-sections (1) and (2) shall apply to any person appointed to
manage the property of a company under any powers contained in an instrument in
the same manner as they apply to a receiver so appointed.
(4) Any
contravention or default of this section by the receiver, or person appointed
to manage the property of the company referred to sub-section (3), shall be an
offence liable to a penalty of level 1 on the standard scale.
115.
Disqualification for appointment as receiver or manager.—The following shall
not be appointed as a receiver or manager of the company‘s property, namely-
(a) a
minor;
(b) a
person who is of unsound mind and stands so declared by a competent court;
(c) a
body corporate;
(d) a
director of the company;
(e) an
un-discharged insolvent unless he is granted leave by the court by which he has
been adjudged an insolvent; or
(f) a
person disqualified by a Court from being concerned with or taking part in the
management of the company in any other way, unless he is granted leave by the
Court.
116.
Application to Court.—(l) A receiver or manager of the company‘s property
appointed under the powers contained in any instrument may apply to the Court
for directions in relation to any particular matter arising in connection with
the performance of his functions, and on any such application the Court may
give such direction, or may make such order declaring the rights of persons
before the Court, or otherwise, as the Court thinks just.
(2) A
receiver or manager of the company‘s property appointed as aforesaid shall, to
the same extent as if he had been appointed by order of a Court be personally
liable on any contract entered into by him in the performance of his functions,
except in so far as the contract otherwise provides, and entitled in respect of
that liability to indemnity out of the assets; but nothing in this subsection
shall be deemed to limit any right to indemnity which he would have apart from
this sub-section, or to limit his liability on contracts entered into without
authority or to confer any right to indemnity in respect of that liability.
117.
Power of Court to fix remuneration of receiver or manager.— (1) The Court may,
on an application made to it by the receiver or manager of the property, by
order fix the amount to be paid by way of remuneration to any person who, under
the power contained in an instrument, has been appointed as receiver or manager
of the company‘s property:
Provided
that the amount of remuneration shall not exceed such limits as may be
specified.
(2) The
power of the Court under sub-section (1) shall, where no previous order has
been made with respect thereto—
(a)
extend to fixing the remuneration for any period before the making of the order
or the application therefore;
(b) be
exercisable notwithstanding that the receiver or manager had died or ceased to
act before the making of the order or the application therefore; and
(c)
where the receiver or manager has been paid or has retained for his
remuneration for any period before the making of the order any amount in excess
of that so fixed for that period, extend to requiring him or his representative
to account for the excess or such part thereof as may be specified in the
order:
Provided
that the power conferred by clause (c) shall not be exercised as respects any
period before the making of the application or the order unless in the opinion
of the Court there are special circumstances making it proper for the power to
be so exercised. (3) The Court may from time to time, on an application made
either by the liquidator or by the receiver or manager, or by the registrar,
vary or amend an order made under sub-section (1) and issue directions to the
receiver respecting his duties and functions or any other matter as it may deem
expedient: Provided that an order made under sub-section (1) shall not be
varied so as to increase the amount of remuneration payable to any person.
118.
Members of a company.—The subscribers to the memorandum of association are
deemed to have agreed to become members of the company and become members on
its registration and every other person-
(a) to
whom is allotted, or who becomes the holder of any class or kind of shares; or
(b) in
relation to a company not having a share capital, any person who has agreed to
become a member of the company; and whose names are entered; in the register of
members, are members of the company.
REGISTER
AND INDEX OF MEMBERS
119.
Register of members.—(1) Every company shall keep a register of its members and
any contravention or default in complying with requirement of this section
shall be an offence punishable under this Act.
(2)
There must be entered in the register such particulars of each member as may be
specified.
(3) In
the case of joint holders of shares or stock in a company, the company‘s
register of members shall state the names of each joint holder. In other
respects joint holders shall be regarded for the purposes of this Part as a single
member and the address of the person named first shall be entered in the
register;
(4) A
person guilty of an offence under this section shall be liable to a penalty of
level 1 on the standard scale.
120.
Index of members.—(1) Every company having more than fifty members shall keep
an index of the names of the members of the company, unless the register of
members is in such a form as to constitute in itself an index.
(2) The
company shall make any necessary alteration in the index within fourteen days
after the date on which any alteration is made in the register of members.
(3) The
index shall contain, in respect of each member, a sufficient indication to
enable the account of that member in the register to be readily found.
(4) A
person guilty of an offence under this section shall be liable to a penalty of
level 1 on the standard scale.
121.
Trust not to be entered on register.—No notice of any trust, expressed, implied
or constructive, shall be entered on the register of members of a company, or
be receivable by the registrar.
122.
Register of debenture-holders.—(1) Every company shall keep a register of its
debenture-holders and any contravention or default in complying with
requirement of this section shall be an offence punishable under this Act.
(2)
There must be entered in the register such particulars of each debenture-holder
as may be specified.
(3) This
section shall not apply with respect to debentures which, ex facie, are payable
to the bearer thereof.
(4) A
person guilty of an offence under this section shall be liable to a penalty of
level 1 on the standard scale.
123.
Index of debenture-holders.—(1) Every company having more than fifty
debenture-holders shall keep an index of the names of the debentureholders of
the company, unless the register of debenture-holders is in such a form as to
constitute in itself an index and any contravention or default in complying
with requirement of this section shall be an offence punishable under this Act.
(2) The
company shall make any necessary alteration in the index within fourteen days
after the date on which any alteration is made in the register of
debenture-holders.
(3) The
index shall contain, in respect of each debenture-holder, a sufficient
indication to enable the account of that debenture-holder in the register to be
readily found.
(4) A
person guilty of an offence under this section shall be liable to a penalty of
level 1 on the standard scale.
124.
Rights to inspect and require copies.—(1) The registers and the index referred
to in sections 119, 120, 122 and 123 shall, be open to the inspection of
members or debentures-holders during business hours, subject to such reasonable
restrictions, as the company may impose, so that not less than two hours in
each day be allowed.
(2)
Inspection by any member or debenture-holder of the company shall be without
charge, and in the case of any other person on payment of such fee as may be
fixed by the company for each inspection.
(3) Any
person may require a certified copy of register and index or any part thereof,
on payment of such fee as may be fixed by the company.
(4) The
certified copies requested under this section shall be issued within a period
of seven days, exclusive of the days on which the transfer book of the company
is closed.
(5) A
person seeking to exercise either of the rights conferred by this section must
make a request to the company to that effect.
(6) The
request must contain the following information—
(a) in
the case of an individual, his name and address;
(b) in
the case of an organisation, its name and address and also of the authorised
person; and (c) the purpose for which the information is to be used.
(7) Any
refusal of inspection required under sub-section (1), or if any copy required
under sub-section (3) is not issued within the specified period shall be an
offence and any person guilty of an offence under this section shall be liable
to a penalty of level 1 on the standard scale; and the registrar may by an
order compel an immediate inspection of the register and index or direct that
copies required shall be sent to the persons requiring them.
125.
Power to close register. — (1) A company may, on giving not less than seven
days‘ previous notice close its register of members, or the part of it relating
to members holding shares of any class, for any period or periods not exceeding
in the whole thirty days in each year: Provided that the Commission may, on the
application of the company extend the period mentioned in sub-section (1), for
a further period of fifteen days.
(2) In
the case of listed company, notice for the purposes of sub-section (1), must be
given by advertisement in English and Urdu languages at least in one issue each
of a daily newspaper of respective language having wide circulation.
(3) The
provision of this section shall also apply for the purpose of closure of
register of debenture-holders of a company.
(4) Any
contravention or default in complying with requirement of this section shall be
an offence liable to a penalty of level 2 on the standard scale.
126. Power
of Court to rectify register.—(1) If—
(a) the
name of any person is fraudulently or without sufficient cause entered in or
omitted from the register of members or register of debenture-holders of a
company; or
(b)
default is made or unnecessary delay takes place in entering on the register of
members or register of debenture-holders the fact of the person having become
or ceased to be a member or debentureholder; the person aggrieved, or any
member or debenture-holder of the company, or the company, may apply to the
Court for rectification of the register.
(2) The
Court may either refuse the application or may order rectification of the
register on payment by the company of any damages sustained by any party
aggrieved, and may make such order as to costs as it in its discretion thinks
fit.
(3) On
any application under sub-section (1) the Court may decide any question
relating to the title of any person who is a party to the application to have
his name entered in or omitted from the register, whether the question arises
between members or debenture-holders or alleged members or debenture-holders,
or between members or alleged members, or debenture-holders or alleged
debentureholders, on the one hand and the company on the other hand; and
generally may decide any question which it is necessary or expedient to decide
for rectification of the register.
(4)
Where the Court has passed an order under sub-section (3) that prima facie
entry in or omission from, the register of members or the register of
debenture-holders the name or other particulars of any person, was made
fraudulently or without sufficient cause, the Court may send a reference for
adjudication of offence under section 127 to the court as provided under
section 482.
127.
Punishment for fraudulent entries in and omission from register.—Anyone who
fraudulently or without sufficient cause enters in, or omits from the register
of members or the register of debenture-holders the name or other particulars
of any person, shall be punishable with imprisonment for a term which may
extend to three years or with fine which may extend to one million rupees, or
with both.
128.
Notice to registrar of rectification of register.—When it makes an order for
rectification of the register of members in respect of a company which is
required by this Act to file a list of its members with the registrar, the
Court shall cause a copy of the order to be forwarded to the company and shall,
by its order, direct the company to file notice of the rectification with the
registrar within fifteen days from the receipt of the order.
129.
Register to be evidence.—The registers referred to in sections 119 and 122
shall be prima facie evidence of any matter which by this Act is directed or
authorised to be inserted therein.
130.
Annual return.—(1) Every company having a share capital shall, once in each
year, prepare and file with the registrar an annual return containing the
particulars in a specified form as on the date of the annual general meeting
or, where no such meeting is held or if held is not concluded, on the last day
of the calendar year.
(2) A
company not having a share capital shall in each year prepare and file with the
registrar a return containing the particulars in a specified form as on the
date of the annual general meeting or, where no such meeting is held or if held
is not concluded, on the last day of the calendar year.
(3) The
return referred to in sub-section (1) or sub-section (2) shall be filed with
the registrar within thirty days from the date of the annual general meeting
held in the year or, when no such meeting is held or if held is not concluded,
from the last day of the calendar year to which it relates:
Provided
that, in the case of a listed company, the registrar may for special reasons
extend the period of filing of such return by a period not exceeding fifteen
days.
(4) All
the particulars required to be submitted under sub-section (1) and sub-section
(2) shall have been previously entered in one or more registers kept by the
company for the purpose.
(5) Nothing
in this section shall apply to a company, in case there is no change of
particulars in the last annual return filed with the registrar: Provided that a
company, other than a single member company or a private company having paid up
capital of not more than three million rupees, shall inform the registrar in a
specified manner that there is no change of particulars in the last annual
return filed with the registrar.
(6) Any
contravention or default in complying with requirement of this section shall be
an offence liable—
(a) in
case of a listed company, to a penalty of level 2 on the standard scale; and
(b) in
case of any other company, to a penalty of level 1 on the standard scale.
MEETINGS
AND PROCEEDINGS
131.
Statutory meeting of company.—(1) Every public company having a share capital
shall, within a period of one hundred and eighty days from the date at which
the company is entitled to commence business or within nine months from the
date of its incorporation whichever is earlier, hold a general meeting of the
members of the company, to be called the “statutory meeting”:
Provided
that in case first annual general meeting of a company is decided to be held
earlier, no statutory meeting shall be required.
(2) The
notice of a statutory meeting shall be sent to the members at least twenty-one
days before the date fixed for the meeting along-with a copy of statutory
report.
(3) The
statutory report shall state—
(a) the
total number of shares allotted, distinguishing shares allotted other than in
cash, and stating the consideration for which they have been allotted;
(b) the
total amount of cash received by the company in respect of all the shares
allotted;
(c) an
abstract of the receipts of the company and of the payments made there out up
to a date within fifteen days of the date of the report, exhibiting under
distinctive headings the receipts of the company from shares and debentures and
other sources, the payments made there out, and particulars concerning the
balance remaining in hand, and an account or estimate of the preliminary
expenses of the company showing separately any commission or discount paid or
to be paid on the issue or sale of shares or debentures;
(d) the
names, addresses and occupations of the directors, chief executive, secretary,
auditors and legal advisers of the company and the changes, if any, which have
occurred since the date of the incorporation;
(e) the
particulars of any contract the modification of which is to be submitted to the
meeting for its approval, together with the particulars of the modification or
proposed modification;
(f) the
extent to which underwriting contracts, if any, have been carried out and the
extent to which such contracts have not been carried out, together with the
reasons for their not having been carried out; and
(g) the
particulars of any commission or brokerage paid or to be paid in connection
with the issue or sale of shares to any director, chief executive, secretary or
officer or to a private company of which he is a director; and certified by the
chief executive and at least one director of the company, and in case of a
listed company also by the chief financial officer.
(4) The
statutory report shall also contain a brief account of the state of the
company‘s affairs since its incorporation and the business plan, including any
change or proposed change affecting the interest of shareholders and business
prospects of the company.
(5) The
statutory report shall, so far as it relates to the shares allotted by the
company, the cash received in respect of such shares and to the receipts and
payments of the company, be accompanied by a report of the auditors of the
company as to the correctness of such allotment, receipt of cash, receipts and
payments.
(6) The
directors shall cause a copy of the statutory report, along-with report of the
auditors as aforesaid, to be delivered to the registrar for registration
forthwith after sending the report to the members of the company.
(7) The
directors shall cause a list showing the names, occupations, nationality and addresses
of the members of the company, and the number of shares held by them
respectively, to be produced at the commencement of the meeting and to remain
open and accessible to any member of the company during the continuance of the
meeting.
(8) The
members of the company present at the meeting shall be at liberty to discuss
any matter relating to the formation of the company or arising out of the
statutory report, whether previous notice has been given or not, but no
resolution of which notice has not been given in accordance with the articles
may be passed.
(9) The
meeting may adjourn from time to time, and at any adjourned meeting any
resolution of which notice has been given in accordance with the articles,
either before or after the original meeting, may be passed, and an adjourned
meeting shall have the same powers as an original meeting.
(10) The
provisions of this section shall not apply to a public company which converts
itself from a private company after one year of incorporation.
(11) Any
contravention or default in complying with requirement of this section shall be
an offence liable—
(a) in
case of a listed company, to a penalty of level 2 on the standard scale; and
(b) in case of any other company, to a penalty of level 1 on the standard scale.
132.
Annual general meeting.—(1) Every company, shall hold, an annual general
meeting within sixteen months from the date of its incorporation and thereafter
once in every calendar year within a period of one hundred and twenty days
following the close of its financial year: Provided that, in the case of a
listed company, the Commission, and, in any other case, the registrar, may for
any special reason extend the time within which any annual general meeting,
shall be held by a period not exceeding thirty days.
(2) An
annual general meeting shall, in the case of a listed company, be held in the
town in which the registered office of the company is situate or in a nearest
city:
Provided
that at least seven days prior to the date of meeting, on the demand of members
residing in a city who hold at least ten percent of the total paid up capital
or such other percentage as may be specified, a listed company must provide the
facility of video- link to such members enabling them to participate in its
annual general meeting.
(3) The
notice of an annual general meeting shall be sent to the members and every
person who is entitled to receive notice of general meetings at least
twenty-one days before the date fixed for the meeting:
Provided
that in case of a listed company, such notice shall be sent to the Commission,
in addition to its being dispatched in the normal course to members and the
notice shall also be published in English and Urdu languages at least in one
issue each of a daily newspaper of respective language having nationwide
circulation.
(4)
Nothing in this section shall apply to a single member company.
(5) Any
contravention or default in complying with requirement of this section shall be
an offence liable—
(a) in
case of a listed company, to a penalty of level 2 on the standard scale; and
(b) in
case of any other company, to a penalty of level 1 on the standard scale.
133.
Calling of extra-ordinary general meeting.—(1) All general meetings of a
company, other than the annual general meeting referred to in section 132 and
the statutory meeting mentioned in section 131, shall be called extra-ordinary
general meetings.
(2) The
board may at any time call an extra-ordinary general meeting of the company to
consider any matter which requires the approval of the company in a general
meeting.
(3) The
board shall, at the requisition made by the members— (a) in case of a company
having share capital, representing not less than one-tenth of the total voting
power as on the date of deposit of requisition; and
(b) in case
of a company not having share capital, not less than onetenth of the total
members; forthwith proceed to call an extra-ordinary general meeting.
(4) The
requisition shall state the objects of the meeting, be signed by the
requisitionists and deposited at the registered office of the company.
(5) If
the board does not proceed within twenty-one days from the date of the
requisition being so deposited to cause a meeting to be called, the
requisitionists, may themselves call the meeting, but in either case any
meeting so called shall be held within ninety days from the date of the deposit
of the requisition.
(6) Any
meeting called under sub-section (5) by the requisitionists shall be called in
the same manner, as nearly as possible, as that in which meetings are to be
called by board.
(7) Any
reasonable expenses incurred by the requisitionists in calling a meeting under
sub-section (5) shall be re-imbursed to the requisitionists by the company and
the sums so paid shall be deducted from any fee or other remuneration payable
to such of the directors who were in default in calling the meeting.
(8)
Notice of an extra-ordinary general meeting shall be served to the members in
the manner provided for in section 55:
Provided
that in case of a company other than listed, if all the members entitled to
attend and vote at any extraordinary general meeting so agree, a meeting may be
held at a shorter notice.
(9) Any
contravention or default in complying with requirement of this section shall be
an offence liable— (a) in case of a listed company, to a penalty of level 2 on
the standard scale; and
(b) in
case of any other company, to a penalty of level 1 on the standard scale.
134.
Provisions as to meetings and votes.—(1) The following provisions shall apply
to the general meetings of a company or meetings of a class of members of the
company, namely:
(a)
notice of the meeting specifying the place and the day and hour of the meeting
alongwith a statement of the business to be transacted at the meeting shall be
given—
(i) to every
member or class of the members of the company as the case may be;
(ii) to
every director;
(iii) to
any person who is entitled to a share in consequence of the death or bankruptcy
of a member, if the company has been notified of his entitlement;
(iv) to
the auditors of the company; in the manner in which notices are required to be
served by section 55, but the accidental omission to give notice to, or the
non-receipt of notice by, any member shall not invalidate the proceedings at
any meeting;
(b) in
case of a listed company, if certain members who hold ten percent of the total
paid up capital or such other percentage as may be specified, reside in a city,
it shall be mentioned in the notice that such members, may demand the company
to provide them the facility of video-link for attending the meeting.
(2) For
the purposes of sub-section (1), in the case of an annual general meeting, all
the businesses to be transacted shall be deemed special, other than—
(a) the
consideration of financial statements and the reports of the board and
auditors;
(b) the
declaration of any dividend;
(c) the
election and appointment of directors in place of those retiring; and
(d) the
appointment of the auditors and fixation of their remuneration.
(3)
Where any special business is to be transacted at a general meeting, there
shall be annexed to the notice of the meeting a statement setting out all
material facts concerning such business, including, in particular, the nature
and extent of the interest, if any, therein of every director, whether directly
or indirectly, and, where any item of business consists of the according of an
approval to any document by the meeting, the time when and the place where the
document may be inspected, shall be specified in the statement.
(4)
Members of a company may participate in the meeting personally, through
video-link or by proxy.
(5) The
chairman of the board, if any, shall preside as chairman at every general
meeting of the company, but if there is no such chairman, or if at any meeting
he is not present within fifteen minutes after the time appointed for holding
the meeting, or is unwilling to act as chairman, any one of the directors
present may be elected to be chairman, and if none of the directors is present
or is unwilling to act as chairman the members present shall choose one of
their member to be the chairman.
(6) In
the case of a company having a share capital, every member shall have votes
proportionate to the paid-up value of the shares or other securities carrying
voting rights held by him according to the entitlement of the class of such
shares or securities, as the case may be:
Provided
that, at the time of voting, fractional votes shall not be taken into account.
(7) No
member holding shares or other securities carrying voting rights shall be
debarred from casting his vote, nor shall anything contained in the articles
have the effect of so debarring him.
(8) In
the case of a company limited by guarantee and having no share capital, every
member thereof shall have one vote.
(9) On a
poll, votes may be given either personally or through video-link or by proxy or
through postal ballot in a manner and subject to the conditions as may be
specified.
(10)
Notwithstanding anything contained in this Act, the Commission shall have the
power to notify any business requiring the approval of the members shall only
be transacted through postal ballot for any company or class of companies.
(11) All
the requirements of this Act regarding calling of, holding and approval in
general meeting, board meeting and election of directors in case of a single
member company, shall be deemed complied with; if the decision is recorded in
the relevant minutes book and signed by the sole member or sole director as the
case may be.
(12) Any
contravention or default in complying with requirement of this section shall be
an offence liable—
(a) in
case of a listed company, to a penalty of level 3 on the standard scale; and
(b) in
case of any other company, to a penalty of level 2 on the standard scale.
135.
Quorum of general meeting.—(1) The quorum of a general meeting shall be—
(a) in
the case of a public listed company, unless the articles provide for a larger
number, not less than ten members present personally, or through video-link who
represent not less than twenty-five percent of the total voting power, either
of their own account or as proxies;
(b) in
the case of any other company having share capital, unless the articles provide
for a larger number, two members present personally, or through video-link who
represent not less than twenty-five percent of the total voting power, either
of their own account or as proxies;
(c) in
the case of a company not having share capital, as provided in the articles:
Provided that, if within half an hour from the time appointed for the meeting a
quorum is not present, the meeting, if called upon the requisition of members,
shall be dissolved; in any other case, it shall stand adjourned to the same day
in the next week at the same time and place, and, if at the adjourned meeting a
quorum is not present within half an hour from the time appointed for the
meeting, the members present personally or through video-link being not less
than two shall be a quorum, unless the articles provide otherwise.
(2) Any
contravention or default in complying with requirement of this section shall be
an offence liable—
(a) in
case of a listed company, to a penalty of level 2 on the standard scale; and
(b) in
case of any other company, to a penalty of level 1 on the standard scale.
136.
Power of the Court to declare the proceedings of a general meeting invalid.—The
Court may, on a petition, by members having not less than ten percent of the
voting power in the company, that the proceedings of a general meeting be
declared invalid by reason of a material defect or omission in the notice or
irregularity in the proceedings of the meeting, which prevented members from
using effectively their rights, declare such proceedings or part thereof
invalid and direct holding of a fresh general meeting:
Provided
that the petition shall be made within thirty days of the impugned meeting.
137.
Proxies.—(1) A member of a company entitled to attend and vote at a meeting of
the company may appoint another person as his proxy to exercise all or any of
his rights to attend, speak and vote at a meeting:
Provided
that—
(a)
unless the articles of a company otherwise provide, this sub-section shall not
apply in the case of a company not having a share capital;
(b) a
member shall not be entitled to appoint more than one proxy to attend any one
meeting;
(c) if
any member appoints more than one proxy for any one meeting and more than one
instruments of proxy are deposited with the company, all such instruments of
proxy shall be rendered invalid; and
(d) a
proxy must be a member unless the articles of the company permit appointment of
a non-member as proxy.
(2)
Subject to the provisions of sub-section (1), every notice of a meeting of a
company shall prominently set out the member‘s right to appoint a proxy and the
right of such proxy to attend, speak and vote in the place of the member at the
meeting and every such notice shall be accompanied by a proxy form.
(3) The
instrument appointing a proxy shall—
(a) be
in writing; and
(b) be
signed by the appointer or his attorney duly authorised in writing, or if the
appointer is a body corporate, be under its seal or be signed by an officer or
an attorney duly authorised by it.
(4) An
instrument appointing a proxy, if in the form set out in Regulation 43 of Table
A in the First Schedule shall not be questioned on the ground that it fails to
comply with any special requirements specified for such instruments by the
articles.
(5) The
proxies must be lodged with the company not later than forty-eight hours before
the time for holding a meeting and any provision to the contrary in the
company‘s articles shall be void.
(6) In
calculating the period mentioned in sub-section (5), no account shall be taken
of any part of the day that is not a working day.
(7) The
members or their proxies shall be entitled to do any or all the following
things in a general meeting, namely—
(a)
subject to the provisions of section 143, demand a poll on any question; and
(b) on a
question before the meeting in which poll is demanded, to abstain from voting
or not to exercise their full voting rights; and any provision to the contrary
in the articles shall be void.
(8)
Every member entitled to vote at a meeting of the company shall be entitled to
inspect during the business hours of the company all proxies lodged with the
company.
(9) The
provisions of this section shall apply mutatis mutandis to the meeting of a
particular class of members as they apply to a general meeting of all the
members.
(10)
Failure to issue notices in time or issuing notices with material defect or
omission or any other contravention of this section which has the effect of
preventing participation or use of full rights by a member or his proxy shall
make the company and its every officer who is a party to the default or
contravention liable to—
(a) a
penalty of level 2 on the standard scale if the default relates to a listed
company; and
(b) to a
penalty of level 1 on the standard scale if the default relates to any other
company.
138.
Representation of body corporate or corporation at meetings.— (1) A body
corporate or corporation (whether or not a company within the meaning of this
Act) which is a member of another company may, by resolution of its board or
other governing body authorise an individual to act as its representative at
any meeting of that other company, and the individual so authorised shall be
entitled to exercise the same powers on behalf of the corporation which he
represents.
(2) A
body corporate or corporation (whether or not a company within the meaning of
this Act) which is a creditor of another company may, by resolution of its
board or other governing body authorise an individual to act as its
representative at any meeting of the creditors of that other company held in
pursuance of this Act or any other meeting to which it is entitled to attend in
pursuance of the provisions contained in any instrument and the person so
authorised shall be entitled to exercise the same powers on behalf of the
corporation which he represents.
139.
Representation of Federal Government at meetings of companies.—(1) The
concerned Minister-in-Charge of the Federal Government, or as the case may be,
a Provincial Government, as the case may be, if a member of a company, may
appoint such individual as it thinks fit to act as its representative at any
meeting of the company or at any meeting of any class of members of the
company.
(2) An
individual appointed to act as aforesaid shall, for the purpose of this Act, be
deemed to be a member of such a company and shall be entitled to exercise the
same rights and powers, including the right to appoint proxy, as the concerned
Minister-in-Charge of the Federal Government or as the case may be, the
Provincial Government, as the case may be, may exercise as a member of the
company.
140.
Notice of resolution.—(1) The notice of a general meeting of a company shall
state the general nature of each business proposed to be considered and dealt
with at a meeting, and in case of special resolution, accompanied by the draft
resolution.
(2) The
members having not less than ten percent voting power in the company may give
notice of a resolution and such resolution together with the supporting
statement, if any, which they propose to be considered at the meeting, shall be
forwarded so as to reach the company—
(a) in
the case of a meeting requisitioned by the members, together with the
requisition for the meeting;
(b) in
any other case, at least ten days before the meeting; and the company shall
forthwith circulate such resolution to all the members.
(3) Any
contravention or default in complying with requirement of this section shall be
an offence liable—
(a) in
case of a listed company, to a penalty of level 2 on the standard scale; and
(b) in
case of any other company, to a penalty of level 1 on the standard scale.
141.
Voting to be by show of hands in first instance.—At any general meeting, a
resolution put to the vote of the meeting shall, unless a poll is demanded, be
decided on a show of hands.
142.
Declaration by chairman on a show of hands.—(1) On a vote on a resolution at a
meeting on a show of hands, a declaration by the chairman that the resolution—
(a) has
or has not been passed; or
(b)
passed unanimously or by a particular majority; is conclusive evidence of that
fact without proof of the number or proportion of the votes recorded in favour
of or against the resolution.
(2) An
entry in respect of such a declaration in minutes of the meeting recorded in
accordance with section 151 is also conclusive evidence of that fact without
such proof.
143.
Demand for poll.—(1) Before or on the declaration of the result of the voting
on any resolution on a show of hands, a poll may be ordered to be taken by the
chairman of the meeting of his own motion, and shall be ordered to be taken by
him on a demand made in that behalf by the members present in person or through
video-link or by proxy, where allowed, and having not less than one-tenth of
the total voting power.
(2) The
demand for a poll may be withdrawn at any time by the members who made the
demand. 144. Poll through secret ballot.—Notwithstanding anything contained in
this Act, when a poll is demanded on any resolution, it may be ordered to be
taken by the chairman of the meeting by secret ballot of his own motion, and
shall be ordered to be taken by him on a demand made in that behalf by the
members present in person, through video-link or by proxy, where allowed, and
having not less than one-tenth of the total voting power.
145.
Time of taking poll.—(1) A poll demanded on the election of a chairman or on a
question of adjournment shall be taken forthwith and a poll demanded on any
other question shall be taken at such time, not more than fourteen days from
the day on which it is demanded, as the chairman of the meeting may direct.
(2) When
a poll is taken, the chairman or his nominee and a representative of the
members demanding the poll shall scrutinize the votes given on the poll and the
result shall be announced by the chairman.
(3)
Subject to the provisions of this Act, the chairman shall have power to
regulate the manner in which a poll shall be taken.
(4) The
result of the poll shall be deemed to be the decision of the meeting on the
resolution on which the poll was taken.
146.
Resolutions passed at adjourned meeting.—Where a resolution is passed at an
adjourned meeting of—
(a) a company;
(b) the
holders of any class of shares in a company;
(c) the
board; or
(d) the
creditors of a company; the resolution shall, for all purposes, be treated as
having been passed on the date on which it was in fact passed, and shall not be
deemed to have been passed on any earlier date.
147.
Power of Commission to call meetings.—(1) If default is made in holding the
statutory meeting, annual general meeting or any extraordinary general meeting
in accordance with sections 131, 132 or 133, as the case may be, the Commission
may, notwithstanding anything contained in this Act or in the articles of the
company, either of its own motion or on the application of any director or
member of the company, call, or direct the calling of, the said meeting of the
company in such manner as the Commission may think fit, and give such ancillary
or consequential directions as the Commission thinks expedient in relation to
the calling, holding and conducting of the meeting and preparation of any
document required with respect to the meeting.
Explanation.—The
directions that may be given under sub-section (1) may include a direction that
one member of the company present in person or by proxy shall be deemed to
constitute a meeting.
(2) Any
meeting called, held and conducted in accordance with any such direction shall,
for all purposes, be deemed to be a meeting of the company duly called, held
and conducted, and all expenses incurred in connection thereto shall be paid by
the company unless the Commission directs the same to be recovered from any
officer of the company which he is hereby authorised to do.
148.
Punishment for default in complying with provisions of section 147.—If any
person makes default in holding a meeting of the company in accordance with
section 147 or in complying with any directions of the Commission, shall be
liable to a penalty of level 3 on the standard scale.
149.
Passing of resolution by the members through circulation.—(1) Except for the
businesses specified under sub-section (2) of section 134 to be conducted in
the annual general meeting, the members of a private company or a public
unlisted company (having not more than fifty members), may pass a resolution
(ordinary or special) by circulation signed by all the members for the time
being entitled to receive notice of a meeting.
(2) Any
resolution passed under sub-section (1), shall be as valid and effectual as if
it had been passed at a general meeting of the company duly convened and held.
(3) A
resolution shall not be deemed to have been duly passed, unless the resolution
has been circulated, together with the necessary papers, if any, to all the
members.
(4) A
members‘ agreement to a written resolution, passed by circulation, once
signified, may not be revoked.
(5) A
resolution under sub-section (1) shall be noted at subsequent meeting of the
members and made part of the minutes of such meeting.
150.
Filing of resolution.—(1) Every special resolution passed by a company shall,
within fifteen days from the passing thereof, be filed with the registrar duly
authenticated by a director or secretary of the company.
(2)
Where articles have been registered, a copy of every special resolution for the
time being in force shall be embodied in or annexed to every copy of the
articles issued after the date of the resolution.
(3) A
copy of every special resolution shall be forwarded to any member at his
request on payment of such fee not exceeding the amount as the company may
determine.
(4) Any
contravention or default in complying with requirement of this section shall be
an offence liable to a penalty of level 1 on the standard scale.
151.
Records of resolutions and meetings.—(1) Every company shall keep records of—
(a)
copies of all resolutions of members passed otherwise than at general meetings;
and
(b) minutes
of all proceedings of general meetings along with the names of participants, to
be entered in properly maintained books;
(2)
Minutes recorded in accordance with sub-section (1), if purporting to be
authenticated by the chairman of the meeting or by the chairman of the next
meeting, shall be the evidence of the proceedings at the meeting.
(3)
Until the contrary is proved, every general meeting of the company in respect
of the proceedings whereof minutes have been so made shall be deemed to have
been duly called, held and conducted.
(4) The
records must be kept at the registered office of the company from the date of
the resolution, meeting or decision simultaneously in physical and electronic
form and it shall be preserved for at least twenty years in physical form and
permanently in electronic form.
(5) Any
contravention or default in complying with requirement of this section shall be
an offence liable to a penalty of level 1 on the standard scale.
152.
Inspection of records of resolutions and meetings.—(1) The books containing the
minutes of proceedings of the general meetings shall be open to inspection by
members without charge during business hours, subject to such reasonable
restrictions as the company may by its articles or in general meeting impose so
that not less than two hours in each day be allowed for inspection.
(2) Any
member shall at any time after seven days from the meeting be entitled to be
furnished, within seven days after he has made a request in that behalf to the
company, with a certified copy of the minutes of any general meeting at such
charge not exceeding the amount as may be fixed by the company.
(3) If
any inspection required under sub-section (1) is refused, or if any copy
required under sub-section (2) is not furnished within the time specified
therein, the person guilty of an offence shall be liable to a penalty of level
1 on the standard scale, and the registrar may direct immediate inspection or
supply of copy, as the case may be.
APPOINTMENT
AND REMOVAL OF DIRECTORS
153. Ineligibility
of certain persons to become director.—A person shall not be eligible for
appointment as a director of a company, if he —
(a) is a
minor;
(b) is
of unsound mind;
(c) has
applied to be adjudicated as an insolvent and his application is pending;
(d) is
an undischarged insolvent;
(e) has
been convicted by a court of law for an offence involving moral turpitude;
(f) has
been debarred from holding such office under any provision of this Act;
(g) is
lacking fiduciary behaviour and a declaration to this effect has been made by
the Court under section 212 at any time during the preceding five years;
(h) does
not hold National Tax Number as per the provisions of Income Tax Ordinance,
2001 (XLIX of 2001):
Provided
that the Commission may grant exemption from the requirement of this clause as
may be notified.
(i) is
not a member:
Provided
that clause (i) shall not apply in the case of,—
(i) a
person representing a member which is not a natural person;
(ii) a
whole-time director who is an employee of the company;
(iii) a
chief executive; or
(iv) a
person representing a creditor or other special interests by virtue of
contractual arrangements;
(j) has
been declared by a court of competent jurisdiction as defaulter in repayment of
loan to a financial institution;
(k) is
engaged in the business of brokerage, or is a spouse of such person or is a
sponsor, director or officer of a corporate brokerage house:
Provided
that clauses (j) and (k) shall be applicable only in case of listed companies.
154.
Minimum number of directors of a company.—(1) Notwithstanding anything
contained in any other law for the time being in force,
(a) a
single member company shall have at least one director;
(b)
every other private company shall have not less than two directors;
(c) a
public company other than a listed company shall have not less than three
directors; and
(d) a
listed company shall have not less than seven directors: Provided that public
interest companies shall be required to have female representation on their
board as may be specified by the Commission.
(2) Only
a natural person shall be a director.
155.
Number of directorships.—(1) No person shall, after the commencement of this
Act, hold office as a director, including as an alternate director at the same
time in more than such number of companies as may be specified:
Provided
that this limit shall not include the directorships in a listed subsidiary.
(2) A
person holding the position of director in more than seven companies on the
commencement of this Act shall ensure the compliance of this section within one
year of such commencement.
(3) Any
casual vacancy on the board of a listed company shall be filled up by the
directors at the earliest but not later than ninety days from the date, the
vacancy occurred.
156.
Compliance with the Code of Corporate Governance.—The Commission may provide
for framework to ensure good corporate governance practices, compliance and
matters incidental and axillary for companies or class of companies in a manner
as may be specified.
157.
First directors and their term.—(1) The number of directors and the names of
the first directors shall be determined by the subscribers of the memorandum
and their particulars specified under section 197 shall be submitted along with
the documents for the incorporation of the company.
(2) The
number of first directors may be increased by appointing additional directors
by the members in a general meeting. The first directors shall hold office
until the election of directors in the first annual general meeting of the
company.
158.
Retirement of first and subsequent directors.—(1) All directors of the company—
(a) on
the date of first annual general meeting; or (b) in case of subsequent
directors on expiry of term of office of directors mentioned in section 161, shall
stand retired from office and the directors so retiring shall continue to
perform their functions until their successors are elected.
(2) The
directors so continuing to perform their functions shall take immediate steps
to hold the election of directors and in case of any impediment report such
circumstances to the registrar within forty-five days before the due date of
the annual general meeting or extra ordinary general meeting, as the case may
be, in which elections are to be held:
Provided
that the holding of annual general meeting or extra ordinary general meeting,
as the case may be, shall not be delayed for more than ninety days from the due
date of the meeting or such extended time as may be allowed by the registrar,
for reasons to be recorded, only in case of exceptional circumstances beyond
the control of the directors, or in compliance of any order of the court.
(3) The
registrar, may on expiry of period as provided in sub-section (2), either—
(a) on
its own motion; or
(b) on
the representation of the members holding not less than one tenth of the total
voting powers in a company having share capital; or
(c) on
the representation of the members holding not less than one tenth of the total
members of the company not having share capital of the company, directs the
company to hold annual general meeting or extra ordinary general meeting for
the election of directors on such date and time as may be specified in the
order.
(4) Any
officer of the company or any other person who fails to comply with the
direction given under sub-section (3) shall be guilty of an offence liable to a
fine of level 2 on the standard scale.
159.
Procedure for election of directors.—(1) Subject to the provision of section
154, the existing directors of a company shall fix the number of directors to
be elected in the general meeting, not later than thirty-five days before
convening of such meeting and the number of directors so fixed shall not be
changed except with the prior approval of the general meeting in which election
is to be held.
(2) The
notice of the meeting at which directors are proposed to be elected shall among
other matters, expressly state—
(a) the
number of directors fixed under sub-section (1); and (b) the names of the
retiring directors.
(3) Any
member who seeks to contest an election to the office of director shall,
whether he is a retiring director or otherwise, file with the company, not
later than fourteen days before the date of the meeting at which elections are
to be held, a notice of his intention to offer himself for election as a
director:
Provided
that any such person may, at any time before the holding of election, withdraw
such notice.
(4) All
notices received by the company in pursuance of sub-section (3) shall be
transmitted to the members not later than seven days before the date of the
meeting, in the same manner as provided under this Act for sending of a notice
of general meeting. In the case of a listed company such notice shall be
published in English and Urdu languages at least in one issue each of a daily
newspaper of respective language having wide circulation.
(5) The
directors of a company having a share capital shall, unless the number of
persons who offer themselves to be elected is not more than the number of
directors fixed under sub-section (1), be elected by the members of the company
in general meeting in the following manner, namely—
(a) a
member shall have such number of votes as is equal to the product of the number
of voting shares or securities held by him and the number of directors to be
elected;
(b) a
member may give all his votes to a single candidate or divide them between more
than one of the candidates in such manner as he may choose; and
(c) the
candidate who gets the highest number of votes shall be declared elected as
director and then the candidate who gets the next highest number of votes shall
be so declared and so on until the total number of directors to be elected has
been so elected.
(6) The
directors of a company limited by guarantee and not having share capital shall
be elected by members of the company in general meeting in the manner as
provided in articles of association of the company.
160.
Powers of the Court to declare election of directors invalid.— The Court may,
on the application of members holding ten percent of the voting power in the
company, made within thirty days of the date of election, declare election of
all directors or any one or more of them invalid if it is satisfied that there
has been material irregularity in the holding of the elections and matters
incidental or relating thereto.
161.
Term of office of directors.—(1) A director elected under sections 159 or 162
shall hold office for a period of three years unless he earlier resigns,
vacates office due to fresh election required under section 162 as the case may
be, becomes disqualified from being a director or otherwise ceases to hold
office:
Provided
that the term of office of directors of a company limited by guarantee and not
having share capital may be a period of less than three years as provided in
the articles of association of a company.
(2) Any
casual vacancy occurring among the directors may be filled up by the directors
and the person so appointed shall hold office for the remainder of the term of
the director in whose place he is appointed.
162.
Fresh election of directors.—(1) Notwithstanding anything contained in this
Act, a member having acquired, after the election of directors, the requisite
shareholding to get him elected as a director on the board of a company, may
require the company to hold fresh election of directors in accordance with the
procedure laid down in section 159:
Provided
that the number of directors fixed in the preceding election shall not be
decreased; Provided further that a listed company for the purpose of fresh
election of directors under this section shall follow such procedure as may be
specified by the Commission (2) The board shall upon receipt of requisition
under sub-section (1), as soon as practicable but not later than thirty days
from the receipt of such requisition, proceed to hold fresh election of
directors of the company.
163.
Removal of directors.—A company may by resolution in general meeting remove a
director appointed under sections 157, 161 or section 162 or elected in the
manner provided for in section 159:
Provided
that a resolution for removing a director shall not be deemed to have been
passed if the number of votes cast against it is equal to, or exceeds—
(a) the
total number of votes for the time being computed in the manner laid down in
sub-section (5) of section 159 divided by the number of directors for the time
being, if the resolution relates to removal of a director appointed under
sections 157, 161 or section 162 or where the directors were elected unopposed;
or
(b) the
minimum number of votes that were cast for the election of a director at the
immediately preceding election of directors, if the resolution relates to
removal of a director elected in the manner provided in sub-section (5) of
section 159.
164.
Nominee directors.—(1) In addition to the directors elected or deemed to have
been elected by shareholders, a company may have directors nominated by the
company‘s creditors or other special interests by virtue of contractual
arrangements.
(2) A
body corporate or corporation owned or controlled by the Federal Government or
as the case may be, a Provincial Government may also have directors nominated
on the board to whom such corporation or company has extended credit
facilities.
165.
Certain provisions not to apply to directors representing special
interests.—(1) Nothing in sections 158, 159,161, 162 or 163 shall apply to—
(a)
directors nominated by a body corporate or company or any other entity owned or
controlled, whether directly or indirectly, by the Federal Government or as the
case may be, a Provincial Government on the board of the company in which such
body corporate or company or entity has made investment;
(b)
directors nominated by virtue of investment made by the Federal Government or
as the case may be, a Provincial Government or the Commission on the board; or
(c)
directors nominated by foreign equity holders on the board or any other body
corporate set up under a regional co-operation or other co-operation
arrangement approved by the Federal Government.
(2) For
the purpose of nominating directors referred to in clause (a), (b) and (c), the
number of votes computed in the manner laid down in sub-section (5) of section
159 as are proportionate to the number of votes required to elect the director
if they had offered themselves for election, shall stand excluded from the
total number of votes available to the nominating body at an election of
directors, which may be proportionate to their voting power required to elect
directors at an election of directors of a company.
(3) A
director nominated under sub-section (1) shall hold office during the pleasure
of the nominating body.
166.
Manner of selection of independent directors and maintenance of databank of
independent directors.—(1) An independent director to be appointed under any
law, rules, regulations or code, shall be selected from a data bank containing
names, addresses and qualifications of persons who are eligible and willing to
act as independent directors, maintained by any institute, body or association,
as may be notified by the Commission, having expertise in creation and
maintenance of such data bank and post on their website for the use by the
company making the appointment of such directors:
Provided
that responsibility of exercising due diligence before selecting a person from
the data bank referred to above, as an independent director shall lie with the
company or the Government, as the case may be, making such appointment.
(2) For
the purpose of this section, an independent director means a director who is
not connected or does not have any other relationship, whether pecuniary or
otherwise, with the company, its associated companies, subsidiaries, holding
company or directors; and he can be reasonably perceived as being able to
exercise independent business judgment without being subservient to any form of
conflict of interest:
Provided
that without prejudice to the generality of this sub-section no director shall
be considered independent if one or more of the following circumstances exist—
(a) he has
been an employee of the company, any of its subsidiaries or holding company
within the last three years; (b) he is or has been the chief executive officer
of subsidiaries, associated company, associated undertaking or holding company
in the last three years;
(c) he
has, or has had within the last three years, a material business relationship
with the company either directly, or indirectly as a partner, major shareholder
or director of a body that has such a relationship with the company.
Explanation:
The major shareholder means a person who, individually or in concert with his
family or as part of a group, holds 10% or more shares having voting rights in
the paid-up capital of the company;
(d) he
has received remuneration in the three years preceding his/her appointment as a
director or receives additional remuneration, excluding retirement benefits
from the company apart from a director‘s fee or has participated in the
company‘s stock option or a performance-related pay scheme;
(e) he
is a close relative of the company‘s promoters, directors or major
shareholders: Explanation: “close relative” means spouse(s), lineal ascendants and descendants and
siblings;
(f) he
holds cross-directorships or has significant links with other directors through
involvement in other companies or bodies not being the associations licenced
under section 42;
(g) he
has served on the board for more than three consecutive terms from the date of
his first appointment, and for more than two consecutive terms in case of a
public sector company, provided that such person shall be deemed “independent
director” after a
lapse of one term;
(h) a
person nominated as a director under sections 164 and 165:
Provided
further that for determining the independence of directors for the purpose of sub-clauses
(a), (b) and (c) in respect of public sector companies, the time period shall
be taken as two years instead of three years. Further, an independent director
in case of a public sector company shall not be in the service of Pakistan or
of any statutory body or any body or institution owned or controlled by the
Government.
(3) The
independent director of a listed company shall be elected in the same manner as
other directors are elected in terms of section 159 and the statement of
material facts annexed to the notice of the general meeting called for the
purpose shall indicate the justification for choosing the appointee for
appointment as independent director.
(4) No
individual shall be selected for the data bank referred to in sub-section (1)
without his consent in writing.
(5) The
manner and procedure of selection of independent directors on the databank who
fulfill the qualifications and other requirements shall be specified by the
Commission.
(6) The
requirements of sub-section (1)—
(a)
shall be deemed relaxed till such time a notification is issued by the
Commission; and
(b) may
be relaxed by the Commission on an application made by the company supported
with the sufficient justification or the practical difficulty, as the case may
be.
167.
Consent to act as director to be filed with company— (1) No person shall be
appointed or nominated as a director or chief executive of a company or
represent as holding such office, nor shall any person describe or name any
other person as a director or proposed director or chief executive or proposed
chief executive of any company, unless such person or such other individual has
given his consent in writing to the company for such appointment or nomination.
(2) The
consent given to the company under sub-section (1) shall be filed with the
registrar within fifteen days thereof.
168.
Validity of acts of directors.—The acts of a person acting as a director are
valid notwithstanding that it is afterwards discovered that there was a defect
in his appointment; or he was disqualified from holding office; or he had
ceased to hold such office:
Provided
that, as soon as any such defect has come to notice, the director shall not
exercise the right of his office till the defect has been removed.
169.
Penalties.—Whoever contravenes or fails to comply with any of the provisions of
sections 154 to 168 or is a party to the contravention of the said provisions
shall be liable to a penalty of level 2 on the standard scale and may also be
debarred by the authority which imposes the penalty from becoming or continuing
a director of the company for a period not exceeding three years.
170.
Restriction on director’s remuneration.—(l) The remuneration of a director for
performing extra services, including the holding of the office of chairman,
shall be determined by the board or the company in general meeting, as the case
may be, in accordance with the provisions in the company‘s articles.
(2) The
remuneration to be paid to any director for attending the meetings of the board
or a committee of directors shall not exceed the scale approved by the company
or the board, as the case may be, in accordance with the provisions of the
articles:
171.
Vacation of office by the directors.—(1) A director shall ipso facto cease to
hold office if—
(a) he
becomes ineligible to be appointed as a director on any one or more of the
grounds enumerated in section 153;
(b) he
absents himself from three consecutive meetings of the board without seeking
leave of absence;
(c) he
or any firm of which he is a partner or any private company of which he is a
director—
(i)
without the sanction of the company in general meeting accepts or holds any
office of profit under the company other than that of chief executive or a
legal or technical adviser; or
(ii)
accepts a loan or guarantee from the company in contravention of section 182;
(2)
Nothing contained in sub-section (l) shall be deemed to preclude a company from
providing by its articles that the office of director shall be vacated on any
grounds additional to those specified in that sub-section.
DISQUALIFICATION
OF DIRECTORS BY THE COMMISSION
172.
Disqualification orders.—(1) In any of the circumstances stated hereunder, the
Commission may pass a disqualification order against a person to hold the
office of a director of a company for a period up to five years beginning from
the date of order—
(a)
conviction of an offence in connection with the promotion, formation,
management or liquidation of a company, or with the receivership or management
of a company‘s property;
(b)
persistent default in relation to provisions of this Act requiring any return,
account or other document to be filed with, delivered or sent, or notice of any
matter to be given, to the Commission or the registrar;
(c) a
person has been a director of a company which became insolvent at any time
(while he was a director or subsequently): Provided that order against any such
person shall not be made after the end of the period of two years beginning
with the day on which the company of which that person is or has been a
director became insolvent;
(d) the
business of the company in which he is or has been a director, has conducted to
defraud its creditors, members or any other persons or for a fraudulent or
unlawful purpose, or in a manner oppressive of any of its members or that the
company was formed for any fraudulent or unlawful purpose; or
(e) the
person concerned in the formation of the company or the management of its
affairs have in connection therewith been guilty of fraud, misfeasance, breach
of trust or other misconduct towards the company or towards any of its member;
or
(f) the
affairs of the company of which he is a director have been conducted in a
manner which has deprived the shareholders thereof of a reasonable return; or
(g) the
person has been convicted of allotment of shares of a company for inadequate
consideration; or (h) the person is involved in illegal deposit taking; or
(i) the
person has been convicted of financial irregularities or malpractices in a
company or
(j) the
company of which he is a director has acted against the interests of the
sovereignty and integrity of Pakistan, the security of the State, friendly
relations with foreign States; or
(k) the
company of which he is a director refuses to act according to the requirements of
the memorandum or articles or the provisions of this Act or fail to carry out
the directions of the Commission given in the exercise of powers under this
Act; or
(l) the
person is convicted of insider trading or market manipulation practices; or
(m) the
person has entered into a plea bargain arrangement with the National
Accountability Bureau or any other regulatory body;
(n) the
person has been declared a defaulter by the securities exchange;
(o) that
it is expedient in the public interest so to do.
(2)
Where a disqualification order is made against a person who is already subject
to such an order, the periods specified in those orders shall run concurrently.
(3) An
order under this section may be made by the Commission on its own motion or
upon a complaint made in this regard.
(4)
Before making an order the Commission shall afford the person concerned an
opportunity of representation and of being heard.
(5) Any
order made by the Commission under this section shall be without prejudice to
the powers of the Commission to take such further action as it deems fit with
regard to the person concerned.
173.
Personal liability for company’s debts where person acts while
disqualified.—(1) A person shall be personally responsible for all the relevant
debts of a company if at any time—
(a) in
contravention of a disqualification order under section 172, he is involved in
the management of the company, or
(b) as a
person who is involved in the management of the company, he acts on
instructions given without the leave of the Commission by a person whom he
knows at that time to be the subject of a disqualification order:
Provided
that where the decision is taken in the board, the disqualified director shall
be personally responsible to the extent of proportionate amount of liability so
incurred.
(2)
Where a person is personally responsible under this section for the relevant
debts of a company, he is jointly and severally liable in respect of those
debts with the company and any other person who, whether under this section or
otherwise, is so liable. -
(3) For
the purposes of this section, the relevant debts of a company are (a) in
relation to a person who is personally responsible under paragraph (a) of
sub-section (1), such debts and other liabilities of the company as are
incurred at a time when that person was involved in the management of the
company; and (b) in relation to a person who is personally responsible under
paragraph (b) of that sub-section, such debts and other liabilities of the
company as are incurred at a time when that person was acting on instructions
given as mentioned in that paragraph.
(4) For
the purposes of this section, company means a public interest company and a
person shall be deemed involved in the management of the company, if he is a
director or concerned, whether directly or indirectly or takes part in the
management of such company.
174.
Prohibition on assignment of office by directors.—(1) A director of any company
shall not assign his office to any other person and any such appointment shall
be void ab-initio.
(2)
Notwithstanding anything contained in sub-section (1), the appointment by a
director, with the approval of the board, of an alternate or substitute
director to act for him during his absence from Pakistan of not less than
ninety days, shall not be deemed to be an assignment of office.
(3) The
alternate director appointed under sub-section (2) shall ipso facto vacate
office if and when the director appointing him returns to Pakistan.
175.
Penalty for unqualified person acting as director.—If a person who is not
qualified to be a director or chief executive or who has otherwise vacated the
office of director or chief executive describes or represents himself or acts
as a director or chief executive, or allows or causes himself to be described
as such, shall be liable to a penalty of level 1 on the standard scale.
176.
Proceedings of the board.—(1) The quorum for a meeting of board of a listed
company shall not be less than one-third of number of directors or four,
whichever is greater and the participation of the directors by video
conferencing or by other audio visual means shall also be counted for the
purposes of quorum under this sub-section: Provided that if at any time, there
are not enough directors to form a quorum to fill a casual vacancy, all the
remaining directors shall be deemed to constitute a quorum for this limited
purpose.
(2) The
quorum for a meeting of the board of other than listed company shall be as
provided in the articles.
(3) The
board of a public company shall meet at least once in each quarter of a year.
(4) If a meeting of the board is conducted in the absence of a quorum or a
meeting of board is not held as required by sub-section (3), the chairman of
the directors and the directors shall be liable—
(a) if
the default relates to a listed company, to a penalty of level 2 on the
standard scale; and
(b) if
the default relates to any other company, to a penalty of level 1 on the
standard scale.
177.
Ineligibility of bankrupt to act as director.—If any person being an
undischarged insolvent acts as chief executive or director of a company, he
shall be liable to imprisonment for a term not exceeding two years or to a fine
not exceeding one hundred thousand rupees, or to both.
178.
Records of resolutions and meetings of board.—(1) Every company shall keep
records comprising—
(a) all
resolutions of the board passed by circulation; and
(b)
minutes of all proceedings of board meetings or committee of directors along
with the names of participants, to be entered in properly maintained books.
(2)
Minutes recorded in accordance with sub-section (1), if purporting to be
authenticated by the chairman of the meeting or by the chairman of the next
meeting, shall be the evidence of the proceedings at the meeting.
(3)
Until the contrary is proved, every meeting of board or committee of directors
in respect of the proceedings whereof minutes have been so made shall be deemed
to have been duly called, held and conducted.
(4) A
copy of the draft minutes of meeting of board shall be furnished to every
director within fourteen days of the date of meeting.
(5) The
records must be kept at the registered office of the company from the date of
the resolution, meeting or decision simultaneously in physical and electronic
form and it shall be preserved for at least ten years in physical form and
permanently in electronic form.
(6) Any
contravention or default in complying with requirement of this section shall be
an offence liable to a penalty of level 1 on the standard scale.
179.
Passing of resolution by the directors through circulation.—(1) A resolution in
writing signed by all the directors or the committee of directors for the time
being entitled to receive notice of a meeting of the directors or committee of
directors shall be as valid and effectual as if it had been passed at a meeting
of the directors or the committee of directors duly convened and held.
(2) A
resolution shall not be deemed to have been duly passed, unless the resolution
has been circulated, together with the necessary papers, if any, to all the
directors.
(3) A
resolution under sub-section (1) shall be noted at a subsequent meeting of the
board or the committee thereof, as the case may be, and made part of the
minutes of such meeting.
(4) A
directors‘ agreement to a written resolution, passed by circulation, once
signified, may not be revoked.
180.
Liabilities of directors and officers.— Any provision, whether contained in the
articles of a company or in any contract with a company or otherwise, for
exempting any officer or auditor of the company, from, or indemnifying him
against, any liability which by virtue of any law would otherwise attach to him
in respect of any negligence, default, breach of duty or breach of trust of
which he may be guilty in relation to the company, shall be void except as
otherwise specified for:
(a)
provisions of insurance undertaken by a company on behalf of such officers of
the company; or
(b)
qualifying third party indemnity provisions undertaken by a company on behalf
of such officers of the company:
Provided
that, notwithstanding anything contained in this section, a company may, in
pursuance of any such provision as aforesaid, indemnify any such director,
chief executive, officer against any liability incurred by him in defending any
proceedings, whether civil or criminal, in which judgment is given in his
favour or in which he is acquitted, or in connection with any application under
section 493 in which relief is granted to him.
181.
Protection to independent and non-executive directors.—(1) Notwithstanding
anything contained in this Act—
(a) an
independent director; and
(b) a
non-executive director; shall be held liable, only in respect of such acts of
omission or commission by a listed company or a public sector company which had
occurred with his knowledge, attributable through board processes, and with his
consent or connivance or where he had not acted diligently.
(2) For
the purpose of this section a non-executive director means, a person on the
board of the company who-
(a) is
not from among the executive management team and may or may not be independent;
(b) is
expected to lend an outside viewpoint to the board of a company;
(c) does
not undertake to devote his whole working time to the company and not involve
in managing the affairs of the company;
(d) is
not a beneficial owner of the company or any of its associated companies or
undertakings;
(e) does
not draw any remuneration from the company except the meeting fee.
182.
Loans to directors: requirement of members’ approval.—(1) A company shall not—
(a) make
a loan to a director of the company or of its holding company; or to any of his
relatives;
(b) give
a guarantee or provide security in connection with a loan made by any person to
such a director; or to any of his relatives; unless the transaction has been
approved by a resolution of the members of the company: Provided that in case
of a listed company, approval of the Commission shall also be required before
sanctioning of any such loan.
Explanation.—For
the purpose of this section “relative” in relation to a director means his spouse and minor
children.
(2)
Nothing contained in sub-section (1) shall apply to a company which in the
ordinary course of its business provides loans or gives guarantees or
securities for the due repayment of any loan.
(3)
Every person who is a party to any contravention of this section, including in
particular any person to whom the loan is made or who has taken the loan in
respect of which the guarantee is given or the security is provided, shall be
punishable with fine which may extend to one million rupees or with simple
imprisonment for a term which may extend to one year.
(4) All
persons who are parties to any contravention of sub-section (1) shall be
liable, jointly and severally, to the lending company for the repayment of the
loan or for making good the sum with markup not less than the borrowing cost of
the lending company which the lending company may have been called upon to pay
by virtue of the guarantee given or the security provided by such company.
(5)
Sub-section (1) shall apply to any transaction represented by a book-debt which
was from its inception in the nature of a loan or an advance.
183.
Powers of board.—(1) The business of a company shall be managed by the board,
who may exercise all such powers of the company as are not by this Act, or by
the articles, or by a special resolution, required to be exercised by the
company in general meeting.
(2) The
board shall exercise the following powers on behalf of the company, and shall
do so by means of a resolution passed at their meeting, namely:—
(a) to
issue shares;
(b) to
issue debentures or any instrument in the nature of redeemable capital;
(c) to
borrow moneys otherwise than on debentures;
(d) to
invest the funds of the company;
(e) to
make loans;
(f) to
authorise a director or the firm of which he is a partner or any partner of
such firm or a private company of which he is a member or director to enter
into any contract with the company for making sale, purchase or supply of goods
or rendering services with the company;
(g) to
approve financial statements;
(h) to
approve bonus to employees;
(i) to
incur capital expenditure on any single item or dispose of a fixed asset in
accordance with the limits as may be specified:
Provided
that the acceptance by a banking company in the ordinary course of its business
of deposit of money from the public repayable on demand or otherwise and
withdrawable by cheque, draft, order or otherwise, or placing of moneys on
deposit by a banking company with another banking company such conditions as
the board may prescribe, shall not be deemed to be a borrowing of money or, as
the case may be, a making of loan by a banking company with the meaning of this
section;
(j) to
undertake obligations under leasing contracts exceeding such amount as may be
notified;
(k) to
declare interim dividend; and
(l)
having regard to such amount as may be determined to be material (as construed
in Generally Accepted Accounting Principles) by the board—
(i) to
write off bad debts, advances and receivables;
(ii) to
write off inventories and other assets of the company; and
(iii) to
determine the terms of and the circumstances in which a law suit may be
compromised and a claim or right in favour of a company may be released,
extinguished or relinquished.
(m) to
take over a company or acquire a controlling or substantial stake in another
company; (n) any other matter which may be specified.
(3) The
board of a company shall not except with the consent of the general meeting
either specifically or by way of an authorisation, do any of the following
things, namely.—
(a)
sell, lease or otherwise dispose of the undertakings or a sizeable part thereof
unless the main business of the company comprises of such selling or leasing;
and
Explanation.—For
the purposes of this clause- (i) “undertaking” shall mean an undertaking in which the investment of the
company exceeds twenty percent of its net worth as per the audited financial
statements of the preceding financial year or an undertaking which generates
twenty percent of the total income of the company during the previous financial
year;
(ii) the
expression “sizeable part” in any
financial year shall mean twenty five percent or more of the value of the
assets in that class as per the audited financial statements of the preceding
financial year;
(b) sell
or otherwise dispose of the subsidiary of the company;
(c)
remit, give any relief or give extension of time for the repayment of any debt
outstanding against any person specified in sub-section (1) of section 182.
(4)
Nothing contained in sub-section (3) shall entitle a listed company to sell or
otherwise dispose of the undertaking, which results in or may lead to closure
of business operation or winding up of the company, without there being a
viable alternate business plan duly authenticated by the board.
(5) Any
resolution passed under sub-section (3) if not implemented within one year from
the date of passing shall stand lapsed.
(6) Any
contravention or default in complying with requirement of this section shall be
an offence liable to a penalty of level 2 on the standard scale and shall be
individually and severally liable for losses or damages arising out of such
action.
184.
Prohibition regarding making of political contributions.—(1) Notwithstanding anything
contained in this Act, a company shall not contribute any amount or allow
utilization of its assets—
(a) to
any political party; or
(b) for
any political purpose to any individual or body.
(2) If a
company contravenes the provisions of sub-section (1), then—
(a) the
company shall be liable to a penalty of level 2 on the standard scale; and
(b)
every director and officer of the company who is in default shall be punishable
with imprisonment of either description for a term which may extend to two years
and shall also be liable to a fine of one million rupees.
185.
Prohibition regarding distribution of gifts.—(1) Notwithstanding anything
contained in this Act, a company shall not distribute gifts in any form to its
members in its meeting.
(2) Any
contravention or default in complying with requirement of this section shall be
an offence liable to a penalty of level 1 on the standard scale.
CHIEF
EXECUTIVE
186.
Appointment of first chief executive.—(1) Every company shall have a chief
executive appointed in the manner provided in this section and section 187.
(2) The
name of first chief executive shall be determined by the subscribers of the
memorandum and his particulars specified under section 197 shall be submitted
along with the documents for the incorporation of the company.
(3) The
first chief executive shall, unless he earlier resigns or otherwise ceases to
hold office, hold office up to the first annual general meeting of the company
or, if a shorter period is fixed by the subscribers at the time of his
appointment, for such period.
(4)
Notwithstanding anything contained in this section, the Government shall have
the power to nominate chief executive of a public sector company in such manner
as may be specified.
187.
Appointment of subsequent chief executive.—(1) Within fourteen days from the
date of election of directors under section 159 or the office of the chief
executive falling vacant, as the case may be, the board shall appoint any
person, including an elected director, to be the chief executive, but such
appointment shall not be for a period exceeding three years from the date of
appointment: Provided that the chief executive appointed against a casual
vacancy shall hold office till the directors elected in the next election
appoint a chief executive.
(2) On
the expiry of his term of office under section 186 or sub-section (1) of this
section, a chief executive shall be eligible for reappointment.
(3) The
chief executive retiring under section 186 or this section shall continue to
perform his functions until his successor is appointed, unless nonappointment
of his successor is due to any fault on his part or his office is expressly
terminated.
(4)
Notwithstanding anything contained in this section, the Government shall have
the power to nominate chief executive of a company where majority of directors
is nominated by the Government, in such manner as may be specified.
188.
Terms of appointment of chief executive.—(1) Save as provided in sub-section
(2), the terms and conditions of appointment of a chief executive shall be
determined by the board or the company in general meeting in accordance with
the provisions in the company‘s articles.
(2) The
terms and conditions of appointment of a chief executive nominated under
section 186 or 187 shall be determined by the Government, in such manner as may
be specified.
(3) The
chief executive shall if he is not already a director of the company, be deemed
to be its director and be entitled to all the rights and privileges, and
subject to all the liabilities, of that office.
189.
Restriction on appointment of chief executive.—No person who is ineligible to
become a director of a company under section 153 or disqualified under sections
171 or 172 shall be appointed or continue as the chief executive of any company.
190.
Removal of chief executive.—(1) The board by resolution passed by not less than
three-fourths of the total number of directors for the time being, or the
company by a special resolution, may remove a chief executive before the
expiration of his term of office notwithstanding anything contained in the
articles or in any agreement between the company and such chief executive.
(2)
Notwithstanding anything contained in this section, the Government or an
authority or a person authorized by it shall have the power to remove chief
executive of a company where more than seventy-five percent of the voting
rights are held by the Government.
191.
Chief executive not to engage in business competing with company’s
business.—(1) A chief executive of a public company shall not directly or
indirectly engage in any business which is of the same nature as and directly
competes with the business carried on by the company of which he is the chief
executive or by a subsidiary of such company.
Explanation.—A
business shall be deemed to be carried on indirectly by the chief executive if
the same is carried on by his spouse or any of his minor children.
(2)
Every person who is appointed as chief executive of a public company shall
forthwith on such appointment disclose to the company in writing the nature of
such business and his interest therein.
192.
Chairman in a listed company.—(1) The board of a listed company shall within
fourteen days from the date of election of directors, appoint a chairman from
among the non-executive directors who shall hold office for a period of three
years unless he earlier resigns, becomes ineligible or disqualified under any
provision of this Act or removed by the directors.
(2) The
board shall clearly define the respective roles and responsibilities of the
chairman and chief executive:
Provided
that the Commission may specify the classes of companies for which the chairman
and chief executive shall not be the same individual.
(3) The
chairman shall be responsible for leadership of the board and ensure that the
board plays an effective role in fulfilling its responsibilities.
(4)
Every financial statements circulated under section 223 of this Act shall
contain a review report by the chairman on the overall performance of the board
and effectiveness of the role played by the board in achieving the company‘s
objectives.
193.
Penalty.—Any contravention or default in complying with requirements of
sections 186 to 192 shall be an offence liable to a penalty of level 2 on the
standard scale and may also be debarred by the authority which imposes the
penalty from becoming a director or chief executive of a company for a period
not exceeding five years.
194.
Public company required to have secretary.—A public company must have a company
secretary; possessing such qualification as may be specified.
195.
Listed company to have share registrar.—Every listed company shall have an
independent share registrar possessing such qualifications and performing such
functions as may be specified.
196. Bar
on appointment of sole purchase, sales agents.—(1) No company whether
incorporated in Pakistan or outside Pakistan which is carrying on business in
Pakistan shall, without the approval of the Commission, appoint any sole
purchase, sale or distribution agent: Provided that this sub-section shall not
apply to a sole purchase, sale or distribution agent appointed by a company
incorporated, outside Pakistan, unless the major portion of the business of
such company is conducted in Pakistan.
(2)
Whoever contravenes any of the provisions of this section shall be punished
with imprisonment for a term which may extend to two years, or with fine which
may extend to one hundred thousand rupees, or with both; and, if the person
guilty of the offence is a company or other body corporate, every director,
chief executive, or other officer, agent or partner thereof shall, unless he
proves that the offence was committed without his knowledge or that he
exercised all due diligence to prevent its commission, be deemed to be guilty
of the offence.
REGISTER
OF DIRECTORS AND OTHER OFFICERS
197.
Register of directors, officers.—(1) Every company shall keep at its registered
office a register of its directors and officers, including the chief executive,
company secretary, chief financial officer, auditors and legal adviser,
containing with respect to each of them such particulars as may be specified.
(2)
Every person referred to in sub-section (1) shall, within a period of ten days
of his appointment or any change therein, as the case may be, furnish to the
company the particulars specified under sub-section (1).
(3)
Every company shall, within a period of fifteen days from the date of
appointment of any person referred in sub-section (1) or any change among them,
or in any of their particulars, file with the registrar a return in the
specified form:
Provided
that this sub-section shall not apply to the first appointment made at the time
of incorporation of the company.
(4) Any
contravention or default in complying with requirement of sub-section (1) or
sub-section (3) shall be an offence liable to a penalty of level 1 on the
standard scale.
(5) If
the name of any person is fraudulently or without sufficient cause entered in
or omitted from the register of directors of a company the person aggrieved or
the company, may apply to the Court for rectification of the register of
directors.
(6) The
Court may either refuse the application or may order rectification of the
register on such terms and conditions as it may deem fit and may make order as
to costs.
(7)
Where the Court has passed and order under sub-section (6) that prima facie
entry in or omission from, the register of directors the name or other
particulars of any person, was made fraudulently or without sufficient cause,
the Court may send a reference for adjudication of offence under sub-section
(8) to the court as provided in section 482.
(8)
Anyone who fraudulently or without sufficient cause enters in, or omits from
the register of directors the name or other particulars of any person, shall be
punishable with imprisonment for a term which may extend to three years or with
fine which may extend to one million rupees, or with both.
(9) When
it makes an order for rectification of the register of directors in respect of
a company, the Court shall cause a copy of the order to be forwarded to the
company and shall, by its order, direct the company to file notice of the
rectification with the registrar within fifteen days from the receipt of the
order.
198.
Rights to inspect.—(1) The register kept under section 197 shall, be open to
the inspection of any member of the company and of any other person during
business hours, subject to such reasonable restrictions, as the company may
impose by its articles or in general meeting, so that not less than two hours
in each day are allowed.
(2)
Inspection by any member of the company shall be without charge, and in the
case of any other person on payment of such fee as may be fixed by the company
for each inspection.
(3) A
person seeking to exercise the rights conferred by this section must make a
request to the company to that effect.
(4) The
request must contain the following information— (a) in the case of an
individual, his name and address; (b) in the case of an organisation, its name
and address and also of the authorised person; and (c) the purpose for which
the information is to be used.
(5) In
the case any inspection is refused, the registrar on application made by the
person to whom inspection has been refused and upon notice to the company, may
by order direct an immediate inspection of the register.
(6) Any
contravention or default in complying with requirements of this section shall
be an offence shall be liable to a penalty of level 1 on the standard scale.
MISCELLANEOUS
PROVISIONS REGARDING INVESTMENTS, CONTRACTS OFFICERS AND SHAREHOLDINGS, TRADING
AND INTERESTS
199.
Investments in associated companies and undertaking.—(1) A company shall not
make any investment in any of its associated companies or associated
undertakings except under the authority of a special resolution which shall
indicate the nature, period, amount of investment and terms and conditions
attached thereto.
Explanation:
The term ‗investment‘ shall include equity, loans, advances, guarantees,
by whatever name called, except for the amount due as normal trade credit,
where the terms and conditions of trade transaction(s) carried out on
arms-length and in accordance with the trade policy of the company.
(2) The
company shall not invest in its associated company or associated undertaking by
way of loans or advances except in accordance with an agreement in writing and
such agreement shall inter-alia include the terms and conditions specifying the
nature, purpose, period of the loan, rate of return, fees or commission,
repayment schedule for principal and return, penalty clause in case of default
or late repayments and security, if any, for the loan in accordance with the
approval of the members in the general meeting: Provided that the return on
such investment shall not be less than the borrowing cost of the investing
company or the rate as may be specified by the Commission whichever is higher
and shall be recovered on regular basis in accordance with the terms of the
agreement, failing which the directors shall be personally liable to make the
payment:
Provided
further that the directors of the investing company shall certify that the
investment is made after due diligence and financial health of the borrowing
company is such that it has the ability to repay the loan as per the agreement.
(3) The
Commission may—
(a) by
notification in the official Gazette, specify the class of companies or
undertakings to which the restriction provided in subsection (1) shall not
apply; and
(b)
through regulations, specify such disclosure requirements, conditions and
restrictions on the nature, period, amount of investment and terms and
conditions attached thereto, and other ancillary matters.
(4) An
increase in the amount or any change in the nature of investment or the terms
and conditions attached thereto shall be made only under the authority of a
special resolution.
(5)
Every company shall maintain and keep at its registered office a register of
investments in associated companies and undertakings containing such
particulars as may be specified.
(6) Any
contravention or default in complying with requirements of this section shall
be an offence liable to a penalty of level 3 on the standard scale and in
addition, shall jointly and severally reimburse to the company any loss
sustained by the company in consequence of an investment which was made without
complying with the requirements of this section.
200.
Investments of company to be held in its own name.—(1) All investments made by
a company on its own behalf shall be made and held by it in its own name:
Provided
that the company may hold any shares in its subsidiary company in the name of
any nominee of the company, if it is necessary to do so, to ensure that the
number of members of the subsidiary company is not reduced below the statutory
limit.
(2)
Where the company has a right to appoint or get elected any person as a
director of any other company and a nominee of the company in exercise of such
right has been so appointed or elected, the shares in such other company of an
amount not exceeding the nominal value of the qualification shares which are
required to be held by a director thereof, may be registered or held by such company
jointly in its own name and in the name of such person or nominee, or in the
name of such person or nominee alone.
(3)
Nothing in this section shall be deemed to prevent a company from depositing
with, or transferring to, or holding, or registering in the name of a central
depository any shares or securities.
(4)
Where, in pursuance of proviso to sub-section (1) or provisions of sub-sections
(2) or (3), any shares or securities in which investments have been made by a
company are not held by it in its own name, the company shall forthwith enter
in a register maintained by it for the purpose at its registered office the
nature, value and such other particulars as may be necessary fully to identify
such shares or securities.
(5) The
register maintained under sub-section (4) shall, be open to the inspection of
members without charge, and to any other person on payment of such fees as the
company may specify in this behalf during business hours, subject to such
reasonable restrictions, as the company may impose, so that not less than two
hours in each day be allowed.
(6) Any
member may require a certified copy of register or any part thereof, on payment
of such fee as may be fixed by the company.
(7) The
certified copies requested under this section shall be issued within a period
of seven days.
(8) A
member seeking to exercise either of the rights conferred by sub-sections (5)
or (6) must make a request to the company to that effect.
(9) If a
company contravenes the provisions of sub-section (1), the company shall be
punishable with fine which may extend to five million rupees and every officer
of the company who is in default shall be punishable with imprisonment for a
term which may extend to two years or with fine which may extend to one million
rupees, or with both.
(10) Any
contravention or default in complying with requirements of sub-sections (4),
(5) or (6), shall be an offence liable to a penalty of level 1 on the standard
scale; and the registrar may by an order compel an immediate inspection of the
register or direct that copies required shall be sent to the persons requiring
them.
201.
Method of contracting.—(1) A contract or other enforceable obligation may be
entered into by a company as follows:
(a) an
obligation which, if entered into by a natural person, will, by law, be
required to be by deed or otherwise in writing, may be entered into on behalf
of the company in writing signed under the name of the company by a director,
attorney or any other person duly authorised by the board and may affix common
seal of the company;
(b) an
obligation which, if entered into by a natural person, is not, by law, required
to be in writing, may be entered into on behalf of the company in writing or
orally by a person acting under the company‘s express or implied authority.
(2) All
contracts made according to sub-section (1) shall be effectual in law and shall
bind the company and its successors and all other parties thereto, their heirs,
or legal representatives as the case may be.
202.
Execution of bills of exchange, promissory notes and deeds.— (1) A bill of
exchange or promissory note shall be deemed to have been made, drawn, accepted
or endorsed on behalf of a company if made, drawn, accepted or endorsed in the
name of, or on behalf of or on account of, the company by any person acting
under its authority, express or implied.
(2) A
company may, by writing, authorise any person, either generally or in respect
of any specified matters, as its attorney to execute deeds on its behalf in any
place either in or outside Pakistan.
(3) A
deed signed by such an attorney on behalf of the company and under his seal
shall bind the company and have the effect as if it was made by the company
itself.
203.
Company to have official seal for use abroad.—(1) A company that has a common
seal may have an official seal for use outside Pakistan.
(2) The
official seal must be a facsimile of the company‘s common seal, with the
addition on its face of the name of every territory where it is to be used.
(3) The
official seal when duly affixed to a document has the same effect as the
company‘s common seal.
(4) A
company having such an official seal may, by writing under its common seal,
authorise any person appointed for the purpose in any territory not situate in
Pakistan to affix the same to any deed or other document to which the company
is party in that territory.
(5) The authority of any such agent shall, as between the company and any
person dealing with the agent, continue during the period, if any, mentioned in
the instrument conferring the authority, or if no period is mentioned therein,
then until notice of the revocation or determination of the agent‘s authority
has been given to the person dealing with him.
(6) The
person affixing any such official seal shall, by writing under his hand, on the
deed or other document to which the seal is affixed, certify the date and place
of affixing the same.
(7) A
deed or other document to which an official seal is duly affixed shall bind the
company as if it had been sealed with the common seal of the company.
204.
Duties of directors.—(1) Subject to the provisions of this Act, a director of a
company shall act in accordance with the articles of the company.
(2) A
director of a company shall act in good faith in order to promote the objects
of the company for the benefit of its members as a whole, and in the best
interests of the company, its employees the shareholders the community and for
the protection of environment.
(3) A
director of a company shall discharge his duties with due and reasonable care,
skill and diligence and shall exercise independent judgment.
(4) A
director of a company shall not involve in a situation in which he may have a
direct or indirect interest that conflicts, or possibly may conflict, with the
interest of the company.
(5) A
director of a company shall not achieve or attempt to achieve any undue gain or
advantage either to himself or to his relatives, partners, or associates and if
such director is found guilty of making any undue gain, he shall be liable to
pay an amount equal to that gain to the company.
(6) A
director of a company shall not assign his office and any assignment so made
shall be void.
(7) In
addition to the preceding sub-sections, the Commission may provide for the
extent of duties and the role of directors as may be specified.
(8) Any
breach of duty, default or negligence by a director in contravention of the
articles of the company or any of its policy or decision of the board may be
ratified by the company through a special resolution and the Commission may
impose any restriction as may be specified.
(9)
Without prejudice to any other action that may be taken under this Act or any
other law, any contravention or default in complying with requirements of this
section shall be an offence liable to a penalty of level 1 on the standard
scale.
205.
Disclosure of interest by director.—(1) Every director of a company who is in
any way, whether directly or indirectly, concerned or interested in any
contract or arrangement entered into, or to be entered into, by or on behalf of
the company shall disclose the nature of his concern or interest at a meeting
of the board: Provided that a director shall be deemed also to be interested or
concerned if any of his relatives, is so interested or concerned.
Explanation.—
For the purpose of this section “director’s relatives”, are—
(a) the
director‘s spouse;
(b) the
director‘s children, including the step children;
(c) the
director‘s parents;
(2) The
disclosure required to be made by a director under sub-section (1) shall be made—
(a) in
the case of a contract or arrangement to be entered into, at the meeting of the
board at which the question of entering into the contract or arrangement is
first taken into consideration or, if the director was not, on the date of that
meeting, concerned or interested in the contract or arrangement, at the first
meeting of the board held after he becomes so concerned or interested; and
(b) in
the case of any other contract or arrangement, at the first meeting of the
board held after the director becomes concerned or interested in the contract
or arrangement.
(3) For
the purposes of sub-sections (1) and (2), a general notice given to the board
to the effect that a director is a director or a member of a specified body
corporate or a partner of a specified firm and is to be regarded as concerned
or interested in any contract or arrangement which may, after the date of the
notice, be entered into with that body corporate or firm, shall be deemed to be
a sufficient disclosure of concern or interest in relation to any contract or
arrangement so made.
(4) Any
such general notice shall expire at the end of the financial year in which it
is given, but may be renewed for further period of one financial year at a
time, by a fresh notice given in the last month of the financial year in which
it would otherwise expire.
(5) No
such general notice, and no renewal thereof, shall be of effect unless either
it is given at a meeting of the board, or the director concerned takes
reasonable steps to ensure that it is brought up and read at the first meeting
of the board after it is given.
(6) Any
contravention or default in complying with requirements of sub-sections (1) or
(2), shall be an offence liable to a penalty of level 1 on the standard scale.
206.
Interest of officers. (1) Save as provided in section 205 in respect of
directors, no other officer of a company who is in any way, directly or
indirectly, concerned or interested in any proposed contract or arrangement
with the company shall, unless he discloses the nature and extent of his
interest in the transaction and obtains the prior approval of the board, enter
into any such contract or arrangement.
(2) Any
contravention or default in complying with requirement under this section shall
be an offence liable to a penalty of level 1 on the standard scale.
207.
Interested director not to participate or vote in proceedings of (1) No
director of a company shall, as a director, take any part in the board.
discussion of, or vote on, any contract or arrangement entered into, or to be
entered into, by or on behalf of the company, if he is in any way, whether
directly or indirectly, concerned or interested in the contract or arrangement,
nor shall his presence count for the purpose of forming a quorum at the time of
any such discussion or vote; and if he does vote, his vote shall be void:
Provided
that a director of a listed company who has a material personal interest in a
matter that is being considered at a board meeting shall not be present while
that matter is being considered.
(2) If
majority of the directors are interested in, any contract or arrangement
entered into, or to be entered into, by or on behalf of the company, the matter
shall be laid before the general meeting for approval.
(3)
Sub-section (1) shall not apply to—
(a) a
private company which is neither a subsidiary nor a holding company of a public
company;
(b) any
contract of indemnity or insurance coverage executed by the company in favour
of interested director against any loss which he may suffer or incur by reason
of becoming or being a surety for the company or while undertaking any
transaction on behalf of the company:
Provided
that for the purpose of clause (b), a company shall only insure the liability
of interested director where such liability arises out of a transaction validly
approved by the board or the members of the company as the case may be:
(4) Any
contravention or default in complying with requirements under this section
shall be an offence liable to a penalty of level 1 on the standard scale.
208.
Related party transactions. (1) A
company may enter into any contract or arrangement with a related party only in
accordance with the policy approved by the board, subject to such conditions as
may be specified, with respect to—
(a)
sale, purchase or supply of any goods or materials;
(b)
selling or otherwise disposing of, or buying, property of any kind;
(c)
leasing of property of any kind;
(d)
availing or rendering of any services;
(e)
appointment of any agent for purchase or sale of goods, materials, services or
property; and
(f) such
related party‘s appointment to any office or place of profit in the company,
its subsidiary company or associated company:
Provided
that where majority of the directors are interested in any of the above
transactions, the matter shall be placed before the general meeting for
approval as special resolution: Provided also that nothing in this sub-section
shall apply to any transactions entered into by the company in its ordinary
course of business on an arm‘s length basis.
Explanation.—In
this sub-section— (a) the expression “office of profit” means any office—
(i)
where such office is held by a director, if the director holding it receives
from the company anything by way of remuneration over and above the
remuneration to which he is entitled as director, by way of salary, fee,
commission, perquisites, any rent-free accommodation, or otherwise;
(ii)
where such office is held by an individual other than a director or by any
firm, private company or other body corporate, if the individual, firm, private
company or body corporate holding it receives from the company anything by way
of remuneration, salary, fee, commission, perquisites, any rent-free
accommodation, or otherwise;
(b) the
expression “arm’s length transaction” means a transaction which is subject to such terms and
conditions as may be specified.
(c) the
expression “related party”
includes—
(i) a
director or his relative:
(ii) a
key managerial personnel or his relative;
(iii) a
firm, in which a director, manager or his relative is a partner;
(iv) a
private company in which a director or manager is a member or director;
(v) a
public company in which a director or manager is a director or holds alongwith
his relatives, any shares of its paid up share capital;
(vi) any
body corporate whose chief executive or manager is accustomed to act in
accordance with the advice, directions or instructions of a director or
manager;
(vii)
any person on whose advice, directions or instructions a director or manager is
accustomed to act: Provided that nothing in sub-clauses (vi) and (vii) shall
apply to the advice, directions or instructions given in a professional
capacity;
(viii)
any company which is—
(A) a
holding, subsidiary or an associated company of such company; or
(B) a
subsidiary of a holding company to which it is also a subsidiary;
(ix)
such other person as may be specified;
Explanation.—For
the purpose of this section “relative” means spouse, siblings and lineal ascendants and
descendants of a person.
(2)
Every contract or arrangement entered into under sub-section (1) shall be
referred to in the board‘s report to the shareholders along-with the
justification for entering into such contract or arrangement.
(3) The
Commission may specify the record to be maintained by the company with regards
to transactions undertaken with the related party.
(4)
Where any contract or arrangement is entered into by a director or any other
employee, without obtaining the consent of the board or approval by a special
resolution in the general meeting under sub-section (1) and if it is not
ratified by the board or, as the case may be, by the shareholders at a meeting
within ninety days from the date on which such contract or arrangement was
entered into, such contract or arrangement shall be voidable at the option of
the board and if the contract or arrangement is with a related party to any
director, or is authorised by any other director, the directors concerned shall
indemnify the company against any loss incurred by it.
(5)
Without prejudice to anything contained in sub-section (4), it shall be open to
the company to proceed against a director or any employee who had entered into
such contract or arrangement in contravention of the provisions of this section
for recovery of any loss sustained by it as a result of such contract or
arrangement.
(6) Any
director or any other employee of a company, who had entered into or authorised
the contract or arrangement in violation of the provisions of this section
shall be liable—
(a) in
case of listed company, be punishable with imprisonment for a term which may
extend to three years or with fine which shall not be less than five million
rupees, or with both; and
(b) in
case of any other company, to a penalty of level 2 on the standard scale.
209.
Register of contracts or arrangements in which directors are interested.—(1)
Every company shall keep one or more registers giving separately the
particulars of all contracts or arrangements, in such manner and containing
such particulars as may be specified by the Commission.
(2)
Every director shall, within a period of thirty days of his appointment, or
relinquishment of his office, as the case may be, disclose to the company the
particulars relating to his concern or interest in the other associations which
are required to be included in the register under sub-section (1) or such other
information relating to himself as may be specified.
(3) The
register referred to in sub-section (1) shall be kept at the registered office
of the company and it shall be open for inspection at such office during
business hours and extracts may be taken therefrom, and copies thereof as may
be required by any member of the company shall be furnished by the company to
such extent, in such manner, and on payment of such fees as may be specified.
(4) The
register to be kept under this section shall also be produced at the
commencement of every annual general meeting of the company and shall remain
open and accessible during the continuance of the meeting to any person having
the right to attend the meeting.
(5)
Nothing contained in sub-section (1) shall apply to any contract or
arrangement—
(a) for
the sale, purchase or supply of any goods, materials or services if the value
of such goods and materials or the cost of such services does not exceed five
hundred thousand rupees in the aggregate in any year; or
(b) by a
banking company for the collection of bills in the ordinary course of its
business.
(6) Any
contravention or default in complying with requirements under this section
shall be an offence liable to a penalty of level 1 on the standard scale.
210.
Contract of employment with directors.—(1) Every company shall keep at its
registered office—
(a)
where a contract of service with a director is in writing, a copy of the
contract; or
(b)
where such a contract is not in writing, a written memorandum setting out its
terms.
(2) The
copies of the contract or the memorandum kept under subsection (1) shall be
open to inspection by any member of the company without payment of fee.
(3) Any
contravention or default in complying with requirement under this section shall
be an offence liable to a penalty of level 1 on the standard scale.
(4) The
provisions of this section shall not apply to a private company.
211.
Restriction on non-cash transactions involving directors.—(1) No company shall
enter into an arrangement by which—
(a) a
director of the company or its holding, subsidiary or associated company or a
person connected with him acquires or is to acquire assets for consideration
other than cash, from the company; or
(b) the
company acquires or is to acquire assets for consideration other than cash,
from such director or person so connected; unless prior approval for such
arrangement is accorded by a resolution of the company in general meeting and
if the director or connected person is a director of its holding company,
approval under this sub-section shall also be required to be obtained by
passing a resolution in general meeting of the holding company.
(2) The
notice for approval of the resolution by the company or holding company in
general meeting under sub-section (1) shall include the particulars of the
arrangement along-with the value of the assets involved in such arrangement
duly calculated by a registered valuer.
(3) Any
arrangement entered into by a company or its holding company in contravention
of the provisions of this section shall be voidable at the instance of the
company unless—
(a) the
restitution of any money or other consideration which is the subject- matter of
the arrangement is no longer possible and the company has been indemnified by
any other person for any loss or damage caused to it; or
(b) any
rights are acquired bona fide for value and without notice of the contravention
of the provisions of this section by any other person.
(4) The
company shall ensure that all cash transactions with its directors are
conducted only through banking channels.
212.
Declaring a director to be lacking fiduciary behaviour.—The Court may declare a
director to be lacking fiduciary behaviour if he contravenes the provisions of
section 205 or sub-section (1) of section 206 or sections 207 or 208:
Provided
that before making a declaration the Court shall afford the director concerned
an opportunity of showing cause against the proposed action.
213.
Disclosure to members of directors’ interest in contract appointing chief
executive or secretary.—(1) Every director of a company who is in any way,
whether directly or indirectly, concerned or interested, in any appointment or
contract for the appointment of a chief executive, whole-time director or
secretary of the company shall disclose the nature of his interest or concern
at a meeting of the board in which such appointment or contract is to be
approved and the interested director shall not participate or vote in the
proceedings of the board.
(2) All
contracts entered into by a company for the appointment of a chief executive,
whole-time director or secretary shall be kept at the registered office of the
company.
(3)
Every contract required to be kept under sub-section (2) must be open to
inspection by any member of the company without charge.
(4) Any
member of the company is entitled, on request and on payment of such fee as may
be fixed by the company, to be provided with a copy of any such contract. The
copy must be provided within seven days after the request is received by the
company.
(5) Any
contravention or default in complying with requirements under this section
shall be an offence liable to a penalty of level 1 on the standard scale.
214.
Contracts by agents of company in which company is undisclosed principal.—(1)
Every officer or other agent of a company, other than a private company, not
being the subsidiary company of a public company, who enters into a contract
for or on behalf of the company in which contract the company is an undisclosed
principal shall, at the time of entering into the contract, make a memorandum
in writing of the terms of contract, and specify therein the person with whom
it has been made.
(2)
Every such officer or other agent shall forthwith deliver the memorandum
aforesaid to the company and its directors which shall be laid before next
meeting of the board.
(3) If
any such officer or other agent makes default in complying with the
requirements of this section—
(a) the
contract shall, at the option of the company, be void as against the company;
and (b) such officer or other agent shall be liable to a penalty of level 1 on
the standard scale.
215.
Liability for undesired activities of the shareholders.—(1) A member of a
company shall act in good faith while exercising its powers as a shareholder at
the general meetings and shall not conduct themselves in a manner that is
considered disruptive to proceedings of the meeting.
(2)
Without prejudice to his rights under this Act, a member of the company shall
not exert influence or approach the management directly for decisions which may
lead to create hurdle in the smooth functioning of management.
(3) Any
shareholder who fails to conduct in the manner provided in this section and as
specified by the Commission shall be guilty of an offence under this section
and shall be liable to a penalty not exceeding of level 1 on the standard
scale.
216.
Company deemed to be a public interest company in certain circumstances.—(1)
Notwithstanding anything contained in this Act, a company shall be deemed to be
a company with public interest as envisaged in the Third Schedule.
(2) Upon
being deemed as a company with public interest, the company shall be required
to comply with such disclosure and reporting requirements as may be specified
by the Commission.
(3) The
Commission may as specified, after giving an opportunity of hearing to a
company or class of companies, by an order in writing exempt such company from
the requirements of this section if the Commission determines that such
exemption is in the interest of the public:
Provided
that such order shall be posted on the official website of the Commission.
217.
Securities and deposits.—(1) Save as provided in section 84, no company or any
of its officers or agents shall receive or utilise any money received as
security or deposit, except in accordance with a contract in writing.
(2) The
money so received shall be kept in a special account maintained by a company
with a scheduled bank.
(3) This
section shall not apply where the money received is in the nature of an advance
payment for goods to be delivered or sold to an agent, dealer or sub-agent in
accordance with a contract in writing.
218.
Employees’ provident funds, contributory retirement funds and (1) All moneys or
securities deposited with a company by its securities. employees in pursuance
of their contracts of service with the company shall be kept or deposited by
the company within fifteen days from the date of deposit in a special account
to be opened by the company for the purpose in a scheduled bank or in the
National Saving Schemes, and no portion thereof shall be utilized by the
company except for the breach of the contract of service on the part of the
employee as provided in the contract and after notice to the employee
concerned.
(2)
Where a provident fund, contributory pension fund or any other contributory
retirement fund has been constituted by a company for its employees or any
class of its employees, all moneys contributed to such fund, whether by the
company or by the employees or by both, or received or accruing by way of
interest, profit or otherwise from the date of contribution, receipt or
accrual, as the case may be, shall either—
(a) be
deposited—
(i) in a
National Savings Scheme;
(ii) in
a special account to be opened by the company for the purpose in a scheduled
bank; or
(iii)
where the company itself is a scheduled bank, in a special account to be opened
by the company for the purpose either in itself or in any other scheduled bank;
or
(b) be
invested in—
(i)
Government securities; or
(ii)
bonds, redeemable capital, debt securities or instruments issued by a statutory
body, units of collective investment schemes registered as notified entities
with the Commission, and in listed securities including shares of companies,
bonds, redeemable capital, debt securities and equity securities, subject to
the conditions as may be specified.
(3)
Where a trust has been created by a company with respect to any provident fund
or a contributory pension fund or any contributory retirement fund referred to
in sub-section (2), the company shall be bound to collect the contribution of
the employees concerned and pay such contributions as well as its own
contributions, if any, to the trustees within fifteen days from the date of
collection, and thereupon, the obligations laid on the company by that
subsection shall devolve on the trustees and shall be discharged by them
instead of the company.
(4) The
trustees of provident fund, contributory pension or retirement fund shall have
appropriate representation from the members of the funds.
219.
Penalty for contravention of section 217 or 218.—Any contravention or default
in complying with requirements of sections 217 or 218 shall be an offence liable
to a penalty of level 1 on the standard scale and shall also be liable to pay
the loss suffered by the depositor of security or the employee, on account of
such contravention.
ACCOUNTS
OF COMPANIES
220.
Books of account, to be kept by company. (1) Every company shall prepare and
keep at its registered office books of account and other relevant books and
papers and financial statements for every financial year which give a true and
fair view of the state of the affairs of the company, including that of its
branch office or offices, if any:
Provided
that in the case of a company engaged in production, processing, manufacturing
or mining activities, such particulars relating to utilisation of material or
labour or the other inputs or items of cost as may be specified, shall also be
maintained: Provided further that all or any of the books of account aforesaid
and other relevant papers may be kept at such other place in Pakistan as the
board may decide and where such a decision is taken, the company shall, within
seven days thereof, file with the registrar a notice in writing giving the full
address of that other place.
(2)
Where a company has a branch office in Pakistan or outside Pakistan, it shall
be deemed to have complied with the provisions of sub-section (1), if proper
books of account relating to the transactions effected at the branch office are
kept at that office and proper summarized returns are sent periodically by the
branch office to the company at its registered office or the other place referred
to in sub-section (1).
(3) The
books of account and other books and papers maintained by the company within
Pakistan shall be open for inspection at the registered office of the company
or at such other place in Pakistan by any director during business hours, and
in the case of financial information, if any, maintained outside the country,
copies of such financial information shall be maintained and produced for
inspection by any director.
(4)
Where an inspection is made under sub-section (3), the officers and other
employees of the company shall give to the director making such inspection all
assistance in connection with the inspection which the company is reasonably
expected to give.
(5) The
books of account of every company relating to a period of not less than ten
financial years immediately preceding a financial year, or where the company
had been in existence for a period less than ten years, in respect of all the
preceding years together with the vouchers relevant to any entry in such books
of account shall be kept in good order.
(6) If a
company fails to comply with any of the requirements of this section, every
director, including chief executive and chief financial officer, of the company
who has by his act or omission been the cause of such default shall—
(a) in
respect of a listed company, be punishable with imprisonment for a term which
may extend to two year and with fine which shall not be less than five hundred
thousand rupees nor more than five million rupees, and with a further fine
which may extend to ten thousand rupees for every day after the first during
which the default continues; and
(b) in
respect of any other company, be punishable with imprisonment for a term which
may extend to one year and with fine which may extend to one hundred thousand
rupees.
(7) The
provisions of this section except those of sub-section (5), shall apply mutatis
mutandis to the books of account which a liquidator is required to maintain and
keep.
221.
Inspection of books of account by the Commission.—(1) The books of account and
books and papers of every company shall be open to inspection by any officer
authorised by the Commission in this behalf if, for reasons to be recorded in
writing, the Commission considers it necessary so to do.
(2) It
shall be the duty of every director, officer or other employee of the company
to produce to the person making inspection under sub-section (1) all such books
of account and books and papers of the company in his custody or under his
control, and to furnish him with any such statement, information or explanation
relating to the affairs of the company, as the said person may require of him
within such time and at such place as he may specify.
(3) It
shall also be the duty of every director, officer or other employee of the
company to give to the person making inspection under this section all
assistance and facilitation in connection with the inspection which the company
may be reasonably expected to give.
(4) The
officer making the inspection under this section may, during the course of
inspection—
(a) make
or cause to be made copies of books of account and other books and papers; or
(b)
place or cause to be placed by marks of identification thereon in token of the
inspection having been made;
(c) take
possession of such documents and retain them for thirty days if there are
reasonable grounds for believing that they are evidence of the commission of an
offence.
(5)
Where an inspection of the books of account and books and papers of the company
has been conducted under this section, by an officer authorised by the
Commission, such officer shall make a report to the Commission.
(6) Any
officer authorised to make an inspection under this section shall have all the
powers that the Commission has under this Act in relation to the making of
inquiries.
222.
Default in compliance with provisions of section 221.—(1) If default is made in
complying with the provisions of section 221, every person who is in default
shall be punishable with imprisonment for a term which may extend to one
hundred and eighty days and with fine which may extend to one hundred thousand
rupees.
(2)
Where a director or any other officer of a company has been convicted of an
offence under this section, he shall, on and from the date on which he is so
convicted, be deemed to have vacated his office as such and, on such vacation
of office, shall be disqualified for holding such office in any company, for a
period of three years.
223.
Financial Statements.—(1) The board of every company must lay before the
company in annual general meeting its financial statements for the period, in
the case of first such statements since the incorporation of the company and in
any other case since the preceding financial statements, made up to the date of
close of financial year adopted by the company.
(2) The
financial statements must be laid within a period of one hundred and twenty
days following the close of financial year of a company: Provided that, in the
case of a listed company the Commission, and in any other case the registrar,
may, for any special reason, extend the period for a term not exceeding thirty
days.
(3)
Subject to the provision of sub-section (2), the first financial statement must
be laid at some date not later than sixteen months after the date of
incorporation of the company and subsequently once at least in every calendar
year.
(4) The
period to which the statements aforesaid relate, not being the first, shall not
exceed one year except where special permission of the registrar has been
obtained.
(5) The
financial statement shall be audited by the auditor of the company, in the
manner hereinafter provided, and the auditor‘s report shall be attached
thereto: Provided that nothing in this sub-section shall apply to a private
company having the paid up capital not exceeding one million rupees or such
higher amount of paid up capital as may be notified by the Commission.
(6)
Every company shall send in the form and manner specified audited financial
statements together with the auditors‘ report, directors‘ report and in the
case of a listed company the chairman‘s review report to every member of the
company and every person who is entitled to receive notice of general meeting,
either by post or electronically at least twenty-one days before the date of
meeting at which it is to be laid before the members of the company, and shall
keep a copy at the registered office of the company for the inspection of the
members.
(7) A
listed company shall, simultaneously with the dispatch of the financial
statements together with the reports referred to in sub-section (6), send by
post three copies and electronically a copy of such financial statements
together with said reports to each of the Commission, registrar and the
securities exchange and shall also post on the company‘s website:
Provided
that the reports shall be made available on the website of the Company for a
time period as may be specified.
(8) The
provisions of sub-section (6) of section 220 shall apply to any person who is a
party to the default in complying with any of the provisions of this section.
(9) This
section shall not apply to a single member company except to the extent as
provided in sub-section (5).
224.
Classification of Companies.—For the purpose of this Act, the companies may be
classified in such categories as may be specified in the Third Schedule.
225.
Contents of Financial Statements.—(1) The financial statements shall give a
true and fair view of the state of affairs of the company, comply with the
financial reporting standards notified by the Commission and shall be prepared
in accordance with the requirements contained in the Third Schedule for
different class or classes of companies: Provided that for the purpose of
preparation of financial statements and related accounting treatment of associated
companies shall be in accordance with financial reporting standards or such
other standards as may be notified by the Commission: Provided further that,
except to the extent, otherwise notified in the official Gazette by the
Commission, this sub-section shall not apply to an insurance or banking company
or to any other class of companies for which the requirements of financial
statements are specified in the law regulating such class of companies.
(2) The
Commission may, of its own motion or upon application by a company, modify, in
relation to that company, the requirements of the relevant Schedule for the
purpose of adapting it to the circumstances of a company.
(3) The
Commission shall have power from time to time to grant exemption to any company
or any class of companies if it is in the public interest so to do, from
compliance with all or any of the requirements of the relevant Schedule.
(4)
Notwithstanding anything in this Act any company that intends to make
unreserved compliance of IFRS issued by the IASB shall be permitted to do so.
Explanation.—The
expression “IFRS” means
International Financial Reporting Standards and the expression “IASB” means International
Accounting Standards Board.
(5) The
provisions of sub-section (6) of section 220 shall apply to any person who is a
party to the default in complying with any of the provisions of this section.
226.
Duty to prepare directors’ report and statement of compliance.— (1) The board
shall prepare a directors‘ report for each financial year of the company:
Provided
that nothing in this sub-section shall apply to a private company, not being a
subsidiary of public company, having the paid up capital not exceeding three
million rupees.
(2) The
Commission may by general or special order, direct such class or classes of
companies to prepare a statement of compliance.
(3) The
board of a holding company, required to prepare consolidated financial
statements under section 228, shall in its report to the members as provided in
section 227, include information on matters specified in sub-section (2) of
section 227 with respect to the consolidated financial statements.
(4) The
directors in their report shall give greater emphasis to the matters that are
significant to the undertakings included in the consolidation.
(5) Any
contravention or default in complying with requirements of this section shall
be an offence liable to a penalty of level 1 on the standard scale.
227.
Contents of directors’ report and statement of compliance.— (1) The directors
shall make out and attach to the financial statements, a report with respect to
the state of the company‘s affairs and a fair review of its business, the
amount (if any), that the directors recommend should be paid by way of dividend
and the amount (if any), they propose to carry to the Reserve Fund, General
Reserve or Reserve Account.
(2) In
the case of a public company or a private company which is a subsidiary of a
public company, the directors report, in addition to the matters specified in
sub-section (1) must state—
(a) the
names of the persons who, at any time during the financial year, were directors
of the company;
(b) the
principal activities and the development and performance of the company‘s
business during the financial year;
(c) a
description of the principal risks and uncertainties facing the company;
(d) any
changes that have occurred during the financial year concerning the nature of
the business of the company or of its subsidiaries, or any other company in
which the company has interest;
(e) the
information and explanation in regard to any contents of modification in the
auditor‘s report;
(f)
information about the pattern of holding of the shares in the form specified;
(g) the
name and country of origin of the holding company, if such company is a foreign
company;
(h) the
earning per share;
(i) the
reasons for loss if incurred during the year and future prospects of profit, if
any;
(j)
information about defaults in payment of any debts and reasons thereof;
(k)
comments in respect of adequacy internal financial controls;
(l) any
material changes and commitments affecting the financial position of the
company which have occurred between the end of the financial year of the
company to which the financial statement relates and the date of the report;
and
(m) any
other information as may be specified.
(3) In
the case of a listed company, the business review must, to the extent necessary
for understanding the development, performance or position of the company‘s
business, include—
(a) the
main trends and factors likely to affect the future development, performance
and position of the company‘s business;
(b) the
impact of the company‘s business on the environment;
(c) the
activities undertaken by the company with regard to corporate social
responsibility during the year; and
(d)
directors‘ responsibility in respect of adequacy of internal financial controls
as may be specified.
(4) The
board shall make out and attach to the financial statement such statement of
compliance as may be specified.
(5) The
directors‘ report and statement of compliance must be approved by the board and
signed by the chief executive and a director of the company.
(6)
Whoever contravenes any of the provisions of this section shall—
(a) in
respect of a listed company, be punishable with imprisonment for a term which
may extend to two years and with fine may extend to five hundred thousand
rupees and with a further fine which may extend to ten thousand rupees for
every day after the first during which the default continues; and
(b) in
respect of any other company, be punishable with imprisonment for a term which
may extend to one year and with fine which may extend to one hundred thousand
rupees.
228.
Consolidated financial statements.—(1) There shall be attached to the financial
statements of a holding company having a subsidiary or subsidiaries, at the end
of the financial year at which the holding company‘s financial statements are
made out, consolidated financial statements of the group presented as those of
a single enterprise and such consolidated financial statements shall comply
with the disclosure requirements of the relevant Schedule and financial
reporting standards notified by the Commission: Provided that nothing in this
sub-section shall apply to a private company and its subsidiary, where none of
the holding and subsidiary company has the paid up capital exceeding one
million rupees.
(2)
Where the financial year of a subsidiary precedes the day on which the holding
company‘s financial year ends by more than ninety days, such subsidiary shall
make an interim closing, on the day on which the holding company‘s financial
year ends, and prepare financial statements for consolidation purposes.
(3)
Every auditor of a holding company appointed under section 246 shall also
report, in the specified form, on consolidated financial statements and
exercise all such rights and duties as are vested in him under sections 248 and
249 respectively.
(4)
There shall be disclosed in the consolidated financial statements any note or
saving contained in such accounts to call attention to a matter which, apart
from the note or saving, would properly have been referred to in such a
qualification, in so far the matter which is the subject of the qualification
or note is not covered by the holding company‘s own accounts and is material
from the point of view of its members.
(5)
Every consolidated financial statement shall be signed by the same persons by
whom the individual financial statements of the holding company are required to
be signed, under section 232.
(6) All
provisions of sections 223, 233, 234, 235 and 236 shall apply to a holding
company required to prepare consolidated financial statements under this
section as if for the word “company” appearing in these sections, the words “holding company” were substituted.
(7) The
Commission may, on an application of a holding company, direct that the
provisions of this section shall not apply to such extent as may be specified
in the direction.
(8) Any
contravention or default in complying with requirements of this section shall
be an offence liable to a penalty of level 2 on the standard scale.
229.
Financial year of holding company and subsidiary.—(1) The board of a holding
company shall ensure that, except where in their opinion there are good reasons
against it, its financial year and each of its subsidiaries coincides.
(2) The
Commission may, on an application of a holding company or a subsidiary of the
holding company, extend the financial year of any such company for the purpose
of sub-section (1).
(3)
While granting any extension under sub-section (2), the Commission may grant
such other relaxations as may be incidental or ancillary thereto.
230.
Rights of holding company’s representatives and members.—(1) A holding company
may, by resolution, authorise representatives named in the resolution to
inspect the books of account kept by any of its subsidiaries; and the books of
account of any such subsidiary shall be open to inspection by those
representatives at any time during business hours.
(2) The
rights conferred by section 256 upon members of a company may be exercised, in
respect of any subsidiary, by members of the holding company as if they also
were members of the subsidiary.
231.
Financial Statements of modaraba company to include modaraba accounts.—(1) There
must be attached to the financial statements of a modaraba company, the annual
accounts and other reports circulated in pursuance of the provisions of section
14 of the Modaraba Companies and Modaraba (Floatation and Control) Ordinance,
1980 (XXXI of 1980), made out—
(a) as
at the end of the financial year of the modaraba where such financial year
coincides with the financial year of the modaraba company; and
(b) as
at the end of the financial year of the modaraba last before that of the
modaraba company, where the financial year of the modaraba does not coincide
with that of the modaraba company.
(2) The
provisions of sub-section (8) of section 228 shall apply to any person who is a
party to the default in complying with any of the provisions of this section.
232.
Approval and authentication of Financial Statements.—(1) The financial
statements, including consolidated financial statement, if any, must be
approved by the board of the company and signed on behalf of the board by the
chief executive and at least one director of the company, and in case of a
listed company also by the chief financial officer: Provided that when the
chief executive is for the time being not available in Pakistan, then the
financial statements may be signed by at least two directors: Provided further
that in case of a private company having a paid up capital not exceeding one
million rupees, the financial statements shall also be accompanied by an
affidavit executed by the chief executive if the accounts are signed by him or
by any of the directors if the accounts has been signed by two directors, as
the case may be, that the financial statements have been approved by the board.
(2) The
financial statements of a single member company shall be signed by one
director.
(3) Any
contravention or default in complying with requirements of this section shall
be an offence liable to a penalty of level 1 on the standard scale.
233.
Copy of Financial Statements to be forwarded to the registrar.— (1) Without
prejudice to the provisions of sub-section (5) of section 223, after the
audited financial statements have been laid before the company at the annual
general meeting and duly adopted, a copy of such financial statements together
with reports and documents required to be annexed to the same, duly signed in
the manner provided by sections 226, 232 and 251, shall be filed by the company
with the registrar within thirty days from the date of such meeting in case of
a listed company and within fifteen days in case of any other company.
(2) If
the general meeting before which the financial statement is laid does not adopt
the same or defers consideration thereof or is adjourned, a statement of that
fact and of the reasons therefor shall be annexed to the said financial
statements required to be filed with the registrar.
(3)
Nothing in this section shall apply to a private company having the paid up
capital not exceeding ten million rupees or such higher amount of paid up
capital as may be notified by the Commission.
(4) Any
contravention or default in complying with requirements of this section shall
be an offence liable—
(a) in
case of a listed company, to a penalty of level 2 on the standard scale; and
(b) in
case of any other company, to a penalty of level 1 on the standard scale.
234.
Filing of unaudited financial statements.—(1) A private company, not being a
subsidiary of public company, having the paid up capital not exceeding one
million rupees or such other amount of paid up capital as may be notified by
the Commission, shall file the duly authenticated financial statements, whether
audited or not, with the registrar within thirty days from the holding of such
meeting.
(2) Any
contravention or default in complying with requirement of this section shall be
an offence liable to a penalty of level 1 on the standard scale.
235.
Right of member of a company to copies of the Financial Statements and the
auditor’s report.—(1) Any member of the company is entitled, on request and on
payment of such fee as may be fixed by the company to be provided with a copy
of any financial statement. The copy must be provided within seven days after
the request is received by the company.
(2) Any
contravention or default in complying with requirement of this section shall be
an offence liable to a penalty of level 1 on the standard scale.
236.
Penalty for improper issue, circulation or publication of Financial
Statements.—If any copy of financial statements is issued, circulated or
published without there being annexed or attached thereto, as the case may be,
a copy each of (i) any component of financial statements, reports, or
statements referred therein, (ii) the auditors‘ report, (iii) review reports on
the statement of compliance, (iv) the directors‘ report and (v) the statements
of compliance, the company, and every officer of the company who is in default
shall be liable to a penalty of level 1 on the standard scale.
237.
Quarterly financial statements of listed companies.—(1) Every listed company
shall prepare the quarterly financial statements within the period of—
(a)
thirty days of the close of first and third quarters of its year of accounts;
and
(b)
sixty days of the close of its second quarter of its year of accounts:
Provided
that the cumulative figures for the half year, presented in the second quarter
accounts shall be subjected to a limited scope review by the statutory auditors
of the company in such manner and according to such terms and conditions as may
be determined by the Institute of Chartered Accountants of Pakistan and
approved by the Commission:
Provided
further that the Commission may, upon an application by the company, extend the
period of filing in case of accounts of first quarter for a period not
exceeding thirty days, if the company was allowed extension in terms of
sections 223.
(2) The quarterly
financial statements shall be posted on the company‘s website for the
information of its members and also be transmitted electronically to the
Commission, securities exchange and with the registrar within the period
specified under sub-section (1): Provided that a copy of the quarterly
financial statements shall be dispatched in physical form if so requested by
any member without any fee: Provided further that the Commission may specify
the time period for which the quarterly financial statements shall be made
available on the website of the company.
(3) The
provisions of section 232 shall be applicable to the quarterly financial
statements.
(4) If a
company fails to comply with any of the requirements of this section, every
director, including chief executive and chief financial officer of the company
who has by his act or omission been the cause of such default shall be liable
to a penalty of level 2 on the standard scale.
238.
Power of Commission to require submission of additional statements of accounts
and reports.—(1) Notwithstanding anything contained in any other provision of
this Act the Commission may, by general or special order, require companies
generally, or any class of companies or any particular company, to prepare and
send to the members, the Commission, the registrar, the securities exchange and
any other person such periodical statements of accounts, information or other
reports, in such form and manner and within such time, as may be specified in
the order.
(2) Any
contravention or default in complying with requirement of this section shall be
an offence liable to a penalty of level 3 on the standard scale.
239.
Rights of debenture-holders to obtain copies of financial statements.—(1) The
holders of debentures, including the trustees for holders of debentures, of a
company shall be entitled to have copies of financial statements of the company
and other reports on payment of such fee as may be fixed by the company.
(2) Any
contravention or default in complying with requirements of this section shall
be an offence liable to a penalty of level 1 on the standard scale.
DIVIDENDS
AND MANNER AND TIME OF PAYMENT THEREOF
240.
Certain restrictions on declaration of dividend.—(1) The company in general
meeting may declare dividends; but no dividend shall exceed the amount
recommended by the board.
(2) No
dividend shall be declared or paid by a company for any financial year out of
the profits of the company made from the sale or disposal of any immovable
property or assets of a capital nature comprised in the undertaking or any of
the undertaking of the company, unless the business of the company consists,
whether wholly or partly, of selling and purchasing any such property or
assets, except after such profits are set off or adjusted against losses
arising from the sale of any such immovable property or assets of a capital
nature: Provided that no dividend shall be declared or paid out of unrealized
gain on investment property credited to profit and loss account.
241.
Dividend to be paid only out of profits.—Any dividend may be paid by a company
either in cash or in kind only out of its profits. Explanation.—The payment of
dividend in kind shall only be in the form of shares of listed company held by
the distributing company.
242.
Dividend not to be paid except to registered shareholders.—Any dividend
declared by a company must be paid to its registered shareholders or to their
order within such period and in such manner as may be specified: Provided that
any dividend payable in cash may be paid by cheque or warrant or in any
electronic mode to the shareholders entitled to the payment of the dividend, as
per their direction: Provided further that in case of a listed company, any
dividend payable in cash shall only be paid through electronic mode directly
into the bank account designated by the entitled shareholders.
243.
Directors not to withhold declared dividend.—(1) When a dividend has been
declared, it shall not be lawful for the directors of the company to withhold
or defer its payment and the chief executive of the company shall be
responsible to make the payment in the manner provided in section 242.
Explanation.—Dividend
shall be deemed to have been declared on the date of the general meeting in
case of a dividend declared or approved in the general meeting and on the date
of commencement of closing of share transfer for purposes of determination of
entitlement of dividend in the case of an interim dividend and where register
of members is not closed for such purpose, on the date on which such dividend
is approved by the board.
(2)
Where a dividend has been declared by a company but is not paid within the
period specified under section 242, the chief executive of the company shall be
punishable with imprisonment for a term which may extend to two years and with
fine which may extend to five million rupees: Provided that no offence shall be
deemed to have been committed within the meaning of the foregoing provisions in
the following cases, namely—
(a)
where the dividend could not be paid by reason of the operation of any law;
(b)
where a shareholder has given directions to the company regarding the payment
of the dividend and those directions cannot be complied with;
(c)
where there is a dispute regarding the right to receive the dividend;
(d) where
the dividend has been lawfully adjusted by the company against any sum due to
it from the shareholder; or
(e)
where, for any other reason, the failure to pay the dividend or to post the
warrant within the period aforesaid was not due to any default on the part of
the company; and the Commission has, on an application of the company on the
specified form made within forty-five days from the date of declaration of the
dividend, and after providing an opportunity to the shareholder or person who
may seem to be entitled to receive the dividend of making representation
against the proposed action, permitted the company to withhold or defer payment
as may be ordered by the Commission.
(3)
Notwithstanding anything contained in sub-section (2), a company may withhold
the payment of dividend of a member where the member has not provided the
complete information or documents as specified by the Commission.
(4)
Chief executive convicted under sub-section (2) shall from the day of the
conviction cease to hold the office of chief executive of the company and shall
not, for a period of five years from that day, be eligible to be the chief
executive or a director of that company or any other company.
244.
Unclaimed shares, modaraba certificates and dividend to vest with the Federal
Government.—(1) Notwithstanding anything to the contrary contained in this Act
or any other law—
(i)
where shares of a company or modaraba certificates of a Modaraba have been
issued; or
(ii)
where dividend has been declared by a company or Modaraba; which remain
unclaimed or unpaid for a period of three years from the date it is due and
payable, or
(iii)
any other instrument or amount which remain unclaimed or unpaid, having such
nature and for such period as may be specified; the company shall give ninety
days notices to the shareholders or certificate holders or the owner, as the
case may be, to file claim, in the following manner—
(a) by a
registered post acknowledgement due on his last known address; and
(b)
after expiry of notice period as provided under clause (a), final notice in the
specified form shall be published in two daily newspapers of which one will be
in Urdu and one in English having wide circulation.
Explanation.—For
the purpose of this section “shares” or “modaraba certificates” include unclaimed or undelivered bonus shares or modaraba
certificates and “company”
includes a “modaraba company”.
(2) If
no claim is made before the company by the shareholder, certificate holder or
the owner, as the case may be, the company shall after ninety days from the
date of publication of notice under clause (b) of sub-section (1) shall—
(a) in
case of sum of money, deposit any unclaimed or unpaid amount to the credit of
the Federal Government; and
(b) in
case of shares or modaraba certificates or other instrument, report and deliver
to the Commission such shares or modaraba certificates or other instrument and
the Commission shall sell such shares or modaraba certificates or other
instrument, as the case may be, in the manner and within such period as may be
specified and deposit the proceeds to the credit of Federal Government:
Provided that where the company has deposited the unclaimed or unpaid amount or
delivered the shares or modaraba certificates or other instrument with the
Commission for credit of the Federal Government, the company shall preserve and
continue to preserve all original record pertaining to the deposited unclaimed
or unpaid amount and the shares or modaraba certificates or other instrument
and provide copies of the relevant record to the Commission until it is
informed by the Commission in writing that they need not to be preserved any
longer.
(3)
Notwithstanding anything contained in any law or procedure for the time being
in force, the unclaimed or unpaid amount as well as the proceeds from the sale
of shares or modaraba certificates or any other instrument or any benefit
accrued thereon, as the case may be, shall be maintained in a profit bearing
account with the State Bank of Pakistan or National Bank of Pakistan to be called
“Companies Unclaimed Instruments and Dividend and Insurance Benefits and
Investors Education Account” as may be notified by the concerned Minister-In-Charge of
the Federal Government and shall be deemed to be part of public accounts and
interest / profit accumulated thereon shall be credited on quarterly basis to
the Fund established under section 245 of this Act.
(4) Any
person claiming to be entitled to any money paid into “Companies Unclaimed
Instruments and Dividend and Insurance Benefits and Investors Education Account” may in pursuance of this
section apply to the Commission in such manner along with such documents as may
be specified for payment thereof, and the Commission after necessary
verification from the company concerned forward to the bank as notified under
sub-section (3) to make the payment to entitled person of the sum equivalent to
his unclaimed or unpaid dividend or amount of proceeds:
Provided
that the payment to the claimant shall be made within a period of thirty days
from the date of verification by the company.
(5) A
person shall be entitled to receive the shares or modaraba certificates or any
other instrument as delivered to the Commission by the company, making a claim
under this Act before the sale of such unclaimed shares or modaraba
certificates or the instrument, is effected by the Commission.
(6) A
person making a claim under this section shall be entitled to the proceeds of
the sale of the shares or modaraba certificates or the instrument less any
deduction for expenses of sale.
(7)
Payment to the claimant pursuant to sub-section (4) and a receipt given by the
bank in this respect shall be a good discharge to the Commission and the bank.
(8)
Where any dispute regarding unclaimed shares, modaraba certificates, the
instrument or dividend arises or is pending adjudication before the competent
authority or Court, the Commission shall process the claim in accordance with
the decision of such authority or Court.
(9) No
claim whatsoever shall be entertained after the period of ten years from the
credit of any amount to the account of the Federal Government to be maintained
under this section.
(10)
Every company within thirty days of the close of each financial year shall
submit to the Commission a return of all unclaimed shares, modaraba
certificates, the instruments or dividend in its books in the manner as may be
specified by the Commission.
(11)
Whoever contravenes the provisions of this section shall be punishable with a
penalty of level 3 on the standard scale.
(12) The
account to be maintained under sub-section (3) shall be available on the
direction of Minister-in-Charge to serve as a collateral in order to facilitate
the provision of credit facility to the clearing house to address any systemic
risk in the capital market:
Provided
that powers under this sub-section shall be exercised only in case where in
opinion of the Commission the resources of the clearing house are or likely to
be insufficient for timely settlement of trades executed at the securities and
future exchanges.
245.
Establishment of Investor Education and Awareness Fund.— (1) There is hereby
established a fund to be called Investor Education and Awareness Fund
(hereinafter in this section referred to as “Fund”) to be managed and controlled by the
Commission as may be prescribed through rules.
(2) The
Fund shall be credited with—
(a) the
interest/profit earned on the “Companies Unclaimed Instruments and Dividend and
Insurance Benefits and Investors Education Account”;
(b)
forfeited amounts under sub-section (7) of section 87 of the Securities Act,
2015;
(c)
grants or donations given by the Federal Government, Provincial Governments,
companies, or any other institution or person for the purposes of the Fund;
(d) the
interest or other income received out of the investments made from the Fund;
(e) the
amount realised in terms of fourth proviso of section 341 or fourth proviso of
sub-section (4) of section 372; and
(f) such
other amounts as may be prescribed.
(3) The
Fund shall be utilized for—
(a) the
promotion of investor education and awareness in such manner as may be
prescribed;
(b)
without prejudice to the generality of the object of sub-clause (a) of
sub-section (3), the Fund may be used for the following purposes, namely—
(i)
educational activities including seminars, training, research and publications
aimed at investors;
(ii)
awareness programs including through media – print, electronic, social media,
aimed at investors;
(iii)
funding investor education and awareness activities approved by the Commission;
and
(iv) to
meet the administrative expenses of the Fund.
Explanation.—”Investors” means investor in
securities, insurance policyholders and customers of non-bank finance companies
and Modarabas.
(4) The
Commission shall, by notification in the official Gazette, constitute an
advisory committee with such members as may be prescribed, for recommending
investor education and awareness activities that may be undertaken directly by
the Commission or through any other agency, for utilization of the Fund for the
purposes referred to in sub-section (3).
(5) The
accounts of the Fund shall be audited by auditors appointed by the Commission
who shall be a firm of chartered accountants. The Commission shall ensure
maintenance of proper and separate accounts and other relevant records in
relation to the Fund giving therein the details of all receipts to, and,
expenditure from, the Fund and other relevant particulars.
(6) The
Commission may invest the moneys of the Fund in such manner as set out in
section 20 of the Trusts Act, 1882 (II of 1882).
AUDIT
246.
Appointment, removal and fee of auditors.—(1) The first auditor or auditors of
a company shall be appointed by the board within ninety days of the date of
incorporation of the company; and the auditor or auditors so appointed shall
retire on the conclusion of the first annual general meeting.
(2)
Subject to the provisions of sub-section (3), the subsequent auditor or
auditors shall be appointed by the company in the annual general meeting on the
recommendation of the board after obtaining consent of the proposed auditors, a
notice shall be given to the members with the notice of general meeting. The
auditor or auditors so appointed shall retire on the conclusion of the next
annual general meeting.
(3) A
member or members having not less than ten percent shareholding of the company
shall also be entitled to propose any auditor or auditors for appointment whose
consent has been obtained by him and a notice in this regard has been given to
the company not less than seven days before the date of the annual general
meeting. The company shall forthwith send a copy of such notice to the retiring
auditor and shall also be posted on its website.
(4)
Where an auditor, other than the retiring auditor is proposed to be appointed,
the retiring auditor shall have a right to make a representation in writing to
the company at least two days before the date of general meeting. Such
representation shall be read out at the meeting before taking up the agenda for
appointment of the auditor:
Provided
that where such representation is made, it shall be mandatory for the auditor
or a person authorized by him in writing to attend the general meeting in
person.
(5) The
auditor or auditors appointed by the board or the members in an annual general
meeting may be removed through a special resolution.
(6) Any
casual vacancy of an auditor shall be filled by the board within thirty days
from the date thereof. Any auditor appointed to fill in any casual vacancy
shall hold office until the conclusion of the next annual general meeting:
Provided
that where the auditors are removed during their tenure, the board shall
appoint the auditors with prior approval of the Commission.
(7) If
the company, fails to appoint—
(a) the
first auditors within a period of ninety days of the date of incorporation of
the company;
(b) the
auditors at an annual general meeting; or
(c) an
auditor in the office to fill up a casual vacancy within thirty days after the
occurrence of the vacancy; and
(d) if
the appointed auditors are unwilling to act as auditors of the company; the
Commission may, of its own motion or on an application made to it by the
company or any of its members direct to make good the default within such time
as may be specified in the order. In case the company fails to report
compliance within the period so specified, the Commission shall appoint
auditors of the company who shall hold office till conclusion of the next
annual general meeting:
(8) The
remuneration of the auditors of a company shall be fixed—
(a) by
the company in the general meeting;
(b) by
the board or by the Commission, if the auditors are appointed by the board or
the Commission, as the case may be.
(9)
Every company shall, within fourteen days from the date of any appointment of
an auditor, send to the registrar intimation thereof, together with the consent
in writing of the auditor concerned.
247.
Qualification and disqualification of auditors.—(1) A person shall not be
qualified for appointment as an auditor—
(a) in
the case of a public company or a private company which is subsidiary of a
public company or a private company having paid up capital of three million
rupees or more unless such person is a chartered accountant having valid
certificate of practice from the Institute of Chartered Accountants of Pakistan
or a firm of chartered accountants; and
(b) in
the case of a company other than specified in clause (a), unless such person,
is a chartered accountant or cost and management accountant having valid
certificate of practice from the respective institute or a firm of chartered
accountants or cost and management accountants, having such criteria as may be
specified: Provided that for the purpose of clause (a) and (b), a firm whereof
majority of practicing partners are qualified for appointment shall be
appointed by its firm name to be auditors of the company.
(2)
Where a partnership firm is appointed as auditor of a company, only the
partners who meet the qualification requirements as provided in subsection (1),
shall be authorized to act and sign on behalf of the firm.
(3) None
of the following persons shall be appointed as auditor of a company, namely—
(a) a
person who is, or at any time during the preceding three years was, a director,
other officer or employee of the company;
(b) a
person who is a partner of , or in the employment of, a director, officer or
employee of the company;
(c) the
spouse of a director of the company;
(d) a
person who is indebted to the company other than in the ordinary course of
business of such entities;
(e) a
person who has given a guarantee or provided any security in connection with
the indebtedness of any third person to the company other than in the ordinary
course of business of such entities;
(f) a
person or a firm who, whether directly or indirectly, has business relationship
with the company other than in the ordinary course of business of such
entities;
(g) a
person who has been convicted by a court of an offence involving fraud and a
period of ten years has not elapsed from the date of such conviction;
(h) a body
corporate;
(i) a
person who is not eligible to act as auditor under the code of ethics as
adopted by the Institute of Chartered Accountants of Pakistan and the Institute
of Cost and Management Accountants of Pakistan; and
(j) a
person or his spouse or minor children, or in case of a firm, all partners of
such firm who hold any shares of an audit client or any of its associated
companies:
Provided
that if such a person holds shares prior to his appointment as auditor, whether
as an individual or a partner in a firm the fact shall be disclosed on his
appointment as auditor and such person shall disinvest such shares within
ninety days of such appointment.
Explanation.—Reference
in this section to an “officer” or “employee” shall be construed as not including reference to an
auditor.
(4) For
the purposes of clause (d) of sub-section (3) a person who owes—
(a) a
sum of money not exceeding one million rupees to a credit card issuer; or
(b) a
sum to a utility company in the form of unpaid dues for a period not exceeding
ninety days; shall not be deemed to be indebted to the company.
(5) A
person shall also not be qualified for appointment as auditor of a company if
he is, by virtue of the provisions of sub-section (3), disqualified for
appointment as auditor of any other company which is that company‘s subsidiary
or holding company or a subsidiary of that holding company.
(6) If,
after his appointment, an auditor becomes subject to any of the
disqualifications specified in this section, he shall be deemed to have vacated
his office as auditor with effect from the date on which he becomes so
disqualified.
(7) A
person who, not being qualified to be an auditor of a company, or being or
having become subject to any disqualification to act as such, acts as auditor
of a company shall be liable to a penalty of level 2 on the standard scale.
(8) The
appointment as auditor of a company of an unqualified person, or of a person
who is subject to any disqualifications to act as such, shall be void, and,
where such an appointment is made by a company, the Commission may appoint a
qualified person in place of the auditor appointed by the company.
RIGHTS
AND DUTIES OF AUDITOR
248.
Auditors’ right to information.—(1) An auditor of a company has a right—
(a) of
access at all times to the company‘s books, accounts and vouchers (in whatever
form they are held); and
(b) of
access to such copies of, an extracts from, the books and accounts of the
branch as have been transmitted to the principal office of the company;
(c) to
require any of the following persons to provide him with such information or
explanations as he thinks necessary for the performance of his duties as
auditor—
(i) any
director, officer or employee of the company;
(ii) any
person holding or accountable for any of the company‘s books, accounts or
vouchers;
(iii)
any subsidiary undertaking of the company; and
(iv) any
officer, employee or auditor of any such subsidiary undertaking of the company
or any person holding or accountable for any books, accounts or vouchers of any
such subsidiary undertaking of the company.
(2) If
any officer of a company refuses or fails, without lawful justification, the
onus whereof shall lie on him, to allow any auditor access to any books and
papers in his custody or power, or to give any such information possessed by
him as and when required, or otherwise hinders, obstructs or delays an auditor
in the performance of his duties or the exercise of his powers or fails to give
notice of any general meeting to the auditor or provides false or incorrect
information, he shall be liable to penalty as provided under section 252.
249.
Duties of auditor.—(1) A company‘s auditor shall conduct the audit and prepare
his report in compliance with the requirements of International Standards on
Auditing as adopted by the Institute of Chartered Accountants of Pakistan.
(2) A
company‘s auditor must carry out such examination to enable him to form an
opinion as to—
(a)
whether adequate accounting records have been kept by the company and returns
adequate for their audit have been received from branches not visited by him;
and
(b)
whether the company‘s financial statements are in agreement with the accounting
records and returns.
(3) The
auditor shall make out a report to the members of the company on the accounts and
books of accounts of the company and on every financial statements and on every
other document forming part of such statements including notes, statements or
schedules appended thereto, which are to be laid before the company in general
meeting and the report shall state—
(a)
whether or not they have obtained all the information and explanations which to
the best of their knowledge and belief were necessary for the purposes of the
audit and if not, the details thereof and the effect of such information on the
financial statements;
(b)
whether or not in their opinion proper books of accounts as required by this
Act have been kept by the company;
(c)
whether or not in their opinion the statement of financial position and profit
and loss account and other comprehensive income or the income and expenditure
account and the cash flows have been drawn up in conformity with the
requirements of accounting and reporting standards as notified under this Act
and are in agreement with the books of accounts and returns;
(d)
whether or not in their opinion and to the best of their information and
according to the explanations given to them, the said accounts give the
information required by this Act in the manner so required and give a true and
fair view—
(i) in
the case of the statement of financial position, of the state of affairs of the
company as at the end of the financial year;
(ii) in
the case of the profit and loss account and other comprehensive income or the
income and expenditure account, of the profit or loss and other comprehensive
income or surplus or deficit, as the case may be, for its financial year; and
(iii) in
the case of statement of cash flows, of the generation and utilisation of the
cash and cash equivalents of the company for its financial year;
(e)
whether or not in their opinion—
(i)
investments made, expenditure incurred and guarantees extended, during the
year, were for the purpose of company‘s business; and
(ii)
zakat deductible at source under the Zakat and Usher Ordinance, 1980 (XVIII of
1980), was deducted by the company and deposited in the Central Zakat Fund
established under section 7 of that Act.
Explanation.—Where
the auditor‘s report contains a reference to any other report, statement or
remarks which they have made on the financial statements examined by them, such
statement or remarks shall be annexed to the auditor‘s report and shall be
deemed to be a part of the auditor‘s report.
(4)
Where any of the matters referred to in sub-section (2) or (3) is answered in
the negative or with a qualification, the report shall state the reason for
such answer along with the factual position to the best of the auditor‘s
information.
(5) The
Commission may, by general or special order, direct that, in the case of all
companies generally or such class or description of companies as may be
specified in the order, the auditor‘s report shall also include a statement of
such additional matters as may be so specified.
(6) The
auditor shall express unmodified or modified opinion in his report in
compliance with the requirements of International Standards on Auditing as
adopted by the Institute of Chartered Accountants of Pakistan.
(7) The
Commission may by general or special order, direct, that the statement of
compliance as contained in sub-section (4) of section 227 of this Act, shall be
reviewed by the auditor who shall issue a review report to the members on the
format specified by the Commission.
(8) The
auditor of a company shall be entitled to attend any general meeting of the
company, and to receive all notices of, and any communications relating to, any
general meeting which any member of the company is entitled to receive, and to
be heard at any general meeting which he attends on any part of the business
which concerns him as auditor: Provided that, in the case of a listed company,
the auditor or a person authorised by him in writing shall be present in the
general meeting in which the financial statements and the auditor‘s report are
to be considered.
250.
Audit of cost accounts.—(1) Where any company or class of companies is required
under first proviso of sub-section (1) of section 220 to include in its books
of account the particulars referred to therein, the Commission may direct that
an audit of cost accounts of the company shall be conducted in such manner and
with such stipulations as may be specified in the order by an auditor who is a
chartered accountant within the meaning of the Chartered Accountants Ordinance,
1961 (X of 1961), or a cost and management accountant within the meaning of the
Cost and Management Accountants Act, 1966 (XIV of 1966); and such auditor shall
have the same powers, duties and liabilities as an auditor of a company and
such other powers, duties and liabilities as may be specified.
(2) The
audit of cost accounts of the company under sub-section (1) shall be directed
by the Commission subject to the recommendation of the regulatory authority
supervising the business of relevant sector or any entity of the sector.
251.
Signature of auditor’s report.—(1) The auditor‘s report must state the name of
the auditor, engagement partner, be signed, dated and indicate the place at
which it is signed.
(2)
Where the auditor is an individual, the report must be signed by him.
(3)
Where the auditor is a firm, the report must be signed by the partnership firm
with the name of the engagement partner.
252.
Penalty for non-compliance with provisions by companies.— Any contravention or
default in complying with requirements of sections 246, 247, 248 and 250 shall
be an offence liable to a penalty of level 3 on the standard scale.
253.
Penalty for non-compliance with provisions by auditors.—(1) If any auditor‘s
report or review report is made, or any document of the company is signed or
authenticated otherwise than in conformity with the requirements of section
131, sections 249 and 251 or is otherwise untrue or fails to bring out material
facts about the affairs of the company or matters to which it purports to
relate, the auditor concerned and the person, if any, other than the auditor
who signs the report or signs or authenticates the document, and in the case of
a firm all partners of the firm, shall be liable to a penalty of level 2 on the
standard scale.
(2) If
the auditor‘s report to which sub-section (1) applies is made with the intent
to profit such auditor or any other person or to put another person to a
disadvantage or loss or for a material consideration, the auditor shall, in
addition to the penalty provided by that sub-section, be punishable with
imprisonment for a term which may extend to two years and with penalty which
may extend to one million rupees.
POWER OF
REGISTRAR TO CALL FOR INFORMATION
254.
Power of registrar to call for information or explanation.—(1) Where on a
scrutiny of any document filed by a company or on any information received by
him under this Act, or any notice, advertisement, other communication, or
otherwise, the registrar is of opinion that any information, explanation or
document is necessary with respect to any matter, he may, by a written notice,
call upon the company and any of its present or past directors, officers or
auditors to furnish such information or explanation in writing, or such
document, within thirty days: Provided that a director, officer or auditor who
ceased to hold office more than six years before the date of the notice of the
registrar shall not be compelled to furnish information or explanation or
document under this sub-section.
(2) On
receipt of the notice under sub-section (1) it shall be the duty of the company
and all persons who are or have been directors, officers or auditors of the
company to furnish such information, explanation or documents as required.
(3) If
no information or xplanation is furnished within the time specified or if the
information or explanation furnished is, in the opinion of the registrar,
inadequate, the registrar may if he deems fit, by written order, call on the
company and any such person as is referred to in sub-section (1) or (2) to
produce before him for his inspection such books and papers as he considers
necessary within such time as he may specify in the order; and it shall be the
duty of the company and of such persons to produce such books and papers.
(4) If
the company or any such person as is referred to in sub-section (1), (2) or (3)
refuses or makes default in furnishing any such information or in producing any
such books or papers—
(a) the
company shall be liable to a penalty of level 2 on the standard scale; and
(b)
every officer of the company who authorises or permits, or is a party to, the
default shall be punishable with imprisonment of either description for a term
which may extend to two years, and shall also be liable to fine which may
extend to one million rupees and the court trying the offence may, make an
order directing the company to produce such books or papers as in its opinion
may reasonably be required by the registrar.
(5) On
receipt of such information or explanation or production of any books and
papers, the registrar may annex the same or any copy thereof or extract therefrom
to the original document submitted to him; and any document so annexed shall be
subject to the provisions as to inspection and the taking of extracts and
furnishing of copies to which the original document is subject.
(6) If
the information or explanation or book or papers required by the registrar
under sub-section (1) is not furnished within the specified time, or if after
perusal of such information or explanation or books or papers the registrar is
of opinion that the document in question or the information or explanation or
book or paper discloses an unsatisfactory state of affairs, or that it does not
disclose a full and fair statement of the matter to which it purports to
relate, the registrar shall without prejudice to any other provisions, and whether
or not action under sub-section (3) or sub-section (4) has been taken, report
in writing the circumstances of the case to the Commission.
255.
Seizure of documents by registrar, inspector or investigation officer.—(1)
Notwithstanding anything contained in Code of Criminal Procedure, 1898(Act V of
1898) or any other law including Banking Companies Ordinance (Act LVII of 1962)
the registrar, inspector or investigation officer, as the case may be, upon
information in his possession or otherwise or during investigation, has reasons
to believe that documents, books and papers or anything relating to any company
or any chief executive or officer of such company or any associate of such
person or is useful or relevant to any proceedings or investigation under this
Act which is required or may be destroyed, mutilated, altered, falsified or
secreted, the registrar, inspector, or investigation officer after obtaining
prior permission of the Commission, signed by one Commissioner, without
warrants, enter such place and cause a search to be made at any time freeze,
seize or take possession of and retain any document, object, article, material,
thing, account books, movable or immovable property or cause any account,
property or thing to be maintained in specific manner.
(2) For
the purposes of sub-section (1), the registrar may, after he has obtained the
permission from the Commission under that sub-section (1), may also authorise
any officer subordinate to him, not inferior in rank to an assistant registrar
to enter, with such assistance as may be required, the place where he has
reasons to believe that any of the items referred in sub-section (1) are kept;
(a) to search that place; and (b) to seize any of the items referred in
sub-section (1) as he considers necessary.
(3) The
registrar shall return the items seized under this section as soon as may be
and in any case not later than thirty day after such seizure, to the company
or, as the case may be, to the chief executive or any other person from whose
custody or power they were seized:
Provided
that the Commission may, after providing to the company an opportunity to show
cause against the order proposed to be made by it, allow the registrar to
retain the items seized for a further period not exceeding thirty days:
Provided further that the registrar may, before returning items as aforesaid,
take copies of, or extracts from them or put such marks of identification
thereon as he considers necessary.
(4)
Where, the registrar, inspector or investigation officer, as the case may be,
has apprehension that any person or occupants of any place to be searched may
create hindrance, resist search, or such document or thing is not known to be
in the possession of any person, or where general search is required for the
purposes of any proceedings, inspection or investigation under this Act, or any
person will not or would not produce any document or thing as required by the
registrar, inspector or investigation officer in any proceedings, inspection or
investigation under this Act, a search-warrants from the concerned Magistrate
may be obtained.
(5) The
registrar, inspector or investigation officer after obtaining warrant under
sub-section (4) may conduct search of such person and enter any place and seize
any property, material, document or thing required under this Act or is
associated with commission of any offence under this Act or administered
legislation and Magistrate while issuing orders under this section may also
direct local police, authority or any agency to provide necessary assistance to
such person.
(6) The
registrar, inspector or investigation officer executing the warrants shall
comply and proceed in manner provided in the Criminal Procedure Code 1898(Act V
of 1898) including sections 102, 48 and 52:
Provided
that any proceeding under this section shall not be vitiated or called into
question for non–observance of any requirement of Section 103 of the Code and
shall be admissible in the Court of law.
(7)
Notwithstanding anything contained in sub section (3) in case of seizure of any
property, material or thing by the investigation officer, in relation to any
offense under this Act or administered legislation or scheduled offences, may
retain any property, material, document or thing seized under sub-section (1)
or (5) which is a case property and produce the same as and when required
during the trial in accordance with law.
(8)
Where the Commission has reason to believe that proceeds of crime of any
offence under this Act or administered legislation, it may pass an order to
freeze account, securities and any other moveable property or part or parts
thereof for not more than thirty days.
(9) Any
person aggrieved of the seizure, freezing or retention by the investigation
officer may approach the Court and obtain order for release of such accounts,
securities, movable or immovable property, things or material seized or
retained, after expiry of thirty days of such seizure or freezing order by the
inspector or investigator under sub-sections (1), (5) or (8), if it can satisfy
the Court that such property, accounts, securities, material or thing is not
associated with any offence under this Act or any administered legislation and
Court while passing order of release may impose such restriction and condition
as deemed necessary.
Explanation
I.—For the purposes of sub-section (8) the expression “Court” means the Company Bench of
the High Court having jurisdiction where registered office is situated, in case
of company or any connected person and in all other case, it will be the Company
Bench of the High Court having territorial jurisdiction over area where the
search has been conducted under this section.
Explanation
II.—For the purposes of this Act, the expression “administrated legislation” shall have the same
meaning as provided in clause (aa) of sub-section (1) of section 2 of the
Securities and Exchange Commission of Pakistan Act, 1997 (XLII of 1997).
INVESTIGATION
AND RELATED MATTERS
256.
Investigation into affairs of company.—(1) Where the Commission is of the
opinion, that it is necessary to investigate into the affairs of a company—
(a) on
the application of the members holding not less than one tenth of the total
voting power in a company having share capital;
(b) on
the application of not less than one tenth of the total members of a company
not having share capital;
(c) on
the receipt of a report under sub-section (5) of section 221 or on the report
by the registrar under sub-section (6) of section 254; it may order an
investigation into the affairs of the company and appoint one or more persons
as inspectors to investigate into the affairs of the company and to report
thereon in such manner as the Commission may direct:
Provided
that before making an order of investigation, the Commission shall give the
company an opportunity of being heard.
(2)
While appointing an inspector under sub-section (1), the Commission may define
the scope of the investigation, the period to which it is to extend or any
other matter connected or incidental to the investigation.
(3) An
application by members of a company under clause (a) or (b) of sub-section (1)
shall be supported by such evidence as the Commission may require for the
purpose of showing that the applicants have good reason for requiring the
investigation.
(4) The
Commission may, before appointing an inspector, require the applicants to give
such security for payment of the costs of the investigation as the Commission
may specify.
257.
Investigation of company’s affairs in other cases.—(1)Without prejudice to its
power under section 256, the Commission—
(a)
shall appoint one or more competent persons as inspectors to investigate the
affairs of a company and to report thereon in such manner as the Commission may
direct, if—
(i) the
company, by a special resolution, or
(ii) the
Court, by order, declares that the affairs of the company ought to be
investigated; and
(b) may
appoint one or more competent persons as inspectors to investigate the affairs
of a company and to report thereon in such manner as the Commission may direct
if in its opinion there are circumstances suggesting—
(i) that
the business of the company is being or has been conducted with intent to
defraud its creditors, members or any other person or for a fraudulent or
unlawful purpose, or in a manner oppressive of any of its members or that the
company was formed for any fraudulent or unlawful purpose; or
(ii)
that persons concerned in the formation of the company or the management of its
affairs have in connection therewith been guilty of fraud, misfeasance, breach
of trust or other misconduct towards the company or towards any of its members
or have been carrying on unauthorised business; or
(iii)
that the affairs of the company have been so conducted or managed as to deprive
the members thereof of a reasonable return; or
(iv)
that the members of the company have not been given all the information with
respect to its affairs which they might reasonably expect; or
(v) that
any shares of the company have been allotted for inadequate consideration; or
(vi)
that the affairs or the company are not being managed in accordance with sound
business principles or prudent commercial practices; or
(vii)
that the financial position of the company is such as to endanger its solvency:
Provided
that, before making an order under clause (b), the Commission shall give the
company an opportunity of being heard.
(2)
While appointing an inspector under sub-section (1), the Commission may define
the scope of the investigation, whether as respects the matters or the period
to which it is to extend or otherwise.
258.
Serious Fraud Investigation.—(1) Notwithstanding anything contained in sections
256 and 257, the Commission may authorize any one or more of its officers or
appoint such number of professionals from amongst the persons of ability, integrity
and having experience in the fields of corporate affairs, accountancy,
taxation, forensic audit, capital market, banking, information technology, law
or such other fields as may be notified, as an inspector or investigation
officer to investigate such serious nature of offences relating to a company as
provided in Sixth Schedule.
(2) The
persons appointed as inspectors or investigation officer under sub-section (1)
shall have all powers of investigation officer under this Act, the Securities
and Exchange Commission of Pakistan Act, 1997 (XLII of 1997) and Code of
Criminal Procedure, 1898 (Act V of 1898), mutatis mutandis and shall report in
such manner as the Commission may direct.
(3)
Where no procedure is provided in this Act or Securities and Exchange
Commission of Pakistan Act, 1997 (XLII of 1997) the investigation officer shall
comply with the relevant provisions of Code of Criminal Procedure, 1898 (Act V
of 1898).
(4)
Notwithstanding anything contained in this Act or any other law, the Commission
may, if it is satisfied that the matter is of public importance or it is in the
interest of public at large, request the concerned Minister-in-Charge of the
Federal Government to form a Joint Investigation Team to be headed by a senior
level officer of the Commission, not below the rank of additional director, and
may include any person mentioned in sub section (1) alongwith Gazetted officer
of any Federal law enforcement agency, bureau or authority for providing
assistance in investigating the offence under this section and the direction of
the concerned Minister-in-Charge of the Federal Government under this section
shall be binding and any person who fails to comply with such directions, shall
be guilty of an offence punishable with simple imprisonment of thirty days or
fine up to one hundred thousand rupees by the Court:
Provided
that nothing in this section shall be in derogation to or affect any
proceedings under powers of the Commission to send reference under section 41B
of the Securities and Exchange Commission of Pakistan Act, 1997 (XLII of 1997).
(5) Upon
completion of investigation, the Joint Investigation Team shall, through the
Special Public Prosecutor, submit a report before the Court as mentioned in
section 483 of this Act: Provided that notwithstanding anything contained in
the Qanun-e-Shahadat (Order), 1984 (P.O. No. X of 1984) or any other law, such
report shall be admissible as an evidence in the Court.
(6)
While trying any offence under this Act, the Court may also try any other
offence, in which an accused may be charged under any other law, at the same
trial if the offence is connected with such other offence.
(7)
Where, in the course of any trial under this Act, it is found that the accused
person has committed any other offence in addition to any offences connected
with the scheduled offences, the Court may convict an accused for such other
offence and pass any sentence under this Act or any other law: Provided that
where such offence is tried by any special court having jurisdiction, higher or
equal to the Court of Session, joint trial will be conducted by such special
court of all the offences and convict an accused accordingly under the process
provided in the special law.
259.
Inspector to be a Court for certain purposes.—(1) Notwithstanding anything
contained in any other law for the time being in force, the Commission may
either on its own motion or on the basis of any information received, is of the
view that any offence has been committed under this Act or any person is
engaged in any fraud, misfeasance, misconduct or any other activity prejudice
to the public interest shall have all the powers as provided under the
Securities and Exchange Commission of Pakistan Act, 1997(XLII of 1997).
(2) A
person appointed as inspector under sections 256, 257 and 258 shall, for the
purposes of his investigation, have the same powers as are vested in a Court
under the Code of Civil Procedure, 1908 (Act V of 1908), while trying a suit,
in respect of the following matters, namely—
(a)
enforcing the attendance of persons and examining them on oath or affirmation;
(b)
compelling the discovery and production of books and papers and any material
objects; and
(c)
issuing commissions for the examination of witnesses; and every proceeding
before such person shall be deemed to be “judicial proceeding” within the meaning of
sections 193 and 228 of the Pakistan Penal Code, 1860 (Act XLV of 1860).
(3) Any
contravention of or non-compliance with any orders, directions or requirement
of the inspector exercising powers of a Court under sub-section (1) shall, in
all respects, entail the same liabilities, consequences and penalties as are
provided for such contravention, non-compliance or default under the Code of
Civil Procedure, 1908 (Act V of 1908) and Pakistan Penal Code, 1860 (Act XLV of
1860).
260.
Power of inspectors to carry investigation into affairs of associated
companies.—If an inspector appointed under sections 256, 257 or 258 to
investigate the affairs of a company considers it necessary for reasons to be recorded
in writing, he may probe after seeking prior approval of the Commission, the
affairs of any other associated company or associated undertaking which is, or
has been associated and also from the chief executive of any such company:
Provided
that the Commission shall not grant approval under this section without
providing opportunity of being heard to the associated company or associated
undertaking or the chief executive, as the case may be.
261.
Duty of officers to assist the inspector.—(1) It shall be the duty of all
officers and other employees and agents of the company and all persons who have
dealings with the company to give to the inspector all assistance in connection
with the investigation.
(2) Any
such person who makes default in complying with the provisions of sub-section
(1) shall, without prejudice to any other liability, be publishable in respect
of each offence with imprisonment of either description for a term which may
extend to two years and shall also be liable to a fine which may extend to one
million rupees.
(3) In
this section—
(a) the
expression “agents”, in
relation to any company, body corporate or person, includes the bankers, legal
advisers and auditors of the company;
(b) the
expression “officer”, in
relation to any company or body corporate, include any trustee for the
debenture-holders of such company or body corporate; and
(c) any
reference to officers and other employees and agents shall be construed as a
reference to past as well as present officers and other employees and agents,
as the case may be.
262.
Inspector’s report.—(1) The inspector may, and if so directed by the Commission
shall, make an interim report, and on the conclusion of the investigation a
final report to the Commission.
(2) The
Commission— (a) shall forward a copy of any report made by the inspector to the
company at its registered office with such directions as the Commission thinks
fit;
(b) may,
if it thinks fit, furnish a copy thereof, on request and on payment of the
specified fee, to any person-
(i) who
is a member of the company or other body corporate or is interested in the
affairs of the company;
(ii)
whose interests as a creditor of the company or other body corporate appear to
the Commission to be affected;
(c)
shall, when the inspectors are appointed under clause (a) or clause (b) of
section 256, furnish, at the request of the applicants for the investigation, a
copy of the report to them;
(d)
shall, where the inspector are appointed under section 257 in pursuance of an
order of the Court, furnish a copy of the report to the Court;
(e) may
forward a copy of the report to the registrar with such directions as it may
deem fit; and
(f) may
also cause the report or any part thereof to be posted on its website.
(1) If,
from any report made under section 262, it-263.
Prosecution
appears to the Commission that any person has, in relation to the company or in
relation to any other body corporate, whose affairs have been investigated by
virtue of sections 256, 257 and 258, been guilty of any offense for which he is
criminally liable, the Commission may, prosecute such person for the offence,
and it shall be the duty of all officers and other employees and agents of the
company or body corporate, as the case may be, other than the accused in the
proceedings, to give the Commission or any person nominated by it in this
behalf all assistance in connection with the prosecution which they are
reasonably able to give.
(2)
Sub-section (3) of section 261 shall apply for the purpose of this section as
it applies for the purposes of that section.
264.
Power of Commission to initiate action against management.— (1) If from any
report made under section 262, the Commission is of the opinion that—
(a) the
business of the company is being or has been conducted with intent to defraud
its creditors, members or any other persons or for a fraudulent or unlawful
purpose, or in a manner oppressive of any of its members or that the company
was formed for any fraudulent or unlawful purpose; or
(b) the
person concerned in the formation of the company or the management of its
affairs have in connection therewith been guilty of fraud, misfeasance, breach
of trust or other misconduct towards the company or towards any of its member
or have been carrying on unauthorized business; or
(c) the
affairs of the company have been so conducted or managed as to deprive the
shareholders thereof of a reasonable return; or
(d) that
the members of the company have not been given all the information with respect
to its affairs which they might reasonably expect; or
(e) any
shares of the company have been allotted for inadequate consideration; or
(f) the
affairs of the company are not being managed in accordance with sound business
principles or prudent commercial practices; or
(g) the
financial position of the company is such as to endanger its solvency; the
Commission may apply to the Court and the Court may, after taking such evidence
as it may consider necessary, by an order—
(i)
remove from office any director including the chief executive or other officer
of the company; or
(ii)
direct that the directors of the company shall carry out such changes in the
management or in the accounting policies of the company as may be specified in
the order; or
(iii)
notwithstanding anything contained in this Act or any other law for the time
being in force, direct the company to call a meeting of its members to consider
such matters as may be specified in the order and to take appropriate remedial
actions; or
(iv)
direct that any existing contract which is to the detriment of the company or
its members or is intended to or does benefit any officer or director shall be
annulled or modified to the extent specified in the order:
Provided
that no such order shall be made so as to have effect from any date preceding
the date of the order: Provided further that any director, including a chief
executive or other officer who is removed from office under clause (i), unless
the Court specified a lesser period, shall not be a director, chief executive
or officer of any company for a period of five years from the date of his
removal.
(2) No
order under this section shall be made unless the director or other officer
likely to be affected by such order has been given an opportunity of being
heard.
(3) The
action taken under sub-section (1) shall be in addition to and not in
substitution of any other action or remedy provided in any other law for the
time being in force.
265.
Effect of Court’s order.—On the issue of the Court‘s order under section 264
removing from office any director, including chief executive or other officer,
such director or other officer shall be deemed to have vacated his office and—
(a) if
the Court‘s order has removed a director, the casual vacancy in the office of
director shall be filled in accordance with the relevant provisions of section
161 of this Act; and
(b) if
the Court‘s order has removed from office a chief executive, the board shall
appoint another person to be the chief executive; and
(c) if
the Court‘s order has removed from office all the directors including the chief
executive, a general meeting of the company shall be called forthwith for
electing new directors.
266. No
compensation to be payable for annulment or modification of
contract.—Notwithstanding anything contained in any other law for the time
being in force, and except as ordered by the Court for special reasons to be
recorded in writing, no director, chief executive or other officer of the
company shall be entitled to be paid any compensation for annulment or
modification of a contract to which he is a party or of which he is a
beneficiary, if such contract is annulled or modified by an order issued by the
Court under section 264.
267. No
right to compensation for loss of office.—No person shall be entitled to or be
paid any compensation or damages for the loss of office by reason of an order
issued under section 264.
POWERS
OF COURT HEARING APPLICATION
268.
Application for winding up of company or an order under section 286.—If any
company or other body corporate the affairs of which have been investigated by
inspectors is liable to be wound up under this Act, and it appears to the
Commission from any report made under section 262 that it is expedient so to do
by reason of any such circumstances as are referred to in subclause (i) or sub-clause
(ii) or sub-clause (iii) or sub-clause (iv) or sub-clause (vii) of clause (b)
of sub-section (1) of section 257, the Commission may, unless the company or
other body corporate is already being wound up by the Court cause to be
presented to the Court by the registrar or any person authorised by the
Commission in this behalf—
(a) a
petition for the winding up of the company or body corporate, on the ground
that it is just and equitable that it should be wound up;
(b) an
application for an order under section 286; or (c) both a petition and an
application as aforesaid.
269.
Proceedings for recovery of damages or property.—(1) If from any report
referred to in sub-section (1) of section 262 it appears to the Commission that
proceedings ought, in the public interest, to be brought by the company or any
body corporate whose affairs have been investigated in pursuance of section
260—
(a) for
the recovery of damages in respect of any fraud, misfeasance, breach of trust
or other misconduct in connection with the promotion or formation, or the
management of the affairs, of such company or body corporate; or
(b) for
the recovery of any property of such company or body corporate which has been
misapplied or wrongfully retained; the Commission may itself bring proceedings
for that purpose in the name of such company or body corporate.
(2) The
Commission shall be indemnified by such company or body corporate against any
costs or expenses incurred by it in, or in connection with, any proceedings
brought by virtue of sub-section (1) and the Court or other authority before
which proceedings are brought shall pass an order accordingly.
270.
Expenses of investigation.—(1) When an investigation is ordered to be made
under section 256 or 257 or 258, the expenses of and incidental to the
investigation shall in the first instance be defrayed by the Commission; but
the following persons shall, to the extent mentioned below, be liable to
reimburse the Commission in respect of such expenses, namely—
(a) any
person who is convicted on a prosecution instituted in pursuance of section 263
or is ordered to pay damages or restore any property as a result of proceedings
under section 269 may in the same proceedings be ordered to pay the said
expenses to such extent as may be specified by the Commission or the Court
convicting such person or ordering him to pay such damages or restore such
property, as the case may be;
(b) any
company or body corporate in whose name proceedings are brought as aforesaid
shall be liable, to the extent of the amount or value of any sums or property
recovered by it as a result of the proceedings;
(c)
where the investigation was ordered by the Commission under clause (c) of
sub-section (1) of section 256 or 257 or 258, the company or body corporate
whose affairs are ordered to be investigated, shall be liable; and
(d)
where the investigation was ordered under section 256 on an application of the
members, the members making the application and the company or body corporate
dealt with by the report shall be liable to such extent, if any, as the
Commission may direct.
(2) The
amount of expenses which any company, body corporate or person is liable under
this section to reimburse to the Commission shall be recoverable from that
company, body corporate or person as provided under section 486.
(3) For
the purposes of this section, any costs or expenses incurred by the Commission
in or in connection with proceeding brought by the Commission under section 269
shall be treated as expenses of the investigation giving rise to the
proceedings.
(4) Any
liability to reimburse the Commission imposed by clauses (a) and (b) of
sub-section (1) shall, subject to satisfaction of the right of the Commission
to re-imbursement, be a liability also to indemnify all persons against liability
under clause (c) of that sub-section.
(5) Any
such liability imposed by clause (a) of sub-section (1) shall, subject as
aforesaid, be a liability also to indemnify all persons against liability under
clause (b) of that sub-section.
(6) Any
person liable under clause (a) or clause (b) or clause (c) of subsection (1)
shall be entitled to contribute from any other person liable under the same
clause according to the amount of their respective liabilities thereunder.
(7) In
so far as the expenses to be defrayed by the Commission under this section are
not recovered thereunder, they shall be borne by the Commission.
271.
Inspector’s report to be evidence.—A copy of any report of any inspector or
inspectors appointed under sections 256, 257 or 258 authenticated in such
manner, if any, as may be specified, shall be admissible in any legal
proceedings as evidence of the opinion of the inspector or inspectors in
relation to any matter contained in the report.
272.
Imposition of restrictions on shares and debentures and prohibition of transfer
of shares or debentures in certain cases.—(1) Where it appears to the
Commission in connection with any investigation that there is good reason to
find out the relevant facts about any shares, whether issued or to be issued, and
the Commission is of the opinion that such facts cannot be found out unless the
restrictions specified in sub-section (2) are imposed, the Commission may, by
order, direct that the shares shall be subject to the restrictions imposed by
sub-section (2) for such period not exceeding one year as may be specified in
the order:
Provided
that, before making an order under this sub-section, the Commission shall
provide an opportunity of showing cause against the proposed action to the
company and the persons likely to be affected by the restriction.
(2) So
long as any shares are directed to be subject to the restrictions imposed by
this sub-section—
(a) any
transfer of those shares shall be void;
(b)
where those shares are to be issued, they shall not be issued; and any issue
thereof or any transfer of the right to be issued therewith, shall be void;
(c) no
voting right shall be exercisable in respect of those shares;
(d) no
further shares shall be issued in right of those shares or in pursuance of any
offer made to the holder thereof; and any issue of such shares or any transfer
of the right to be issued therewith, shall be void;
(e)
except in a liquidation, no payment shall be made of any sums due from the
company on those shares, whether in respect of dividend, capital or otherwise;
and
(f) no
change other than a change by operation of law shall be made in the directors
or the chief executive.
(3)
Where a transfer of shares in a company has taken place and as a result thereof
a change in the directors of the company is likely to take place and the
Commission is of opinion that any such change will be prejudicial to the public
interest, the Commission may, by order, direct, that—
(a) the
voting rights in respect of those shares shall not be exercisable for such period
not exceeding one year as may be specified in the order; and
(b) no
resolution passed or action taken to effect a change in the directors before
the date of the order shall have effect unless confirmed by the Commission.
(4)
Where the Commission has reasonable ground to believe that a transfer of shares
in a company is likely to take place as a result of which a change in the
directors of the company will follow and the Commission is of opinion that any
such change will be prejudicial to the public interest, the Commission may, by
order, prohibit any transfer of shares in the company during such period not
exceeding one year as may be specified in the order.
(5) The
Commission may, by order, at any time, vary or rescind any order made by it
under sub-section (1) or sub-section (3) or sub-section (4).
(6)
Where the Commission makes an order under sub-section (1) or sub- section (3)
or sub-section (4) or sub-section (5) or refuses to rescind any such order, any
person aggrieved thereby may apply to the Court and the Court may, if it thinks
fit, by order, vacate any such order of the Commission: Provided that no order,
whether interim or final shall be made by the Court without giving the
Commission an opportunity of being heard.
(7) Any
order of the Commission rescinding an order under sub-section (1), or any order
of the Court vacating any such order, which is expressed to be made with a view
to permitting a transfer of any shares, may continue the restrictions mentioned
in clauses (d) and (e) of sub-section (2), either in whole or in part, so far
as they relate to any right acquired, or offer made, before the transfer.
(8) Any
order made by the Commission under sub-section (5) shall be served on the
company within fourteen days of the making of the order.
(9) Any
person who— (a) exercises or purports to exercise any right to dispose of any
shares or of any right to be issued with any such shares, when to his knowledge
he is not entitled to do so by reason of any of the restrictions applicable to
the case under sub-section (1); or
(b)
votes in respect of any shares, whether as holder or proxy, or appoints a proxy
to vote in respect thereof, when to his knowledge he is not entitled to do so
by reason of any of the restrictions applicable to the case under sub-section
(2) or by reason of any order made under sub-section (3); or
(c)
transfers any shares in contravention of any order made under subsection (4);
or
(d)
being the holder of any shares in respect of which an order under sub- section
(2) or sub-section (3) has been made, fails to give notice of the fact of their
being subject to any such order to any person whom he does not know to be aware
of that fact but whom he knows to be otherwise entitled to vote in respect of
those shares, whether as holder or a proxy; shall be punishable with
imprisonment for a term which may extend to one year, or with fine which may
extend to one million rupees, or with both.
(10) Any
contravention or default in complying with requirements of sub-section (2)
shall be an offence liable to a penalty of level 2 on the standard scale.
(11) A
prosecution shall not be instituted under this section except by or with the
consent of the Commission.
(12)
This section shall also apply in relation to debentures as it applies in
relation to shares.
273.
Saving for legal advisers and bankers.—Nothing in sections 256 to 263 shall
require the disclosure to the registrar or to the Commission or to an inspector
appointed by the Commission—
(a) by a
legal adviser, of any privileged communication made to him in that capacity,
except as respects the name and address of his client; or
(b) by
the bankers of any company, body corporate, or other person, referred to in the
sections aforesaid, as such bankers, of any information as to be the affairs of
any of their customers other than such company, body corporate, or person.
274.
Enquiries and investigation not to be affected by winding up.— An inspection,
enquiry or investigation may be initiated or proceeded with under sections 221,
254, 255, 256, 257 and 260 and any consequential action taken in accordance
with any provisions of this Act notwithstanding that—
(a) the
company has passed a resolution for winding up;
(b) a
petition has been submitted to the Court for winding up of the company; or
(c) any
other civil or criminal proceedings have been initiated against the company or
its officers under any provision of this Act.
275.
Application of sections 254 to 274 to liquidators and foreign companies.—The
provisions of sections 254 to 274 shall apply mutatis mutandis to companies in
the course of winding up, their liquidators and foreign companies.
PART
VIII
MEDIATION,
ARBITRATION, ARRANGEMENTS AND RECONSTRUCTION
276.
Mediation and Conciliation Panel.— (1) Any of the parties to the proceedings
may, by mutual consent, at any time during the proceedings before the
Commission or the Appellate Bench, apply to the Commission or the Appellate
Bench, as the case may be, in such form along-with such fees as may be
specified, for referring the matter pertaining to such proceedings to the
Mediation and Conciliation Panel and the Commission or the Appellate Bench, as
the case may be, shall appoint one or more individuals from the panel referred
to in sub-section (2).
(2) The
Commission shall maintain a panel to be called as the Mediation and
Conciliation Panel consisting of individuals having such qualifications as may
be specified for mediation between the parties during the pendency of any
proceedings before the Commission or the Appellate Bench under this Act.
(3) The
fee and other terms and conditions of individuals of the Mediation and
Conciliation Panel shall be such as may be specified.
(4) The
Mediation and Conciliation Panel shall follow such procedure as and dispose of
the matter referred to it within a period of ninety days from the date of such
reference and forward its recommendations to the Commission or the Appellate
Bench, as the case may be.
277.
Resolution of disputes through mediation.— A company, its management or its
members or creditors may by written consent, directly refer a dispute, claim or
controversy arising between them or between the members or directors inter-se,
for resolution, to any individuals enlisted on the mediation and conciliation
panel maintained by the Commission before taking recourse to formal dispute
resolution.
278.
Power for companies to refer matter to arbitration.— (1) A company may by
written agreement refer any existing or future difference between itself and
any other company or person to arbitration, in accordance with the Arbitration
Act, 1940 (X of 1940).
(2)
Companies, parties to the arbitration, may delegate to the arbitrator power to
settle any term or to determine any matter capable of being lawfully settled or
determined by the companies themselves, or by the board or other managing body.
(3) The
provisions of the Arbitration Act, 1940 (X of 1940), shall apply to all
arbitrations between companies and persons in pursuance of this Act.
279.
Compromise with creditors and members.— (1) Where a compromise or arrangement is
proposed between a company and its creditors or any class of them, or between
the company and its members or any class of them, the Commission may, on the
application of the company or of any creditor or member of the company or, in
the case of a company being wound up, of the liquidator, order a meeting of the
creditors or class of creditors, or of the members of the company or class of
members, as the case may be, to be called, held and conducted in such manner as
the Commission directs.
(2) If a
majority in number representing three-fourths in value of the creditors or
class of creditors, or members, as the case may be, present and voting either
in person or, where proxies are allowed, by proxy at the meeting, agree to any
compromise or arrangement, the compromise or arrangement shall, if sanctioned
by the Commission be binding on the company, all its creditors, all the
members, the liquidators and the contributories of the company, as the case may
be: Provided that no order sanctioning any compromise or arrangement shall be
made by the Commission unless the Commission is satisfied that the company or
any other person by whom an application has been made under sub-section (1) has
disclosed to the Commission, by affidavit or otherwise, all material facts relating
to the company, such as the financial position of the company, the auditor‘s
report on the latest accounts of the company, the pendency of any investigation
proceedings in relation to the company and the like.
(3) A
copy of the order under sub-section (2) sanctioning the compromise or
arrangement duly certified by an authorised officer of the Commission shall be
forwarded to the registrar within seven days from the date of the order.
(4) A
copy of the order under sub-section (2) shall be annexed to every copy of the
memorandum of the company issued after the order has been made or in the case
of a company not having a memorandum to every copy so issued of the instrument
constituting or defining the constitution of the company.
(5) The
Court may, at any time after an application has been made to the Commission
under this section, stay the commencement or continuation of any suit or
proceeding until final disposal of the application.
(6) In
this section the expression “company” means any company liable to be wound up under this Act and
the expression “arrangement” includes a re-organisation of the share-capital of the
company by the consolidation of shares of different classes or by the division
of shares into shares of different classes or by both those methods, and for
the purposes of this section unsecured creditors who may have filed suits or
obtained decrees shall be deemed to be of the same class as other unsecured
creditors.
(7) Any
contravention or default in complying with requirements of sub-section (4)
shall be an offence liable to a penalty of level 1 on the standard scale.
280.
Power of Commission to enforce compromises and arrangements.— (1) Where the
Commission makes an order under section 279 sanctioning a compromise or an
arrangement in respect of a company, it may, at the time of making such order
or at any time thereafter, give such directions in regard to any matter or make
such modifications in the compromise or arrangement as it may consider
necessary for the proper working of the compromise or arrangement.
(2) If
the Commission is satisfied that a compromise or arrangement sanctioned under
section 279 cannot be worked satisfactorily with or without modification, it
may, initiate proceedings for the winding up of the company.
281.
Information as to compromises or arrangements with creditors and members.—(1)
Where a meeting of creditors or any class of creditors, or of members or any
class of members, is called under section 279—
(a) with
every notice calling the meeting which is sent to a creditor or member, there
shall be sent also a statement setting forth the terms of the compromise or
arrangement and explaining its effect; and in particular, stating any material
interest of the directors including the chief executive of the company, whether
in their capacity as such or as members or creditors of the company or
otherwise, and the effect on those interests, of the compromise or arrangement
if, and in so far as, it is different from the effect on the like interest of
other persons; and
(b) in
every notice calling the meeting which is given by advertisement, there shall
be included either such a statement as aforesaid or a notification of the place
at which and the manner in which creditors or members entitled to attend the
meeting may obtain copies of such a statement as aforesaid.
(2)
Where the compromise or arrangement affects the rights of debenture-holders of
the company, the said statement shall give the like information and explanation
as respects the trustees of any deed for securing the issue of the debentures
as it is required to give as respects the company‘s directors.
(3)
Where a notice given by advertisement includes a notification that copies of a
statement setting forth the terms of the compromise or arrangement proposed and
explaining its effect can be obtained by creditors or members entitled to
attend the meeting, every creditor or member so entitled shall, on making an
application in the manner indicated by the notice, be furnished by the company,
free of charge, with a copy of the statement.
(4) Any
contravention or default in complying with requirements of this section shall
be an offence liable to a penalty of level 1 on the standard scale; and for the
purpose of this sub-section any liquidator of the company and trustee of a deed
for securing the issue of debentures of the company shall be deemed to be an
officer of the company:
Provided
that a person shall not be under this sub-section if he shows that the default
was due to the refusal of any other person, being a director, including chief
executive or trustee for debenture-holder, to supply the necessary particulars
as to his material interests.
(5)
Every director, including chief executive of the company and every trustee for
debenture-holders of the company, shall give notice to the company of such
matters relating to himself as may be necessary for the purposes of this
section and on the request of the company shall provide such further
information as may be necessary for the purposes of this section; and, if he
fails to do so within the time allowed by the company, he shall be liable to a
penalty of level 1 on the standard scale.
282.
Powers of Commission to facilitate reconstruction or amalgamation of
companies.—(1) Where an application is made to the Commission under section 279
to sanction a compromise or arrangement and it is shown that—
(a) the
compromise or arrangement is proposed for the purposes of, or in connection
with, a scheme for the reconstruction of any company or companies, or the
amalgamation of any two or more companies or division of a company into one or
more companies; (b clause is missing)
(c)
under the scheme the whole or any part of the undertaking or property or
liabilities of any company concerned in the scheme (“a transferor company”) is to be transferred to
another company (“the transferee company”) or is proposed to be divided among and transferred to two
or more companies; and
(d) a
copy of the scheme drawn up by the applicants has been filed with the
registrar; the Commission may order a meeting of the creditors or class of
creditors or the members or class of members, as the case may be, to be called,
held and conducted in such manner as the Commission may direct.
(2)
Where an order has been made by the Commission under subsection (1), merging
companies or the company in respect of which a division is proposed, shall also
be required to circulate the following for the meeting so ordered by the
Commission, namely:—
(a) the
draft of the proposed terms of the scheme drawn up and adopted by the board of
each of the applicant companies;
(b)
confirmation that a copy of the draft scheme has been filed with the registrar;
(c) a
report adopted by the board of the applicant companies explaining effect of
compromise on each class of members, laying out in particular the share swap
ratio, specifying any special valuation difficulties;
(d) the
report of the expert with regard to valuation, if any;
(e) a
supplementary audited financial statements if the last annual accounts of any
of the applicant company relate to a financial year ending more than one
hundred and eighty days before the first meeting of the company summoned for
the purposes of approving the scheme.
(3) The
Commission may, either by an order, sanction the compromise or arrangement or
by a subsequent order, make provision for all or any of the following matters—
(a) the
transfer to the transferee company of the whole or any part of the undertaking
and of the property or liabilities of any transferor company;
(b) the
allotment or appropriation by the transferee company of any shares, debentures,
policies or other like interests in that company which under the compromise or
arrangement are to be allotted or appropriated by that company to or for any
person;
(c) the
continuation by or against the transferee company of any legal proceedings
pending by or against any transferor company;
(d) the
dissolution, without winding up, of any transferor company;
(e) the
provision to be made for any persons who, within such time and in such manner
as the Commission directs, dissent from the compromise or arrangement;
(f) such
incidental, consequential and supplemental matters as are necessary to secure
that the reconstruction, amalgamation or bifurcation is fully and effectively
carried out.
(4) If
an order under this section provides for the transfer of property or
liabilities—
(a) the
property, by virtue of the order stands transferred to, and vests in, the
transferee company, and
(b) the
liabilities, by virtue of the order, stand transferred to and become liabilities
of that company.
(5)
Notwithstanding anything contained in the Stamp Act, 1899 (II of 1899) or any
other law for the time being in force, no stamp duty shall be payable on
transfer to the transferee company of the whole or any part of the undertaking
and of the property of any transferor company as a result of sanctioning by the
Commission, any compromise or arrangement under this Part:
Provided
that this sub-section (5) shall, in respect of the companies having registered
office within the jurisdiction of—
(a) the
Islamabad Capital Territory, be applicable at once; and
(b) the
Provinces, be applicable upon notification or legislation by the respective
Provincial Governments.
(6) The
property (if the order so directs) vests freed from any charge that is by
virtue of the compromise or arrangement to cease to have effect.
(7) A
copy of the order passed by the Commission under this section sanctioning the
reconstruction, the amalgamation or division, duly certified by an authorised
officer of the Commission shall be forwarded to the registrar within seven days
from the date of the order.
(8) In
this section “property”
includes property, rights and powers of every description; and “liabilities” includes duties.
(9) In
this section the expression “transferee company” does not include any company
other than a company within the meaning of this Act, and the expression “transferor
company”
includes any body corporate, whether a company within the meaning of this Act
or not.
283.
Notice to be given to registrar for applications under section 279. The
Commission shall give notice of every application made to it-and 282. under sections 279 to 282 to the registrar and
shall take into consideration the representation if any, made to it by the
registrar before passing any order under any of these sections.
284.
Amalgamation of wholly owned subsidiaries in holding company.— (1) A company
and one or more other companies that is or that are directly or indirectly
wholly owned by it, may amalgamate and continue as one company (being the
company first referred to) without complying with sections 279 to 282, if—
(a) the
scheme of amalgamation is approved by the board of each amalgamating company;
and (b) each resolution provides that—
(i) the
shares of each transferor company, other than the transferee company, will be
cancelled without payment or other consideration; and
(ii) the
board is satisfied that the transferee company will be able to pay its debts as
they fall due during the period of one year immediately after the date on which
the amalgamation is to become effective and a declaration verified by an
affidavit to the effect will be filed with the registrar; and
(iii)
the person or persons named in the resolution will be the director or directors
of the transferee company.
(2) Two
or more companies, each of which is directly or indirectly wholly owned by the
same person, may amalgamate and continue as one company without complying with
section 279 or section 282 if—
(a) the
scheme of amalgamation is approved by a resolution of the board of each
amalgamating company; and
(b) each
resolution provides that—
(i) the
shares of all the transferor companies will be cancelled without payment or
other consideration; and
(ii) the
board is satisfied that the transferee company will be able to pay its debts as
they fall due during the period of one year immediately after the date on which
the amalgamation is to become effective and a declaration verified by an
affidavit to the effect will be filed with the registrar; and
(iii)
the person or persons named in the resolution will be the director or directors
of the transferee company.
(3) The
board of each amalgamating company must, not less than twenty days before the
amalgamation is proposed to take effect, give written notice of the proposed
amalgamation to every secured creditor of the company.
(4) The
resolutions approving an amalgamation under this section, taken together, shall
be deemed to constitute an amalgamation proposal that has been approved.
(5) The
transferee company shall file a copy of the scheme so approved in the manner as
may be specified, with the registrar where the registered office of the company
is situated.
(6) Any
contravention or default in complying with requirements of this section shall
be an offence liable to a penalty of level 2 on the standard scale.
285.
Power to acquire shares of members dissenting from scheme or (1) Where a scheme
or contract involving the transfer of shares or any-contract. class of shares in any company (in this section
referred to as “the transferor company”) to another company (in this section referred to as “transferee
company”) has,
within one hundred and twenty days after the making of the offer in that behalf
by the transferee company, been approved by the holders of not less than
nine-tenths in value of the shares whose transfer is involved (other than
shares already held at the date of the offer by, or by a nominee for, the
transferee company or its subsidiary), the transferee company may, at any time
within sixty days after the expiry of the said one hundred and twenty days,
give notice in the specified manner to any dissenting shareholder that it
desires to acquire his shares; when such a notice is given the transferee
company, shall, unless, on an application made by the dissenting shareholder
within thirty days from the date on which the notice was given, the Commission
thinks fit to order otherwise, be entitled and bound to acquire those shares on
the terms on which, under the scheme or contract, the shares of the approving shareholders
are to be transferred to the transferee company:
Provided
that, where shares in the transferor company of the same class as the shares
whose transfer is involved are already held as aforesaid by the transferee
company to a value greater than one-tenths of the aggregate of the value of all
the shares in the company of such class, the foregoing provisions of this
sub-section shall not apply, unless—
(a) the
transferee company offers the same terms to all holders of the shares of that
class (other than those already held as aforesaid) whose transfer is involved;
and
(b) the
holders who approve the scheme or contract, besides holding not less than
nine-tenths in value of the shares (other than those already held as aforesaid)
whose transfer is involved, are not less than three-fourths in number of the
holders of those shares.
(2)
Where, in pursuance of any such scheme or contract as aforesaid, shares, or
shares of any class, in a company are transferred to another company or its
nominee, and those shares together with any other shares or any other shares of
the same class, as the case may be, in the first mentioned company held at the
date of the transfer by, or by a nominee for, the transferee company or its
subsidiary comprise nine-tenth in value of the shares, or shares of that class,
as the case may be, in the first-mentioned company, then—
(a) the
transferee company shall, within thirty days from the date of the transfer
(unless on a previous transfer in pursuance of the scheme or contract it has already
complied with this requirement), give notice of that fact in the specified
manner to the holders of the remaining shares or of the remaining shares of
that class, as the case may be, who have not assented to the scheme or
contract; and
(b) any
such holder may, within ninety days from the giving of the notice to him,
require the transferee company to acquire the shares in question;
and
where a shareholder gives notice under clause (b) with respect to any shares,
the transferee company shall be entitled and bound to acquire those shares on
the terms on which, under the scheme or contract, the shares of the approving
shareholders were transferred to it, or on such other terms as may be agreed,
or as the Commission on the application of either the transferee company or the
shareholders thinks fit to order.
(3)
Where a notice has been given by the transferee company under sub-section (1)
and the Commission has not, on an application made by the dissenting
shareholder, made an order to the contrary, the transferee company shall, on
the expiration of thirty days from the date on which the notice has been given
or, if an application to the Commission by the dissenting shareholder is then
pending, after that application has been disposed of, transmit a copy of the
notice to the transferor company together with an instrument of transfer
executed on behalf of the shareholder by any person appointed by the transferee
company and on its own behalf by the transferee company and pay or transfer to
the transferor company the amount or other consideration representing the price
payable by the transferee company for the shares which, by virtue of this
section, that company is entitled to acquire; and the transferor company shall—
(a)
thereupon register the transferee company as the holders of those shares; and
(b)
within thirty days of the date of such registration, inform the dissenting
shareholders of the fact of such registration and of the receipt of the amount
or other consideration representing the price payable to them by the transferee
company:
Provided
that an instrument of transfer shall not be required for any share for which a
share warrant is for the time being outstanding.
(4) Any
sums received by the transferor company under this section shall forthwith be
paid into a separate bank account to be opened in a scheduled bank and any such
sum and any other consideration so received shall be held by that company in
trust for the several persons entitled to the shares in respect of which the
said sums or other consideration were or was respectively received.
(5) The
following provisions shall apply in relation to every offer of a scheme or
contract involving the transfer of shares or any class of shares in the
transferor company to the transferee company, namely—
(a) every
such offer or every circular containing such offer or every recommendation to
the members of the transferor company by its board to accept such offer shall
be accompanied by such information as may be specified;
(b)
every such offer shall contain a statement by or on behalf of the transferee
company disclosing the steps it has taken to ensure that necessary cash will be
available;
(c)
every circular containing or recommending acceptance of, such offer shall be
presented to the registrar for registration and no such circular shall be
issued until it is so registered;
(d) the
registrar may refuse to register any such circular which does not contain the
information required to be given under clause (a) or which sets out such
information in a manner likely to give a misleading, erroneous or false
impression; and
(e) an
appeal shall lie to the Commission against an order of the registrar refusing
to register any such circular.
(6) The
Commission or any party may make a reference to the Court, on any matter including
but not limited to the determination of liabilities of the company or
incidental thereto as provided under sections 279 to 285, for necessary orders.
(7)
Whoever issues a circular referred to in clause (c) of sub-section (5) which
has not been registered shall be punishable to a penalty of level 1 on the
standard scale.
(8)
Notwithstanding anything contained in sections 279 to 283 and 285, the powers
of the Commission shall be exercised by the Court for such companies or class
of companies or having such capital, as may be notified by the concerned
Minister-in-Charge of the Federal Government.
PART IX
PREVENTION
OF OPPRESSION AND MIS-MANAGEMENT
286.
Application to Court.—(1) If any member or members holding not less than ten
percent of the issued share capital of a company, or a creditor or creditors
having interest equivalent in amount to not less than ten percent of the paid
up capital of the company, complains, or complain, or the Commission or
registrar is of the opinion, that the affairs of the company are being
conducted, or are likely to be conducted, in an unlawful or fraudulent manner,
or in a manner not provided for in its memorandum, or in a manner oppressive to
the members or any of the members or the creditors or any of the creditors or are
being conducted in a manner that is unfairly prejudicial to the public
interest, such member or members or, the creditor or creditors, as the case may
be, the Commission or registrar may make an application to the Court by
petition for an order under this section.
(2) If,
on any such petition, the Court is of opinion—
(a) that
the company‘s affairs are being conducted, or are likely to be conducted, as
aforesaid; and
(b) that
to wind-up the company will unfairly prejudice the members or creditors; the
Court may, with a view to bringing to an end the matters complained of, make
such order as it thinks fit, whether for regulating the conduct of the
company‘s affairs in future, or for the purchase of the shares of any members
of the company by other members of the company or by the company and, in the
case of purchase by the company, for, the reduction accordingly of the
company‘s capital, or otherwise.
(3)
Where an order under this section makes any alteration in, or addition to, a
company‘s memorandum or articles, then, notwithstanding anything in any other
provision of this Act, the company shall not have power without the leave of
the Court to make any further alteration in or addition to the memorandum or
articles inconsistent with the provisions of the order; and the alterations or
additions made by the order shall be of the same effect as if duly made by
resolution of the company and the provisions of this Act shall apply to the
memorandum or articles as so modified accordingly.
(4) A
copy of any order under this section altering or adding to, or giving leave to
alter or add to, a company‘s memorandum or articles shall, within fourteen days
after the making thereof, be delivered by the company to the registrar for
registration; and if the company makes default in complying with this
sub-section, the company and every officer of the company who is in default
shall be liable to a penalty of level 1 on the standard scale.
(5) The
provisions of this section shall not prejudice the right of any person to any
other remedy or action.
287.
Powers of Court under section 286.—Without prejudice to the generality of the
powers of the Court under section 286, an order under that section may provide
for—
(a) the
termination, setting aside or modification of any agreement, however arrived at
between the company and any director, including the chief executive or other
officer, upon such terms and conditions as may, in the opinion of the Court be
just and equitable in all the circumstances;
(b)
setting aside of any transfer, delivery of goods, payment, execution or other
transactions not relating to property made or done by or against the company
within ninety days before the date of the application which would, if made or
done by or against an individual, be deemed in his insolvency to be a
fraudulent preference; and
(c) any
other matter, including a change in management, for which in the opinion of the
Court it is just and equitable that provision should be made.
288.
Interim order.—Pending the making by it of a final order under section 286 the
Court may, on the application of any party to the proceedings, make such
interim order as it thinks fit for regulating the conduct of the company‘s
affairs, upon such terms and conditions as appear to it to be just and
equitable.
289. Claim
for damages inadmissible.— Where an order of the Court made under section 286
terminates, sets aside, or modifies an arrangement, the order shall not give
rise to any claim whatever against the company by any person for damages or for
compensation for loss of office or in any other respect, either in pursuance of
the agreement or otherwise.
290.
Application of certain sections to proceedings under this Part.— In relation to
an application under section 286, sections 395 to 400 shall mutatis mutandis apply
as they apply in respect of winding up.
291.
Management by Administrator.—(1) If at any time a creditor or creditors having
interest equivalent in amount not less than sixty per cent of the paid up
capital of a company, represents or represent to the Commission that—
(a) the
affairs or business of the company are or is being or have or has been
conducted or managed in a manner likely to be prejudicial to the interest of
the company, its members or creditors, or any director of the company or person
concerned with the management of the company is or has been guilty of breach of
trust, mis-feasance or other misconduct towards the company or towards any of
its members or creditors or director;
(b) the
affairs or business of the company are or is being or have or has been
conducted or managed with intent to defraud its members or creditors or any
other person or for a fraudulent or unlawful purpose, or in a manner oppressive
of any of such persons or for purposes as aforesaid; or
(c) the
affairs of the company have been so conducted or managed as to deprive the
members thereof of a reasonable return; or
(d) any
industrial project or unit to be set up or belonging to the company has not
been completed or has not commenced operations or has not been operating smoothly
or its production or performance has so-deteriorated that:
(i) the
market value of its shares as quoted on the securities exchange or the net
worth of its share has fallen by more than seventy-five per cent of its par
value; or
(ii)
debt equity ratio has deteriorated beyond 9:1; or
(iii)
current ratio has deteriorated beyond 5:1; or
(e) any
industrial unit owned by the company is not in operation for over a period of
two years or has been in operation intermittently or partially during the
preceding two years; or
(f) the
accumulated losses of the company exceed sixty percent of its paid up capital,
and request the Commission to take action under this section, the Commission
may, after giving the company an opportunity of being heard, without prejudice
to any other action that may be taken under this Act or any other law, by order
in writing, appoint an Administrator, hereinafter referred to as the
Administrator, within sixty days of the date of receipt of the representation,
from a panel maintained by it on the recommendation of the State Bank of
Pakistan to manage the affairs of the company subject to such terms and
conditions as may be specified in the order:
Provided
that the Commission may, if it considers it necessary so to do, for reasons to
be recorded, or on the application of the creditors on whose representation it
proposes to appoint the Administrator, and after giving a notice to the State
Bank of Pakistan, appoint a person whose name does not appear on the panel
maintained for the purpose to be the Administrator.
Explanation.—For
the purposes of clause (c), the members shall be deemed to have been deprived
of a reasonable return if, having regard to enterprises similarly placed, the
company is unable to, or does not, declare any or adequate dividend for a
period of three consecutive years.
(2) The
Administrator shall receive such remuneration as the Commission may determine.
(3) On
and from the date of appointment of the Administrator, the management of the
affairs of the company shall vest in him, and he shall exercise all the powers
of the board or other persons in whom the management vested and all such
directors and persons shall stand divested of that management and powers and
shall cease to function or hold office.
(4)
Where it appears to the Administrator that any purchase or sales agency
contract has been entered into, or any employment given, patently to benefit
any director or other person in whom the management vested or his nominees and
to the detriment of the interest of the general members, the Administrator may,
with the previous approval in writing of the Commission, terminate such
contract or employment.
(5) No
person shall be entitled to, or be paid, any compensation or damages for
termination of any office, contract or employment under sub-section (3) or
sub-section (4).
(6) If
at any time it appears to the Commission that the purpose of the order
appointing the Administrator has been fulfilled, it may permit the company to
appoint directors and, on the appointment of directors, the Administrator shall
cease to hold office.
(7) Save
as provided in sub-section (8), no suit, prosecution or other legal proceeding
shall lie against the Administrator for anything which is in good faith done or
intended to be done by him in pursuance of this section or of any rules or
regulations made thereunder.
(8) Any
person aggrieved by an order of the Commission under subsection (1) or
sub-section (10), or of the Administrator under sub-section (4) may, within
sixty days from the date of the order, appeal against such order to the
concerned Minister-in-Charge of the Federal Government.
(9) If
any person fails to deliver to the Administrator any property, records or
documents relating to the company or does not furnish any information required
by him or in any way obstructs the Administrator in the management, of the
affairs of the company or acts for or represents the company in any way, the
Commission may by order in writing, direct that such person shall be liable to
a penalty of level 3 on the standard scale.
(10) The
Commission may issue such directions to the Administrator as to his powers and
duties as it deems desirable in the circumstances of the case, and the
Administrator may apply to the Commission at any time for instructions as to
the manner in which he shall conduct the management of the company or in
relation to any matter arising in the course of such management.
(11) Any
order or decision or direction of the Commission made in pursuance of this
section shall be final and shall not be called in question in any Court.
(12) The
Commission may, make regulations to carry out the purposes of this section.
(13) The
provisions of this section shall have effect notwithstanding anything contained
in any other provision of this Act or any other law or contract, or in the
memorandum or articles of a company.
292.
Rehabilitation of sick public sector companies.—(1) The provisions of this
section shall apply to a public sector company which is facing financial or
operational problems and is declared as a sick company by the concerned
Minister-in-Charge of the Federal Government.
(2)
After a company is declared as a sick company under sub-section (1), any
institution, authority, committee or person authorised by the concerned
Minister-in-Charge of the Federal Government in this behalf may draw up a plan
for the rehabilitation, reconstruction and reorganisation of such company,
hereafter in this section referred to as the rehabilitation plan.
(3)
Without prejudice to the generality of the foregoing provision, the
rehabilitation plan, may, in addition to any other matter, provide for all or
any of the following—
(a)
reduction of capital so as to provide for all or any of the matters referred to
in section 89 or reconstruction, compromise, amalgamation and other
arrangements so as to provide for all or any of the matters referred to in
section 279 or section 282 or section 285;
(b)
alteration of share capital and variation in the rights and obligations of
shareholders or any class of shareholders;
(c)
alteration of loan structure, debt rescheduling or conversion into shares
carrying special rights or other relief and modification in the terms and
conditions in respect of outstanding debts and liabilities of the company or
any part of such loan, debts or liabilities or variation in the rights of the
creditors or any class of them including any security pertaining thereto;
(d)
acquisition or transfer of shares of the company on the specified terms and
conditions;
(e)
issue of further capital including shares carrying special rights and
obligations relating to voting powers, dividend, redemption or treatment on
winding up;
(f)
removal and appointment of directors (including the chief executive) or other
officers of the company;
(g)
amendment, modification or cancellation of any existing contract; or (h)
alteration of the memorandum or articles or changes in the accounting policy
and procedure.
(4) The
rehabilitation plan shall be submitted for approval to the concerned
Minister-in-Charge of the Federal Government which shall, unless it otherwise
decides for reasons to be recorded, cause it to be published in the official
Gazette for ascertaining the views of the shareholders, creditors and other
persons concerned within a specified period.
(5)
Before approving the rehabilitation plan, the concerned Minister-inCharge of
the Federal Government shall take into consideration the views relating thereto
received from any quarter within the specified period.
(6) On
the approval of the rehabilitation plan by the concerned Ministerin-Charge of
the Federal Government, its provisions, with such modification as may be
directed by the concerned Minister-in-Charge of the Federal Government, shall
become final and take effect and be implemented and shall be valid, binding and
enforceable in all respects notwithstanding anything in this Act or any other
law or the memorandum or articles of the company or in any agreement or
document executed by it or in any resolution passed by the company in general
meeting or by its board, whether the same be registered, adopted, executed or
passed, as the case may be, before or after the commencement of this Act.
(7) Any
provision contained in the memorandum, articles, agreements, documents or
resolutions as aforesaid shall, to the extent to which it is repugnant to the
provisions of this Act or the rehabilitation plan, become void.
(8) No
compensation or damages shall be payable to any one for any matter or
arrangement provided for in, or action taken in pursuance of, the
rehabilitation plan.
(9) The
concerned Minister-in-Charge of the Federal Government may vary or rescind
rehabilitation plan from time to time and issue such directions as to its
implementation and matters ancillary thereto as it may deem expedient.
(10) The
concerned Minister-in-Charge of the Federal Government or any authority or
other person authorised by the concerned Minister-in-Charge of the Federal
Government in this behalf shall supervise the implementation of the
rehabilitation plan and may issue such directions to the parties concerned as
may be deemed necessary by such Government, authority or person, as the case
may be.
(11)
Whosoever fails to give effect, to carry out or implement the rehabilitation
plan or any matter provided for therein or any direction issued under sub-section
(10), shall be liable to imprisonment of either description for a term which
may extend to three years and fine not exceeding five million rupees and, in
case of a continuing failure, to a further fine not exceeding ten thousand
rupees for every day after the first during which the failure or default
continues.
(12)
Until a rehabilitation plan has been approved by the concerned
Minister-in-Charge of the Federal Government and is in operation, the
provisions of this section shall not prejudice or affect the power or rights of
a company or its shareholders or creditors to enter into, arrive at or make any
compromise, arrangement or settlement in any manner authorised by this Act or
any other law for the time being in force.
(13) The
rehabilitation plan approved by the concerned Minister-in-Charge of the Federal
Government and any modification thereof shall, unless otherwise directed by it,
be published in the official Gazette and a copy thereof shall be forwarded by
the concerned Minister-in-Charge of the Federal Government to the registrar who
shall register and keep the same with the documents of the company.
(14) The
Federal Government may, by notification in the official Gazette, make rules to
carry out the purposes of this section.
(15)
This section is in addition to and not in derogation of any other law regarding
rehabilitation of any entity.
PART X
WINDING
UP PRELIMINARY
293.
Modes of winding up.- (1) The winding up of a company may be either—
(a) by
the Court or
(b)
voluntary; or
(c)
subject to the supervision of the Court.
(2) Save
as otherwise expressly provided, the provisions of this Act with respect to
winding up shall apply to the winding up of a company in any of the modes
specified in sub-section (1).
294.
Liability as contributories of present and past members.—(1) In the event of a
company being wound up, every present and past member shall, subject to the
provisions of section 295, be liable to contribute to the assets of the company
to an amount sufficient for payment of its debts and liabilities and the costs,
charges and expenses of the winding up, and for the adjustment of the rights of
the contributories among themselves, with the following qualifications, that is
to say—
(a) a
past member shall not be liable to contribute if he has ceased to be member for
one year or upwards before the commencement of the winding up;
(b) a
past member shall not be liable to contribute in respect of any debt or
liability of the company contracted after he ceased to be a member;
(c) a
past member shall not be liable to contribute unless it appears to the Court
that the present members are unable to satisfy the contributions required to be
made by them in pursuance of this Act;
(d) in
the case of a company limited by shares, no contribution shall be required from
any past or present member exceeding the amount, if any, unpaid on the shares
in respect of which he is liable as such member;
(e) in
the case of a company limited by guarantee, no contribution shall, subject to
the provisions of sub-section (2), be required from any past or present member
exceeding the amount undertaken to be contributed by him to the assets of the
company in the event of its being wound up;
(f)
nothing in this Act shall invalidate any provision contained in any policy of
insurance or other contract whereby the liability of individual members on the
policy or contract is restricted, or whereby the funds of the company are alone
made liable in respect of the policy or contract; and
(g) a
sum due to any past or present member of a company in his character as such, by
way of dividends, profits or otherwise, shall not be deemed to be a debt of the
company payable to that member in a case of competition between himself and any
other creditor not being a member of the company, but any such sum may be taken
into account for the purpose of the final adjustments of the rights of the
contributories among themselves.
(2) In
the winding up of a company limited by guarantee which has a share capital,
every member of the company shall be liable, in addition to the amount
undertaken to be contributed by him to the assets of the company in the event
of its being wound up, to contribute to the extent of any sum unpaid on any
shares held by him, as if the company were a company limited by shares.
295.
Liability of directors whose liability is unlimited.—In the winding up of a
limited company any director, whether past or present, whose liability is, in
pursuance of this Act, unlimited, shall, in addition to his ability, if any, to
contribute as an ordinary member, be liable to make a further contribution as
if he were, at the commencement of the winding up, a member of an unlimited
company:
Provided
that—
(a) a
past director shall not be liable to make such further contribution if he has
ceased to hold office for a year or upwards before the commencement of the
winding up;
(b) a
past director shall not be liable to make such further contribution in respect
of any debtor liability of the company contracted after he ceased to hold
office; subject to the articles, a director shall not be liable to make such
further contribution unless the Court deems it necessary to require that
contribution in order to satisfy the debts and liabilities of the company, and
the costs, charges and expenses of the winding up.
296.
Liability of Contributory having fully paid share.—A person holding fully
paid-up shares in a company shall be considered as a contributory but shall
have no liabilities of a contributory under this Act while retaining rights of
such a contributory.
Explanation.—The
term “contributory” means a person liable to contribute towards the assets of
the company on the event of its being wound up.
297.
Nature of liability of contributory.—The liability of a contributory shall
create a debt accruing due from him at the time when his liability commenced,
but payable at the time specified in calls made on him for enforcing the
liability.
298.
Contributories in case of death of member.—If a contributory dies, whether
before or after being placed on the list of contributories of a company:
(a) his
legal representatives shall be liable, in due course of administration, to
contribute to the assets of the company in discharge of his liability, and
shall be contributories accordingly; and
(b) if
the legal representatives make default in paying any money ordered to be paid
by them, proceedings may be initiated for administering the property of the
deceased contributory, and of compelling payment of the money due, out of
assets of the deceased.
299.
Contributory in case of insolvency of member.—If a contributory is adjudged
insolvent whether before or after he has been placed on the list of
contributories of a company, then—
(a) his
assignees in insolvency shall represent him for all the purposes of the winding
up, and shall be contributories accordingly, and may be called on to admit to
proof against the estate of the insolvent, or otherwise to allow to be paid out
of his assets in due course of law, any money due from the insolvent in respect
of his liability to contribute to the assets of the company; and
(b)
there may be proved against the estate of the insolvent the estimated value of
his liability to further calls as well as calls already made.
300.
Contributories in case of winding up of a body corporate which is a member.—If
a body corporate which is a contributory is ordered to be wound up, whether
before or after it has been placed on the list of contributories of a company—
(a) the
liquidator of the body corporate shall represent it for all purposes of the
winding up of the company and shall be a contributory accordingly, and may be
called on to admit to proof against the assets of the body corporate, or
otherwise to allow to be paid out of its assets in due course of law, any money
due from the body corporate in respect of its liability to contribute to the
assets of the company; and
(b)
there may be proved against the assets of the body corporate the estimated
value of its liability to future calls as well as calls already made.
WINDING
UP BY COURT
301.
Circumstances in which a company may be wound up by Court.—A company may be
wound up by the Court—
(a) if
the company has, by special resolution, resolved that the company be wound up
by the Court; or
(b) if
default is made in delivering the statutory report to the registrar or in
holding the statutory meeting; or
(c) if
default is made in holding any two consecutive annual general meetings; or
(d) if
the company has made a default in filing with the registrar its financial
statements or annual returns for immediately preceding two consecutive
financial years; or
(e) if
the number of members is reduced, in the case of public company, below three
and in the case of a private company below two; or
(f) if
the company is unable to pay its debts; or
(g) if
the company is—
(i) conceived
or brought forth for, or is or has been carrying on, unlawful or fraudulent
activities; or
(ii)
carrying on business prohibited by any law for the time being in force in
Pakistan; or restricted by any law, rules or regulations for the time being in
force in Pakistan; or
(iii)
conducting its business in a manner oppressive to the minority members or
persons concerned with the formation or promotion of the company; or
(iv) run
and managed by persons who fail to maintain proper and true accounts, or commit
fraud, misfeasance or malfeasance in relation to the company; or
(v)
managed by persons who refuse to act according to the requirements of the
memorandum or articles or the provisions of this Act or failed to carry out the
directions or decisions of the Commission or the registrar given in the
exercise of powers under this Act; or
(h) if,
being a listed company, it ceases to be such company; or
(i) if
the Court is of opinion that it is just and equitable that the company should
be wound up; or
(j) if a
company ceases to have a member; or
(k) if
the sole business of the company is the licensed activity and it ceases to
operate consequent upon revocation of a licence granted by the Commission or
any other licencing authority; or
(l) if a
licence granted under section 42 to a company has been revoked or such a
company has failed to comply with any of the provisions of section 43 or where
a company licenced under section 42 is being wound up voluntarily and its
liquidator has failed to complete the winding up proceedings within a period of
one year from the date of commencement of its winding up; or
(m) if a
listed company suspends its business for a whole year.
Explanation
I.—The promotion or the carrying on of any scheme or business, howsoever
described—
(a)
whereby, in return for a deposit or contribution, whether periodically or
otherwise, of a sum of money in cash or by means of coupons, certificates,
tickets or other documents, payment, at future date or dates of money or grant
of property, right or benefit, directly or indirectly, and whether with or
without any other right or benefit, determined by chance or lottery or any
other like manner, is assured or promised; or
(b)
raising un-authorised deposits from the general public, indulging in referral
marketing, multi-level marketing (MLM), Pyramid and Ponzi Schemes, locally or
internationally, directly or indirectly; or
(c) any
other business activity notified by the Commission to be against public policy
or a moral hazard; shall be deemed to be an unlawful activity.
Explanation
II.—“Minority members” means
members together holding not less than ten percent of the equity share capital
of the company.
302.
Company when deemed unable to pay its debts.—(1) A company shall be deemed to
be unable to pay its debts-
(a) if a
creditor, by assignment or otherwise, to whom the company is indebted in a sum
exceeding one hundred thousand rupees, then due, has served on the company, by
causing the same to be delivered by registered post or otherwise, at its
registered office, a demand under his hand requiring the company to pay the sum
so due and the company has for thirty days thereafter neglected to pay the sum,
or to secure or compound for it to the reasonable satisfaction of the creditor;
or
(b) if
execution or other process issued on a decree or order of any Court or any
other competent authority in favour of a creditor of the company is returned
unsatisfied in whole or in part; or
(c) if
it is proved to the satisfaction of the Court that the company is unable to pay
its debts, and, in determining whether a company is unable to pay its debts,
the Court shall take into account the contingent and prospective liabilities of
the company.
(2) The
demand referred to in clause (a) of sub-section (1) shall be deemed to have been
duly given under the hand of the creditor if it is signed by an agent or legal
adviser duly authorised on his behalf.
303.
Transfer of proceedings to other Courts.—Where the Court makes an order for
winding up a company under this Act, it may, if it thinks fit, direct all
subsequent proceedings to be held in any other High Court, with the consent of
such court and thereupon, for the purposes of the winding up of the company,
such Court shall be deemed to be the “Court” within the meaning of this Act and shall have all the
powers and jurisdiction of the Court thereunder.
PETITION
FOR WINDING UP
304.
Provisions as to applications for winding up.—An application to the Court for
the winding up of a company shall be by petition presented, subject to the provisions
of this section, either by the company, or by any creditor or creditors
(including any contingent or prospective creditor or creditors), or by any
contributory or contributories, or by all or any of the aforesaid parties,
together or separately or by the registrar, or by the Commission or by a person
authorised by the Commission in that behalf: Provided that—
(a) a
contributory shall not be entitled to present a petition for winding up a
company unless-
(i)
either the number of members is reduced, in the case of a private company,
below two, or, in the case of public company, below three; and
(ii) the
shares in respect of which he is a contributory or some of them either were
originally allotted to him or have been held by him, and registered in his name,
for at least one hundred and eighty days during the eighteen months before the
commencement of the winding up, or have or devolved on him through the death of
a former holder; (b) the registrar shall not be entitled to present a petition
for the winding up of a company unless the previous sanction of the Commission
has been obtained to the presentation of the petition:
Provided
that no such sanction shall be given unless the company has first been afforded
an opportunity of making a representation and of being heard;
(c) the
Commission or a person authorised by the Commission in that behalf shall not be
entitled to present a petition for the winding up of a company unless an
investigation into the affairs of the company has revealed that it was formed for
any fraudulent or unlawful purpose or that it is carrying on a business not
authorised by its memorandum or that its business is being conducted in a
manner oppressive to any of its members or persons concerned in the formation
of the company or that its management has been guilty of fraud, mis-feasance or
other misconduct towards the company or towards any of its members; and such
petition shall not be presented or authorised to be presented by the Commission
unless the company has been afforded an opportunity of making a representation
and of being heard: Provided that if sole business of the company is the
licensed activity and that licence is revoked, no investigation into the
affairs of the company shall be required to present the petition for winding up
of the company;
(d) the
Court shall not give a hearing to a petition for winding up a company by a
contingent or prospective creditor until such security for costs has been given
as the Court thinks reasonable and until a prima facie case for winding up has
been established to the satisfaction of the Court;
(e) the
Court shall not give a hearing to a petition for winding up a company by the
company until the company has furnished with its petition, in the prescribed
manner, the particulars of its assets and liabilities and business operations
and the suits or proceedings pending against it.
305.
Right to present winding up petition where company is being wound up
voluntarily or subject to Court‘s supervision.— (1) Where a company is being
wound up voluntarily or subject to the supervision of the Court, a petition for
its winding up by the Court may be presented by any person authorised to do so
under section 304 and subject to the provisions of that section.
(2) The
Court shall not make a winding up order on a petition presented to it under
sub-section (1) unless it is satisfied that the voluntary winding up or winding
up subject to the supervision of the Court cannot be continued with due regard
to the interests of the creditors or contributories or both or it is in the
public interest so to do.
306.
Commencement of winding up by Court.—A winding up of a company by the Court
shall be deemed to commence at the time of the presentation of the petition for
the winding up.
POWERS
OF COURT HEARING APPLICATION
307.
Court may grant injunction.—The Court may, at any time after presentation of
the petition for winding up a company under this Act, and before making an
order for its winding up, upon the application of the company itself or of any
its creditors or contributories, restrain further proceedings in any suit or
proceeding against the company, upon such terms as the Court thinks fit. 308.
Powers of Court on hearing petition.—
(1) The
Court may, on receipt of a petition for winding up under section 304 pass any
of the following orders, namely—
(a)
dismiss it, with or without costs;
(b) make
any interim order as it thinks fit;
(c)
appoint a provisional manager of the company till the making of a winding up
order;
(d) make
an order for the winding up of the company with or without costs; or
(e) any
other order as it thinks fit: Provided that an order under this sub-section
shall be made within ninety days from the date of presentation of the petition:
Provided further that before appointing a provisional manager under clause (c),
the Court shall give notice to the company and afford a reasonable opportunity
to it to make its representations, if any, unless for special reasons to be
recorded in writing, the Court thinks fit to dispense with such notice:
Provided also that the Court shall not refuse to make a winding up order on the
ground only that the assets of the company have been mortgaged for an amount
equal to or in excess of those assets, or that the company has no assets.
(2)
Where a petition is presented on the ground that it is just and equitable that
the company should be wound up, the Court may refuse to make an order of
winding up, if it is of the opinion that some other remedy is available to the
petitioners and that they are acting unreasonably in seeking to have the
company wound up instead of pursuing the other remedy.
(3)
Where the Court makes an order for the winding up of a company, it shall
forthwith cause intimation thereof to be sent to the official liquidator
appointed by it and to the registrar.
309.
Copy of winding up order to be filed with registrar.—(1) Within fifteen days
from the date of the making of the winding up order, the petitioner in the
winding up proceedings and the company shall file a certified copy of the order
with the registrar.
(2) If
default is made in complying with the foregoing provision, the petitioner or,
as the case may require, the company, and every officer of the company who is
in default, shall be liable to a penalty of level 1 on the standard scale.
(3) On
the filing of a certified copy of a winding up order, the registrar shall
forthwith make a minute thereof in his books relating to the company, and shall
simultaneously notify in the official Gazette that such an order has been made.
(4) Such
order shall be deemed to be notice of discharge to the employees of the
company, except when the business of the company is continued.
310.
Suits stayed on winding up order.—(1) When a winding up order has been made or
a provisional manager has been appointed, no suit or other legal proceeding
shall be proceeded with or commenced against the company except by leave of the
Court, and subject to such terms as the Court may impose.
(2) The
Court which is winding up the company shall, notwithstanding anything contained
in any other law for the time being in force, have jurisdiction to entertain,
or dispose of, any suit or proceeding by or against the company.
(3) Any
suit or proceeding by or against the company which is pending in any court
other than that in which the winding up of the company is proceeding may,
notwithstanding anything contained in any other law for the time being in
force, be transferred to and disposed of by the Court.
311.
Court may require expeditious disposal of suits.—(1) Notwithstanding anything
contained in any other law—
(a) If
any suit or proceedings, including an appeal, by or against the company which
is allowed to be proceeded with in any Court other than the Court in which
winding up of the company is proceeding, the Court may issue directions to that
other Court if that Court is subordinate to it and, in any other case, make a
request to that other Court for expeditious disposal of the pending suit or
proceedings by or against the company; and
(b) If
any proceedings, including proceedings for assessment or recovery of any tax,
duty or levies or appeal or review petitions against any order is pending or is
likely to be instituted, before any officer, authority or other body, the Court
may issue directions to that officer, authority or other body for expeditious
action and disposal of the said proceedings.
(2) Upon
issue of a direction or making of a request as aforesaid, the Court, officer,
authority or body to whom the same is addressed shall, notwithstanding anything
contained in any other law, proceed to dispose of the said suit or other
proceedings expeditiously by according it special priority and adopting such
measures as may be necessary in this behalf, and shall inform the Court issuing
the direction or making the request of the action taken.
312.
Effect of winding up order.—An order for winding up a company shall operate in
favour of all the creditors and of all contributories of the company as if made
on the joint petition of a creditor and of a contributory.
313.
Power of Court to stay winding up.—(1) The Court may at any time not later than
three years after an order for winding up, on the application of any creditor
or contributory or of the registrar or the Commission or a person authorised by
it, and on proof to the satisfaction of the Court that all proceedings in
relation to the winding up ought to be stayed, withdrawn, cancelled or revoked,
make an order accordingly, on such terms and conditions as the Court thinks
fit.
(2) On
any application under sub-section (1), the Court may, before making an order,
require the official liquidator to furnish to the Court a report with respect
to any facts or matters which are in his opinion relevant to the application.
(3) A
copy of every order made under sub-section (1) shall forthwith be forwarded by
the Court to the registrar, who shall make a minute of the order in his books
relating to the company.
314.
Court may ascertain wishes of creditors or contributories.—(1) -In all matters relating to the winding up of a company, the
Court may.---
(a) have
regard to the wishes of creditors or contributories of the company, as proved
to it by any sufficient evidence in a manner as provided under this Act;
(b) if
it thinks fit for the purpose of ascertaining their wishes, order meetings of
the creditors or contributories to be called, held and conducted in such manner
as may be directed; and
(c)
appoint a person to act as chairman of any such meeting and to submit a report
in this regard.
(2)
While ascertaining the wishes of creditors or contributories under sub-section
(1), regard shall be had to the value of each debt of the creditor or the
voting power exercised by each contributory, as the case may be.
OFFICIAL
LIQUIDATORS
315.
Appointment of official liquidator.—(1) For the purpose of the winding up of
companies by the Court, the Commission shall maintain a panel of persons from
whom the Court shall appoint a provisional manager or official liquidator of a
company ordered to be wound up.
(2) A
person shall not be appointed as provisional manager or official liquidator of
more than three companies at one point of time.
(3) The
panel for the purpose of sub-section (1) shall consist of persons having at
least ten years experience in the field of accounting, finance or law and as
may be specified by the Commission such other persons, having at least ten
years professional experience.
(4)
Where a provisional manager is appointed by the Court, the Court may limit and
restrict his powers by the order appointing him or by a subsequent order, but
otherwise he shall have the same powers as a liquidator.
(5) On
appointment as provisional manager or official liquidator, as the case may be,
such liquidator shall file a declaration within seven days from the date of
appointment in the specified form disclosing conflict of interest or lack of
independence in respect of his appointment, if any, with the Court and such
obligation shall continue throughout the term of his appointment.
(6)
While passing a winding up order, the Court may appoint a provisional manager,
if any, under clause (c) of sub-section (1) of section 308, as the official
liquidator for the conduct of the proceedings for the winding up of the
company.
(7) If
more persons than one are appointed to the office of official liquidator, the
Court shall declare whether any act by this Act required or authorised to be
done by the official liquidator is to be done by all or any one or more of such
persons:
Provided
that in case of any dispute or any varying stance amongst the liquidators, the
matter shall be referred to the Court for an appropriate order in chambers in
the presence of the parties concerned.
(8) The
Court may determine whether any, and what, security is to be given by any
official liquidator on his appointment.
(9)
Notwithstanding anything contained in sub-section (1), the Court may, on the
application of creditors to whom amounts not less than sixty percent of the
issued share-capital of the company being wound up are due, after notice to the
registrar, appoint a person whose name does not appear on the panel maintained
for the purpose, to be the official liquidator.
(10) An
official liquidator shall not resign or quit his office before conclusion of
the liquidation proceedings except for reasons of personal disability to the
satisfaction of the Court.
(11) Any
casual vacancy in the office of an official liquidator occurred due to his
death, removal or resignation, shall be filled up by the Court by the
appointment of another person from the panel maintained under sub-section (1):
Provided
that in case of resignation, the outgoing official liquidator shall, unless the
Court directs otherwise, continue to act until the person appointed in his
place takes charge.
(12) The
Commission may of its own, remove the name of any person from the panel
maintained under sub-section (1) on the grounds of misconduct, fraud,
misfeasance, breach of duties or professional incompetence:
Provided
that the Commission before removing him from the panel shall give him a
reasonable opportunity of being heard.
(13) The
person appointed on the panel under this section shall be subject to such code
of conduct and comply with the requirement of any professional accreditation
programs as may be specified by the Commission.
316.
Removal of official liquidator.—(1) The Court may, on a reasonable cause being
shown including but not limited to lack of independence or lack of
impartiality, remove the provisional manager or the official liquidator, as the
case may be, on any of the following grounds, namely:—
(a)
misconduct;
(b)
fraud or misfeasance;
(c)
professional incompetence or failure to exercise due care and diligence in
performance of the powers and functions;
(d)
inability to act as provisional manager or official liquidator, as the case may
be;
(e)
conflict of interest during the term of his appointment that will justify
removal.
(2)
Where the Court is of the opinion that any liquidator is responsible for
causing any loss or damage to the company due to fraud or misfeasance or
failure to exercise due care and diligence in the performance of his powers and
functions, the Court may recover or cause to be recovered such loss or damage
from the provisional manager or official liquidator, as the case may be, and
pass such other orders as it may think fit.
317.
Remuneration of official liquidator.—(1) The terms and conditions of
appointment of a provisional manager or official liquidator and the fee payable
to him shall be fixed by the Court on the basis of task required to be
performed, experience, qualification of such liquidator and size of the company.
(2) An
official liquidator, shall also be entitled to such remuneration by way of
percentage of the amount realised by him by disposal of assets as may be fixed
by the Court having regard to the amount and nature of the work actually done
and subject to such limits as may be prescribed:
Provided
that different percentage rates may be fixed for different types of assets and
items.
(3) In
addition to the remuneration payable under sub-section (2), the Court may
permit payment of a monthly allowance to the official liquidator for meeting
the expenses of the winding up for a period not exceeding one year from the
date of the winding up order.
(4) The
remuneration fixed as aforesaid shall not be enhanced subsequently but may be
reduced by the Court at any time.
(5) If
the official liquidator resigns, is removed from office or otherwise ceases to
hold office before conclusion of the winding up proceedings, he shall not be
entitled to any remuneration and the remuneration already received by him, if
any, shall be refunded by him to the company.
(6) No
remuneration shall be payable to official liquidator who fails to complete the
winding up proceedings within the prescribed period or such extended time as
may be allowed by the Court.
318.
Style and title of official liquidator.—The official liquidator shall be
described by the style of “the official liquidator” of the particular company
in respect of which he acts, and in no case he shall be described by his
individual name.
319.
General provisions as to liquidators.—(1) The official liquidator shall conduct
the proceedings in winding up the company and perform such duties in reference
thereto as the Court may impose.
(2) The
acts of a liquidator shall be valid, notwithstanding any defect that may
afterwards be discovered in his appointment or qualification:
Provided
that nothing in this sub-section shall be deemed to give validity to acts done
by a liquidator after his appointment has been shown to be invalid.
(3) The
winding up proceedings shall be completed by the official liquidator within a
period as determined by the Court under section 322.
(4) If
an official liquidator is convicted of misfeasance, or breach of duty or other
lapse or default in relation to winding up proceedings of a company, he shall
cease to be the official liquidator of the company and shall also become
disqualified, for a period of five years from such conviction, from being the
liquidator or to hold any other office including that of a director, in any
company and if he already holds any such office he shall forthwith be deemed to
have ceased to hold such office.
(5) The
registrar or the Commission shall take cognizance of any lapse, delay or other
irregularity on the part of the official liquidator and may, without prejudice
to any other action under the law, report the same to the Court.
320.
Statement of affairs to be made to official liquidator.—(1) Where the Court has
appointed a provisional manager or made a winding up order and appointed an
official liquidator, there shall be made out and submitted to the provisional
manager or official liquidator, a statement as to the affairs of the company in
the prescribed form, verified by an affidavit, and containing the following
particulars, namely—
(a)
particulars of the company‘s assets, debts and liabilities;
(b) the
detail of cash balance in hand and at the bank;
(c) the
names and addresses of the company‘s creditors stating separately the amount of
secured debts and unsecured debts, and, in the case of secured debts,
particulars of the securities given, their value and the dates when they were
given.
(d) the
names, residential addresses and occupations of the persons from whom debts of
the company are due and the amount likely to be realised therefrom;
(e)
where any property of the company is not in its custody or possession, the
place where and the person in whose custody or possession such property is;
(f) full
address of the places where the business of the company was conducted during
the one hundred and eighty days preceding the relevant date and the names and
particulars of the persons incharge of the same;
(g)
details of any pending suits or proceedings in which the company is a party;
and
(h) such
other particulars as may be prescribed or as the Court may order or the
provisional manager or official liquidator may require in writing, including
any information relating to secret reserves and personal assets of directors.
(2) The
statement shall be submitted and verified by persons who are at the relevant
date the directors, chief executive, chief financial officer and secretary of
the company.
(3) The
provisional manager or official liquidator, subject to the direction of the
Court, may also require to make out and submit to him a statement in the
prescribed form as to the affairs of the company by some or all of the persons:
(a) who
have been directors, chief executives, chief financial officer, secretary or
other officers of the company within one year from the relevant date;
(b) who
have taken part in the formation of the company at any time within one year
before the relevant date;
(c) who
are in the employment of the company, or have been in the employment of the
company within the said year, and are in the opinion of the official liquidator
or provisional manager capable of giving the information required and to whom
the statement relates;
(4) The
statement shall be submitted within fifteen days from the relevant date, or
within such extended time not exceeding forty-five days from that date as the
official liquidator or provisional manager or the Court may, for special
reasons, appoint.
(5) Any
person making the statement required by this section shall be entitled to and
be paid by the official liquidator or the provisional manager, as the case may
be, the reasonable expenses incurred in preparation of such statement.
(6) Any
contravention or default in complying with requirements of this section shall
be an offence liable to a daily penalty of level 2 on the standard scale.
(7)
Without prejudice to the operation of any provisions imposing penalties in
respect of any such default as aforesaid, the Court which makes the winding up
order or appoints a provisional manager may take cognizance of an offence under
sub-section (6) and try the offence itself in accordance with the procedure laid
down in the Code of Criminal Procedure, 1898 (Act V of 1898), for the trial of
cases by Magistrates and further direct the persons concerned to comply with
the provisions of this section within such times as may be specified by it.
(8) Any
person stating himself in writing to be a creditor or contributory of the
company shall be entitled, by himself or by his agent, at all reasonable times,
on payment of the prescribed fee, to inspect the statement submitted in
pursuance of this section, and to a copy thereof or extract therefrom.
(9) Any
person untruthfully so stating himself to be a creditor or contributory shall
be guilty of an offence under section 182 of the Pakistan Penal Code, 1860 (Act
XLV of 1860), and shall, on the application of the official liquidator or
provisional manager, be punishable accordingly.
(10) In
this section, the expression “the relevant date” means, in a case where a provisional manager is appointed,
the date of his appointment, and, in a case where no such appointment is made, the
date of the winding up order.
321.
Report by official liquidator.—(1) Where the Court has made a winding up order
and appointed an official liquidator, such liquidator shall, as soon as
practicable after receipt of the statement to be submitted under section 320
and not later than sixty days, from the date of the winding up order submit a
report to the Court, containing the following particulars, namely.—
(a) the
nature and details of the assets of the company including their location and
current value duly ascertained by a registered valuer;
(b) the
cash balance in hand and in the bank, if any, and the negotiable securities, if
any, held by the company;
(c) the
amount of authorised and paid up capital;
(d) the
existing and contingent liabilities of the company indicating particulars of
the creditors, stating separately the amount of secured and unsecured debts,
and in the case of secured debts, particulars of the securities given;
(e) the
debts due to the company and the names, addresses and occupations of the
persons from whom they are due and the amount likely to be realised on account
thereof;
(f)
debts due from contributories;
(g)
details of trademarks and intellectual properties, if any, owned by the
company;
(h)
details of subsisting contracts, joint ventures and collaborations, if any;
(i)
details of holding and subsidiary companies, if any;
(j)
details of legal cases filed by or against the company;
(k) any
other information which the Court may direct or the official liquidator may
consider necessary to include.
(2) The
official liquidator shall also include in his report the manner in which the
company was promoted or formed and whether in his opinion any fraud has been
committed by any person in its promotion or formation, or by any director or other
officer of the company in relation to the company since its formation.
(3) The
official liquidator shall also make a report on the viability of the business
of the company or the steps which, in his opinion, are necessary for maximising
the value of the assets of the company.
(4) The
official liquidator may also, if he thinks fit or upon directions of the Court,
make any further report or reports.
(5) A
certified copy of the reports aforesaid shall also be sent to the registrar
simultaneously with their submission to the Court.
322.
Court directions on report of official liquidator.—(1) The Court shall, on
consideration of the report of the official liquidator, fix a time limit within
which the entire proceedings shall be completed and the company be dissolved:
Provided
that the Court may, if it is of the opinion, at any stage of the proceedings,
or on examination of the reports submitted to it by the official liquidator and
after hearing the official liquidator, creditors or contributories or any other
interested person, that it will not be advantageous or economical to continue
the proceedings, revise the time limit within which the entire proceedings
shall be completed and the company be dissolved.
(2) The
Court may, on examination of the reports submitted to it by the official
liquidator and after hearing the official liquidator, creditors or
contributories or any other interested person, order sale of the company as a
going concern or its assets or part thereof: Provided that the Court may where
it considers fit, appoint a sale committee comprising such creditors, promoters
and officers of the company as the Court may decide to assist the official
liquidator in sale under this subsection.
(3)
Where a report is received from the official liquidator or the Commission or
any person that a fraud has been committed in respect of the company, the Court
shall, without prejudice to the process of winding up, order for investigation
under section 257, and on consideration of the report of such investigation it may
pass order and give directions under sections 391 or 392 or direct the official
liquidator to file a criminal complaint against persons who were involved in
the commission of fraud.
(4) The
Court may order for taking such steps and measures, as may be necessary, to
protect, preserve or enhance the value of the assets of the company.
(5) The
Court may pass such other order or give such other directions as it considers
fit.
323.
Settlement of list of contributories and application of assets.— (1) As soon as
may be after making a winding up order, the Court shall settle a list of
contributories, with power to rectify the register of members and shall cause
the assets of the company to be collected and applied in discharge of its
liabilities: Provided that, where it appears to the Court that it will not be
necessary to make calls on or adjust the rights of contributories, the Court
may dispense with the settlement of a list of contributories.
(2) In
settling the list of contributories, the Court shall distinguish between
persons who are contributories in their own right and persons who are
contributories as being representatives of, or liable for the debts of, others.
324.
Custody of company’s properties.—(1) Where a winding up order has been made or
where a provisional manager has been appointed, the official liquidator or the
provisional manager, as the case may be, shall, on the order of the Court,
forthwith take into his custody or control all the property, effects and
actionable claims to which the company is or appears to be entitled to and take
such steps and measures, as may be necessary, to protect and preserve the
properties of the company.
(2) On
an application by the official liquidator or otherwise, the Court may, at any
time after the making of a winding up order, require any contributory for the
time being on the list of contributories, and any trustee, receiver, banker,
agent, officer or other employee of the company, to pay, deliver, surrender or
transfer forthwith, or within such time as the Court directs, to the official
liquidator, any money, property or books and papers in his custody or under his
control to which the company is or appears to be entitled.
(3) The
promoters, directors, officers and employees, who are or have been in
employment of the company or acting or associated with the company shall extend
full cooperation to the official liquidator in discharge of his functions and
duties.
(4)
Notwithstanding anything contained in sub-section (1), all the property and
effects of the company shall be deemed to be in the custody of the Court from
the date of the appointment of the Provisional manager or the passing of order
for the winding up of the company as the case may be.
(5)
Where any person, without reasonable cause, fails to discharge his obligations
under sub-sections (2) or (3), he shall be punishable with imprisonment which
may extend to two years or with fine which may extend to five hundred thousand
rupees, or with both.
325.
Power to require delivery of property.—Without prejudice to the obligation
imposed under any other provisions, the Court may, at any time after making a
winding up order, require any contributory for the time being on the list of
contributories and any trustee, receiver, banker, agent, officer or employee or
past officer or employee or auditor of the company to pay, deliver, convey,
surrender or transfer forthwith, or within, such time as the Court directs, to
the official liquidator any money, property or books and papers including
documents in his hands to which the company is prima facie entitled.
326.
Power to summon persons suspected of having property of company.—(1) The Court
may, at any time after the appointment of a provisional manager or the making
of winding up order, summon before it any officer of the company or person
known or suspected to have in his possession any property or books or papers of
the company, or known or suspected to be indebted to the company, or any person
whom the Court deems capable of giving information concerning the promotion,
formation, trade, dealings, books or papers, affairs or property of the
company.
(2) The
Court may examine a person summoned under sub-section (1) on oath concerning
the matters aforesaid, either by word of mouth or on written interrogatories,
and may reduce his answers to writing and require him to sign them.
(3) The
Court may require a person summoned under sub-section (1) to produce any books
and papers in his custody or power relating to the company, but, where he
claims any lien on books or papers produced by him, the production shall be
without prejudice to that lien, and the Court shall have jurisdiction in the
winding up to determine all questions relating to that lien.
(4) If
any person so summoned, after being paid or tendered a reasonable sum for his
expenses, fails to come before the Court at the time appointed, not having a
lawful impediment made known to the Court at the time of its sitting and
allowed by it, the Court may cause him to be apprehended and brought before the
Court for examination.
(5) If,
on his examination, any officer or person so summoned admits that he is
indebted to the company, the Court may order him to pay to the provisional
manager or, as the case may be, the liquidator, at such time and in such manner
as the Court may direct, the amount in which he is indebted, or any part
thereof, either in full discharge of the whole amount or not, as the Court
thinks fit, with or without costs of the examination.
(6) If,
on his examination, any such officer or person admits that he has in his
possession any property belonging to the company, the Court may order him to
deliver to the provisional manager or, as the case may be, the liquidator that
property or any part thereof, at such time, in such manner and on such terms as
the Court may direct.
(7)
Orders made under sub-sections (5) and (6) shall be executed in the same manner
as decrees for the payment of money or for the delivery of property under the
Code of Civil Procedure, 1908 (Act V of 1908), respectively.
(8) Any
person making any payment or delivery in pursuance of an order made under
sub-section (5) or sub-section (6) shall by such payment or delivery be, unless
otherwise directed by such order, discharged from all liability whatsoever in
respect of such debt or property.
327. Power
to order public examination of promoters, directors.— (1) When an order has
been made for winding up a company by the Court, and the official liquidator
has made a report to the Court stating that in his opinion a fraud or other
actionable irregularity has been committed by any person in the promotion or
formation of the company or by any director or other officer of the company in
relation to the company since its formation, the Court may, after consideration
of the report, direct that such person, director or other officer shall attend
before the Court on a day appointed by the Court for that purpose, and be
publicly examined as to the promotion or formation or the conduct of the
business of the company, or as to his conduct and dealings as director, manager
or other officer thereof.
(2) The
official liquidator shall take part in the examination, and for that purpose
may, if specially authorised by the Court in that behalf, employ such legal
assistance as may be sanctioned by the Court.
(3) Any
creditor or contributory may also take part in the examination either
personally or by any person entitled to appear before the Court.
(4) The
Court may put such questions to the person examined as the Court thinks fit.
(5) The
person examined shall be examined on oath, and shall answer all such questions
as the Court may put or allow to be put to him.
(6) A
person ordered to be examined under this section—
(a)
shall, before his examination, be furnished at his own cost with a copy of the
official liquidator‘s report; and
(b) may
at his own cost employ any person entitled to appear before the Court, who
shall be at liberty to put to him such questions as the Court may deem just for
the purpose of enabling him to explain or qualify any answer given by him:
Provided
that if he is, in the opinion of the Court, exculpated from any charges made or
suggested against him, the Court may allow him such costs as in its discretion
it may think fit.
(7) If
any such person applies to the Court to be exculpated from any charges made or
suggested against him, it shall be the duty of the official liquidator to
appear on the hearing of the application and call the attention of the Court to
any matters which appear to the official liquidator to be relevant, and if the
Court, after hearing any evidence given or witnesses called by the official
liquidator, grants the application, the Court may allow the applicant such
costs as it may think fit.
(8)
Notes of the examination shall be taken down in writing and shall be read over
to or by, and signed by, the person examined, and may thereafter be used in
evidence against him and shall be open to the inspection of any creditor or
contributory at all reasonable times.
(9) The
Court may, if it thinks fit, adjourn the examination from time to time.
(10) An
examination under this section may, if the Court so directs, and subject to any
rules in this behalf, be held before any officer of the Court, being an
official referee, registrar, additional registrar or deputy registrar.
(11) The
powers of the Court under this section as to the conduct of the examination,
but not as to costs may be exercised by the person before whom the examination
is held by virtue of a direction under sub-section (10).
328.
Power to arrest absconding contributory.—The Court, at any time either before
or after making a winding up order, on proof of probable cause for believing
that a contributory is about to quit Pakistan or otherwise to abscond, or to
remove or conceal any of his property, for the purpose of evading payment of
calls or of avoiding examination respecting the affairs of the company, may
cause the contributory to be arrested and his books and papers and movable
property to be seized, and kept safely until such time as the Court may order.
329.
Power to order payment of debts by contributory.—(1) The Court may, at any time
after making a winding up order, make an order on any contributory for the time
being settled on the list of contributories to pay, in a manner directed by the
order, any money due from him or from the estate of the person whom he
represents to the company, exclusive of any money payable by him or the estate
by virtue of any call in pursuance of this Act.
(2) The
Court in making such an order may—
(a) in
the case of an unlimited company, allow the contributory by way of set-off, any
money due to him or to the estate which he represents from the company on any
independent dealing or contract with the company, but not any money due to him
as a member of the company in respect of any dividend or profit; and
(b) in
the case of a limited company, make to any director whose liability is
unlimited or to his estate the like allowance.
(3) In
the case of any company, whether limited or unlimited, when all the creditors
are paid in full, any money due on any account whatever to a contributory from
the company may be allowed to him by way of set-off against any subsequent
call.
330.
Power of Court to make calls.—(1) The Court may, at any time after making a
winding up order, and either before or after it has ascertained the sufficiency
of the assets of the company, make calls on and order payment thereof by all or
any of the contributories for the time being settled on the list of the
contributories to the extent of their liability, for payment of any money which
the Court considers necessary to satisfy the debts and liabilities of the
company, and the costs, charges and expenses of winding up, and for the
adjustment of the rights of the contributories among themselves.
(2) In
making the call the Court may take into consideration the probability that some
of the contributories may partly or wholly fail to pay the call.
331.
Power to order payment into bank.—(1) The Court may order any contributory,
purchaser or other person from whom any money is due to the company to pay the
same into the account of the official liquidator in a scheduled bank instead of
to the official liquidator, and any such order may be enforced in the same
manner as if it had directed payment to the official liquidator.
(2)
Information about the amount deposited shall be sent by the person paying it to
the official liquidator within three days of the date of payment.
332.
Regulation of account with Court.- All moneys, bills, notes and other
securities paid and delivered into the scheduled bank where the official
liquidator of the company may have his account, in the event of a company being
wound up by the Court, shall be subject in all respect to the orders of the
Court.
333.
Order on contributory conclusive evidence.- (1) An order made by the Court on a
contributory shall, subject to any right of appeal, be conclusive evidence that
the money, if any, thereby appearing to be due or ordered to be paid is due.
(2) All
other pertinent matters stated in the order shall be taken to be truly stated as
against all persons, and in all proceedings whatsoever.
334.
Power to exclude creditors not proving in time.- The Court may fix a time or
times within which creditors are to prove their debts or claims, or to be
excluded from the benefit of any distribution made before those debts are
proved.
335.
Adjustment of rights of contributories.- The Court shall adjust the rights of
the contributories among themselves, and distribute any surplus among the
persons entitled thereto.
336.
Power to order costs.—The Court may, in the event of the assets being
insufficient to satisfy the liabilities, make an order as to the payment out of
the assets of the costs, charges and expenses incurred in the winding up in
such order of priority as the Court thinks just.
337.
Powers and duties of official liquidator.—(1) Subject to directions by the
Court, if any, in this regard, the official liquidator, in a winding up of a
company, shall have the power—
(a) to
carry on the business of the company so far as may be necessary for the
beneficial winding up of the company;
(b) to
do all acts and to execute, in the name and on behalf of the company, all
deeds, receipts and other documents, and for that purpose, to use, when
necessary, the company‘s seal;
(c) to
sell the immovable and movable property and actionable claims of the company by
public auction or private contract, with power to transfer such property to any
person or body corporate;
(d) to
sell whole of the undertaking of the company as a going concern;
(e) to
institute or defend any suit, prosecution or other legal proceeding, civil or
criminal, in the name and on behalf of the company;
(f) to
invite and settle claim of creditors, employees or any other claimant and
distribute sale proceeds in accordance with priorities established under this
Act;
(g) to
draw, accept, make and endorse any negotiable instruments in the name and on
behalf of the company, with the same effect with respect to the liability of
the company as if such instruments had been drawn, accepted, made or endorsed
by or on behalf of the company in the course of its business;
(h) to
obtain any professional assistance from any person or appoint any professional,
in discharge of his duties, obligations and responsibilities and for protection
of the assets of the company, appoint an agent to do any business which the
official liquidator is unable to do himself;
(i) to
appoint an Advocate entitled to appear before the Court or such person as may
be prescribed to assist him in the performance of his duties;
(j) to
take all such actions, steps, or to sign, execute and verify any paper, deed,
document, application, petition, affidavit, bond or instrument as may be
necessary-
(i) for
winding up of the company;
(ii) for
distribution of assets;
(iii) in
discharge of his duties and obligations and functions as official liquidator;
and
(k) to
apply to the Court for such orders or directions as may be necessary for the
winding up of the company.
(2) The
exercise of powers by the official liquidator under sub-section (1) shall be
subject to the overall control of the Court, and any creditor or contributory
or the registrar may apply to the Court with respect to any exercise or
proposed exercise of any of the said powers.
(3)
Notwithstanding the provisions of sub-section (1), the official liquidator
shall perform such other duties as the Court may specify in this behalf.
338.
Liquidator to keep books containing proceedings of meetings.— The official
liquidator of a company which is being wound up by the Court shall, in order to
reflect a correct and fair view of` the administration of the company‘s
affairs, maintain proper books of accounts and also keep the following books;
(a)
register showing the dates at which notices were issued to the creditors and
contributories;
(b)
minutes book of all proceedings and resolutions passed at any meeting of the
contributories or the creditors;
(c)
register containing particulars of all transactions and negotiations made by
him in relation to the winding up of the company and the connected matters.
339.
Liquidator’s account.—(1) The official liquidator shall,
(a)
maintain proper and regular books of accounts including accounts of receipts
and payments made by him in such form and manner as may be prescribed;
(b) at
the end of one hundred and eighty days from the date of winding up order,
prepare a report consisting of account of his receipts and payments and
dealings as liquidator, together with such further information as may be
prescribed, which shall be subjected to a limited scope review by the company‘s
auditor;
(c)
present to the Court and file with the registrar a certified copy of such
accounts within thirty days from the close of half year. Such copies shall be
open to the inspection of any person on payment of prescribed fee;
(d)
where the winding up is not concluded within one year from the date of winding
up order, within sixty days after the close of each year, prepare a statement
of financial position and the receipt and payment accounts, get it audited by
the company‘s auditor and lay before the contributories in the general meeting
in the same manner as the annual accounts of a company are laid before the
annual general meeting, in terms of section 223 of this Act.
(2) The
account and information as aforesaid shall be in the prescribed form, shall be
made in duplicate, and shall be verified by a declaration in the prescribed
form.
(3) When
the account and the books and papers have been audited, one copy thereof
alongwith the auditor‘s report shall be filed and kept by the Court, and the
other copy alongwith the auditor‘s report shall be delivered to the registrar
for filing; and each copy shall be open to the inspection of any person on
payment of prescribed fee.
(4) The
official liquidator shall cause a copy of the account to be sent by post to
every creditor and contributory:
(a)
within thirty days in case of half yearly accounts, referred in clause (b) of
sub-section (1); and
(b) at
least fifty days before the date of general meeting in case of clause (d) of
sub-section (1).
(5) The
concerned Minister-in-Charge of the Federal Government may, by notification in
the official Gazette require that the accounts and information referred to in
sub-section (1) shall be furnished to an officer to be designated by it for the
purpose and that such officer shall cause the accounts to be audited; and, upon
the publication of such notification, reference to “Court” in the preceding
provisions of this section shall be construed as a reference to such officer.
340.
Exercise and control of liquidator’s powers.—(1) Subject to the provisions of
this Act, the official liquidator of a company which is being wound up by the
Court shall, in the administration of the assets of the company and in the
distribution thereof among its creditors, have regard to any directions that
may be given by resolution of the creditors or contributories at any general
meeting.
(2) The
official liquidator may summon general meetings of the creditors or
contributories for the purpose of ascertaining their wishes, and it shall be
his duty to summon meetings at such times as the creditors or contributories,
by resolution, may direct, or whenever requested in writing to do so by
one-tenth in value of the creditors or contributories, as the case may be.
(3)
Subject to the provisions of this Act, the official liquidator shall use his
own discretion in the administration of the assets of the company and in the
distribution thereof among the creditors.
(4) If
any person is aggrieved by any act or decision of the official liquidator, that
person may apply to the Court, and the Court may confirm, reverse or modify the
act or decision complained of, and make such order as it thinks just in the
circumstances.
341.
Distribution by official liquidator.—Subject to any directions given by the
Court, the official liquidator shall, within thirty days of the coming into his
hands of funds sufficient to distribute among the creditors or contributories
after providing for expenses of the winding up or for other preferential
payments as provided in this Act, distribute in accordance with the provisions
of this Act:
Provided
that in case of company licenced under section 42 of this Act, if on a winding
up, there remains after the satisfaction of all debts and liabilities, any
assets, those shall be transferred to another company licenced under section 42
of this Act, preferably having similar or identical objects to those of the
company in the manner as may be specified and subject to such conditions as the
Court may impose:
Provided
further that such portion of the funds as may be required for meeting any claim
against the company which may be subjudice or subject matter of adjudication or
assessment shall not be distributed till the claim is finally settled:
Provided
also that any amounts retained as aforesaid shall be invested by the official
liquidator in Special Saving Certificates and the same shall be deposited by
him with the Court and the distribution thereof shall be made by him after the
pending claims are settled:
Provided
also that in case of company licenced under section 42, if any of the assets is
not transferred in the manner provided in first proviso due to any reason, all
such assets shall be sold and proceeds thereof credited to the Investor
Education and Awareness Fund formed under section 245.
342.
Dissolution of company.—(1) When the affairs of a company have been completely
wound up, or when the Court is of the opinion that the official liquidator
cannot proceed with the winding up of the company for want of funds and assets
or any other reason whatsoever and it is just and reasonable in the
circumstances of the case that an order of dissolution of the company be made,
the Court shall make an order that the company be dissolved from the date of
the order, and the company shall be dissolved accordingly: Provided that such
dissolution of the company shall not extinguish and right of, or debt due to
the company against or from any person.
(2) A
copy of the order shall, within fifteen days of the making thereof, be
forwarded by the official liquidator to the registrar, who shall make in his
books a minute of the dissolution of the company and shall publish a notice in
the official Gazette that the company is dissolved.
(3) If
the official liquidator makes default in complying with the requirements of
this section, he shall be liable to a daily penalty of level 1 on the standard
scale.
343.
Saving of other proceedings.—Any powers conferred on the Court by this Act
shall be in addition to, and not in derogation of, any existing power of
instituting proceedings against any contributory or debtor of the company, or
the estate of any contributory or debtor, for the recovery of any call or other
sums.
ENFORCEMENT
OF ORDERS
344.
Power to enforce orders.—All orders made by a Court under this Act may be enforced
in the same manner in which decrees of such Court made in any suit may be
enforced.
345.
Order made by any Court to be enforced by other Courts.- Any order made by a
Court for, or in the course of, winding up of a company shall be enforceable in
any place in Pakistan, and in the same manner in all respects as in such order
had been made by a Court having jurisdiction in respect of that company or a
Court to whom the Court refers the order for enforcement.
346.
Mode of Dealing with Orders to be enforced by other Courts.- Where any order
made by one Court is to be enforced by another Court, a certified copy of the
order so made shall be produced to the proper officer of the Court required to
enforce the same, and the production of such certified copy shall be sufficient
evidence of such order having been made; and thereupon the last mentioned Court
shall take the requisite steps in the matter for enforcing the order, in the
same manner as if it were the order of the Court enforcing the same.
347.
Circumstances in which company may be wound up -voluntarily.—A
company may be wound up voluntarily;
(a) if
the company in general meeting passes a resolution requiring the company to be
wound up voluntarily as a result of the expiry of the period for its duration, if
any, fixed by its articles or on the occurrence of any event in respect of
which the articles provide that the company should be dissolved; or
(b) if
the company passes a special resolution that the company be wound up
voluntarily; and, in the subsequent provisions of this Part, the expression “resolution
for voluntary winding up” means a
resolution passed under clause (a) or clause (b).
348.
Commencement of voluntary winding up.- A voluntary winding up shall be deemed
to commence at the time of the passing of the resolution for voluntary winding
up.
349.
Effect of voluntary winding up on status of company.—In the case of voluntary
winding up, the company shall, from the commencement of the winding up, cease
to carry on its business, except so far as may be required for the beneficial
winding up thereof:
Provided
that the corporate state and corporate powers of the company shall,
notwithstanding anything to the contrary in its articles, continue until it is
dissolved.
350.
Notice of resolution to wind up voluntarily.- (1) Notice of any resolution for
winding up a company voluntarily shall be given by the company within ten days
of the passing of the same by advertisement in a newspaper in English and Urdu
languages at least in one issue each of a daily newspaper of respective
language having wide circulation and a copy thereof shall be sent to the
registrar immediately thereafter.
(2) Any
contravention or default in complying with requirement of this section shall be
an offence liable to a daily penalty of level 1 on the standard scale.
(3) For
the purpose of this section, a liquidator of a company shall be deemed to be an
officer of the company.
351.
Declaration of solvency in case of proposal to wind up voluntarily.—(1) Where
it is proposed to wind up a company voluntarily, its directors, or in case the
company has more than three directors, the majority of the directors, including
the chief executive, may, at a meeting of the board make a declaration verified
by an affidavit to the effect that they have made a full inquiry into the
affairs of the company, and that having done so, they have formed the opinion
that the company has no debts, or that it will be able to pay all its debts in
full from the proceeds of assets within such period not exceeding one year from
the commencement of the winding up, as may be specified in the declaration.
(2) A
declaration made as aforesaid shall have no effect for the purposes of this
Act, unless—
(a) it
is made within the five weeks immediately preceding the date of the passing of
the resolution for winding up the company and is delivered to the registrar for
registration before that date;
(b) it
contains a declaration that the company is not being wound up to defraud any
person or persons; and
(c) it
is accompanied by a copy of the report of the auditors of the company,
prepared, so far as the circumstances admit, in accordance with the provisions
of this Act, on the statement of financial position and profit and loss account
of the company for the period commencing from the date up to which the last
such accounts were prepared and ending with the latest practicable date
immediately before the making of the declaration.
(3)
Where the company is wound up in pursuance of a resolution passed within the
period of five weeks after the making of the declaration, but its debts are not
paid or provided for in full within the period specified in the declaration; it
shall be presumed, until the contrary is shown, that the director did not have
reasonable grounds for his opinion.
(4) Any
director of a company making a declaration under this section without having
reasonable grounds for the opinion that the company will be able to pay its
debts in full from the proceeds of assets within the period specified in the
declaration shall be liable to penalty of level 3 on the standard scale.
352.
Distinction between members and creditors voluntary winding up.—A winding up in
the case of which a declaration under section 351 has been made is a members‘
voluntary winding up and a winding up in the case of which such a declaration
has not been made is a creditors‘ voluntary winding up.
353.
Appointment of liquidator.—(1) In a members‘ voluntary winding up, the company
in general meeting shall appoint one or more liquidators, whose written consent
to act as such has been obtained in advance, for the purpose of winding up the
company‘s affairs and distributing its assets.
(2) On
the appointment of a liquidator all the powers of the board shall cease, except
for the purpose of giving notice of resolution to wind up the company and
appointment of liquidator and filing of consent of liquidator in pursuance of
sections 351 and 363 or in so far as the company in general meeting, or the
liquidator sanctions the continuance thereof.
(3) The
liquidator shall subject to the specified limits be entitled to such
remuneration by way of percentage of the amount realised by him by disposal of
assets or otherwise, as the company in general meeting may fix having regard to
the nature of the work done, experience, qualification of such liquidator and
size of the company: Provided that different percentage rates may be fixed for
different types of assets and items.
(4) In
addition to the remuneration payable under sub-section (3), the company in
general meeting may authorise payment of a monthly allowance to the liquidator
for meeting the expenses of the winding up for a period not exceeding one year
from the date of the commencement of winding up.
(5) The
remuneration fixed as aforesaid shall not be enhanced subsequently but may be
reduced by the Court at any time.
(6) If
the liquidator resigns, is removed from office or otherwise ceases to hold
office before conclusion of winding up, he shall not be entitled to any
remuneration and remuneration already received by him, if any, shall be
refunded by him to the company.
(7) The
liquidator shall not resign or quit his office as liquidator before conclusion
of the winding up proceedings except for reasons of personal disability to the
satisfaction of the members and also be removed by a resolution in general
meeting.
(8) No
remuneration shall be payable to liquidator who fails to complete the winding
up proceedings within the prescribed period.
354.
Power to fill vacancy in office of liquidator.- (1) If a vacancy occurs by
death, resignation or otherwise in the office of any liquidator appointed by
the company, the company in general meeting may fill the vacancy by appointing
a person who has given his written consent to act as liquidator.
(2) For
that purpose a general meeting shall be convened by the outgoing liquidator
before he ceases to act as liquidator except where the vacancy occurs by death,
or where there were more liquidators than one, by the continuing liquidator,
and failing that may be convened by any contributory, or by the Commission on
the application of any person interested in the winding up of the company.
(3) The
meeting shall be held in the manner provided by this Act or in such manner as
may, on application by any contributory or by the continuing liquidator, or any
person interested in the winding up be determined by the Commission.
(4) If
default is made in complying with the provisions of this section, every person,
including the outgoing liquidator, who is in default, shall be liable to a
daily penalty of level 1 on the standard scale.
355.
Notice by liquidator of his appointment.—(1) The liquidator shall, within ten
days after his appointment, file with the registrar for registration a notice
of his appointment in the specified form.
(2) If
the liquidator fails to comply with this section, he shall be liable to a daily
penalty of level 1 on the standard scale.
356.
Power of liquidator to accept shares as consideration for sale of property of
company.—(1) Where—
(a) a
company (in this section called the “transferor company”) is proposed to be, or is
in the course of being, wound up altogether voluntarily; and
(b) the
whole or a part of its business or property is proposed to be transferred or
sold to another body corporate, whether a company within the meaning of this
Act or not (in this section called “the transferee company”), the liquidator of the
transferor company may, with the sanction of a special resolution of that
company conferring on the liquidator either a general authority or an authority
in respect of any particular arrangement-
(i)
receive, by way of compensation or part compensation for the transfer or sale,
shares, policies, or other like interests in the transferee company, for
distribution among the members of the transferor company; or
(ii) enter
into any other arrangement whereby the members of the transferor company may,
in lieu of receiving cash, shares, policies, or other like interests or in
addition thereto, participate in the profits of, or receive any other benefit
from, the transferee company.
(2) Any
sale or arrangement in pursuance of this section shall be binding on the
members of the transferor company.
(3) If
any member of the transferor company who did not vote in favour of the special
resolution expresses his dissent therefrom in writing addressed to the
liquidator and left at the registered office of the company within seven days
after the passing of the special resolution, he may require the liquidator
either-
(a) to
abstain from carrying the resolution into effect; or (b) to purchase his
interest at a price to be determined by agreement or by arbitration in the
manner hereafter provided.
(4) If
the liquidator elects to purchase the member‘s interest, the purchase money
shall be paid before the company is dissolved, and be raised by the liquidator
in such manner as may be determined by special resolution.
(5) A
special resolution shall not be invalid for the purpose of this section by
reason only that it is passed before or concurrently with a resolution for
voluntary winding up or for appointing liquidators; but if an order is made
within a year for winding up the company by or subject to the supervision of
the Court, the special resolution shall not be valid unless it is sanctioned by
the Court.
(6) The
provisions of the Arbitration Act, 1940 (X of 1940), other than those
restricting the application of this Act in respect of the subject-matter of the
arbitration, shall apply to all arbitrations in pursuance of this section.
357.
Duty of liquidator where company turns out to be insolvent. (1) Where the
liquidator is of the opinion that the company will be unable to pay its debts
in full within the period stated in the directors‘ declaration under section
351, he shall forthwith summon a meeting of the creditors and shall lay before the
meeting a statement of the assets and liabilities of the company and such other
particulars as may be specified.
(2)
Where sub-section (1) becomes applicable, the creditors may in their meeting
held as aforesaid decide to continue with the existing liquidator or appoint a
different person as liquidator who has consented to act as such and in that
case the person so appointed shall be the liquidator.
(3) In
the case of a different person being nominated, any director, member of the
company may, within fifteen days after the date on which the nomination was
made by the creditors, apply to the Court for an order either—
(a)
directing that the person nominated as liquidator by the company shall be
liquidator instead of or jointly with the person nominated by the creditors, or
(b)
appointing some other person to be liquidator instead of the person nominated
by the creditors.
(4) A
return of convening the creditors meeting as aforesaid along with a copy of the
notice thereof and a statement of assets and liabilities of the company and the
minutes of the meeting shall be filed with the registrar within ten days of the
date of the meeting.
(5) If
the liquidator fails to comply with any of the requirements of this section, he
shall be liable to a penalty of level 1 on the standard scale.
358.
Duty of liquidator to call general meetings.- (1) The liquidator shall—
(a)
summon and hold annual general meeting of the company within a period of sixty
days from the close of first year after the commencement of winding up, in the
manner provided under section 132;
(b) lay
before the meeting audited accounts consisting of statement of financial
position and the receipt and payment accounts, auditors‘ report and the
liquidator‘s report on the acts, dealings and the conduct of the company‘s
winding up during the preceding period from the date of winding up; and
(c)
forward by post to every contributory a copy of the accounts and the reports,
as referred to in clause (b).
(2) A
return of convening of each general meeting together with a copy of the notice,
accounts and the reports as aforesaid, the list of contributories as on the
date of the meeting and the minutes of the meeting shall be filed by the
liquidator with the registrar within fifteen days of the date of the meeting.
(3) If
the liquidator fails to comply with this section, he shall be liable, in
respect of each failure, to a penalty of level 1 on the standard scale.
359.
Final meeting and dissolution.- (1) As soon as the affairs of a company are
fully wound up, the liquidator shall-
(a)
prepare final accounts of the company, get the same audited; and also prepare a
report of the winding up, showing that the property and assets of the company
have been disposed of and its debts fully discharged and such other
particulars; as may be specified; and
(b) call
a general meeting of the company for the purpose of laying the report and
accounts before it, and giving any explanation therefor.
(2) A
copy of the report and accounts together with a copy of the auditor‘s report
and notice of meeting shall be sent by post or courier or through electronic
mode to each contributory of the company at least twenty-one days before the
meeting required to be held under this section.
(3) The
notice of the meeting specifying the time, place and object of the meeting
shall also be published at least twenty-one days before the date of the meeting
in the manner specified in section 350.
(4)
Within one week after the meeting, the liquidator shall file with the registrar
his final report in the specified form.
(5) If a
quorum is not present at the meeting, the liquidator shall in lieu of the
return referred to in sub-section (4), make a return that the meeting was duly
summoned and that no quorum was present thereat, and upon such a return being
made within one week after the date fixed for the meeting along with a copy of
his report and account in the specified manner, the provision of subsection (4)
as to the making of the return shall be deemed to have been complied with.
(6) The
registrar, on receiving the report and account and either the return mentioned
in sub-section (4) or the return mentioned in sub-section (5), shall, after
such scrutiny as he may deem fit, register them, and on the expiration of
ninety days from such registration, the company shall be deemed to be
dissolved:
Provided
that, if on his scrutiny the registrar considers that the affairs of the
company or the liquidation proceedings have been conducted in a manner
prejudicial to its interest or the interests of its creditors and members or
that any actionable irregularity has been committed, he may take action in
accordance with the provisions of this Act:
Provided
further that the Court may on the application of the liquidator or of any other
person who appears to the Court to be interested, make an order deferring the
date at which the dissolution of the company is to take effect, for such time
as the Court thinks fit.
(7) It
shall be the duty of the person on whose application an order of the Court
under the foregoing proviso is made, within fourteen days after the making of
the order, to deliver to the registrar a certified copy of the order for
registration, and, if that person fails so to do, he shall be liable to a daily
penalty of level 1 on the standard scale.
(8) If
the liquidator fails to comply with any requirements of this section, he shall
be liable to a penalty of level 1 on the standard scale.
360.
Alternative provisions as to annual and final meetings in case of
insolvency.—Where section 357 has effect, sections 368 and 369 shall apply to
the winding up, to the exclusion of sections 358 and 359 as if the winding up
were creditors‘ voluntary winding up and not a members‘ voluntary winding up:
Provided that the liquidator shall not be required to summon a meeting of creditors
under section 368 at the end of the first year from the commencement of the
winding up, unless the meeting held under section 362 has been held more than
ninety days before the end of the year.
PROVISIONS
APPLICABLE TO CREDITORS’ VOLUNTARY WINDING UP
361.
Provisions applicable to creditors’ voluntary winding up.—The provisions
contained in sections 355 to 369, both inclusive, shall apply in relation to
creditors‘ voluntary winding up.
362.
Meeting of creditors.—(1) The company shall;
(a)
cause a meeting of its creditors to be summoned for a day not later than the
fourteenth day after the day on which there is to be held the company meeting
at which the resolution for voluntary winding up is to be proposed;
(b)
cause the notices of the creditors‘ meeting to be sent by post to the creditors
not less than seven days before the day on which that meeting is to be held;
and
(c)
cause notice of the creditors‘ meeting to be advertised in a newspaper in
English and Urdu languages at least in one issue each of respective language
having wide circulation and a copy thereof shall simultaneously be sent to the
registrar.
(2) The
directors of the company shall—
(a) make
out a statement of the position of the company‘s affairs and assets and
liabilities together with a list of the creditors of the company, details of
securities held by them respectively along with the dates when such securities
were held, the estimated amount of their claims to be laid before the meeting
of creditors and such other information as may be specified; and
(b)
appoint one of their members to preside at the said meeting.
(3) It
shall be the duty of the director appointed to preside at the meeting of
creditors to attend the meeting and preside thereat.
(4) Any
contravention or default in complying with requirements of this section shall
be an offence liable to a penalty of level 1 on the standard scale.
363.
Appointment of liquidator.- (1) The creditors and the company at their
respective meetings mentioned in sections 357 and 362 may nominate a person,
who has given his written consent to act as such, to be liquidator for the
purpose of winding up the affairs and distributing the assets of the company.
(2) If
the creditors and company nominate different persons, the persons nominated by
the creditors shall be liquidator: Provided that any director, member or
creditor of the company may, within fifteen days after the date on which the
nomination was made by the creditors, apply to the Court for an order either
directing that the person nominated as liquidator by the company shall be
liquidator instead of or jointly with the person nominated by the creditors or
appointing some other person to be liquidator instead of the person appointed
by the creditors.
(3) If
no person is nominated by the creditors, the person, if any, nominated by the
company shall be liquidator.
(4) If
no person is nominated by the company, the person, if any, nominated by the
creditors shall be the liquidator.
(5) The
liquidator shall not resign or quit his office as liquidator before conclusion
of the winding up proceedings except for reasons of personal disability to the
satisfaction of the Court and may also be removed by the Court for reasons to
be recorded.
(6)
Notice of appointment of liquidator as well as the resolution passed at a
creditors‘ meeting in pursuance of section 362 shall be given by the company to
the registrar, along with the consent of the liquidator to act as such, within
ten days of the passing thereof.
364.
Fixing of liquidator’s remuneration.—(1) The liquidator shall subject to the
specified limits be entitled to such remuneration by way of percentage of the
amount realised by him by disposal of assets or otherwise, as the creditors in
their meeting or the Court in terms of proviso to sub-section (2) of section
317 as the case may be, may fix having regard to the nature of the work done,
experience, qualification of such liquidator and size of the company:
Provided
that different percentage rates may be fixed for different types of assets and
items.
(2) In addition
to the remuneration payable under sub-section (1), the creditors in their
meeting or the Court may authorise payment of a monthly allowance to the
liquidator for meeting the expenses of the winding up for a period not
exceeding one year from the date of the commencement of winding up.
(3) The
remuneration fixed as aforesaid shall not be enhanced subsequently but may be
reduced by the Court at any time.
(4) If
the liquidator resigns, is removed from office or otherwise ceases to hold
office before conclusion of winding up, he shall not be entitled to any
remuneration and the remuneration already received by him, if any, shall be
refunded by him to the company.
365.
Cessation of boards’ powers.—On the appointment of a liquidator, all the powers
of the board, chief executive and other officers shall cease, except for the
purpose of giving notice of resolution to wind up and appointment of the
liquidator and filing of consent of the liquidator as required under this Act,
the creditors, in general meeting may sanction the continuance thereof.
366.
Power to fill vacancy in office of liquidator.—If a vacancy occurs, by death,
resignation or otherwise, in the office of a liquidator, other than a
liquidator appointed by or by the direction of, the Court, the creditors in
their meeting may fill the vacancy by appointing a person who has given his
written consent to act as liquidator, and for this purpose the provisions of
section 354 shall mutatis mutandis apply.
367.
Application of section 356 to a creditors voluntary winding up.—The provisions
of section 356 shall apply in the case of a creditors voluntary winding up as
in the case of member‘s voluntary winding up with the modification that the
powers of the liquidator under the said section shall not be exercised except
with the sanction of the Court.
368.
Duty of liquidator to call meeting of company and of creditors-(1) The liquidator shall-
(a)
summon and hold annual general meeting of the company and a meeting of the
creditors within a period of sixty days from the close of its financial year in
the manner provided under section 132;
(b) lay
before the meetings mentioned in clause (a), audited accounts consisting of
statement of financial position and the receipt and payment accounts, auditors‘
report and the liquidator‘s report on the acts, dealings and the conduct of the
company‘s winding up during the preceding period from the date of winding up;
and
(c)
forward by post to every contributory a copy of the accounts and the reports,
as referred to in clause (b).
(2) A
return of convening of each general meeting together with a copy of the notice,
accounts and the reports as aforesaid, the list of contributories as on the
date of the meeting and the minutes of the meeting shall be filed by the
liquidator with the registrar within fifteen days of the date of the meeting.
(3) If
the liquidator fails to comply with this section, he shall be liable to a
penalty of level 1 on the standard scale.
369.
Final meeting and dissolution.- (1) As soon as the affairs of a company are
fully wound up, the liquidator shall—
(a)
prepare final accounts of the company, get the same audited; and also prepare a
report of the winding up, showing that the property and assets of the company
have been disposed of and its debts fully discharged and such other
particulars; as may be specified;
(b)
summon and hold general meeting of the company and a meeting of the creditors
within a period of sixty days from the close of its financial year in the
manner provided under section 132; and
(c) lay
before the meetings mentioned in clause (a), audited accounts consisting of
statement of financial position and the receipt and payment accounts, auditors‘
report and the liquidator‘s report on the acts, dealings and the conduct of the
company‘s winding up during the preceding period from the date of winding up.
(2) A
copy of the report and accounts together with a copy of the auditor‘s report
and notice of meeting shall be sent by post or courier or through electronic
mode to each contributory of the company at least twenty-one days before the
meeting required to be held under this section.
(3) The
notice of the meeting specifying the time, place and object of the meeting
shall also be published at least twenty-one days before the date of the meeting
in the manner specified in section 350.
(4)
Within one week after the meeting, the liquidator shall file with the registrar
his final report in the specified form.
(5) If a
quorum (which for the purpose of this section shall be two persons) is not
present at either of such meetings, the liquidator shall in lieu of the return
referred to in sub-section (4), make a return that the meeting was duly
summoned and that no quorum was present thereat, and upon such a return being
made within one week after the date fixed for the meeting along with a copy of
his report and account in the specified manner, the provision of sub-section
(4) as to the making of the return shall be deemed to have been complied with.
(6) The
registrar, on receiving the report and account and either the return mentioned
in sub-section (4) or the return mentioned in sub-section (5), shall, after
such scrutiny as he may deem fit, register them, and on the expiration of
ninety days from such registration, the company shall be deemed to be dissolved:
Provided
that, if on his scrutiny the registrar considers that the affairs of the
company or the liquidation proceedings have been conducted in a manner
prejudicial to its interest or the interests of its creditors and members or
that any actionable irregularity has been committed, he may take action in
accordance with the provisions of this Act:
Provided
further that the Court may on the application of the liquidator or of any other
person who appears to the Court to be interested, make an order deferring the
date at which the dissolution of the company is to take effect, for such time
as the Court thinks fit.
(7) It
shall be the duty of the person on whose application an order of the Court
under the foregoing proviso is made, within fourteen days after the making of
the order, to deliver to the registrar a certified copy of the order for
registration, and, if that person fails so to do, he shall be liable to a daily
penalty of level 1 on the standard scale.
(8) If
the liquidator fails to comply with any requirements of this section, he shall
be liable to a penalty of level 1 on the standard scale.
PROVISIONS
APPLICABLE TO EVERY VOLUNTARY WINDING UP
370.
Distribution of property of company.—Subject to the provisions of this Act as
to preferential payments, the property of a company shall, on its winding up,
be applied in satisfaction of its liabilities pari passu and, subject to such
application shall, unless the articles otherwise provide be distributed among
the members according to their rights and interests in the company.
371.
Application of sections 320 and 321 to voluntary winding up.- The provisions of
sections 320 and 321 shall, so far as may be, apply to every voluntary winding
up as they apply to winding up by the Court except that references to—
(a) “the
Court” shall
be omitted;
(b) the “official
liquidator” or the “provisional
manager” shall
be construed as references to the liquidator; and
(c) the “relevant
date” shall
be construed as reference to the date of commencement of the winding up; and the
report referred to in section 321 shall be submitted to the registrar instead
of the Court.
372.
Powers and duties of liquidator in voluntary winding up.-(1) The liquidator may;
(a) in
the case of a members‘ voluntary winding up, with the sanction of a special
resolution of the company, and, in the case of a creditors‘ voluntary winding
up, of a meeting of the creditors, exercise any of the powers given by
sub-section (1) of section 337 to a liquidator in a winding up by the Court;
(b)
without the sanction referred to in clause (a), exercise any of the other
powers given by this Act to the liquidator in a winding up by the Court;
(c)
exercise the power of the Court under this Act of settling a list of
contributories, which shall be prima facie evidence of the liabilities of the
persons named therein to be contributories;
(d)
exercise the powers of the Court of making calls;
(e)
summon general meeting of the company and creditors for the purpose of
obtaining the sanction of the company by special resolution or for any other
purpose he may think fit.
(2) The
exercise by the liquidator of the powers given by clause (a) of sub- section
(1) shall be subject to the control of the Court; and any creditor or
contributory may apply to the Court with respect to any exercise or proposed
exercise of any of the power conferred by this section.
(3) The
liquidator shall pay the debts of the company and shall adjust the rights of
the contributories among themselves.
(4) The
liquidator shall within thirty days of the coming into his hands of any funds
sufficient to distribute among the creditors or contributories after providing
for expenses of the winding up or for other preferential payments as provided
in this Act, distribute in accordance with the provisions of this Act:
Provided
that in case of company licenced under section 42 of this Act, if on a winding
up, there remains after the satisfaction of all debts and liabilities, any
assets, those shall be transferred to another company licenced under section 42
of this Act, preferably having similar or identical objects to those of the
company in the manner as may be specified: Provided further that such portion
of the funds as may be required for meeting any claim against the company which
may be subjudice or subject matter of adjudication or assessment shall not be
distributed till the claim is finally settled:
Provided
also that any amounts retained as aforesaid shall be invested by the official
liquidator in Special Saving Certificates or in such other securities or instruments
as may be specified and the distribution thereof shall be made by him after the
pending claims are settled:
Provided
also that in case of company licenced under section 42, if any of the assets is
not transferred in the manner provided in first proviso due to any reason, all
such assets shall be sold and proceeds thereof credited to the Investor
Education and Awareness Fund formed under section 245.
(5) The
winding up proceedings shall be completed by the liquidator within a period of
one year from the date of commencement of winding up:
Provided
that the Court may, on the application of the liquidator, grant extension by
thirty days at any time but such extension shall not exceed a period of one
hundred and eighty days in all and shall be allowed only for the reason that
any proceedings for or against the company are pending in a court and the Court
shall also have the power to require expeditious disposal of such proceedings
as it could under section 337 if the company was being wound up by the Court.
(6) If
an official liquidator is convicted of misfeasance, or breach of duty or other
lapse or default in relation to winding up proceedings of a company, he shall
cease to be the official liquidator of the company and shall also become
disqualified, for a period of five years from such conviction, from being the
liquidator of, or to hold any other office including that of a director in any
company and if he already holds any such office he shall forthwith be deemed to
have ceased to hold such office.
(7) When
several liquidators are appointed, any power given by this Act may be exercised
by such one or more of them as may be determined at the time, of their
appointment, or in default of such determination, by any two or more of them.
373.
Power of Court to appoint and remove liquidator in voluntary winding up.—(1) If
from any cause whatever, there is no liquidator acting, the Court may appoint a
liquidator in accordance with the provisions of section 315 who shall have the
same powers, as are exercisable by an official liquidator under sub-section (1)
of section 337.
(2) The
Court may, on cause shown, replace a liquidator on the application of any
creditor or contributory or the registrar or a person authorised by the
Commission.
(3) The
remuneration to be paid to the liquidator appointed under subsection (1) or
sub-section (2) shall be fixed by the Court subject to the provisions of
section 364.
374.
Notice by liquidator of his appointment.—(1) Every liquidator shall, within
fourteen days after his appointment, publish in the official Gazette, and
deliver to the registrar for registration, a notice of his appointment in the
form specified.
(2) If
the liquidator fails to comply with the requirements of subsection (1), he
shall be liable to a daily penalty of level 1 on the standard scale.
375.
Arrangement when binding on company and creditors.—(1) Any arrangement other
than the arrangement referred to in section 356 entered into between a company
which is about to be, or is in the course of being wound up and its creditors
shall be binding on the company and on the creditors, if it is sanctioned by a
special resolution of the company and acceded to by the creditors who hold
three-fourths in value of the total amount due to all the creditors of the
company.
(2) Any
creditor or contributory may, within twenty-one days from the completion of the
arrangement, appeal to the Court against it, and the Court may thereupon, as it
thinks just, amend, vary, confirm or set aside the arrangement.
376
Power to apply to Court to have questions determined or powers exercised.—(1)
The liquidator or any contributory or creditor may apply to the Court—
(a) to
determine any question arising in the winding up of a company; or
(b) to
exercise as respects the enforcing of calls, the staying of proceedings or any
other matter, all or any of the powers which the Court might exercise if the
company were being wound up by the Court.
(2) The
liquidator or any contributory may apply to the Court specified in sub-section
(3) for an order setting aside any attachment, distress or execution put into
force against the estate or effects of the company after the commencement of
the winding up.
(3) An
application under sub-section (2) shall be made-
(a) if
the attachment, distress or execution is levied or put into force by a Court,
to such Court; and
(b) if
the attachment, distress or execution is levied or put into force by any other
court, to the court having jurisdiction to wind up the company.
(4) The
Court, if it is satisfied that the determination of the question or the
required exercise of power or the order applied for will be just and
beneficial, may accede wholly or partially to the application on such terms and
conditions as it thinks fit, or may make such other orders on the application as
it thinks just.
(5) A
copy of an order staying the proceedings in the winding up, made by virtue of
this section, shall forthwith be forwarded by the company, or otherwise as may
be prescribed, to the registrar, who shall make a minute of the order in his books
relating to the company.
377.
Application of liquidator to Court for public examination of promoters,
directors.—The liquidator may make a report to the Court stating that in his
opinion a fraud or any other actionable irregularity has been committed by any
person in the promotion or formation of the company or by any officer of the
company in relation to the company since its formation; and the Court may,
after considering the report, direct that person or officer shall attend before
the Court on a day appointed by it for that purpose, and be publicly examined
as to the promotion or formation or the conduct of the business of the company,
or as to his conduct and dealings as officer thereof, in the manner provided
for such examination in the case of winding up of a company by the Court.
378.
Costs of voluntary winding up.—All costs, charges and expenses properly
incurred in the winding up, including the remuneration of the liquidator, shall
subject to the rights of secured creditors, if any, be payable out of the
assets of the company in priority to all other claims.
379.
Saving for right of creditors and contributories.—The voluntary winding up of a
company shall not bar the right of any creditor or contributory to have it
wound up by the Court, but in the case of an application by a contributory, the
Court must be satisfied that the rights of the contributories will be
prejudiced by a voluntary winding up.
380.
Power of Court to adopt proceedings of voluntary winding up.—Where a company is
being wound up voluntarily, and an order is made for winding up by the Court,
the Court may, if it thinks fit by the same or any subsequent order, provide
for the adoption of all or any of the proceedings in the voluntary winding up.
WINDING
UP SUBJECT TO SUPERVISION OF COURT
381.
Power to order winding up subject to supervision.— When a company has passed a
resolution for voluntary winding up, the Court may of its own motion or on the
application of any person entitled to apply to the Court for winding up a
company, make an order that the voluntary winding up shall continue, but
subject to such supervision of the Court, and with such liberty for creditors,
contributories or others to apply to the Court, and generally on such terms and
conditions, as the Court thinks just.
382.
Effect of petition for winding up subject to supervision.—A petition for the
continuance of a voluntary winding up subject to the supervision of the Court
shall, for the purpose of giving jurisdiction to the Court over suits and
another legal proceedings, be deemed to be a petition for winding up by the
Court.
383.
Court may have regard to the wishes of creditors and contributories.—The Court
may, in deciding between a winding up by the Court and a winding up subject to
supervision, in the appointment of liquidators, and in all other matters
relating to the winding up subject to supervision, have regard to the wishes of
the creditors or contributories as proved to it by any sufficient evidence, but
subject to the provisions which would have been applicable had the company been
wound up by the Court.
384.
Power to replace liquidator.—Where an order is made for winding up subject to
supervision, the Court may on an application by any creditor or contributory or
the registrar or a person authorised by the Commission in this behalf, replace
the liquidator who shall have the same powers, be subject to the same
obligations and in all respects stand in the same position as if he had been
appointed by the company.
385.
Effects of supervision order.— (1) Where an order is made for a winding up
subject to supervision, the liquidator may, subject to any restriction imposed
by the Court, exercise all his powers, without the sanction or intervention of
the Court, in the same manner as if the company were being wound up altogether
voluntarily.
(2)
Except as provided in sub-section (1), and save for the purposes of section 327
an order made by the Court for a winding up subject to the supervision of the
Court shall for all purposes including the staying of suits and other
proceedings, be deemed to be an order of the Court for winding up the company
by the Court, and shall confer full authority on the Court to make call or to
enforce calls made by the liquidator, and to exercise all other powers which it
might have exercised if an order had been made for winding up the company
altogether by the Court.
(3) In
the construction of the provisions whereby the Court is empowered to direct any
act or thing to be done to or in favour of the official liquidator, the
expression “official liquidator” shall be deemed to mean the liquidator conducting the
winding up subject to the supervision of the Court.
(4)
Unless otherwise directed by the Court, an order for winding up subject to
supervision shall not in any way affect the duties, obligations and liabilities
of the liquidator as provided for in respect of voluntary winding up.
386.
Appointment of voluntary liquidator as official liquidator in certain
cases.—Where an order has been made for the winding up of a company subject to
supervision, and an order is afterwards made for winding up by the Court, the
Court shall by the last mentioned order, appoint the voluntary liquidator,
either provisionally or permanently, and either with or without the addition of
any other person, to be official liquidator in the winding up by the Court.
387.
Status of companies being wound up.—A company being wound up shall continue to
be a company for all purposes till its final dissolution in accordance with the
provisions of this Act and, unless otherwise specified, all provisions and
requirements of this Act relating to companies shall continue to apply mutatis
mutandis in the case of companies being wound up:
Provided
that, from the date of commencement of the winding up of a company, the
official liquidator or the liquidator shall be deemed to have taken the place
of the board and chief executive of the company, as the case may be.
PROOF
AND RANKING OF CLAIMS
388.
Debts of all description to be proved.—In every winding up (subject, in the
case of insolvent companies, to the application in accordance with the
provisions of this Act or the law of insolvency) all debts payable on a
contingency, and all claims against the company, present or future, certain or
contingent, ascertained or sounding only in damages, shall be admissible to
proof against the company, a just estimate being made, so far as possible, of
the value of such debts or claims as may be subject to any contingency, or may
sound only in damages, or for some other reason do not bear a certain value.
389.
Application of insolvency rules in winding up of insolvent companies.— In the
winding up of an insolvent company the same rules shall prevail and be observed
with regard to the respective rights of secured and unsecured creditors and to
debts provable and to the valuation of annuities and future and contingent
liabilities as are in force for the time being under the law of insolvency with
respect to the estates of persons adjudged insolvent; and all persons who in
any such case will be entitled to prove for and receive dividend out of the
assets of the company may come in under the winding up, and make such claims
against the company as they respectively are entitled to by virtue of this
section.
390.
Preferential payments. priority to all other debts— (1) In a winding up, there
shall be paid in-
(a) all
revenues, taxes, cesses and rates due from the company to the Federal
Government or a Provincial Government or to a local authority at the relevant
date and having become due and payable within the one year next before that
date on pari passu basis;
(b) all
wages or salary (including wages payable for time or piece work and salary
earned wholly or in part by way of commission) of any employee in respect of
services rendered to the company;
(c) all accrued
holiday remuneration becoming payable to any employee or in the case of his
death to any other person in his right, on the termination of his employment
before, or by the winding up order, or, as the case may be, the dissolution of
the company;
(d)
unless the company is being wound up voluntarily merely for the purposes of
reconstruction or of amalgamation with another company, all amounts due, in
respect of contributions towards insurance payable during the one year next
before the relevant date, by the company as employer of any persons, under any
other law for the time being in force;
(e)
unless the company has, at the commencement of the winding up, under such a
contract with insurers as is mentioned in section 14 of the Workmen‘s
Compensation Act, 1923 (VIII of 1923), rights capable of being transferred to
and vested in the workman, all amounts due in respect of any compensation or
liability for compensation under the said Act in respect of the death or
disablement of any employee of the company:
Provided
that where any compensation under the said Act is a weekly payment, the amount
payable under this clause shall be taken to be the amount of the lump sum for
which such weekly payment could, if redeemable, be redeemed, if the employer
made for that purpose under the said Act;
(f) all
sums due to any employee from a provident fund, a pension fund, a gratuity fund
or any other fund for the welfare of the employees maintained by the company;
and
(g) the
expenses of any investigation held in pursuance of sections 256, 257 or 258, in
so far as they are payable by the company.
(2)
Where any payment has been made;
(a) to
an employee of a company on account of wages or salary; or
(b) to
an employee of a company or, in the case of his death, to any other person in
his right, on account of accrued holiday remuneration, out of money advanced by
some person for that purpose, the person by whom the money was advanced shall,
in a winding up, have a right of priority in respect of the money so advanced
and paid, up to the amount by which the sum in respect of which the employee or
other person in his right would have been entitled to priority in the winding
up has been diminished by reason of the payment having been made.
(3) The
foregoing debts shall
(a) rank
equally among themselves and be paid in full, unless the assets are
insufficient to meet them, in which case they shall abate in equal proportion;
and
(b) so
far as the assets of the company available for payment of general creditors are
insufficient to meet them, have priority over the claims of holders of
debentures under any floating charge created by the company, and be paid
accordingly out of any property comprised in or subject to that charge.
(4)
Subject to the retention of such sums as may be necessary for the costs and
expenses of the winding up, the foregoing debts shall be discharged forthwith
so far as the assets are sufficient to meet them and, in the case of the debts
to which priority is given by clause (d) of sub-section (1), formal proof
thereof shall not be required except in so far as may be otherwise prescribed.
(5) In
the event of a landlord or other person distraining or having distrained on any
goods or effects of the company within ninety days next before the date of
winding up order, the debts to which priority is given by this section shall be
a first charge on the goods or effects so distrained on, or the proceeds of the
sale thereof:
Provided
that, in respect of any money paid under any such charge, the landlord or other
person shall have the same rights of priority as the person to whom the payment
is made.
(6) For
the purposes of this section;
(a) any
remuneration in respect of a period of holiday or of absence from work on
medical grounds or other good cause shall be deemed to be wages in respect of
services rendered to the company during that period;
(b) the
expression “accrued holiday remuneration” includes, in relation to any person, all sums which by
virtue either of his contract of employment or of any enactment (including any
order made or direction given under any enactment), are payable on account of
the remuneration which would, in the ordinary course, have become payable to
him in respect of a period of holiday had his employment with the company
continued until he became entitled to be allowed the holiday; and
(c) the
expression “the relevant date” means—
(i) in
the case of a company ordered to be wound up by the Court, the date of the
appointment (or first appointment) of the provisional manager or, if no such
appointment was made, the date of the winding up order, unless in either case
the company had commenced to be wound up voluntarily before that date; and
(ii) in
any other case, the date of the passing of the resolution for the voluntary
winding up of the company.
391. Avoidance
of transfers.- Except when an order to
the contrary is passed by the Court;
(a)
every transfer of shares and alteration in the status of a member made after
the commencement of winding up shall, unless approved by the liquidator, be
void;
(b) any
transfer or disposition of property, including actionable claims of the
company, not being a transfer or delivery made in the ordinary course of its
business or in favour of a purchaser or encumbrancer in good faith and for
valuable consideration, if made within a period of one year before the
presentation of a petition for winding up by the Court or the passing of a
resolution for voluntary winding up of the company, shall be void.
392.
Disclaimer of onerous property.—(1) Where any part of the -property of a company which is being wound up consists of;
(a) land
of any tenure, burdened with onerous covenants;
(b)
shares or stocks in companies;
(c) any
other property which is not saleable or is not readily saleable by reason of
the possessor thereof being bound either to the performance of any onerous act
or to the payment of any sum of money; or
(d)
unprofitable contracts, the liquidator may, notwithstanding that he has
endeavoured to sell or has taken possession of the property or exercised any
act of ownership in relation thereto or done anything in pursuance of the
contract, with the leave of the Court and subject to the provisions of this
section, by writing signed by him, at any time within one year after the
commencement of the winding up or such extended period as may be allowed by the
Court, disclaim the property:
Provided
that, where any such property has not come to the knowledge of the liquidator
within thirty days after the commencement of the winding up, the power under
this section of disclaiming the property may be exercised at any time within
one year after he has become aware thereof or such extended period as may be
allowed by the Court.
(2) The
disclaimer shall operate to determine, as from the date of disclaimer, the
rights, interest and liabilities of the company in or in respect of the
property disclaimed, but shall not, except so far as is necessary for the
purpose of releasing the company and the property of the company from
liability, affect the rights, interest or liabilities of any other person.
(3) The
Court, before or on granting leave to disclaim, may require such notices to be
given to persons interested, and impose such terms as a condition of granting
leave, and make such other order in the matter as the Court considers just and
proper.
(4) The
liquidator shall not be entitled to disclaim any property in any case where an
application in writing has been made to him by any person interested in the
property requiring him to decide whether he will or will not disclaim and the
liquidator has not, within a period of twenty-eight days after the receipt of
the application or such extended period as may be allowed by the Court, give
notice to the applicant that he intends to apply to the Court for leave to
disclaim, and in case the property is under a contract, if the liquidator after
such an application as aforesaid does not within the said period or extended
period disclaim the contract, he shall be deemed to have adopted it.
(5) The
Court may, on the application of any person who is, as against the liquidator,
entitled to the benefit or subject to the burden of a contract made with the
company, make an order rescinding the contract on such terms as to payment by
or to either party of damages for the non-performance of the contract, or otherwise
as the Court considers just and proper, and any damages payable under the order
to any such person may be proved by him as a debt in the winding up.
(6) The
Court may, on an application by any person who either claims any interest in
any disclaimed property or is under any liability not discharged under this Act
in respect of any disclaimed property, and after hearing any such persons as it
thinks fit, make an order for the vesting of the property in, or the delivery
of the property to, any person entitled thereto or to whom it may seem just
that the property should be delivered by way of compensation for such liability
as aforesaid, or a trustee for him, and on such terms as the Court considers
just and proper, and on any such vesting order being made, the property
comprised therein shall vest accordingly in the person named therein in that
behalf without any conveyance or assignment for the purpose:
Provided
that where the property disclaimed is of a leasehold nature, the Court shall
not make a vesting order in favour of any person claiming under the company,
whether as under-lessee or as mortgagee or holder of a charge by way of demise,
except upon the terms of making that person—
(a)
subject to the same liabilities and obligations as those to which the company
was subject under the lease in respect of the property at the commencement of
the winding up; or
(b) if
the Court thinks fit, subject only to the same liabilities and obligations as
if the lease had been assigned to that person at that date, and in either event
as if the lease had comprised only the property comprised in the vesting order,
and any mortgagee or under-lessee declining to accept a vesting order upon such
terms shall be excluded from all interest in, and security upon the property,
and, if there is no person claiming under the company who is willing to accept
an order upon such terms, the Court shall have power to vest the estate and
interest of the company in the property in any person liable, either personally
or in a representative character, and either alone or jointly with the company,
to perform the covenants of the lessee in the lease, free and discharged from
all estates, encumbrances and interests created therein by the company.
(7) Any
person affected by the operation of a disclaimer under this section shall be
deemed to be a creditor of the company to the amount of the compensation or
damages payable in respect of such effect, and may accordingly prove the amount
as a debt in the winding up.
EFFECT
OF WINDING UP ON ANTECEDENT AND OTHER TRANSACTIONS
393.
Fraudulent preference.—(1) Where a company has given preference to a person who
is one of the creditors of the company or a surety or guarantor for any of the
debts or other liabilities of the company, and the company does anything or
suffers anything done which has the effect of putting that person into a
position which, in the event of the company going into liquidation, will be
better than the position he would have been in if that thing had not been done
prior to one hundred and eighty days of commencement of winding up, the Court,
if satisfied that, such transaction is a fraudulent preference may order as it
may think fit for restoring the position to what it would have been if the
company had not given that preference.
(2) If the
Court is satisfied that there is a preference transfer of property, movable or
immovable, or any delivery of goods, payment, execution made, taken or done by
or against a company within one hundred and eighty days before the commencement
of winding up, the Court may order as it may think fit and may declare such
transaction invalid and restore the position.
394.
Liabilities and rights of certain fraudulently preferred persons.—(1) Where, in
the case of a company which is being wound up, anything made or done after the
commencement of this Act, is invalid under section 393 as a fraudulent
preference of a person interested in property mortgaged or charged to secure
the company‘s debt, then (without prejudice to any rights or liabilities
arising apart from this provision) the person preferred shall be subject to the
same liabilities and shall have the same rights as if he had undertaken to be
personally liable as surety for the debt to the extent of the charge on the
property or the value of his interest, whichever is less.
(2) The
value of the said person‘s interest shall be determined as at the date of the
transaction constituting the fraudulent preference, and shall be determined as
if the interest were free of all encumbrances other than those to which the
charge for the company‘s debt was then subject.
(3) On
any application made to the Court with respect to any payment on the ground
that the payment was a fraudulent preference of a surety or guarantor, the
Court shall have jurisdiction to determine any questions with respect to the
payment arising between the person to whom the payment was made and the surety
or guarantor and to grant relief in respect thereof, notwithstanding that it is
not necessary so to do for the purposes of the winding up, and for that purpose
may give leave to bring in the surety or guarantor as a third party as in the
case of a suit for the recovery of the sum paid.
(4)
Sub-section (3) shall apply, with the necessary modifications, in relation to
transactions other than the payment of money as it applied in relation to such
payments.
395.
Avoidance of certain attachments, executions.—(1) Where any company is being
wound up by or subject to the supervision of the Court, any attachment,
distress or execution put in force without leave of the Court against the
estate or effects or any sale held without leave of the Court of any of the
properties of the company after the commencement of the winding up shall be
void.
(2)
Nothing in this section applies to proceedings by the Government.
396.
Effect of floating charge.—Where a company is being wound up, a floating charge
on the undertaking or property of the company created within one year
immediately preceding the commencement of the winding up shall, unless it is
proved that the company immediately after the creation of the charge was
solvent, be invalid except to the amount of any cash paid to the company at the
time of, or subsequently to the creation of, and in consideration for, the
charge, together with markup on that amount at the rate of five percent per
annum or part thereof or such other rate as may be notified by the Commission
in the official Gazette.
OFFENCES
ANTECEDENT TO OR IN COURSE OF WINDING UP
397.
Power of Court to assess damages against delinquent directors.—If in the course
of winding up a company it appears that any person who has taken part in the
promotion or formation of the company or any past or present director,
liquidator or officer of the company-
(a) has
misapplied or retained or become liable or accountable for any money or
property of the company; or
(b) has
been guilty of any misfeasance or breach of trust in relation to the company;
the Court may, on the application of the official liquidator or the liquidator
or of any creditor or contributory, made within the time specified in that
behalf in subsection (2), examine into the conduct of the person, director,
liquidator or officer aforesaid, and compel him to repay or restore the money
or property or any part thereof respectively, with surcharge at such rate as
the Court thinks just, or to contribute such sum to the assets of the company
by way of compensation in respect of the misapplication, retainer, misfeasance
or breach of trust as the Court thinks just.
(2) An
application under sub-section (1) shall be made within five years from the date
of the order for winding up, or of the first appointment of the liquidator in
the winding up, or of the misapplication, retainer, misfeasance or breach of
trust, as the case may be, whichever is longer.
(3) This
section shall apply notwithstanding that the matter is one for which the person
concerned may be criminally liable.
398.
Liability for fraudulent conduct of business.— (1) If in the course of the
winding up of a company it appears that any business of the company has been
carried on with intent to defraud creditors of the company or any other person,
or for any fraudulent purpose, the Court, on the application of the official
liquidator or the liquidator or any creditor or contributory of the company,
may, if it thinks fit, declare that any persons who were knowingly parties to
the carrying on of the business in the manner aforesaid shall be personally
responsible, without any limitation of liability, for all or any of the debts
or other liabilities of the company as the Court may direct.
(2) On
the hearing of an application under sub-section (1), the official liquidator or
the liquidator, as the case may be, may himself give evidence or call
witnesses.
(3)
Where the Court makes any such declaration, it may give such further directions
as it thinks proper for the purpose of giving effect to that declaration; and,
in particular, may make provision for making that liability of any such person
under the declaration a charge on any debt or obligation due from the company to
him, or on any mortgage or charge or any interest in any mortgage or charge on
any assets of the company held by or vested in him, or any company or person on
his behalf, or any person claiming as assignee from or though the person liable
or any company or person acting on his behalf, and may, from time to time, make
such further order as may be necessary for the purpose of enforcing any charge
imposed under this sub-section. For the purpose of this sub-section, the
expression.
Explanation.
“assignee” includes
any person to whom or in whose favour, by the directions of the person liable,
the debt, obligation, mortgage or charge was created, issued or transferred or
the interest was created, but does not include an assignee for valuable
consideration (not including consideration by way of marriage) given in good
faith and without notice of any of the matters on the ground of which
declaration is made.
(4)
Where any business of a company is carried on with such intent or for such
purpose as is mentioned in sub-section (1), every person who was a party to the
carrying on of the business in the manner aforesaid shall be punishable with
imprisonment for a term which may extend to three years, or with fine which may
extend to one million rupees, or with both.
(5) This
section shall apply, notwithstanding that the person concerned may be
criminally liable in respect of the matters on the ground of which the
declaration is to be made.
399.
Liability under sections 397 and 398 to extend to partners or directors in firm
or body corporate.—Where an order under section 397 or a declaration under
section 398 is or may be made in respect of a firm or body corporate, the Court
shall also have power to pass an order under section 397 or make a declaration
under section 398, as the case may be, in respect of any person who was at the
relevant time a partner in that firm or a director of that body corporate.
400.
Penalty for fraud by officers of companies which have gone into
liquidation.—(1) If any person, being at the time of the commission of the
alleged offence an officer of a company which is subsequently ordered to be
wound up by the Court or which subsequently passes a resolution for voluntary
winding up—
(a) has,
by false pretenses or by means of any other fraud, induced any person to give
credit to the company; or
(b) with
intent to defraud creditors of the company, has made or caused to be made any
gift or transfer of or charge on, or has caused or connived at the levying of
any execution against, the property of the company; or
(c) with
intent to defraud creditors of the company, has concealed or removed any part
of the property of the company since, or within sixty days before, the date of
any unsatisfied judgment or order for payment of money obtained against the
company; he shall be punishable with imprisonment for a term which may extend
to three years, and shall also be liable to a fine which may extend to one
million rupees.
(2)
Where the Court has passed an order of winding up of a company and prima facie
concludes that any of the offence provided in sub-section (1) has been
committed, the Court may send a reference for adjudication of offence under
sub-section (1) to the court as provided under section 482.
401.
Liability where proper accounts not kept.—(1) If, where a company is being
wound up, it is shown that proper books of account were not kept by the company
throughout the period of two years immediately preceding the commencement of
the winding up, or the period between the incorporation of the company and the
commencement of the winding up, whichever is the shorter, every officer of the
company who is in default shall, unless he shows that he acted honestly and
that in the circumstances in which the business of the company was carried on
the default was excusable, be punishable with imprisonment for a term which may
extend to three years or with fine which may extend to one hundred thousand
rupees or with both.
(2) For
the purpose of sub-section (1), proper books of account shall be deemed not to
have been kept in the case of a company, if there have not been kept-
(a) such
books or accounts as are necessary to exhibit and explain the transactions and
financial position of the trade or business of the company, including books
containing entries from day to day in sufficient detail of all cash received
and all cash paid; and
(b)
where the trade or business has involved dealings in goods, statement of the
annual stock takings and (except in the case of goods sold by way of ordinary
retail trade) of all goods sold and purchased, showing the goods and the buyers
and sellers thereof in sufficient detail to enable those goods and those buyers
and sellers to be identified.
402.
Penalty for falsification of books.—If any director, manager, officer, auditor
or contributory of any company being wound up destroys, mutilates, alters or
falsifies or fraudulently secrets any books, papers or securities, or makes or
is privy to the making of any false or fraudulent entry in any register, books
or paper belonging to the company with intent to defraud or deceive any person,
he shall be liable to imprisonment for a term which may extend to three years,
or with fine which may extend to one million rupees, or with both.
403.
Prosecution of delinquent directors.—(1) If it appears to the Court in the
course of winding up by, or subject to the supervision of the Court that any
past or present director, or other officer, or any member, of the company has
been guilty of any offence in relation to the company for which he is
criminally liable, the Court may, either on the application of any person
interested in the winding up or of its own motion, direct the liquidator either
himself to prosecute the offender or to refer the matter to the registrar.
(2) If
it appears to the liquidator in the course of a voluntary winding up that any
past or present director, manager or other officer, or any member, of the
company has been guilty of any offence in relation to the company for which he
is criminally liable, he shall forthwith report the matter to the registrar and
shall furnish to him such information and give to him such access to and
facilities for inspecting and taking copies of any documents, being information
or documents in the possession or under the control of the liquidator relating
to the matter in question, as he may require.
(3)
Where any report is made under sub-section (1) or (2) to the registrar, he may,
if he thinks fit, refer the matter to the Commission for further inquiry and
the Commission may thereupon investigate the matter and may, if it thinks it
expedient, appoint one or more competent inspectors to investigate the affairs
of the company and to report thereon as if it were a case falling under clause
(c) of section 256 and thereupon the provision contained in sections 259 to 273
shall mutatis mutandis apply in all respects.
(4) If
on any report to the registrar under sub-section (2) it appears to him that the
case is not one in which proceedings ought to be taken by him, he shall inform
the liquidator accordingly, giving his reasons, and thereupon, subject to the
previous sanction of the Court, the liquidator may himself take proceedings
against the offender.
(5) If
it appears to the Court in the course of a voluntary winding up that any past
or present director, manager or other officer, or any member, of the company
has been guilty as aforesaid, and that no report with respect to the matter has
been made by the liquidator to the registrar, the Court may, on the application
of any person interested in the winding up or of its own motion, direct the
liquidator to make such a report and, on a report being made accordingly, the
provisions of this section shall have effect as though the report has been made
in pursuance of the provisions of sub-section (1) or (2).
(6) If,
where any matter is reported or referred to the registrar under this section,
he considers that the case is one in which a prosecution ought to be
instituted, he shall report the matter to the Commission, and the Commission
may, after taking such legal advice as it thinks fit, direct the registrar to
proceed in accordance with sections 477 and 486:
Provided
that no report shall be made by the registrar under this subsection without
first giving the accused person an opportunity of making a statement in writing
to the registrar and of being heard thereon.
(7)
Notwithstanding anything contained in the Qanun-e-Shahadat Order, 1984 (P.O.
No. Act X of 1984), when any proceedings are instituted under this section it
shall be the duty of the liquidator and of every officer and agent of the
company past and present (other than the defendant in the proceedings) to give
all assistance in connection with the prosecution which he is reasonably able
to give, and for the purposes of this sub-section the expression “agent” in relation to a company
shall be deemed to include any banker or legal adviser of the company and any
person employed by the company as auditor, whether that person is or is not an
officer of the company.
(8) If
any person fails or neglects to give assistance in manner required by
sub-section (7), the Court may, on the application of the registrar or the
prosecutor, as the case may be, direct that person to comply with the
requirements of the said sub-section, and where any such application is made
with respect to a liquidator, the Court may, unless it appears that the failure
or neglect to comply was due to the liquidator not having in his hands
sufficient assets of the company to enable him so to do, direct that the cost
of the application shall be borne by the liquidator personally.
404.
Penalty for false evidence.—If any person, upon any examination upon oath
authorised under this Act, or in any affidavit, disposition or solemn
affirmation, in or about the winding up of any company under this Act, or
otherwise in or about any matter arising under this Act, intentionally gives
false evidence, he shall be liable to imprisonment for a term which may extend
to three years, and shall also be liable to a fine which may extend to one
million rupees.
405.
Penal Provisions.—(1) If any person, being a past or present director, chief
executive, manager, auditor or other officer of a company which at the time of
the commission of the alleged offence, is being wound up, whether by or under
the supervision of the Court or voluntarily or is subsequently ordered to be
wound up by the Court or subsequently passes a resolution for voluntary winding
up—
(a) does
not to the best of his knowledge and belief fully and truly discover to the
liquidator all the property, real and personal, of the company, and how and to
whom and for what consideration and when the company disposed of any part
thereof, except such part as has been disposed of in the ordinary way of the
business of the company; or
(b) does
not deliver up to the liquidator, or as he directs, all such part of the real
and personal property of the company as is in his custody or under his control,
and which he is required by law to deliver up; or
(c) does
not deliver up to the liquidator, or as he directs, all books and papers in his
custody or under his control belonging to the company which he is required by
law to deliver up; or
(d)
within one year next before the commencement of the winding up or at any time
thereafter, conceals any part of the property of the company to the value of
one thousand rupees or upwards or conceals any debt due to or from the company;
or
(e)
within one year next before the commencement of the winding up or at any time
thereafter, fraudulently removes any part of the property of the company to the
value of one thousand rupees or upward; or
(f)
makes any material omission in any statement relating to the affairs of the
company; or
(g)
knowing or believing that a false debt has been proved by any person under the
winding up, fails for the period of a month to inform the liquidator thereof;
or
(h)
after the commencement of the winding up, prevents the production of any books
or papers affecting or relating to the property or affairs of the company; or
(i)
within one year next before the commencement of the winding up or at any time
thereafter, conceals, destroys, mutilates or falsifies, or is privy to the
concealment, destruction, mutilation or falsification of, any book or paper
affecting or relating to the property or affairs of the company; or
(j)
within one year next before the commencement of the winding up or at any time
thereafter, makes or is privy to the making of any false entry in any book or
paper affecting or relating to the property or affairs of the company; or
(k)
within one year next before the commencement of the winding up or at any time
thereafter, fraudulently parts with, alters or makes any omission in, or is
privy to the fraudulent parting with, altering or making any omission in, any
document affecting or relating to the property or affairs of the company; or
(l)
after the commencement of the winding up or at any meeting of the creditors of
the company within one year next before the commencement of the winding up,
attempts to account for any part of the property of the company by fictitious
loses or expenses; or
(m) has
within one year next before the commencement of the winding up or at any time
thereafter, by any false representation or other fraud, obtained any property
for or on behalf of the company on credit which the company does not
subsequently pay for; or
(n)
within one year next before the commencement of the winding up or at any time
thereafter, under the false pretense that the company is carrying on its
business, obtains on credit, for or on behalf of the company, any property
which the company does not subsequently pay for; or
(o)
within one year next before the commencement of the winding up or at any time
thereafter, pawns, pledges or disposes of any property of the company which has
been obtained on credit and has not been paid for, unless such pawning,
pledging or disposing is in the ordinary way of the business of the company; or
(p) is
guilty of any false representation or other fraud for the purpose of obtaining
the consent of the creditors of the company or any of them to an agreement with
reference to the affairs of the company or to the winding up; he shall be
punishable, in the case of the offences mentioned respectively in clauses (m),
(n) and (o) of this sub-section, with imprisonment for a term which may extend to
five years, and, in the case of any other offence, with imprisonment for a term
which may extend to three years and shall also be liable to fine which may
extend to five million rupees in each case and the liquidator may, with the
permission of the Court, file a complaint before the Court as provided under
section 482 for adjudication of offence: Provided that it shall be a good
defence, to a charge under any of clauses (b), (c), (d), (f), (n) and (o), if
the accused proves that he had no intent to defraud, and to a charge under any
of clauses (a), (h), (i) and (j), if he proves that he had no intent to conceal
the state of affairs of the company or to defeat the law.
(2)
Where any person pawns, pledges or disposes of any property in circumstances
which amount to an offence under clause (o) of sub-section (1) every person who
takes in pawn or pledge or otherwise receives the property knowing it to be
pawned, pledged or disposed of in such circumstances as aforesaid shall be
punishable with imprisonment for a term which may extend to three years, and
shall also be liable to a fine which may extend to one million rupees.
SUPPLEMENTARY
PROVISIONS AS TO WINDING UP
406.
Liquidator to exercise certain powers subject to sanction.—(1) The liquidator
may, with the sanction of the Court when the company is being wound up by the
Court or subject to the supervision of the Court, and with the sanction of a
special resolution of the company in the case of a voluntary winding up, do the
following things or any of them-
(a) pay
any classes of creditors in full;
(b) make
any compromise or arrangement with creditors or persons claiming to be
creditors or having or alleging themselves to have any claim, present or
future, whereby the company may be rendered liable;
(c)
compromise any calls and liabilities to calls, debts, and liabilities, capable
of resulting in debts, and all claims, present or future, certain or contingent
subsisting or supposed to subsist between the company and a contributory or
alleged contributory or other debtor or person apprehending liability to the
company, and all questions in any way relating to or affecting the assets or
liabilities or the winding up of the company, on such terms as may be agreed,
and take any security for the discharge of any such calls, debt, liability or
claim, and give a complete discharge in respect thereof.
(2) The
exercise by the liquidator of the powers under sub-section (1) shall be subject
to the control of the Court, and any creditor or contributory may apply to the
Court with respect to any exercise or proposed exercise of any of these powers.
407.
Meetings to ascertain wishes of creditors or contributories.—(1) In all matter
relating to the winding up of a company, the Court—
(a)
shall have regard to the wishes of creditors or contributories of the company,
as proved to it by any sufficient evidence;
(b) may,
if it thinks fit for the purpose of ascertaining those wishes, direct meetings
of the creditors or contributories to be called, held and conducted in such
manner as the Court directs; and
(c) may
appoint a person to act as chairman of any such meeting and to report the
result thereof to the Court.
(2) When
ascertaining the wishes of creditors, regard shall be had to the value of each
creditor‘s debt.
(3) When
ascertaining the wishes of contributories, regard shall be had to the number of
votes which may be cast by each contributory.
408.
Documents of company to be evidence.—Where any company is being wound up, all
books and papers of the company and of the liquidators, shall, as between the
contributories of the company, be prima facie evidence of the truth of all
matters purporting to be recorded therein.
409.
Summary disposal of certain suits by liquidators.— Notwithstanding anything
contained in the Code of Civil Procedure, 1908 (Act V of 1908), a liquidator
desiring to recover any debt due to the company may apply to the Court in which
the proceedings are pending that the same be determined summarily, and the
Court may determine it on affidavits but when the Court deems it just and
expedient, either on an application made to it in this behalf or of its own
motion, it may set down any issue or issues for hearing on other evidence also
and pass such orders for discovery of particulars as it may do in a suit.
410.
Limitation.—Notwithstanding anything contained in the Limitation Act (IX of
1908), in computing the time within which a liquidator may file a suit for the
recovery of any debt due to the company, the period which elapses between the
making of the petition for liquidation and the assumption of charge by the
liquidator, or a period of one year, whichever be greater, shall be excluded.
411.
Court fees.—(1) Notwithstanding anything contained in the Courtfees Act, 1870
(VII of 1870), or in the Code of Civil Procedure, 1908 (Act V of 1908), where
sufficient funds are not available with the liquidator and it is necessary to
file a suit for the recovery of a debt due to the company, no courtfee stamp
need be affixed on the plaint.
(2) If
the liquidator succeeds in the suit, the Court shall calculate the amount of
court-fee which would have been paid by the liquidator if he had not been
permitted to sue under sub-section (1), and such amount shall be recoverable by
the Court from any party ordered by the decree to pay the same.
(3)
Where the liquidator does not succeed, the court-fee shall be payable by him
out of other assets, if any, whenever realised.
412.
Inspection of documents.—(1) After an order for a winding up by or subject to
the supervision of the Court, the Court may make such order for inspection by
creditors and contributories of the company of its documents as the Court
thinks just, and any documents in the possession of the company may be
inspected by creditors or contributories accordingly.
(2) The
order as aforesaid may, in the case of voluntary winding up, be made by the
Commission.
(3)
Nothing in sub-section (1) shall be taken as excluding or restricting any
rights conferred by any law for the time being in force—
(a) on
the Federal Government or a Provincial Government; or
(b) on
the Commission or any officer thereof; or
(c) on
any person acting under the authority of any such Government or the Commission
or officer thereof; or
(d) on
the registrar.
413.
Disposal of books and papers of company.—(1) Subject to any rules made under
sub-section (3), when a company has been wound up and is about to be dissolved,
the books and papers of the company and of the liquidators may be disposed of
as follows, that is to say (a) in the case of a winding up by or subject to the
supervision of the Court in such way as the Court directs;
(b) in
the case of a members voluntary winding up, in such way as the company by
special resolution directs; and
(c) in
the case of a creditors‘ voluntary winding up, in such a way, as the creditors
of the company may direct.
(2)
After the expiry of three years from the dissolution of the company no
responsibility shall rest on the company, or the liquidators, or any person to
whom the custody of the books and papers has been committed, by reason of any
book or paper not being forthcoming to any person claiming to be interested
therein.
(3) The
concerned Minister-in-Charge of the Federal Government, may by notification,
prevent for such period (not exceeding three years from the dissolution of the company
as the concerned Minister-in-Charge of the Federal Government thinks proper,
the destruction of the books and papers of a company which has been wound up,
and enable any creditor or contributory of the company to make representations
to the concerned Minister-in-Charge of the Federal Government.
(4) Any
contravention or default in complying with requirements of this section shall
be an offence liable to a penalty of level 2 on the standard scale.
414.
Power of Court to declare dissolution of company void.—(1) Where a company has
been dissolved, the Court may at any time within two years of the date of the
dissolution, on an application being made for the purpose by the liquidator of
the company or by any other person who appears to the Court to be interested,
make an order, upon such terms as the Court thinks fit, declaring the
dissolution to have been void, and thereupon such proceedings may be taken as
might have been taken if the company had not been dissolved.
(2) It
shall be the duty of the person on whose application the order was made, within
fifteen days after the making of the order, to file with the registrar a
certified copy of the order, and if that person fails so to do he shall be
punishable a daily penalty specified in level 1 on the standard scale.
415.
Information as to pending liquidations.—(1) Where a company is being wound up,
if the winding up is not concluded within one year after its commencement, the
liquidator shall, once in each half year and at intervals of not more than one
hundred and eighty days, or such shorter period as may be prescribed, until the
winding up is concluded, file in the Court or with the registrar, as the case
may be, a statement in the prescribed form and containing the prescribed
particulars with respect to the accounts, proceedings in and position of the
liquidation alongwith the report of auditors.
(2) Any
person stating himself in writing to be a creditor or contributory of the
company shall be entitled, by himself or by his agent, at all reasonable times,
on payment of the prescribed fee, to inspect the statement, and to receive a
copy thereof or extract therefrom; but any person untruthfully so stating
himself to be a creditor or contributory shall be deemed to be guilty of an
offence under section 182 of the Pakistan Penal Code, 1860 (Act XLV of 1860),
and shall be punishable accordingly on the application of the liquidator.
(3) When
the statement is filed in the Court a copy shall simultaneously be filed by the
liquidator with the registrar and shall be kept by him along with the other
records of the company.
(4) If a
liquidator fails to comply with the requirements of this section, he shall be
liable to a penalty of level 1 on the standard scale.
416.
Payments by liquidator into bank.—(l) Every liquidator of a company shall, in
such manner as may be prescribed, pay and keep all moneys received by him or
which become available with him or come under his control in his capacity as
such in a special account opened by him in that behalf in a scheduled bank in
the name of the company.
(2) If
any such liquidator at any time retains or allows any money to be not so paid
and kept as aforesaid or utilises otherwise for more than three days a sum
exceeding ten thousand rupees or such other amount as the Court may on the
application of the liquidator authorise him to retain then he shall pay
surcharge on the amount so retained at the rate of two percent per month or
part thereof and shall be liable to
(a)
disallowance of all or such part of his remuneration as the Court may think
just;
(b) to
make good any loss suffered by the company personally and
(c) be
removed from the office by the Court of its own motion or on application of the
registrar or a creditor or contributory of the company, and shall also be
liable personally for any loss occasioned by the default.
(3) No
liquidator shall pay into his personal account or any account other than the
liquidation account of the particular company in liquidation any sums received
by him as liquidator.
(4)
Every liquidator who makes default in complying with the provisions of this
section shall, in addition to his other liabilities, be punishable with
imprisonment for a term which may extend to three years and with fine which may
extend to the amount of loss caused to the company or wrongful gain or five
hundred thousand rupees, whichever is higher.
417.
Unclaimed dividends and undistributed assets to be paid to the account
maintained under section 244.—(1) Without prejudice to the provision of section
244, where any company is being wound up, if the liquidator has in his hands or
under his control any money of the company representing unclaimed dividends or
undistributed assets payable to any contributory which have remained unclaimed
or undistributed for one hundred and eighty days after the date on which they
became payable the liquidator shall forthwith deposit the said money in the
account to be maintained under section 244 of this Act and the liquidator
shall, on the dissolution of the company, similarly pay into the said account
any money representing unclaimed dividends or undistributed assets in his hands
at the date of dissolution.
(2) The
liquidator shall when making any payment referred to in subsection (1) furnish
to the Commission a statement in the specified form setting forth in respect of
all sums included in such payment the nature of the sums, the names and last
known addresses of the persons entitled to participate therein, the amount to
which each is entitled and the nature of his claim thereto, and such other
particulars as may be specified, alongwith the official receipt of the receipt
of the State Bank of Pakistan or National Bank of Pakistan, as the case may be.
(3) The
receipt of the State Bank of Pakistan or National Bank of Pakistan, as the case
may be, for any money paid to it under sub-section (1) shall be an effectual
discharge of the liquidator in respect thereof.
(4) The
liquidator shall, when filing a statement in pursuance of subsection (1) of
section 415 indicate the sum of money which is payable to the State Bank of
Pakistan or National Bank of Pakistan, as the case may be, under sub-section
(1) which he has had in his hands or under his control during the one hundred
and eighty days preceding the date to which the said statement is brought down
and shall within fourteen days of the date of filing the said statement, pay
that sum into the account maintained under section 244.
(5) Any
person claiming to be entitled to any money paid into the account maintained
under section 244 may apply to the Commission for payment thereof in the manner
prescribed under said section.
(6) Any
liquidator retaining any money which should have been paid by him into the
account maintained under section 244 shall, in addition to such money, pay
surcharge on the amount retained at the rate of two per cent per month or part
thereof and shall also be liable to pay any expenses or losses occasioned by
reason of his default and he shall also be liable to disallowance of all or
such part of his remuneration as the Court may think just and to be removed
from his office by the Court on an application by the Commission. 418. Books of
accounts and other proceedings to be kept by liquidators.—
(1)
Every liquidator shall maintain at the registered office proper books of
accounts in the manner required in the case of companies under section 220 and
the provisions of that section shall apply mutatis mutandis to companies being
wound up.
(2)
Every liquidator shall also keep at the registered office proper books and
papers in the manner required under section 338.
(3) Any
creditor or contributory may, subject to the control of the Court, inspect any
books and papers kept by the liquidator under sub-section (l) and (2).
(4) The
concerned Minister-in-Charge of the Federal Government may alter or add to any
requirements of this section by a general or special order in which case the
provisions so altered or added shall apply.
(5) If
any liquidator contravenes any provisions of this section, he shall be
punishable with imprisonment for a term, which may extend to two years and with
fine, which may extend to five hundred thousand rupees.
419.
Application of provisions relating to audit.—The provisions of this Act
relating to audit of accounts, rights, powers, duties, liabilities and report
of auditors of companies and the duties of companies and their officers as
applicable to companies shall apply mutatis mutandis to companies being wound
up, books of account and books and papers kept by the liquidator and his
statements of accounts subject as follows-
(a) all
reference therein to officers of the company shall include references to the
liquidator;
(b) the
appointment of auditor shall be made by the Court, members or creditors, as the
case may be, who appointed the liquidator, who shall also fix his remuneration
which shall be paid by the liquidator from the funds of the company:
Provided
that if no appointment of auditor is made by the members or creditors, as the
case may be, the liquidator shall apply to the Commission who shall make the
appointment and fix his remuneration.
420.
Enforcement of duty of liquidator to make return.—(1) If any liquidator who has
made any default in complying with any provision of this Act or committed any
other irregularity in the performance of his duties fails to make good the
default or undo the irregularity, as the case may be, within thirty days after
the service on him of a notice requiring him to do so, the Court may of its own
motion or on an application made to it by any contributory or creditor of the
company or by the registrar, make an order directing the liquidator and any
other person involved to make good the default or undo the irregularity or
otherwise make amends as the circumstances may require, within such time as may
be specified in the order: Provided that, where an application under this
section is made by the registrar, the Court shall dispose of the same within
fourteen days of the submission thereof.
(2) Any
such order may provide that all costs of, and incidental to, the application
shall be borne by the liquidator.
(3)
Nothing in this section shall be taken to prejudice the operation of any
enactment imposing penalty on a liquidator in respect of any such default or
irregularity as aforesaid.
421.
Notification that a company is in liquidation.—(1) Where a company is being
wound up, whether by or under the supervision of the Court or voluntarily,
every advertisement, notice, invoice, order for goods, business letter or other
communication or document issued by or on behalf of the company or a liquidator
of the company or a receiver or manager of the property of the company, being a
document on or in which the name of the company appears, shall contain a
statement that the company is being wound up and about the mode of its winding
up.
(2) If
default is made in complying with this section, the company and any of the
following persons who authorises or permits the default, namely, any officer of
the company, any liquidator of the company and any receiver or manager, shall
be liable to a penalty of level 1 on the standard scale.
422.
Court or person before whom affidavit may be sworn.—(1) Any affidavit required
to be sworn under the provisions or for the purposes of this Part may be sworn-
(a) in
Pakistan, before any Court, judge, or person lawfully authorised to take and
receive affidavits; and
(b)
elsewhere before a Pakistan Consul or Vice-Consul.
(2) All
courts, judges, justices, commissioners, and persons acting judicially in
Pakistan shall take judicial notice of the seal or stamp or signature, as the
case may be, of any such court, judge, person, Consul or Vice-Consul, attached,
appended or subscribed to any such affidavit or to any other document to be
used for the purposes of this Part.
423.
Power to make rules.—(1) The Supreme Court may, in consultation with the Courts
or, where the Supreme Court advises the Federal Government to do so, the
Federal Government may in consultation with the Courts, from time to time, make
rules, consistent with this Act, concerning the mode of proceedings to be held for
winding up a company in a Court and in the courts subordinate thereto, and for
voluntary winding up (both members and creditors), for the holding of meetings
of creditors and members in connection with proceedings under section 279 of
this Act, and for giving effect to the provisions as to the reduction of the
capital and the scheme of reorganisation of a company and generally for all
applications to be made to the Court and all other proceedings or matters
coming within the purview or powers or duties of the Court under the provisions
of this Act and shall make rules providing for all matters relating to the
winding up of companies which, by this Act, are to be prescribed.
(2)
Without prejudice to the generality of the foregoing powers, such rules may enable
or require all or any of the powers and duties conferred and imposed on the
Court by this Act in respect of the matters following, to be exercised or
performed by the official liquidator, and subject to control of the Court, that
is to say, the powers and duties of the Court in respect of
(a)
holding and conducting meetings to ascertain the wishes of creditors and
contributories;
(b)
settling lists of the contributories and rectifying the register of members
where required, and collecting and applying the assets;
(c)
requiring delivery of property or documents to the liquidator;
(d)
making calls;
(e)
fixing a time within which debts and claims must by proved: Provided that the
official liquidator shall not, without the special leave of the Court, rectify
the register of members, and shall not make any call without the special leave
of the Court.
424.
Inactive Company.—(1) Where a company, other than a listed company, is formed
for a future project or to hold an asset or intellectual property and has no significant
accounting transaction, such a company or an inactive company may make an
application to the registrar in such manner as may be specified for obtaining
the status of an inactive company.
Explanation.—For
the purposes of this section—
(a) “inactive
company” means a
company, other than a listed company, which has not been carrying on any
business or operation, or has not made any significant accounting transaction
during the last two financial years;
(b) “significant
accounting transaction” means any
transaction other than—
(i)
payments made by it to fulfill the requirements of this Act or any other law;
(ii)
allotment of shares to fulfill the requirements of this Act; and
(iii)
payments for maintenance of its office and records.
(2) The
registrar on consideration of the application shall allow the status of
inactive company to the applicant and issue a certificate in such form as may
be specified to that effect.
(3) The
registrar shall maintain a register of inactive companies in such form as may be
specified.
(4) In
case of a company which has not filed financial statements or annual returns
for two financial years consecutively, the registrar shall issue a notice to
that company and enter the name of such company in the register maintained for
inactive companies.
(5) An
inactive company shall have such minimum number of directors, file such
documents as may be specified by the Commission through regulations to the
registrar to retain its inactive status in the register and pay such annual fee
as prescribed in the Seventh Schedule and may become an active company on an
application made in this behalf accompanied by such documents as may be
specified by the Commission through regulations on payment of such fee as
prescribed in the Seventh Schedule.
(6) The
registrar shall strike off the name of an inactive company from the register of
inactive companies, which has failed to comply with the requirements of this
section.
(7) Any
contravention or default in complying with requirements of this section shall
be an offence liable to a penalty of level 2 on the standard scale and in case
false or misleading information has been given to obtain the status of an
inactive company, the directors and other officers of the company in default
shall be liable to imprisonment for a term which may extend to three years.
425.
Registrar may strike defunct company off register.—(1) Where the registrar has
reasonable cause to believe that a company is not carrying on business or is
not in operation, he may send to the company by post a letter inquiring whether
the company is carrying on business or is in operation.
(2) If
the registrar does not within fifteen days of sending the letter receive any
answer thereto, he may send to the company by registered post another letter referring
to the first letter, and stating that no answer thereto has been received and
that, if an answer is not received to the second letter within thirty days from
the date thereof, a notice will be published in the newspaper with a view to
striking the name of the company off the register.
(3) If
the registrar either receives an answer from the company to the effect that it
is not carrying on business or is not in operation, or does not within fifteen
days after sending the second letter receive any answer, he may publish in the
newspaper having wide circulation, and send to the company by post a notice
that, at the expiration of thirty days from the date of that notice, the name
of the company mentioned therein will, unless cause is shown to the contrary,
be struck off the register and the company will be dissolved.
(4)
Without prejudice to any other provisions, if, in any case where a company is
being wound up, the registrar has reasonable cause to believe either that no
liquidator is acting or that the affairs of the company are fully wound up, and
the returns required to be made by the liquidator have not been made for a
period of three consecutive months after notice by the registrar demanding the
returns has been sent by post to the company, or to the liquidator at his last
known place of business, the registrar may publish in the newspaper having wide
circulation and send to the company a like notice as is provided in the last
preceding sub-section.
(5) At
the expiration of the time mentioned in the notice the registrar may, unless
cause to the contrary is previously shown by the company or the liquidator, as
the case may be, strike its name off the register, and shall publish notice
thereof in the official Gazette, and, on the publication in the official
Gazette of this notice, the company shall be dissolved: Provided that the
liability criminal, civil or otherwise (if any) of every director, officer,
liquidator and member of the company shall continue and may be enforced as if
the company had not been dissolved: Provided further that nothing in this
section shall affect the powers of the Court to wind up a company the name of
which has been struck off the register.
(6) If a
company or any member or creditor thereof feels aggrieved by the company having
been struck off the register, the Court, on the application of the company or a
member or creditor made before the expiry of three years from the publication
in the official Gazette of the notice aforesaid, may, if satisfied that the
company was at the time of the striking off carrying on business or in
operation, or otherwise that it is just that the company be restored to the
register, order the name of the company to be restored to the register and,
upon the filing of a certified copy of such order with the registrar, the
company shall be deemed to have continued in existence as if its name had not
been struck off, and the Court may by the order give such directions and make
such provisions as seem just for placing the company and all other persons in the
same position as nearly as may be as if the name of the company had not been
struck off.
(7) A
letter or notice under this section may be addressed to the company at its
registered office, or if no office has been registered, to the care of some
director, chief executive or other officer of the company whose name and
address are known to the registrar or if no such address is known to the
registrar, may be sent to each of the persons who subscribed the memorandum,
addressed to him at the address mentioned in the memorandum.
(8) The
provisions of this section shall not apply to a company which has any known
assets and liabilities, and such company shall be proceeded against for winding
up.
(9) If
due to inadvertence or otherwise the name of any company which has any assets
and liabilities or which has been in operation or carrying on business or about
whose affairs any enquiry or investigation may be necessary has been struck off
the register, the registrar may, after such enquiries as he may deem fit, move the
Commission to have the name of the company restored to the register and
thereupon the Commission may, if satisfied that it will be just and proper so
to do, order the name of the company to be restored and shall exercise the
powers of the Court in the manner provided in sub-section (6).
(10) The
provisions of this section shall mutatis mutandis apply to a company
established outside Pakistan but having a place of business in Pakistan as they
apply to a company registered in Pakistan.
426.
Easy exit of a defunct company.—(1) A company which ceases to operate and has
no known assets and liabilities, may apply to the registrar in the specified
manner, seeking to strike its name off the register of companies on payment of
such fee mentioned in the Seventh Schedule.
(2)
After examination of the application, the registrar on being satisfied, may
publish a notice in terms of sub-section (3) of section 425 of this Act, in the
Official Gazette stating that at the expiration of ninety days from the date of
that notice, unless cause is shown to the contrary, the name of the applicant
company will be struck off the register of companies and the company will be
dissolved. Such notice shall also be posted on the Commission‘s website.
(3) At
the expiration of the time mentioned in the notice, the registrar may, unless
any objection to the contrary is received by him, strike its name off the
register, and shall publish a notice thereof in the official Gazette, and, on
the publication of such notice, the company shall stand dissolved:
Provided
that the liability criminal, civil or otherwise (if any) of every director,
officer and member of the company shall continue and may be enforced as if the
company had not been dissolved.
PART XI
WINDING
UP OF UNREGISTERED COMPANIES
427.
Meaning of “unregistered company”.—For the purposes of this Part, the
expression “unregistered company” shall not include a railway company incorporated by Act of
Parliament of the United Kingdom or by a Pakistan law, nor a company registered
under any previous Companies Act or under this Act, but save as aforesaid,
shall include any partnership, association or company consisting of more than
seven members.
428.
Winding up of unregistered companies.—(1) Subject to the provisions of this
Part, any unregistered company may be wound up under this Act, and all the
provisions of this Act with respect to winding up shall apply to an
unregistered company, with the following exceptions and additions—
(a) an
unregistered company shall, for the purpose of determining the Court having
jurisdiction in the matter of the winding up, be deemed to be registered in the
Province where its principal place of business is situated or, if it has a
principal place of business situate in more than one Province then in each
Province where it has a principal place of business; and the principal place of
business situate in the Province in which proceedings are being instituted
shall, for all the purposes of the winding up, be deemed to be the registered
office of the company;
(b) no unregistered
company shall be wound up under this Act voluntarily or subject to supervision
of the Court;
(c) the
circumstances in which an unregistered company may be wound up are as follows
(that is to say)-
(i) if
the company is dissolved, or has ceased to carry on business or is carrying on
business only for the purpose of winding up its affairs;
(ii) if
the company is unable to pay its debts;
(iii) if
the Court is of opinion that it is just and equitable that the company should
be wound up; (d) an unregistered company shall, for the purposes of this Act,
be deemed to be unable to pay its debts—
(i) if a
creditor, by assignment or otherwise, to whom the company is indebted in a sum
exceeding fifty thousand rupees then due, has served on the company, by leaving
at its principal place of business, or by delivering to the secretary, or some
director, manager or principal officer of the company, or by otherwise serving
in such manner as the Court may approve or direct, a demand under his hand
requiring the company to pay the sum so due, and the company has for thirty
days after the service of the demand neglected to pay the sum, or to secure or
compound for it to the satisfaction of the creditor;
(ii) if
any suit or other legal proceeding has been instituted against any member for
any debt or demand due or claimed to be due, from the company or from him in
his character of member, and notice in writing of the institution of the suit
or other legal proceeding having been served on the company by leaving the same
at its principal place of business or by delivering it to the secretary, or
some director, manager or principal officer of the company or by otherwise
serving the same in such manner as the Court may approve or direct, the company
has not within fifteen days after service of the notice paid, secured or
compounded for the debt or demand, or procured the suit or other legal
proceeding to be stayed, or indemnified the defendant to his reasonable
satisfaction against the suit or other legal proceeding, and against all costs,
damages and expenses to be incurred by him by reason of the same;
(iii) if
execution or other process issued on a decree or order obtained in any Court or
other competent authority in favour of a creditor against the company, or any
member thereof as such, or any person authorised to be sued as nominal
defendant on behalf of the company, is returned unsatisfied in whole or in
part; (iv) if it is otherwise proved to the satisfaction of the Court that the
company is unable to pay its debts; and, in determining whether a company is
unable to pay its debts, the Court shall take into account the contingent and
prospective liabilities of the company and its solvency.
(2)
Nothing in this Part shall affect the operation of any enactment which provides
for any partnership, association or company being wound up, or being wound up
as a company or as an unregistered company, under any previous Companies Act:
Provided
that references in any such enactment to any provision contained in any
previous Companies Act shall be read as references to the corresponding
provision (if any) of this Act.
(3)
Where a company incorporated outside Pakistan which has been carrying on
business in Pakistan ceases to carry on business in Pakistan, it may be wound
up as an unregistered company under this Part, notwithstanding that it has been
dissolved or otherwise ceased to exist as a company under or by virtue of the
laws of the country under which it was incorporated.
429.
Contributories in winding up of unregistered companies.—(1) In the event of an
unregistered company being wound up, every person shall be deemed to be a
contributory who is liable to pay or contribute to the payment of any debt or
liability of the company or to pay or contribute to the payment of any sum for the
adjustment of the rights of the members among themselves, or to pay or
contribute to the payment of the cost and expenses of winding up the company,
and every contributory shall be liable to contribute to the assets of the
company all sums due from him in respect of any such liability as aforesaid.
(2) In
the event of any contributory dying or being adjudged insolvent, the provisions
of this Act with respect to the legal representatives and heirs of deceased
contributories, and to the assignees of insolvent contributories, shall apply.
430.
Power to stay or restrain proceedings.—The provisions of this Act with respect
to staying and restraining suits and legal proceedings against a company at any
time after the presentation of a petition for winding up and before the making
of a winding up order shall, in the case of an unregistered company where the
application to stay or restrain is by a creditor; extend to suits and legal
proceedings against any contributory of the company.
431.
Suits stayed on winding up order.—Where an order has been made for winding up
an unregistered company, no suit or other legal proceedings shall be proceeded
with or commenced against any contributory of the company in respect of any
debt of the company, except by leave of the Court, and subject to such terms as
the Court may impose.
432.
Directions as to property in certain cases.—If an unregistered company has no
power to sue and be sued in a common name, or if for any reason it appears
expedient, the Court may, by the winding up order, or by any subsequent order,
direct that all or any part of the property, movable or immovable, including
all interests and rights in, to and out of property, movable and immovable, and
including obligations and actionable claims as may belong to the company or to
trustees on its behalf, is to vest in the official liquidator by his official
name and thereupon the property or any part thereof specified in the order
shall vest accordingly; and the official liquidator may, after giving such
indemnity (if any) as the Court may direct, bring or defend in his official
name any suit or other legal proceeding relating to that property, or necessary
to be brought or defended for the purposes of effectually winding up the
company and recovering its property.
433.
Provisions of this part cumulative.—The provisions of this Part with respect to
unregistered companies shall be in addition to, and not in derogation of, any
provisions hereinbefore, in this Act contained with respect to winding up of
companies by the Court and the Court or official liquidator may exercise any
powers or do any act in the cases of unregistered companies which might be
exercised or done by it or him in winding up companies formed and registered
under this Act; but an unregistered company shall not, except in the event of
its being wound up, be deemed to be a company under this Act, and then only to
the extent provided by this Part.
PART XII
COMPANIES
ESTABLISHED OUTSIDE PAKISTAN PROVISIONS AS TO ESTABLISHMENT OF PLACES OF
BUSINESS IN PAKISTAN
434.
Application of this Part to foreign companies.—This Part shall apply to all
foreign companies, that is to say, companies incorporated or formed outside
Pakistan which, after the commencement of this Act, establish a place of
business within Pakistan or which have, before the commencement of this Act,
established a place of business in Pakistan and continue to have an established
either a place of business within Pakistan or conduct business in Pakistan
through an agent or any other means at the commencement of this Act.
435.
Documents to be delivered to registrar by foreign (1) Every foreign company
which, after the commencement of this-companies.
Act, establishes a place of business in Pakistan shall, within thirty days of
the establishment of the place of business or conduct of business activity,
deliver to the registrar—
(a) a
certified copy of the charter, statute or memorandum and articles of the
company, or other instrument constituting or defining the constitution of the
company, and if the instrument is not written in the English or Urdu language,
a certified translation thereof in the English or Urdu language;
(b) the
full address of the registered or principal office of the company;
(c) a
list of the directors, chief executive and secretary (if any) of the company;
(d) a
return showing the full present and former names and surnames, father‘s name
or, in the case of a married woman or widow, the name of her husband or
deceased husband, present and former nationality, designation and full address
in Pakistan of the principal officer of the company in Pakistan by whatever
name called;
(e) the
full present and former names and surnames, father‘s name, or, in case of a
married woman or widow, the name of her husband or deceased husband, present
and former nationality, occupation and full addresses of some one or more
persons resident in Pakistan authorised to accept on behalf of the company
service of process and any notice or other document required to be served on
the company together with his consent to do so; and
(f) the
full address of that office of the company in Pakistan which is to be deemed
its principal place of business in Pakistan of the company.
Explanation.–
For the purposes of this section the term “conduct of business activity” includes
any business to be undertaken by a foreign company by virtue of its memorandum
and articles of association or as licensed or authorized by any law.
(2) The
list referred to in clause (c) of sub-section (1) shall contain the following
particulars, that is to say—
(a) with
respect to each director—
(i) in
the case of an individual, his present and former name and surname in full, his
usual residential address, his nationality, and if that nationality is not the
nationality of origin, his nationality of origin, and his business occupation,
if any, and any other directorship which he holds;
(ii) in
the case of a body corporate, its corporate name and registered or principal
office; and the full name, address, nationality and nationality of origin, if
different from that nationality, of each of its director;
(b) with
respect to the secretary, or where there are joint secretaries, with respect to
each of them—
(i) in
the case of an individual, his present and former name and surname, and his
usual residential address;
(ii) in
the case of a body corporate, its corporate name and registered or principal
office:
Provided
that, where all the partner in a firm are joint secretaries of the company, the
name and principal office of the firm may be stated instead of the particulars
mentioned in clause (b).
(3)
Every foreign company, other than a company mentioned in subsection (1) shall,
if it has not delivered to the registrar before the commencement of this Act
the documents and particulars specified in section 451 of the Companies
Ordinance, 1984 (XLVII of 1984), shall continue to be subject to the obligation
to deliver those documents and particulars and be liable to penalties in
accordance with the provisions of that Ordinance. 436. Return to be delivered
to registrar by foreign companies whose If any alteration is made or occurs in documents
altered.
(a) the
charter, statute or memorandum and articles of a foreign company or any such
instrument as is referred to in section 435;
(b) the
address of the registered or principal office of the company (c) the directors,
chief executive or secretary or in the particulars contained in the list
referred to in section 435;
(d) the
principal officer referred to in section 435;
(e) the
name or addresses or other particulars of the persons authorised to accept
service of process, notices and other documents on behalf of the company as
referred to in the preceding section 435, or
(f) the
principal place of business of the company in Pakistan; the company shall,
within thirty days of the alteration, deliver to the registrar for registration
a return containing the specified particulars of the alteration and in the case
of change in persons authorised to accept service of process, notices and other
documents on behalf of the company, also his consent to do so.
437.
Accounts of foreign companies.- (1) Every foreign company shall in every year
make out and file with the registrar, together with a list of Pakistani members
and debenture-holders and of the places of business of the company in Pakistan
(a) such
number of copies of financial statements, not being less than three, as may be
specified, in such form, audited by such person, containing such particulars
and including or having annexed or attached thereto such documents (including, in
particular documents relating to every subsidiary of the company) as nearly as
may be as under the provisions of this Act it would, if it were a company
formed and registered under this Act, be required to file in accordance with
the provisions of this Act, in respect of the company‘s operations in Pakistan
as if such operations had been conducted by a separate public company formed
and registered in Pakistan under this Act; and
(b) in a
case where, by the law for the time being in force of the country in which the
company is incorporated, such company is required to file with the public
authority an annual statement of financial position and profit and loss
accounts, also such number of copies of that statement of financial position
and profit and loss account together with any documents annexed thereto as may
be specified, and if the same is not in the English language a certified
translation thereof in the English language; or
(c) in a
case where a company is not required to file with the public authority of the
country in which the company is incorporated an annual statement of financial
position and profit and loss account as referred to in clause (b), the
specified number of copies, not being less than three, of the statement of
financial position and profit and loss account and the report of auditors and
other documents annexed thereto, in such form and manner as under the
provisions of this Act it would, if it had been a public company within the
meaning of this Act, be required to make out and lay before the company in
general meeting.
(2) The
period within which the documents, returns or reports referred to in
sub-section (1) are to be filed with the registrar shall be a period of forty
five days from the date of submission of such documents or returns to the
public authority of the country of incorporation or within one hundred and
eighty days of the date up to which the relevant accounts are made up,
whichever is earlier.
438.
Certain obligations of foreign companies.—Every foreign company shall–
(a)
maintain at its principal place of business in Pakistan, or, if it has only one
place of business in Pakistan, in that place of business, a register of
Pakistani members and debenture-holders, directors and officers, which shall be
open to inspection and copies thereof supplied as in the case of similar
registers maintained by a company under this Act;
(b) in
every prospectus inviting subscriptions for its shares or debentures in
Pakistan, state the country in which the company is incorporated;
(c)
conspicuously exhibit on the outside of every place where it carries on
business in Pakistan the name of the company and the country in which the
company is incorporated in letter easily legible in English or Urdu characters
and also, if any place where it carries on business is beyond the local limits
of the ordinary original civil jurisdiction of a Court, in the characters of
one of the vernacular language used in that place;
(d)
cause the name of the company and of the country in which the company is
incorporated mentioned in legible English or Urdu characters in all bill-heads
and letter papers, and in all notices, advertisements, documents and other
official publications of the company; and
(e) if
the liability of the members of the company is limited, cause notice of that
fact to be stated in legible English or Urdu characters in every prospectus
inviting subscriptions for its shares, and in all bill-heads and letter papers,
notices, advertisements and other official publications of the company in
Pakistan, and to be exhibited on the outside of every place where it carries on
business in Pakistan.
439.
Power of the Commission to require information from foreign (1) The Commission
may, at any time, call upon a foreign company/companies to furnish information
of shareholding including beneficial ownership or such other information or
document, as may be required for the purposes of this Act or in connection with
any inspection, inquiry or investigation and it shall be the duty of the
company and its officers to furnish such information or document within
specified time.
(2) Any
person who fails to provide any information or document required under
sub-section (1) shall commit an offence liable to a penalty of level 3 on
standard scale.
440.
Service on foreign company.- Any process, notice or other document required to
be served on such company as is referred to in this Part shall be deemed to be
sufficiently served if addressed to any person whose name has been so filed
with the registrar as aforesaid and left at or sent by post to the address
which has been so filed:
Provided
that
(a)
where any such company makes default in delivering to the registrar the name
and address of a person resident in Pakistan who is authorised to accept on
behalf of the company service of process, notices or other documents; or
(b) if
at any time all the persons whose names and addresses have been so filed are
dead or have ceased to so reside, or refuse to accept service on behalf of the
company or for any reason cannot be served; a document may be served on the
company against an acknowledgement or by post or courier service to, any place
of business established by the company in Pakistan or through electronic means
or in any other manner as may be specified.
441.
Company’s failure to comply with this part not to affect its liability under
contracts.— Any failure by a foreign company to comply with any of the
requirement or section 435 or section 436 shall not affect the validity of any
contract, dealing or transaction entered into by the company or its liability
to be sued in respect thereof; but the company shall not be entitled to bring
any suit, claim any set-off, make any counter-claim or institute any legal
proceeding in respect of any such contract, dealing or transaction, until it
has complied with the provisions of section 435 and section 436. 442.
Provisions
relating to names, inquiries to apply to foreign companies.—The provisions of
sections 10 to 13 relating to names and changes in the names of companies
shall, as far as applicable, also apply to companies to which this Part
applies; and the power of inspection, inquiries and investigation conferred by
this Act on the registrar and the Commission in respect of companies shall
likewise extend to such companies.
443.
Intimation of ceasing to have place of business to be given.—(1) Any company to
which this Part applies shall at least thirty days before it intends to cease
to have any place of business in Pakistan,–
(a) give
a notice of such intention to the registrar; and
(b) publish
a notice of such intention at least in two daily newspapers circulating in the
Province or Provinces in which such place or places of business are situate.
(2) As
from the date of intention to cease to have any place of business in Pakistan
stated in the notice referred to in sub-section (1), unless the said date is by
a similar notice altered, the obligation of the company to delivery any
document to the registrar shall cease, provided it has no other place of
business in Pakistan.
444.
Penalties.—(1) If any foreign company fails to comply with any of the
provisions of this Part, except section 439, the company, and every officer or
agent of the company who authorises or permits the default, shall be liable to
a penalty of level 1 on the standard scale.
(2) If a
foreign company or any of its directors or other persons as referred in section
439 fails to comply with the provisions of said section, shall be liable to a
penalty of level 2 on the standard scale.
445.
Interpretation of provisions of this Part.—For the purposes of this Part—
(a) the
expression “certified” means
certified in the specified manner to be a true copy or a correct translation;
(b) the
expression “director”, in
relation to a company includes any person in accordance with whose directives
or instructions the directors of the company are accustomed to act;
(c) the
expression “place of business” includes a branch, management, share transfer or
registration office, factory, mine or other fixed place of business, but does
not include an agency unless the agent has, and habitually exercise, a general
authority to negotiate and conclude contracts on behalf of the company or
maintains a stock of merchandise belonging to the company from which he
regularly fills orders on its behalf: Provided that
(i) a
company shall not be deemed to have an established place of business in
Pakistan merely because it carries on business dealings in Pakistan through a
bona fide broker or general commission agent acting in the ordinary course of
his business as such;
(ii) the
fact that a company has a subsidiary which is incorporated, resident, or
carrying on business in Pakistan (whether through an established place of
business or otherwise) shall not of itself constitute the place of business of
that subsidiary an established place of business of the company; and
(d) the
expression “secretary”
includes any person occupying the position of secretary, by whatever name
called.
PROSPECTUS
446.
Issue of prospectus.—No person shall issue, circulate or distribute in Pakistan
any prospectus offering for subscription securities of a foreign company or
soliciting deposits of money, whether the company has or has not established,
or when formed will or will not establish, a place of business in Pakistan
unless authorised to do so by the Commission under the relevant law or as may
be specified.
447.
Restriction on canvassing for sale of securities.—(1) No person shall go from
house to house offering securities of a foreign company for subscription or
purchase to the public or any member of the public. In this sub-section, “house” shall not include an
office-Explanation. used for
business purposes.
(2) Any
contravention or default in complying with requirement of this section shall be
an offence liable to a penalty of level 3 on the standard scale.
448.
Registration of charges.—(1) The provision of sections 100 to 112 both
inclusive, shall extend to charges on properties in Pakistan which are created,
and to charges on property in Pakistan which is acquired, by a foreign company
which has an established place of business in Pakistan:
Provided
that references in the said sections to the registered office of the company
shall be deemed to be reference to the principal place of business in Pakistan
of the company:
Provided
further that, where a charge is created outside Pakistan or the completion of
the acquisition of property takes place outside Pakistan, clause (a) of the
proviso to sub-section (1) and sub-section (4) of section 100 shall apply as if
the property wherever situated were situated outside Pakistan.
(2)
Where a company to which this section applies creates, or has created at any
time before establishing a place of business in Pakistan, a charge on any
property otherwise registerable under this Act it shall register the same with
the registrar in accordance with the provisions of this Act-
(a)
within thirty days of the establishment of a place of business in Pakistan; or
(b) if
the charge was created before the commencement of this Act and subsisted
immediately before such commencements, within ninety days thereof.
449.
Notice of appointment of receiver.—The provisions of section 113 and 114 shall
mutatis mutandis apply to the case of all foreign companies having an
established place of business in Pakistan and the provisions of section 220
shall apply to such companies to the extent of requiring them to keep at their
principal place of business in Pakistan the books of account required by that
section with respect to money received and expended, sales and purchases made,
and assets and liabilities in relation to its business in Pakistan:
Provided
that references in the said section to the registered office of the company
shall be deemed to be reference to the principal place of business in Pakistan
of the company.
450.
Notice of liquidation.—(1) If a foreign company having an established place of
business in Pakistan goes into liquidation in the country of its incorporation,
it shall–
(a)
within thirty days give notice thereof to the registrar, and simultaneously
publish a notice at least in two daily newspapers circulating in the Province
or Provinces or the part of Pakistan not forming part of a Province, as the
case may be, in which its place or places of business are situated and furnish
to the registrar within thirty days of the conclusion of the liquidation
proceedings all returns relating to the liquidation and the liquidation account
in respect of such portion of the company‘s affairs as relates to its business
in Pakistan; and
(b)
cause, in legible letters, a statement to appear, on every invoice, order,
bill-head, letter paper, notice of other publication in Pakistan, to the effect
that the company is being wound up in the country of its incorporation.
(2)
Where a company to which this section applies has been dissolved, or has
otherwise ceased to exist, no person shall, after the date of such dissolution
or cessation, carry on, or purport to carry on, any business in Pakistan in the
name or on behalf of such company.
(3)
Nothing in this section shall be construed as preventing a company to which
this section applies from being wound up in Pakistan in accordance with the
provisions of this Act, notwithstanding that it has neither been dissolved nor
otherwise ceased to exist in the country of its incorporation.
PART
XIII
GENERAL
451.
Certification of Shariah compliant companies and Shariah compliant
securities.—(1) No company shall claim that it is a Shariah compliant company
unless it has been declared Shariah compliant in such form and manner as may be
specified.
(2) No
person shall claim that a security, whether listed or not, is Shariah compliant
unless it has been declared Shariah compliant in such form and manner as may be
specified.
(3) For
the purposes of sub-section (1) and (2), no company shall appoint or engage any
person for Shariah compliance, Shariah advisory, or Shariah audit unless that
person meets the fit and proper criteria and fulfills such terms and conditions
as may be specified: Provided that the person already appointed or engaged by a
company for the purpose of sub-section 3 shall have 180 days to meet the fit
and proper criteria and fulfill such terms and conditions as may be specified.
(4)
Every person who is responsible for contravention of this section shall without
prejudice to other liabilities be liable to a penalty not exceeding level 3 on
the standard scale.
(5)
Nothing in sub-section (1) and (3) shall apply to a banking company or any
other company which is required to follow the Shariah governance framework
prescribed by the State Bank of Pakistan.
452.
Companies’ Global Register of Beneficial Ownership.- (1) Every substantial
shareholder or officer of a company incorporated under the Company law, who is
citizen of Pakistan within the meaning of the Citizenship Act, 1951 (II of
1951), including dual citizenship holder whether residing in Pakistan or not
having shareholding in a foreign company or body corporate shall report to the
company his shareholding or any other interest as may be notified by the
Commission, on a specified form within thirty days of holding such position or
interest.
Explanation.
For the purposes of this section the expression “foreign company” meansa company or body
corporate incorporated or registered in any form, outside Pakistan regardless
of the fact that it has a place of business or conducts any business activity
or has a liaison office in Pakistan or not.
(2) The
company shall submit all the aforesaid information received by it during the
year to the registrar along with the annual return.
(3) Any
investment in securities or other interest as may be notified in sub-section
(1) by a company incorporated under this Act, in a foreign company or body
corporate or any other interest shall also be reported to the registrar along
with the annual return.
(4) All
the above information shall be reported to the registrar through a special
return on a specified form within sixty days from the commencement of this Act
and thereafter in accordance with the sub-section (2).
(5) Any
contravention or default in complying with requirements of this section shall
be an offence liable to a fine of level 1 on the standard scale and the
registrar shall make an order specifying time to provide information under
sub-section (1) and (3).
(6) Any
person who fails to comply with the direction given under subsection (5) by the
registrar shall be punishable with imprisonment which may extend to three years
and with fine upto five hundred thousand rupees or both.
(7) The
Commission shall keep record of the information in the Companies‘ Global
Register of Beneficial Ownership. (8) The Commission shall provide the
information maintained under sub-section (7) to the Federal Board of Revenue or
to any other agency, authority and court.
453.
Prevention of offences relating to fraud, money laundering and (1)Every officer of a company shall endeavor
to prevent-terrorist financing. the
commission of any fraud, offences of money laundering including predicated
offences as provided in the Anti-Money Laundering Act, 2010 (VII of 2010) with
respect to affairs of the company and shall take adequate measures for the
purpose.
(2)
Whosoever fails to comply with the provisions of this section shall be liable
to punishment of imprisonment for a term which may extend to three years and
with fine which may extend to one hundred million rupees:
Provided
that where any such officer has taken all reasonable measures available under
the applicable laws within his capacity to prevent commission of such offence,
shall not be liable under this section.
Provided
further that the punishment provided under this section shall be in addition to
any punishment attracted due to active involvement of such officer in
commission of an offence of money laundering under AntiMoney Laundering Act,
2010 (VII of 2010).
454.
Free Zone Company.—(1) A company incorporated for the purpose of carrying on
business in the export processing zone or an area notified by the Federal
Government as free zone, shall be eligible to such exemptions from the
requirements of this Act as may be notified in terms of section 459.
(2) The
Commission may, for the protection of foreign investors and to secure foreign
investment, restrict the disclosure of information maintained by the registrar
regarding promoters, shareholders and directors of the company incorporated under
sub-section (1), who are foreign nationals unless such disclosure of
information is authorized by the company in writing:
Provided
that the restriction of non-disclosure contained in this section shall not
apply to the revenue authorities collecting tax, duties and levies or
requirement or obligation under international law, treaty or commitment of the
Government.
(3) A
company formed for the purposes stated in sub-section (1) may be dispensed with
the words “Private Limited” or “Limited” as the case may be, and called as the “Free Zone Company” having the parenthesis and
alphabets “FZC” at the
end of its name.
(4) A
Free Zone Company shall pay the annual renewal fee as specified in the Seventh
Schedule.
455.
Filing of documents through intermediaries.—(1) A person may, for the purpose
of filing of documents under this Act, avail services of intermediary as may be
specified.
(2) An
intermediary intending to provide services in terms of subsection (1) must
possess the requisite qualification and be registered with the Commission in
the manner as may be specified.
(3) The
registration as intermediary under this section shall be liable to be cancelled
by the Commission on such grounds and in such manner as may be specified after
providing an opportunity of being heard.
456.
Acceptance of advances by real estate companies engaged in real estate
projects.—(1) Notwithstanding anything contained in this Act or any other law,
any company which invites advances from public for real estate project shall
comply with the provisions of this section in addition to those provided in the
other provisions of this Act.
(2) A
company engaged in real estate project shall
(a) not
announce any real estate project, unless it has obtained the approval of the
Commission and all necessary approvals, permissions or NOCs etc., of the
concerned authorities required as per applicable general, special and local
laws, having jurisdiction over area under which the real estate project is
being developed or undertaken to the satisfaction of the Commission and subject
to such additional disclosure requirements as may be notified;
(b) not
make any publication or advertisement of real estate projects, unless it has
obtained the approval of the Commission and all necessary approvals,
permissions or NOCs etc., of the concerned authorities required as per
applicable general, special and local laws, having jurisdiction over area under
which the real estate project is being developed or undertaken to the
satisfaction of the Commission and subject to such additional disclosure
requirements as may be notified;
(c) not
accept any advances or deposits in any form whatsoever against any booking to
sell or offer for sale or invite persons to purchase any land, apartment or
building, as the case may be, in any real estate project or part of it, unless
it has obtained the approval of the Commission and all necessary approvals,
permissions or NOCs, of the concerned authorities required as per applicable
general, special and local laws, having jurisdiction over area under which the
real estate project is being developed or undertaken to the satisfaction of the
Commission and subject to such additional disclosure requirements as may be
notified;
(d) not
accept a sum against purchase of the apartment, plot or building, as the case
may be, as an advance payment from a person without first entering into a
written agreement for sale with such person except nominal fee for application;
(e)
maintain and preserve such books of account, records and documents in the
manner as may be specified;
(f)
deposit any sum obtained from the allottees, from time to time, in a separate
escrow account opened in the name of the project as may be specified;
(g)
comply with any directions notified by the Commission and accounting framework
as may be notified; and
(h) do
or not to do any act or activity as may be specified.
(3) For
the purposes of this section the escrow accounts shall be dedicated exclusively
for carrying out the project and no attachment shall be imposed on the payment
of such escrow accounts for the benefit of creditors of the real estate company
except for the purpose of project and the real estate company shall recognize
its income in accordance with International Financial Reporting Standards
notified by the Commission.
(4) The
Commission shall provide copy of any returns or information submitted by real
estate company free of cost to the concerned authority, on their request, to
enable such authority to regulate real estate project under its jurisdiction in
accordance with the applicable laws.
(5) The
conditions laid down under this section shall be in addition to and not in
derogation of requirement of law and concerned authority under whose
jurisdiction the project is being undertaken by the real estate company shall
continue to exercise its authority in a manner provided in the relevant law.
(6) Any
person who contravenes the provisions of this section shall be guilty of an
offence which is liable to a penalty of level 3 on the standard scale.
Explanations.
(i) For the purposes of this section the expression “real estate project” shall include projects for
the development and construction of residential or commercial buildings or
compounds and shall not include other construction project;
(ii)
expression “authority” shall include
authority created or prescribed under any law which has powers to give
permission for planning and development of real estate project in specific
area.
457.
Agriculture Promotion Companies.—(1) Notwithstanding anything contained in this
Act or any other law for the time being in force, any person, having its
Principal line of business related to produce for agriculture promotion or
managing produce as collateral or engaged in any activity connected with or
related to any Produce or other related activities may establish Agriculture
Promotion Company under this section in such form and manner and subject to
such terms, conditions and limitations as may be specified.
Explanation.—For
the purpose of this section:
(a) “Agriculture
Promotion Company” includes
a Producer Company or a Collateral Management Company involved in Produce or
any other company or class of companies or corporate body or any other entity
as the concerned Minister-in-Charge of the Federal Government may, by
notification in the official Gazette specify as Agriculture Promotion Company
under this section;
(b) “Produce” means—
(i)
produce of farmers, arising from agriculture (including animal husbandry,
forest products, re-vegetation, bee raising and farming plantation products),
or from any other activity or service which promotes the farming business; or
(ii) any
product resulting from any of the above activities, including by-products of
such products;
(iii)
any activity which is intended to increase the production of anything referred to
in above sub-clauses or improve the quality thereof;
(2)
Producer Company means any company, with or without share capital, formed under
this section by farmers and engaged in any activity connected with or related
to any Produce including the following matters-
(a)
production, harvesting, procurement, grading, pooling, handling, marketing,
selling, export of produce of the members or import of goods or services for
their benefit;
(b)
processing including preserving, drying, distilling, brewing, canning and
packaging of produce of its members;
(c)
rendering technical services, consultancy services, training research; and development
and all other activities for the promotion of the interests of its Members;
(d)
arranging insurance of produce; and
(e) financing
of procurement, processing, marketing, extending of credit facilities including
microfinance subject to such terms and conditions as may be specified, or any
other financial services to its members;
(3)
Every Producer Company shall deal primarily with the produce of its members for
carrying out any of its activities.
(4) For
the purposes of this section, member of a Producer Company means farmers as
promoters and sponsors of a Producer Company and farmers admitted to membership
after registration in accordance with requirements as specified in the
regulations.
(5)
Collateral Management Company means any company formed under this section to
engage in the activity of managing produce as collateral, including but not
limited to the following matters:
(a) warehousing,
i.e. provision of quality storage and preservation services for a range of
agricultural commodities;
(b)
issuance of credible warehouse receipts for agricultural commodity financing;
and
(c)
stock audit and verification services;
(6) If
an Agriculture Promotion Company or Collateral Management Company or Producer
Company or their members indulges in any activity which is prejudicial to the
interests of farmers, members, lending institutions, commodity exchange,
consumers, or other stakeholders, shall be liable to a penalty of level 3 on
the standard scale.
(7) Any
dues outstanding against agriculture promotion company under this section shall
be recoverable as arrears of land revenue.
(8)
Notwithstanding any provision of this section, the Government or any
institution or authority owned and controlled by the Government may form an
Agriculture Promotion Company.
458.
Power to give exemptions by the Federal Government.— Notwithstanding anything
contained in this Act or any other law, the concerned Minister-in-Charge of the
Federal Government may, by notification in the official Gazette exempt
companies under sections 454, 456 and 457 from any provisions of law for the
time being in force.
459.
Quota for persons with disabilities in the public interest companies.—Every
public interest company, employing one hundred or more employees shall ensure
special quota for employment of persons with disabilities of two percent or
such higher percentage as may be specified or required under the applicable
Federal and Provincial law: Provided that in case of any conflict between this
Act and any other Federal or Provincial law for persons with disabilities, the
later shall apply.
460.
Valuation by registered valuers.—(1) Where a valuation is required to be made
in respect of any property, stocks, shares, debentures, securities or goodwill
or any other assets (herein referred to as the assets) or net worth of a
company or its liabilities under the provisions of this Act, it shall be valued
by a person having such qualifications and experience and registered as a
valuer in such manner, on such terms and conditions as may be specified.
(2) The
valuer appointed under sub-section (1) shall—
(a) make
an impartial, true and fair valuation of any assets which may be required to be
valued;
(b)
exercise due diligence while performing the functions as valuer; and
(c) not
undertake valuation of any assets in which he has a direct or indirect interest
or becomes so interested at any time before submission of the report.
(3) The
valuer shall prepare his report in such manner and applying such approaches, as
may be specified.
(4) If a
valuer contravenes the provisions of this section or the regulations made
thereunder, the valuer shall be liable to a penalty of level 2 on the standard
scale:
Provided
that if the valuer has contravened such provisions with the intention to
defraud the company, its members or creditors, he shall be punishable with
imprisonment for a term which may extend to one year and with fine which may
extend to five hundred thousand rupees.
(5)
Where a valuer has been convicted under sub-section (4), he shall be liable to—
(a)
refund the remuneration received by him to the company; and
(b) pay
for damages to the company or to any other person for loss arising out of
incorrect or misleading statements of particulars made in his report.
(6) The
registration as valuer under this section shall be liable to be cancelled by
the Commission on such grounds and in such manner as may be specified after
providing an opportunity of being heard.
461.
Security clearance of shareholder and director.—The Commission may require the
security clearance of any shareholder or director or other office bearer of a
company or class of companies as may be notified by the concerned Minister-in-charge
of the Federal Government.
REGISTRATION
OFFICES AND FEES
462.
Registration offices.—(1) For the purposes of the registration of companies and
other work under this Act, there shall be offices at such places as the
Commission thinks fit.
(2) The
Commission may appoint such registrars as it thinks necessary for the
registration of companies and performing other duties under this Act, and may
make regulations with respect to their duties.
(3)
While performing their functions and duties under this Act, all registrars
shall observe and follow the order and instructions of the Commission.
(4) The
Commission may direct a seal or seals to be prepared for the authentication of
documents required for or connected with the registration of companies.
(5) Any
person may, in the manner as may be specified, inspect the documents kept by
the registrar and may require a certified copy of certificate of incorporation
or any other certificate of any company, or a copy or extract of any other
document or register maintained by the registrar or any part thereof on payment
of the fees specified in the Seventh Schedule.
(6) A
copy of or an extract from any document filed or lodged, whether in electronic
or physical form, with the Commission or the registrar under this Act or the
rules or regulations made thereunder or supplied or issued by the Commission or
the registrar and certified to be a true copy thereof or extract therefrom
under the hand and seal of an officer of the Commission or the registrar, shall
be admissible in evidence in any proceedings as of equal validity as the
original document.
(7)
Where a document is filed or lodged, whether in electronic or physical form,
with the Commission or the registrar, the Commission or the registrar shall not
be liable for any loss or damage suffered by any person by reason of any error
or omission of whatever nature arising or appearing in any document obtained by
any person under the e-service or in physical form under this Act or the rules
or regulations made thereunder, if such error or omission was made in good
faith and in the ordinary course of the discharge of the duties of the
Commission or the registrar or occurred or arose as a result of any defect or
breakdown in the service or in the equipment used for the provision of the
eservice.
(8)
Wherever any act is by this Act directed to be done to or by the registrar it
shall, until the Commission otherwise directs, be done to or by the existing
Registrar of Companies or in his absence to or by such person as the Commission
may for the time being authorise; but, in the event of the Commission altering
the constitution of the existing registration offices or any of them, any such
act shall be done to or by such officer and at such place with reference to the
local situation of the registered offices of the companies to be registered as
the Commission may appoint.
463.
Production of documents kept by registrar.—(1) No process for compelling the
production of any document or register kept by the registrar shall issue from
any court except with the special leave of that court for reasons to be
recorded; and any such process, if issued, shall bear thereon a statement that
it is issued with the special leave of the court so granted and state the
reasons for grant of such leave.
(2) A
copy of, or extract from, any document or register kept and registered at any
of the offices for the registration of companies under this Act, certified to
be a true copy under the hand of the registrar (whose official position it
shall not be necessary to prove) shall, in all legal proceedings, be admissible
in evidence as of equal validity with the original document.
(3)
Notwithstanding anything contained in any other law, no one shall, without the
permission of the Commission in writing, take over or remove any original
document or register from the custody of the registrar.
464.
Registrar not to accept defective documents.—(1) Where, in the opinion of the
registrar, any document required or authorised by or under this Act to be filed
or registered with the registrar
(a)
contains any matter contrary to law, or does not otherwise comply with the
requirements of law;
(b) is
not complete owing to any defect, error or omission;
(c) is
insufficiently legible or is written upon paper which is not durable; or
(d) is
not properly authenticated; the registrar may require the company to file a
revised document in the form and within the period to be specified by him.
(2) If
the company fails to submit the revised document within the specified period,
the registrar may refuse to accept or register the document and communicate his
decision in writing to the company.
(3)
Subject to the provisions of sub-sections (4) and (5), if the registrar refuses
to accept any document for any of the reasons aforesaid, the same shall not be
deemed to have been delivered to him in accordance with the provisions of this
Act unless a revised document in the form acceptable to the registrar is duly
delivered within such time, or such extended time, as the registrar may specify
in this behalf.
(4) If
registration of any document is refused, the company may either supply the
deficiency and remove the defect pointed out or, within thirty days of the
order of refusal, prefer an appeal
(a)
where the order of refusal has been passed by an additional registrar, a joint
registrar, an additional joint registrar, a deputy registrar, an assistant
registrar or such other officer as may be designated by the Commission, to the
registrar; and
(b)
where the order of refusal has been passed, or upheld in appeal, by the
registrar, to the Commission.
(5) An
order of the Commission under sub-section (4) shall be final and shall not be
called in question before any court or other authority.
(6) If a
document has been accepted for record and its data or any of the information
contained therein or any of the supporting documents subsequently found to be
defective or incorrect or false or forged, the registrar concerned may for
special reasons to be recorded in writing, after obtaining such evidence as he
may deem appropriate, allow the rectification in such document or allow the
filing of a revised document in lieu thereof.
(7) If a
document has been accepted for record and its data or any of the information
contained therein or any of the supporting documents subsequently found to be
defective or incorrect which is not possible of rectification or false or
forged or it was accepted by mistake, the registrar concerned may for special
reasons to be recorded in writing, after obtaining such evidence as he may deem
appropriate cancel the recording thereof.
465.
Special return to rectify the data.—(1) The Commission or the registrar may at
any time, by a general or specific order, require a company or class of
companies or all the companies to file a special return signed by all the
directors to rectify the record.
(2) The
information provided in the special return filed under this section shall be a
conclusive evidence of all the relevant facts and shall not be called in
question by any of the person who has signed it.
(3) The
persons who have signed the special return shall be responsible for the loss
caused to any person on account of incorrect information provided in the return
filed under this section.
(4) A
company shall inform the registrar about any change of more than twenty five
percent in its shareholding or membership or voting rights in a manner as may
be specified by the Commission.
466.
Jurisdiction in the disputes relating to shareholding and directorship.— The
registrar shall have no jurisdiction to determine the rights of the parties
relating to shareholding and directorship.
467.
Approval of transfer of shares by the agents licenced by the Commission.—(1) In
case of companies to be notified for the purpose, before making any application
for registration of the transfer of shares to the board the transferor and the
transferee shall appear before the agent licenced by the Commission under this
section; who shall record the statement of both the parties and forward a
certified copy of the statement so recorded to the company for further
necessary action in such form and manner and subject to such conditions as may
be specified:
Provided
that the provision of this sub-section shall not apply to transfer or
transmission of shares by operation of law.
(2) The
agent licenced under this section shall maintain complete record of all the
statements recorded by him including the documents submitted by the parties,
for a period of ten years.
(3) The
licence under this section may be granted by the Commission in the manner and
subject to such conditions, and to the persons having such qualification and
infrastructure, as may be specified.
(4) An
agent licenced under this section shall be responsible for the loss caused to
any person due to any fault on his part, as determined by the Court while
deciding a case under section 126.
(5) The
agent licenced under this section may charge the fee for the services rendered
by him, not exceeding the limit notified by the Commission.
(6) The
Commission may at any time revoke a licence granted under this section on being
satisfied that the agent has failed to comply with any of the terms or
conditions to which the licence is subject:
Provided
that, before a licence is so revoked, the Commission shall give to the agent
notice in writing of its intention to do so, and shall afford the association
an opportunity to be heard.
468.
Acceptance of documents presented after prescribed time.—(1) Notwithstanding
anything contained in section 479, where any document required under this Act
to be filed or registered with the registrar is presented after the expiry of
the prescribed period, the registrar may accept the same, on -payment of the fee as specified below
(a)within
ninety days, a fee equivalent to two times;
(b)
within one hundred and eighty days, a fee equivalent to three times;
(c)
within one year, a fee equivalent to four times;
(d)
within two years, a fee equivalent to five times; of the prescribed fee payable
in respect thereof: Provided that nothing contained in this sub-section shall be
applicable to the public interest company.
(2) No
such document as aforesaid shall be deemed to have been filed with the
registrar until the specified fee, has been paid in full.
(3) The
acceptance of the document by the registrar under sub-section (1) shall not
absolve the defaulting company or other person concerned of any other liability
arising from the default in complying with the requirements of this Act:
Provided
that no proceeding shall be initiated against the company or any of its
officers on account of delay in filing of any document required under this Act
to be filed or registered with the registrar which is presented by the company
or other person concerned on the payment of fee as specified under sub-section
(1) and within the period as specified therein.
469.
Fees.—(1) There shall be paid in respect of the several matters mentioned in
the Seventh Schedule the several fees therein, for the time being, specified
fees as the Commission may direct:
Provided
that, in the case of resolutions to which section 150 applies, not more than
one fee shall be required for the filing of more resolutions than one passed in
the same meeting if such resolutions are filed with the registrar at the same
time.
(2) All
fees paid in pursuance of this Act shall be accounted for to the Commission.
(3) Any
document required or authorised by this Act to be filed by a company with the
registrar shall not be deemed to have been so filed until the fee payable in
respect thereof has been duly paid and either the original receipt or other
proof acceptable to the registrar has been furnished to him.
470.
Power to specify fees chargeable by companies.—The maximum limits of fees to be
paid to or charged by companies and liquidators from members, creditors or
other persons for supply of copies of documents, inspection of records and
other services as are required to be provided under this Act shall be such as
may be specified.
471.
Filing of documents electronically.—(1) The Commission may provide any means or
mode for filing, any document, return or application required to be filed,
lodged or submitted with the Commission or the registrar under this Act or the
rules or regulations made thereunder electronically.
(2) Any
additional information or document required to be submitted along with any
document to be filed under this Act shall also be submitted through electronic
means including in a scanned form.
(3) Any
document to be submitted electronically shall be authenticated by the companies
by affixing electronic signature or advanced electronic signature, as required
under the Electronic Transactions Ordinance, 2002, (LI of 2002).
(4) From
the date appointed by the Commission through notification in the official
Gazette any document, return or application required to be filed, lodged or
submitted with the Commission or the registrar under this Act or the rules or
regulations made thereunder, shall only be lodged, filed or submitted
electronically through e-service or any other means or service provided by the
Commission for this purpose:
Provided
that the Commission may relax the requirement of this section for a company or
class of companies, for such document, return or application and for such time
as may be notified from time to time.
472.
Destruction of physical record.—The record of the companies including the
statutory returns and applications, maintained by the registrar and the
Commission under this Act or the company law shall be preserved for such period
as the Commission may determine and may be destroyed in the manner as may be
specified:
Provided
further that the physical record converted into electronic form in terms of
first proviso, shall be admissible as an evidence in all legal proceedings and
for all purposes.
473.
Supply of documents, information, notices to the members electronically.—(1)
After a date notified by the Commission, the information, notices and accounts
or any other document to be provided by the company to its members under this
Act, shall only be provided electronically on the email address provided by the
members.
(2) A
member requiring the supply of any of the document mentioned in sub-section (1)
in physical form shall bear the cost as fixed by the company.
474.
Enforcing compliance with provisions of Act.—(1) If a company, having made
default in complying with any provision of this Act or committed any other
irregularity fails to make good the default or undo the irregularity, as the
case may be, within thirty days after the service of a notice on the company
requiring it to do so, the Commission may, of its own motion or on an
application made to it by any member or creditor of the company or a reference
by the registrar and, in the case of a listed company, besides other persons as
aforesaid, on a reference by the securities exchange, make an order directing
the company and any officer thereof, as the case may be, to make good the
default or undo the irregularity or otherwise make amends, as the circumstances
may require, within such time as may be specified in the order.
(2) Any
such order may provide that all costs of and incidental to the application or
reference shall be borne by the company or by an officer of the company
responsible for the default.
(3)
Nothing in this section shall be taken to prejudice the operation of any
enactment imposing penalties on a company or its officers in respect of any
such default as aforesaid.
475.
Power of Court trying offences under Act to direct compliance with the
provisions.—The Court, the Commission, the registrar or other officer trying an
offence for a default in compliance with any provisions or requirements of this
Act may, at any time during the pendency of the trial or at the time of passing
final order, direct, without prejudice to any liability, any officer, auditor
or employee of the company in respect of which the default has been committed
to undo the irregularity including but not limited to unwinding the unlawful
transaction or to comply with the said provisions or requirements within such
time as may be specified in the order.
LEGAL
PROCEEDINGS, OFFENCES
476.
Offences to be cognizable.—Notwithstanding anything contained in the Code of
Criminal Procedure, 1898 (V of 1898) or any other law, save as expressly
provided otherwise in this Act or in the Eighth Schedule, any offence in which
punishment of imprisonment is provided under this Act shall be cognizable by
the Commission only and shall be proceeded in accordance with section 38 of the
Securities and Exchange Commission of Pakistan Act, 1997 (XLII of 1997) and
this Act.
477.
Complaint to the court by the Commission, registrar, member or creditor in case
of certain offences.—(1) Offences provided in the Eighth Schedule under this
Act which is alleged to have been committed by any company or any officer or
auditor or any other person shall not be taken -cognizance
by the court, except on the complaint in writing of
(a) the
Commission through its authorised officer or the registrar; or
(b) in
the case of a company having a share capital, by a member or members holding
not less than five percent of the issued share capital of the company or a
creditor or creditors of the company having interest equivalent in amount to
not less than five percent of the issued share capital of the company; or
(c) in
the case of a company not having a share capital, by any member or creditor
entitled to present a petition for winding up of the company:
Provided
that nothing in this sub-section shall apply to a prosecution by a company of
any of its officers or employees: Provided further that the complaint filed
under this section shall not require formal procedure as provided under section
38 of the Securities and Exchange Commission of Pakistan Act, 1997 (XLII of
1997) and such complaint shall be taken cognizance by the court in accordance
with Chapter XVI of Code of Criminal Procedure, 1898 (Act V of 1898).
(2)
Sub-section (1) shall not apply to any action taken by the liquidator of a
company in respect of any offence alleged to have been committed in respect of
any of the matters included in Part-X or in any other provision of this Act
relating to the winding up to companies.
(3) A
liquidator of a company shall not be deemed to be an officer of the company
within the meaning of sub-section (1).
478.
Penalty to be imposed by the Commission.—Wherever a penalty is provided for any
offence, contravention of or default in complying with, any of the provisions
of this Act, rules or regulations made under this Act such penalty shall be
imposed by the Commission after providing a reasonable opportunity of hearing
to the party.
479.
Adjudication of offences and standard scale of penalty.—(1) There shall be a
standard scale of penalty for offences under this Act, which shall be known as “the
standard scale”.
(2) The
standard scale consists of— Level Limit of penalty Per day penalty during which
the default continues 1 Upto Rs.25,000 Upto Rs.500 2 Upto Rs.500,000 Upto
Rs.1,000 3 Upto Rs.100 million Upto Rs.500,000 (3) Where a penalty is provided
for any offence, contravention of, or default in complying with, any of the
provisions of this Act or a directive of the Commission or the registrar or
other authority empowered to issue a directive under any provisions of this
Act, it shall be adjudged and imposed—
(a)
where any person shall be liable to a penalty of level 1, by the officer who is
incharge of the company registration office in which the company is registered:
Provided
that the Commission and the registrar shall have concurrent jurisdiction under
this clause;
(b)
where any person shall be liable to a penalty of level 2, by the registrar
designated for the purpose: Provided that the Commission shall have concurrent
jurisdiction under this clause; and
(c)
where any person shall be liable to a penalty of level 3, by the Commission or
an officer authorised by it.
(4)
Notwithstanding anything contained in sub-section (2), the Commission may, by
an order in writing empower any officer to exercise the powers conferred by the
said sub-section in respect of any case or class of cases, either to the
exclusion of, or concurrently with, any other officer.
(5) The
penalty as aforesaid shall be imposed after giving the person concerned an
opportunity to show cause why he should not be punished for the alleged
offence, contravention, default or non-compliance and, if he so requests, after
giving him an opportunity of being heard personally or through such person as
may be specified.
(6) The
penalty imposed under this section by the Commission, the registrar designated
for the purpose or the officer incharge of the company registration office,
shall be without prejudice to any other action for the violation or
contravention as provided under the relevant provision of this Act.
480.
Appeal against order passed by officer of the Commission.— Any person aggrieved
by any order passed under this Act may, within thirty days of such order,
except as otherwise provided in this Act, prefer an appeal to—
(a) the
registrar designated by the Commission against the order passed by an
additional registrar, a joint registrar, an additional joint registrar, a
deputy registrar or an assistant registrar or such other officer as may be
designated by the Commission; and
(b)
officer authorized by the Commission where the order has been passed or upheld
by the registrar designated under clause (a) by the Commission.
481.
Appeal before the Appellate Bench.—Any person aggrieved by an order passed by
the registrar or an officer authorized by the Commission under section 480, may
prefer an appeal to the Appellate Bench of the Commission under section 33 of
the Securities and Exchange Commission of Pakistan Act, 1997 (XLII OF 1997):
Provided
that no appeal shall lie against—
(a) an
administrative direction given by a Commissioner or an officer of the
Commission;
(b) a
sanction provided or decision made by a Commissioner or an officer of the
Commission to commence legal proceedings; and
(c) an
interim order which does not dispose of the entire matter.
482.
Adjudication of offences involving imprisonment.—Notwithstanding anything
contained in the Code of Criminal Procedure, 1898 (Act V of 1898), no court
other than court of sessions or such other court as may be notified under
section 37 of the Securities and Exchange Commission of Pakistan Act, 1997(XLII
of 1997), shall take cognizance of any offence punishable with imprisonment or
imprisonment in addition to fine under this Act.
483.
Powers of the Commission in relation to enquiries and proceedings.—(1) The
Commission, an authorised officer or the registrar, as the case may be, shall,
for the purposes of a proceeding or enquiry in exercise of its or his powers
and discharge of functions, have the same powers as are vested in a Court under
the Code of Civil Procedure, 1908 (Act V of 1908), while trying a suit, in
respect of the following matters, namely—
(a)
summoning and enforcing the attendance of any witness and examining him on oath
or affirmation;
(b)
compelling the discovery or production of any document or other material
object;
(c)
receiving evidence on affidavit; and (d) issuing commissions for the
examination of witnesses and documents.
(2) Any
proceeding before the Commission, an authorised officer or registrar, as the
case may be, shall be deemed to be a judicial proceeding within the meaning of
section 193 and section 228 of the Pakistan Penal Code, 1860 (Act XLV of 1860),
and the Commission, an authorised officer or registrar shall be deemed to be a
civil court for the purposes of section 195 and Chapter XXXV of the Code of
Criminal Procedure, 1898 (Act V of 1898).
484.
Procedure for trial of a corporate body.—(1) In any proceedings against a body
corporate for an offence against any provisions of this Act a notice to show
cause or appear may be sent to or served on the body corporate by registered
post or in any other manner laid down for the service of summons issued by a
court under the Code of Civil Procedure, 1908 (Act V of 1908), at its
registered office, or if there is no registered office at its principal place
of business in Pakistan and where no such office is known to exist or is not
functioning, at the address of the chief executive or any director or officer
of the body corporate.
(2) On
service of the notice referred to in sub-section (1), it shall be the duty of
the chief executive and other officers of the company to show cause or appear
before the Court, Commission, registrar, other officer or authority himself or
by a counsel or by an officer or other authorised representative of the body
corporate who may be in a position to answer the charge as may be specified in
the notice.
(3)
Where a body corporate does not appear in the manner aforesaid, the Court,
Commission, registrar or officer trying the offence, as the case may be, may
either issue a directive to the chief executive or other officer of the body
corporate as is referred to in sub-section (2) to appear personally and answer
the charge, or, at its or his direction, proceed to hear and decide the case in
the absence of the body corporate.
485.
Recovery of penalty.—Any sum adjudged, penalty imposed by the Commission or the
registrar in exercise of powers under this Act or any rules or any regulations
made thereunder or directed to be paid, shall be recovered in accordance with
section 42B of the Securities and Exchange Commission of Pakistan Act,
1997(XLII of 1997).
486.
Prosecution of offences by the Commission.—All prosecution conducted by the
Commission under this Act shall be made in the manner as provided in section 38
of Securities and Exchange Commission of Pakistan Act, 1997(XLII of 1997).
487.
Appeal against acquittal.—Notwithstanding anything contained in the Code of
Criminal Procedure, 1898 (Act V of 1898), the Commission may, in any case
arising out of this Act, direct any officer of the Commission or authorise any
other person, either by name or by virtue of his office, to present an appeal
from an order of acquittal passed by the court other than a Court and an appeal
presented by such prosecutor or other person shall be deemed to have been
validly presented to the appellate court.
488.
Payment of compensation in cases of frivolous or vexatious prosecution.—(1) In
respect of any case instituted upon the complaint of a member or creditor
against the company or any officer thereof under section 477, the following
provisions shall apply instead of the provisions of section 250 of the Code of
Criminal Procedure, 1898 (Act V of 1898).
(2) If
the Court, officer, Commission or registrar by whom any such case is heard
discharges or acquits all or any of the accused, and is of opinion that the
accusation against them or any of them was false and either frivolous or
vexatious, the Court, officer, Commission or registrar, as the case may be, may
by its or his order of discharge or acquittal, if the member or creditor upon
whose complaint the accusation was made is present, call upon him forthwith to
show cause why he should not pay compensation to such accused, or to each or
any of such accused when there is more than one, or if such member or creditor
is not present, direct the issue of a summons to him to appear and show cause
as aforesaid.
(3) The
Court, officer, Commission or registrar, as the case may be, shall record and
consider any cause which such member or creditor may show; and if it or he is
satisfied that the accusation was false and either frivolous or vexatious, it
or he may, for reasons to be recorded, direct that compensation to such amount
as it may determine be paid by such member or creditor, as the case may be, to
the accused or to each or any of them not exceeding one million rupees in all.
(4) In
default of payment of the compensation ordered under subsection (3), the member
or creditor ordered to pay such compensation shall suffer simple imprisonment
for a term not exceeding one year, and shall also be liable to a fine not
exceeding one hundred thousand rupees.
(5) When
any person is imprisoned under sub-section (4), the provisions of sections 68
and 69 of the Pakistan Penal Code, 1860 (Act XLV of 1860) shall, so far as may
be, apply.
(6) No
person who has been directed to pay compensation under this section shall, by
reason of such order, be exempted from any civil or criminal liability in
respect of the complaint made by him: Provided that any amount paid to an
accused person under this section shall be taken into account in awarding
compensation to such person in any subsequent civil suit relating to the same
matter.
(7) A
complainant who has been ordered to pay compensation under subsection (3) may
appeal from the order, in so far as it relates to the payment of compensation,
as if such complainant had been convicted on a trial.
(8)
Where an order for payment of compensation to an accused person is made, the
amount of compensation recovered shall not be paid to him before the period
allowed for the presentation of the appeal under sub-section (7) has elapsed;
or, if an appeal is presented, before the appeal has been decided.
(9)
Nothing contained in the Code of Criminal Procedure, 1898 (Act V of 1898) or
anything contained in this section shall be applicable to the authorized
officer of the Commission or the registrar and all actions by such officer or
registrar shall deemed to be validly done in good faith and no compensation or
suit for damages shall lie, whatsoever.
489. Application of fines
or penalties.—(1) The Court, officer, Commission or registrar imposing any fine
or penalty under this Act may direct that the whole or any part thereof shall
be applied in or towards- (a) payment of costs of the proceedings; (b)
rewarding the person on whose information the fine or penalty is recovered; and
(c) payment to an aggrieved party of compensation for any loss caused by the
offence. (2) Any amount recovered as fine or penalty which is not applied as
aforesaid shall be accounted for in accordance with section 40AA of the
Securities and Exchange Commission of Pakistan Act, 1997 (XLII of 1997). 490.
Production and inspection of books where offence suspected.— (1) Without
prejudice to the powers otherwise exercisable by the Commission or any of its
authorised officers or registrar, or person under this Act, the Court in
Chambers may, on an application made by a public prosecutor or the
AttorneyGeneral for Pakistan or the Advocate-General of the Province or an
officer authorised by the Commission in this behalf or by a special public
prosecutor appointed under section 38 of the Securities and Exchange Commission
of Pakistan Act, 1997 (XLII of 1997) or by the registrar, if it is shown that
there is reasonable cause to believe that any person has, while he was an
officer of a company, committed an offence in connection with the management of
the company‘s affairs, and that evidence of the commission of the offence is to
be found in any books or papers of or under the control of the company or any
officer or agent of the company, make an order— 488 THE GAZETTE OF PAKISTAN,
EXTRA., MAY 31, 2017 [PART I (a) authorising any person named therein to
inspect the said books or papers or any of them for the purpose of
investigating, and obtaining evidence of the commission of, the offence; or (b)
requiring the chief executive of the company or such other officer thereof or
person as may be named in the order, to produce the said books or papers or any
of them to a person, and at a place and time, named in the order. (2)
Sub-section (1) shall apply also in relation to any books or papers of a person
carrying on the business of banking so far as they relate to the company‘s
affairs, as it applies to any books or papers of or under the control of the
company, except that no such order as is referred to in clause (b) thereof
shall be made by virtue of this sub-section. (3) No appeal shall lie from a
decision under this section. 491. Power to require limited company to give
security for costs.— Where a limited company is plaintiff or petitioner in any
suit or other legal proceeding, the Court having jurisdiction in the matter
may, if it appears that there is reason to believe that the company will be
unable to pay the costs of the defendant if successful in his defence, require
sufficient security to be given for those costs, and may stay all proceedings
until the security is given. 492. Power of Court to grant relief in certain
cases.—(1) If in any criminal proceeding for negligence, default, breach of
duty or breach of trust against a person to whom this section applies, it
appears to the Court, hearing the case that that person is or may be liable in
respect of the negligence, default, breach of duty or breach of trust, but that
he has acted honestly and reasonably, and that having regard to all the
circumstances of the case, including those connected with his appointment, he
ought fairly to be excused for the negligence, default, breach of duty or
breach of trust, the Court, may relieve him, either wholly or partly, from his
liability on such terms as the Court may think fit. (2) Where any person to
whom this section applies has reason to apprehend that any claim will or might
be made against him in respect of any negligence, default, breach of duty, or
breach of trust, he may apply to the Court for relief, and the Court on any
such application shall have the same power to relieve him as if proceedings
against that person for negligence, default, breach of duty or breach of trust
had been brought before the Court. (3) The persons to whom this section applies
are the following namely— (a) directors of a company; PART I] THE GAZETTE OF
PAKISTAN, EXTRA., MAY 31, 2017 489 (b) chief executive of a company; (c)
officers of a company; (d) persons employed by a company as auditors, whether
they are or are not officers of the company; (e) liquidator of a company. (4)
The Court shall not grant any relief to any person under sub-section (1) or
sub-section (2) unless it by notice served in the manner specified by it
requires the Commission or the registrar and such other person, if any, as it
thinks necessary to show cause why such relief should not be granted. 493.
Enforcement of orders of Court.—Any order made by the Court under this Act may
be enforced in the same manner as a decree made by a Court in a suit. 494.
Enforcement of orders of Court by other courts.—(1) Where any order made by the
Court is required to be enforced by another Court, a certified copy of the
order shall be produced to the proper officer of the Court required to enforce
the order. (2) The production of such certified copy shall be sufficient
evidence of the order. (3) Upon the production of such certified copy, the
Court shall take the requisite steps for enforcing the order, in the same
manner as if it had been made by itself. 495. Protection of acts done in good
faith.—No suit, prosecution or other legal proceeding shall lie against the
Government or the Commission or any officer of Government or the Commission or the
registrar or any other person in respect of anything which is in good faith
done or intended to be done in pursuance of this Act or any rules or
regulations or orders made thereunder or in respect of the publication by or
under the authority of the Government, Commission or such officer of any
report, paper or proceedings. 496. Penalty for false statement, falsification,
forgery, fraud, deception.—(1)Notwithstanding anything contained in the
Criminal Procedure Code, 1898, (V of 1898) or any other law, whoever in
relations to affairs of the company or body corporate- (a) makes a statement or
submit any document in any form, which is false or incorrect in any material
particular, or omits any material 490 THE GAZETTE OF PAKISTAN, EXTRA., MAY 31,
2017 [PART I fact, knowing it to be material, in any return, report,
certificate, statement of financial position, profit and loss account, income
and expenditure account, offer of shares, books of account, application,
information or explanation required by or for the purposes of any of the
provisions of this Act or pursuant to an order or direction given under this
Act with an intention to defraud, or cheat the Commission or to obtain
incorporation or to avoid any penal action for an offence under this Act or administered
legislation; (b) makes any false entry or omits or alter any material
particular from books, paper or accounts with an intent to defraud, destroy,
alter or falsifies any books of account belonging to or in his possession shall
commit an offence of falsification of account; (c) submit, present or produce
any forged or fabricated document, knowingly to be forged or fabricated, to the
Commission for the purposes of cheating or cheating by personation or to obtain
any wrongful gain or wrongful loss or to avoid any penal action for an offence
under this Act or administered legislation; or (d) employ any scheme, artifice
or practice in the course of business of the company to defraud or deceive
general public; shall be punishable with imprisonment which shall not be less
than one year but which may extend to seven years and shall also be liable to
fine which shall not be less than the amount involved in the fraud but may
extend to three times the amount involved in the offence: Provided further that
in case of offence involves public interest, the term of imprisonment under
this section shall not be less than three years along with fine.
Explanation.—For the purpose of this section- (i) “fraud” in relation to affairs of the company or body corporate
shall mean doing a thing with an intent to defraud other person; (ii) “wrongful
gain” means the gain by unlawful means of
property to which the person gaining is not legally entitled; (iii) “wrongful
loss” means the loss by unlawful means of
property to which the person losing is legally entitled. (iv) “cheating,
cheating by personation, falsification of accounts or forgery or forgery for
the purposes of cheating” shall have the same PART
I] THE GAZETTE OF PAKISTAN, EXTRA., MAY 31, 2017 491 meanings as assign to it
in Pakistan Penal Code, 1860 (XLV of 1860). (2) All offences under this section
shall be non-bailable and noncompoundable. 497. Penalty for wrongful
withholding of property.—(1) Any director, chief executive or other officer or
employee or agent of a company who wrongfully obtains possession of any
property of the company, or having any such property in his possession
wrongfully withholds it or wilfully applies it to purposes other than those
expressed or directed in the articles and authorised by this Act shall, on the
complaint of the company or any creditor or contributory thereof or a
memorandum placed on record by the registrar or an officer subordinate to him,
be punishable with a fine not exceeding one million rupees and may be ordered
by the Court, or officer, Commission or registrar or the concerned
Minister-in-Charge of the Federal Government trying the offence, to deliver up
or refund within a time to be fixed by the said Court, officer, Commission or
registrar or the concerned Minister-in-Charge of the Federal Government any
such property improperly obtained or wrongfully withheld or wilfully misapplied
and any gain or benefit derived therefrom. (2) Whoever fails to comply with an
order under sub-section (1), shall be punishable with imprisonment for a term
which may extend to three years and shall also be liable to a fine which may
extend to five hundred thousand rupees. 498. Liability of directors for
allotment of shares for inadequate consideration.—(1) Any director, creditor or
member of a company may apply to the Court for a declaration that any shares of
the company specified in the application have been allotted for inadequate
consideration. (2) Every director of the company who is a party to making the
allotment of such shares shall be liable, jointly and severally with his
codirectors, to make good to the company the amount by which the consideration
actually received by the company for the shares is found by the Court, after
full inquiry into the circumstances of the transaction, to be less than the
consideration that the company ought to have received for such shares, if it is
proved, as to any such first mentioned director, that such director- (a) had
knowledge that the consideration so received by the company was inadequate; or
(b) failed to take reasonable steps to ascertain whether such consideration so
received by the company was in fact adequate. 492 THE GAZETTE OF
Notes:
(i) The fee for
submission of documents electronically shall be applicable only for the
documents for which the facility of filing or lodging the documents
electronically has been provided by the Commission.
(ii) Where no fee has
been prescribed for submission of documents electronically, the documents can
only be submitted in physical form.
EIGHTH
SCHEDULE
(See
section 477)
DIRECT
COMPLAINT TO THE COURT BY THE COMMISSION, REGISTRAR, MEMBER OR CREDITOR IN CASE
OF CERTAIN OFFENCES 1. Sub-section (5) of section 73.
2.
Section 95.
3.
Section 177.
4.
Sub-section (2) of section 243.
5.
Sub-section (4) of section 351.
6.
Section 404.
7.
Sub-section (5) of section 418.
8.
Proviso to sub-section (4) of section 460.
9.
Sub-section (2) of section 497.
10.
Sub-section (2) of section 499.
--------
JAWAD
RAFIQUE MALIK, Secretary.
PRINTED
BY THE MANAGER, PRINTING CORPORATION OF
PUBLISHED
BY THE DEPUTY CONTROLLER, STATIONERY AND FORMS,
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