Updated: Wednesday June 08, 2016/AlArbia'a Ramadan 03, 1437/Budhavara Jyaistha 18, 1938, at 08:51:16 AM

 

PREAMBLE

            1          Short title, extent and commencement

            2          Definitions  

            TABLE                      

            3          Meaning of  

            4          Ordinance not to apply to certain corporations           

5          Application of ordinance to non-trading companies with purely provincial objects      

            6          Ordinance to override memorandum, articles, etc       

            7          Jurisdiction of the courts- 

            8          Constitution of company benches          

            9          Procedure of the court       

            10        Appeals against court orders-      

            PART III

Corporate law authority                

            12        Powers and functions of the authority- 

            13        Reference by the federal government or authority to the court

            PART IV

Incorporation of companies and matters incidental thereto              

14        Obligation to register certain associations, partnerships, etc, as companies          

            15        Mode of forming a company       

            16        Memorandum of company limited by shares  

            17        Memorandum of company limited by guarantee        

            18        Memorandum of unlimited company   

            19        Printing, signature, etc, of memorandum-        

            20        Restriction on alteration of memorandum        

            21        Alteration of memorandum         

            22        Power of authority when confirming alteration          

            23        Exercise of discretion by authority         

            24        Procedure on confirmation of the alteration     

            25        Effect of failure to register within ninety days 

            26        Registration of articles      

            27        Printing, signature, etc of articles

            28        Alteration of articles          

            29        Form of memorandum and articles        

            30        Registration of memorandum and articles, etc-           

            31        Effect of memorandum and articles       

            32        Effect of registration          

            33        Conclusiveness of certificate of incorporation 

            34        Effect of alteration in memorandum or articles

            35        Copies of memorandum and articles to be given to members          

            36        Alteration of memorandum or articles to be noted in every copy    

            37        Prohibition of certain names       

            38        Rectification of name of a company

            39        Change of name by a company   

            40        Registration of change of name and effect thereof     

41        Alteration of names on commencement of ordinance and change of status of company-           

            42        Power to dispense with     

            43        Provision as to companies limited by guarantee         

            44        Conversion of public company into private company           

45        Prospectus or statement in lieu of prospectus to be filed by private company on ceasing to be private company           

46        Consequence of default in complying with conditions constituting a company a private company      

47        Liability for carrying on business with less than 1[three] or, in the case of a private company, two members    

            48        Service of documents on company         

            49        Service of documents on registrar          

            50        Service of notice on members, etc           

            51        Authentication of documents and proceedings           

            PART V

Prospectus, allotment, issue and transfer of shares and debentures, deposits, etc.

            52        Prospectus to be dated      

            53        Matters to be stated and reports to be set out in prospectus 

54        Expert to be unconnected with formation or management of company     

55        Expert's consent to issue of prospectus containing statement by him        

            56        Penalty and interpretation-          

            57        Approval, issue and registration of prospectus           

58        Terms of contract mentioned in prospectus or statement in lieu of prospectus not to be varied

            59        Civil liability for mis-statements in prospectus           

            60        Criminal liability for misstatements in prospectus     

61        Document containing offer of shares or debentures for sale to be deemed prospectus  

            62        Offer of shares or debentures for sale by certain persons     

            63        Interpretation of provisions relating to prospectus     

            64        Newspaper advertisement of prospectus          

65        Construction of references to offering shares or debentures to the public, etc     

            66        Penalty for fraudulently inducing persons to invest money

            67        Application for, and allotment of, shares and debentures    

            68        Restriction as to allotment

            69        Statement en lieu of prospectus  

            70        Effect of irregular allotment         

            71        Repayment of money received for shares not allotted           

72        Allotment of shares and debentures to be dealt in on stock exchange       

            73        Return as to allotments     

            74        Limitation of time for issue of certificates

            75        Issue of duplicate certificates

            76        Transfer of shares and debentures         

            77        Directors not to refuse transfer of shares           

            78        Notice of refusal to transfer          

            78 A    Appeal against refusal for registration of transfer       

            79        Transfer to successor-in-interest 

            80        Transfer to nominee of a deceased member     

            81        Transfer by nominee or legal representative    

82        Power to pay certain commissions, and prohibition of payment of other commissions, discounts, etc           

            83        Application of premium received on issue of shares-

            84        Power to issue shares at a discount        

            85        Redemption of preference shares           

            86        Further issue of capital      

            87        Issue of shares in lieu of outstanding balance of any loans, etc       

            88        Deposits not to be invited without issuing an advertisement          

            PART VI

Share capital and debentures nature, numbering and certificate of shares                       

            89        Nature of shares and certificate of shares          

            90        Classes and kinds of share capital          

            91        Only fully paid shares to be issued        

            92        Power of company limited by shares to alter its share capital          

            93        Notice to registrar of consolidation of share capital, etc         

            94        Notice of increase of share capital or of members       

95        Prohibition of purchase or grant of financial assistance by a company for purchase of its own or its holding company's shares     

            95 A    Power of a company to purchase its own shares         

            96        Reduction of share capital

            97        Application to court for confirming order         

            98        Addition to name of company of 'and reduced           

99        Objection by creditors and settlement of list of objecting creditors

100      Power to dispense with consent of creditor on security being given for his debt

            101      Order confirming reduction         

            102      Registration of order and minute of reduction

            103      Minute to form part of memorandum    

            104      Liability of members in respect of reduced shares      

            105      Penalty on concealment of name of creditor    

            106      Publication of reasons for reduction      

107      Increase and reduction of share capital in case of a company limited by guarantee having a share capital         

            108      Variation of shareholders' rights-           

            109      Registration of unlimited company as limited 

110      Power of unlimited company to provide for reserve share capital on re-registration      

            111      Limited company may have directors with unlimited liability-       

112      Special resolution of limited company making liability of directors unlimited   

113      Right of debenture-holder and shareholder to have copies of trust-deed

            114      Debentures not to carry voting rights    

            115      Perpetual debentures        

            116      Power to re-issue redeemed debentures in certain cases       

            117      Specific performance of contract to subscribe for debentures          

118      Payment of certain debts out of assets subject to floating charge in priority to claims under the charge    

            119      Powers and liabilities of trustee  

            120      Issue of securities and redeemable capital not based on interest     

            PART VII

Registration of mortgages, charges, etc              

            121      Certain mortgages and charges to be void if not registered  

            122      Registration of charges on properties acquired subject to charge    

123      Particulars in case of series of debentures entitling holders pari passu     

            124      Particulars in case of commission, etc on debentures 

            125      Register of mortgages and charges         

            126      Index to register of mortgages and charges      

            127      Certificate of registration  

128      Endorsement of certificate of registration on debenture or certificate of debenture stock           

129      Duty of company and right of interested party as regards registration      

130      Copy of instrument creating mortgage or charge to 6e kept at registered office   

            131      Rectification of register of mortgages    

            132      Registration of payment or satisfaction of mortgages and charges  

133      Power of registrar to make entries of satisfaction and release in absence of intimation from company         

            134      Penalties-     

            135      Company's register of mortgages           

136                  Right to inspect copies of instruments creating mortgages and charges and company's register of mortgages         

            137      Registration of appointment of receiver or manager  

            138      Filing of accounts of receiver or manager         

            139      Disqualification for appointment as receiver or manager     

            140      Application to court-          

            141      Power of court to fix remuneration, etc, of receiver or manager       

            PART VIII

Management and administration registered office, publication of name, etc.

            142      Registered office of company      

            143      Publication of name by a limited company      

            144      Penalties for non publication of name  

            145      Publication of authorised as well as paid-up capital  

            146      Restrictions on commencement of business     

            147      Register of members and index  

            148      Trusts not to be entered on register        

            149      Register and index of debenture-holders         

            150      Inspection of registers       

            151      Power to close register       

            152      Power of court to rectify register 

            153      Punishment for fraudulent entries in and omission from register  

            154      Notice to registrar of rectification of register    

            155      Register to be evidence     

            156      Annual list of members, etc         

            157      Statutory meeting of company    

            158      Annual general meeting   

            159      Calling of extraordinary general meeting         

            160      Provisions as to meetings and votes       

160 A  Circumstances in which proceedings of a general meeting may be declared invalid      

            161      Proxies          

162                  Representation of corporations at meetings of companies and of creditors

163                  Representation of federal government, etc, at meetings of companies       

            164      Notice of resolution           

            165      Voting to be by show of hands in first instance          

166                  Chairman's declaration of result of voting by show of hands to be evidence       

            167      Demand for poll     

            168      Time of taking poll

            169      Resolution passed at adjourned meeting          

            170      Power of 1[commission] to call meetings          

171                  Penalty for default in complying with the directions of the [commission] for holding the meeting        

            172      Filing of resolution, etc     

            173      Minutes of proceedings of general meetings and directors  

            174      Minimum number of directors of a company  

            175      Only natural persons to be directors      

            176      First directors acid their tern-       

            177      Retirement of directors     

            178      Procedure for election of directors-        

            178 A  Fresh election of directors on request of substantial acquire

179      Circumstances in which election of directors may be declared invalid      

            180      Term of office of directors

            181      Removal of director           

            182      Creditors may nominate directors          

183      Certain provisions not to apply to directors representing special interests           

            184      Consent to act as director to be filed with registrar     

            185      Validity of acts of directors          

            186      Penalties       

            187      Ineligibility of certain persons to become director      

            188      Vacation of office 6y the directors          

            189      Penalty for unqualified person acting as director, etc

            190      Ineligibility of bankrupt to act as director, etc 

            191      Restriction on director's remuneration, etc       

            192      Restriction on assignment of office by directors         

            193      Proceedings of directors   

            194      Liabilities, etc, of directors and officers 

            195      Loans to directors, etc        

            196      Powers of directors-           

            197      Prohibition regarding making of political contributions-     

            198      Appointment of first chief executive      

            199      Appointment of subsequent chief executive    

200      Terms of appointment of chief executive and filling up of casual vacancy           

            201      Restriction on appointment of chief executive

            202      Removal of chief executive          

203      Chief executive not to engage in business competing with company's business 

            204      Penalty         

            204 A  Certain companies to have secretaries 2[and share registers 

            205      Register of directors, officers, etc

206      Bar on appointment of managing agents, sole purchase, sales agents, etc 

            207      Terms and conditions of appointment of managing agent-  

            208      Investments in associated companies and undertakings       

            209      Investments of company to be held in its own name 

            210      Form of contract      

            211      Bills of exchange and promissory notes

            212      Execution of deeds 

            213      Power for company to have official seal for use abroad        

            214      Disclosure of interest by director

            215      Interest of other officers, etc         

216      Interested director not to participate or vote in proceedings of directors   

            217      Declaring a director to be lacking fiduciary behaviour          

218      Disclosure to members of director's interest in contract appointing chief executive, managing agent or secretary        

219      Register of contracts, arrangements and appointments in which directors, etc, are interested

            220      Register of directors' shareholdings, etc .

            221      Duty of directors; etc, to make disclosure of shareholdings, etc       

            222      Submission of statements of beneficial owners of listed securities 

            223      Prohibition of short-selling          

            224      Trading by directors, officers and principal shareholders    

225      Contracts by agents of company in which company is undisclosed principal      

            226      Securities and deposits, etc          

            227      Employees' provident funds and securities     

            228      Right to see bank receipts for money or securities      

            229      Penalty for contravention of section 226, 227 or 228    

            230      Books of account to be kept by company         

            231      Inspection of books of account by registrar, etc          

            232      Default in compliance with provisions of section 231

            233      Annual accounts and balance-sheet-      

            234      Contents of balance-sheet

            234 A  Special audit           

            235      Treatment of surplus arising out of revaluation of fixed assets       

            236      Directors' report      

            237      Consolidated financial statements         

            238      Financial year of holding company and subsidiary   

            239      Rights of holding company's representatives and members_          

240      Balance-sheet of modaraba company to include modaraba accounts, etc  

            241      Authentication of balance-sheet 

            242      Copy of balance-sheet to be forwarded to the registrar         

243      Right of member of company to copies of the balance-sheets etc. and the auditor's report           

244      Penalty for improper issue, circulation or publication of balance-sheet or profit arid loss account         

            245      Quarterly] accounts of listed companies

246      Power of authority to require submission of additional statements of accounts and reports

247      Rights of debenture-holders, etc, as to receipt and inspection of report, etc.

            248      Certain restrictions on declaration of dividends

            249      Dividend to be paid only out of profits

250      Dividend not to be paid except to registered shareholders or to their order or to their bankers        

            251      Period for payment of dividend 

            252      Appointment and remuneration of auditors    

253      Provisions as to resolutions relating to appointment and removal of auditors     

            255      Powers and duties of auditors     

            256      Reading and inspection of auditors' report      

            257      Signature on audit report etc       

            258      Audit of cost accounts       

            259      Penalty for non-compliance with provisions by companies 

            260      Penalty for non-compliance with provisions by auditors      

            261      Power of registrar to call for information or explanation       

            262      Seizure of documents by registrar

263      Investigation of affairs of company on application by members or report by registrar

264      Application by members to be supported by evidence and power to call for security

            265      Investigation of company's affairs in other cases

            266      Inspector to 6e a court for certain purposes

267      Power of inspectors to carry investigation into affairs of associated companies

            268      Duty of officers, etc, to assist the inspector       

            269      Inspector's report   

            270      Prosecution  

            271      Power of authority to initiate action against management-   

            272      Effect of court's order        

273      No compensation to be payable for annulment or modification of contract         

            274      No right to compensation for loss of office       

275      Application for winding up of company or an order under section 290     

            276      Proceedings for recovery of damages or property       

            277      Expenses of investigation 

            278      Inspector's report to be evidence

279      Imposition of restrictions on shares and debentures and prohibition of transfer of shares or debentures in certain cases      

            280      Saving for legal advisers and bankers   

281      Enquiries and investigations not to be affected by winding up, etc           

282      Application of sections 261 to 281 to liquidators and foreign companies   

            PART IX

Arbitration arrangements and reconstruction              

            283      Power for companies to refer matters to arbitration    

            284      Power to compromise with creditors and members    

            285      Power of court to enforce compromises and arrangements   

286      Information as to compromises or arrangements with creditors and members     

287      Provisions for facilitating reconstruction and amalgamation of companies          

288      Notice to be given to registrar for applications under sections 284 and 287           

289      Power and duty to acquire shares of shareholders dissenting from scheme or contract 

            PART X

Prevention of oppression and mis-management ----------------------------

            290      Application to court           

            291      Powers of court under section 290          

            292      Interim order           

            293      Claim for damages inadmissible

            294      Application of certain sections to proceedings under this part        

            295      Management by administrator    

            296      Rehabilitation of companies owning sick industrial units   

            PART XI

Winding up preliminary              

            297      Modes of winding up       

            298      Liability as contributories of present and past members       

            299      Liability of directors whose liability is unlimited       

            300      Definition of           

            301      Nature of liability of contributory          

            302      Contributories in case of death of member      

            303      Contributory in case of insolvency of member

            304      Contributories in case of winding up of a body corporate which is a member    

            305      Circumstances in which company may be wound up by court        

            306      Company when deemed unable to pay its debts        

            307      Transfer of proceedings to other courts 

            308      Withdrawal and transfer of winding up from one court to another

            309      Provisions as to applications for winding up   

            310      Right to present winding up petition where company is being wound up voluntarily or subject to court's supervision__  

            311      Commencement of winding up by court          

            312      Hearing of winding up petition by the court   

            313      Court may grant injunction         

            314      Powers of court on hearing petition       

            315      Copy of winding up order to be filed with registrar  

            316      Suits stayed on winding up order          

            317      Court may require expeditious disposal of suits, etc  

            318      Effect of winding up order           

            319      Power of court to stay winding up, etc  

            320      Court to have regard to wishes of creditors or contributories           

            321      Appointment of official liquidator         

            322      Resignation, removal, filling up vacancies, etc, of official liquidator         

            323      Remuneration of official liquidator       

            324      Style of official liquidator

            325      Appointment and powers of provisional manager     

            326      General provisions as to liquidators      

            327      Receiver not to be appointed of assets with liquidator          

            328      Statement of affairs to be made to official liquidutor 

            329      Report by official liquidator:       

            330      Custody of company's property  

            331      Committee of inspection in compulsory winding up 

            332      Constitution and proceedings of committee of inspection    

            333      Powers of official liquidator        

            334      Discretion of official liquidator   

            335      Provision for assistance to official liquidator   

            336      Liquidator to, keep books containing proceedings of meetings, etc           

            337      Liquidator's account:         

            338      Exercise and control of liquidator's powers      

            339      Settlement of list of contributories and application of assets           

            340      Power to require delivery of property   

            341      Power to order payment of debts by contributory      

            342      Power of court to make calls_      

            343      Power to order payment into bank         

            344      Regulation of account with court

            345      Order on contributory conclusive evidence     

            346      Power to exclude creditors not proving in time           

            347      Adjustment of rights of contributories  

            348      Power to order costs           

            349      Distribution by official liquidator          

            350      Dissolution of company   

            351      Power to summon person suspected of having property of company        

            352      Power to order public examination of promotors, directors, etc       

            353      Power to arrest absconding contributory          

            354      Saving of other proceedings        

            355      Power to enforce orders    

            356      Order made by any court to be enforced by other courts      

            357      Mode of dealing with orders to be enforced by other courts

            358      Circumstances in which company may be wound up voluntarily  

            359      Commencement of voluntary winding up       

            360      Effect of voluntary winding up on status of company           

            361      Notice of resolution to wind up voluntarily     

            362      Declaration of solvency in case of proposal to wind up voluntarily           

            363      Provisions applicable to members' voluntary winding up   

            364      Appointment of liquidators         

            365      Power to fill vacancy in office of liquidator     

            366      Notice of appointment of liquidator to be given to registrar alongwith his consent       

            367      Power of liquidator to accept shares, etc, as consideration for sale of property of company           

            368      Duty of liquidator to call creditors' meeting in case of insolvency  

            369      Duty of liquidator to call general meeting at the end of each year  

            370      Final meeting and dissolution     

            371      Alternative provisions as to annual and final meetings in case of insolvency      

            372      Provisions applicable to creditors' voluntary winding up    

            373      Meeting of creditors_        

            374      Notice of resolution passed by creditors' meeting to be given to registrar 

            375      Appointment of liquidator           

            376      Appointment of committee of inspection         

            377      Fining of liquidator's remuneration__   

            378      Directors' powers to cease on appointment of liquidator      

            379      Power to fill vacancy in office of liquidator     

            380      Application of section 367 to a creditors' voluntary winding up      

            381      Duty of liquidator to call meetings of company and of creditors at the end of every year           

            382      Final meeting and dissolution     

            383      Provisions applicable to every voluntary winding up           

            384      Accounts and statements to be audited__         

            385      Distribution of property of company     

            386      Application of sections 328 and 329 to voluntary winding up          

            387      Powers and duties of liquidator in voluntary winding up    

            388      Power of court to appoint and remove liquidator in voluntary winding up         

            389      Notice by liquidator of his appointment_         

            390      Arrangement when binding on company and creditors        

            391      Power to apply to court to have questions determined or powers exercised         

            392      Application of liquidator to court for public examination of promotors, directors, etc   

            393      Costs of voluntary winding up   

            394      Saving for right of creditors and contributories          

            395      Power of court to adopt proceedings of voluntary winding up       

            396      Power to order winding up subject to supervision     

            397      Effect of petition for winding up subject to supervision       

            398      Court may have regard to wishes of creditors and contributories   

            399      Power to replace liquidator          

            400      Effects of supervision order_       

            401      Appointment of voluntary liquidator as official liquidator in certain cases          

            402      Status of companies being wound up, etc        

            403      Debts of all descriptions to be proved   

            404      Application of insolvency rules in winding up of insolvent companies    

            405      Preferential payments_     

            406      Avoidance of transfers, etc           

            407      Disclaimer of property      

            408      Fraudulent preference       

            409      Liabilities and rights of certain fraudulently preferred persons      

            410      Avoidance of certain attachments, executions, etc       

            411      Effect of floating charge    

            412      Power of court to assess damages against delinquent directors, etc

            413      Liability for fraudulent conduct of business    

            414      Liability under sections 412 and 413 to extend to partners or directors in firm or body corporate      

            415      Penalty for fraud by officers of companies which have gone into liquidation     

            416      Liability where proper accounts not kept__     

            417      Penalty for falsification of books

            418      Prosecution of delinquent directors       

            419      Penalty for false evidence

            420      Penal provisions     

            421      Liquidator to exercise certain powers subject to sanction      

            422      Meetings to ascertain wishes of creditors or contributories  

            423      Documents of company to be evidence 

            424      Summary disposal of certain suits by liquidators       

            425      Limitation    

            426      Court fees    

            427      Inspection of documents  

            428      Disposal of books arid papers of company_    

            429      Power of court to declare dissolution of company void         

            430      Information as to pending liquidations

            431      Payments by liquidator into bank          

            432      Unclaimed dividends and undistributed assets to be paid to companies liquidation account         

            433      Books of accounts and other proceedings to be kept by liquidators          

            434      Application of provisions relating to audit       

            435      Enforcement of duty of liquidator to make return, etc           

            436      Notification that a company is in liquidation  

            437      Court or person before whom affidavit may be sworn          

            438      Power to make rules          

            439      Registrar may strike defunct company off register     

            440      Application of ordinance to companies formed and registered under previous companies acts    

            441      Application of ordinance to companies registered but not formed under previous companies acts        

            442      Application of ordinance to unlimited companies registered under previous companies acts    

            PART XIII

Winding up of unregistered companies            

            443      Meaning of  

            444      Winding up of unregistered companies

            445      Contributories in winding up of unregistered companies    

            446      Power to stay or restrain proceedings    

            447      Suits stayed on winding up order          

            448      Directions as to property in certain cases          

            449      Provisions of this part cumulative          

            PART XIV

Companies established outside pakistan provisions as to establishment of places of business in pakistan                   

            450      Application of this part to foreign companies  

            451      Documents to be delivered to registrar by foreign companies         

            452      Retrun to be delivered to registrar by foreign companies whose documents etc altered

            453      Accounts of foreign companies   

            454      Certain obligations of foreign companies         

            455      Service on foreign company        

            456      Company's failure to comply with this part not to affect its liability under contracts, etc           

            457      Provisions relating to names, enquiries, etc to apply to foreign companies_        

            458      Intimation of ceasing to have dace of business to be given  

            459      Penalties       

            460      Interpretation of provisions of this part

            461      Issue of prospectus

            462      Restriction on canvassing for sale of securities

            463      Registration of charges     

            464      Notice of appointment of receiver          

            465      Notice of liquidation, etc  

            PART XV

Registration offices and fees                    

            466      Registration offices

            467      Production of documents kept by registrar, etc           

            468      Registrar not to accept defective documents    

            469      Acceptance of documents presented after prescribed time   

            470      Fees   

            471      Power of the federal government to prescribe fees chargeable by companies      

            472      Enforcing compliance with provisions of ordinance  

            473      Power of court, etc, trying offences under ordinance to direct compliance with the provisions    

            PART XVI

General legal proceedings, offences, etc                       

            474      Cognizance of offences, etc          

            475      Offences to be non cognizable    

            476      Punishment and adjudication of fine or penalty        

            477      Appeal and revision          

            478      Powers of the, federal government, etc, in relation to enquiries and proceedings           

            479      Procedure for the trial of a corporate body       

            480      Power of federal government to appoint company prosecutors       

            481      Appeal against acquittal   

            482      Payment of compensation in cases of frivolous or vexations prosecution 

            483      Application of fines_         

            484      Revision and review_        

            485      Appeals against orders etc

            486      Production and inspection of books where offence suspected        

            487      Power to require limited company to give security for costs 

            488      Power of court etc, to grant relief in certain cases_      

            489      Enforcement of orders of court    

            490      Enforcement of orders of court by other courts_         

            491      Protection of acts done in good faith     

            492      Penalty for false statement           

            493      Penalty for wrongful withholding of property

            494      Liability of directors for allotment of shares for inadequate consideration           

            495      Punishment for non compliance of directive of court; etc     

            496      Penalty for carrying on ultra vires business     

            497      Penalty for improper use of word ''limited''     

            498      Penalty where no specific penalty is provided elsewhere in the ordinance          

            PART XVI

Power to accord approval, etc, subject to conditions              

            499      Power to accord approval subject to conditions          

            500      Annual report by authority          

            501      Delegation of powers        

            502      Advisory committee           

            503      Application of ordinance to companies governed by special enactments  

            504      Forms

            505      Power of the federal government to alter schedules   

            506      Power of the federal government to make rules          

            506 A  Power to make regulations           

            506 B  Power to issue directives, circulars, guidelines, etc     

            507      Power of the federal government to permit use of urdu words or abbreviations 

            508      Repeal of laws and savings          

            509      Amendment of ordinance xvii of 1969   

            510      Savings         

            511      Former registration offices, registers and registrars continued         

            512      Construction of references to extraordinary resolution in articles, etc        

            513      Transitional provisions     

            514      Removal of difficulties     

            SCHEDULE

First schedule                      

            TABLE A

Regulations for management of a company limited by shares                     

            BUSINESS

.                      

            SHARES

.                      

            TRANSFER AND TRANSMISSION OF SHARES

.                      

            TRANSMISSION OF SHARES

.                      

            ALTERATION OF CAPITAL

.                      

            GENERAL MEETINGS

.                      

            NOTICE AND PROCEEDINGS OF GENERAL MEETINGS

.                      

            VOTES OF MEMBERS

.                      

            DIRECTORS

.                      

            POWERS AND DUTIES OF DIRECTORS

.                      

            THE SEAL

..                     

            DISQUALIFICATION OF DIRECTORS

.                      

            PROCEEDINGS OF DIRECTORS

.                      

            FILLING OF VACANCIES

.                      

            DIVIDENDS AND RESERVE

.                      

            ACCOUNTS

.                      

            NOTICES

.                      

            WINDING UP

.                      

            INDEMNITY

.                      

            TABLE B

Memorandum of association of company limited by shares            

            TABLE C

Memorandum and articles of association of a company limited by guarantee and not having a share capital                       

            MEMORANDUM OF ASSOCIATION

.                      

            ARTICLES OF ASSOCIATION OF A COMPANY LIMITED BY GUARANTEE AND NOT HAVING A SHARE CAPITAL INTERPRETATION

.                      

            MEMBERS

.                      

            GENERAL MEETINGS

.                      

            PROCEEDINGS AT GENERAL MEETINGS

.                      

            VOTES OF MEMBERS

.                      

            DIRECTORS

.                      

            POWERS AND DUTIES OF DIRECTORS

.                      

            CHIEF EXECUTIVE

.                      

            THE SEAL

.                      

            TABLE D

Memorandum and articles of association of a company limited by guarantee and having a share capital                       

            MEMORANDUM OF ASSOCIATION

.                      

            ARTICLES OF ASSOCIATION OF A COMPANY LIMITED BY GUARANTEE AND HAVING A SHARE CAPITAL

.                      

            SCHEDULE

.                      

            TABLE E

.                      

            MEMORANDUM OF ASSOCIATION

.                      

            ARTICLES OF ASSOCIATION OF AN UNLIMITED COMPANY

.                      

            SCHEDULE

.                      

            PART I

Matters to be specified in prospectus and reports to be set out therein                  

            SECTION 1

Matters to be specified                  

            SECTION 2

Reports to be set out                      

            SECTION 3

Provisions applying to sections 1 and 2 of this part                

            PART II

Form of statement in lieu of prospectus to be delivered to registrar by a company which does not issue a prospectus or which does not go to allotment on a prospectus issued, and reports to be set out                   

            SECTION 1

Form of statement and particulars to be contained therein               

            SECTION 2

Reports to be set out                      

            SECTION 3

Provisions applying to sections 1 and 2 of this part                

            PART III

Form of statement in lieu of prospectus to be delivered to registrar by a private company on becoming a public company and reports to be set out therein                

            SECTION 1

Form of statement and the particulars to be contained therein                    

            SECTION 2

Reports to be set out                      

            SECTION 3

Provisions applying to sections 1 and 2 of this part                

            SCHEDULE

Third schedule                   

            PART I

Contents and form of annual return of company having a share capital               

            FORM A

Form a                       

            1

Address                    

            2

Summary of share capital and debentures                   

            PART II

Contents and form of annual return of company not having a share capital                    

            CONTENTS

Contents                   

            FORM B

Form b                      

            FOURTH SCHEDULE

Requirements as to balance sheet and profit and loss account of listed companies                    

            PART 1

General                     

            PART II

Requirements as to balance sheet fixed assets             

            LONG-TERM INVESTMENTS

Long-term investments                 

            LONG TERM LOANS AND ADVANCES

Long term loans and advances                

            LONG-TERM DEPOSITS AND PREPAYMENTS

Long-term deposits and prepayments               

            CURRENT ASSETS

Current assets                     

            SHARE CAPITAL AND RESERVES

Share capital and reserves            

            NON-CURRENT LIABILITIES

Non-current liabilities                   

            CURRENT LIABILITIES

Current liabilities               

            CONTINGENCIES AND COMMITMENTS

Contingencies and commitments                       

            PART III

Requirements as to profit and loss account                  

            FIFTH SCHEDULE

Requirement as to balance sheet and profit and loss account of non listed companies              

            PART I

General                     

            PART II

Requirements as to balance sheet                       

            NON-CURRENT ASSETS

Non-current assets             

            LONG-TERM INVESTMENTS

Long-term investments                 

            LONG-TERM LOANS AND ADVANCES

Long-term loans and advances                

            LONG-TERM DEPOSITS AND PREPAYMENTS

Long-term deposits and prepayments

            CURRENT ASSETS

Current assets

            SHARE CAPITAL AND RESERVES

Share capital and reserves

            SURPLUS ON REVALUATION OF FIXED ASSETS

Surplus on revaluation of fixed assets

            NON CURRENT LIABILITIES

Non current liabilities

            CURRENT LIABILITIES

Current liabilities

            CONTINGENCIES AND COMMITMENTS

Contingencies and commitments

            PART III

Requirements as to profit and loss account

            SIXTH SCHEDULE

Table of fees to be paid to the registrar and the commission

            SEVENTH SCHEDULE

Enactments repealed

The Companies Ordinance 1984

ORDINANCE NO. XLVII OF 1984

[8th October, 1984]

An Ordinance to consolidate and amend the law relating to companies and certain other associations.

WHEREAS it is expedient to consolidate and amend the law relating to companies and certain other associations for the purpose of healthy growth of the corporate enterprises, protection of investors and creditors, promotion of investment and development of economy and matters arising out of or connected therewith;

AND WHEREAS the President is satisfied that circumstances exist which render it necessary to take immediate action;

NOW, THEREFORE, in pursuance of the Proclamation of the fifth day of July, 1977, and in exercise of all powers enabling him in that behalf , the president is pleased to make and promulgate the following Ordinance:-

1. Short title, extent and commencement.-(1) This Ordinance may be called the Companies Ordinance, 1984.

(2) It extends to the whole of Pakistan.

(3) This section shall come into force at once and the remaining provisions of this Ordinance shall come into force on such date1 as the Federal Government may, by notification in the official Gazette, appoint, and different dates may be so appointed for different provisions.

22. Definitions.-(1) In this Ordinance, unless there is anything repugnant in the subject or context,-

(1) ”articles” means the articles of association of a company as originally framed or as altered in accordance with the provisions of any previous Companies Act, or of this Ordinance, including, so far as they apply to the company, the regulations contained in Table A in the First Schedule;

(2) ”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:-

(i) If a person who is the 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 per cent 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 per cent of the voting power in that company or undertaking; or

(ii) if the companies or undertakings are under common management or control or one is the subsidiary of another; or

TABLE

Section(s)

Date of coming into force

1

2

203 .. .. .. .. ..

First day of May, 1985.

297 to 437 and 443 to 449 .. ..

First day of July, 1985.

41 and 226 .. .. .. ..

First day of January, 1986.


1i.e. on the 1st January, 1985 by S.R.O. 1098(I)/84, dated the 31-12-1984 see Gaz. of P., 1984 Ext., Pt. II, p. 2133 except ss. 41, 88, 203, 226, 295 to 437 and 443 to 449.

2Section 2, 11, 12, 13, 438, and 506, came into force w.e.f. 1-11-1984, by S.R.O. 941 (I)/84, dt. 31-10-1984, see Gaz. of P. 1984, Ext., Pt. II, p. 1877.

(iii) if the undertaking is 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 per cent 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 other company or undertaking:

Provided that 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:

Provided further that --

(i) directorship of a person or persons by virtue of nomination by the Federal Government or a Provincial Government or a financial institution directly or indirectly owned or controlled by such Government; or

(ii) shares owned by the National Investment Trust or the Investment Corporation of Pakistan or a financial institution directly or indirectly owned or contro1led by the Federal Government or a Provincial Government 1[“or shares registered in the name of a central depository, where such shares are 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;

2* * * * * * *

(4) “body corporate” or “corporation” includes a company incorporated outside Pakistan, but does not include -

(i) a corporation sole; or

(ii) a co-operative society registered under any law relating to the registration of co-operative societies: or

(iii) any other body corporate, not being a company as defined in this Ordinance, which the Federal Government may by notification in the official Gazette specify in this behalf.

2[“(5) “book and paper”, “book or paper” or “books of account” include accounts, deeds, vouchers, writings and documents, maintained on paper or computer network. Floppy, diskette magnetic cartridge tape, CD-Rom or any other computer readable media;”]

1[“(5A) ‘central depository’ means a central depository as defined in clause (cc) of section 2 of the Securities and Exchange Ordinance, 1969 (XVII of 1969), and registered with the Authority under section 32A of that Ordinance;”]


1Ins. by Act XIX of 1997, s. 34 & Sch.

2Omitted & subs. by Act IV of 2007, s. 13 (w.e.f. 1-7-07)

(6) “chief executive”, in relation to a company means an individual who, subject to the control and directions of the directors, is entrusted with the whole, or substantially the whole, of the powers of management of the 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;

1[“(6A) “Commission” means the Securities and Exchange Commission of Pakistan established under section 3 of the Securities and Exchange Commission of Pakistan Act, 1997 (XLII of 1997);”]

(7) “company” means a company formed and registered under this Ordinance or an existing company;

(8) “company limited by shares” means a company having the liability of its members limited by the memorandum to the amount, if any unpaid on the shares respectively held by them;

(9) “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 winding up;

2* * * * * * *

(11) “the Court” means the Court having jurisdiction under this Ordinance;

(12) “debenture” includes debenture stock, bonds, 3[term finance certificates] and any other securities, other than a share, of a company, whether constituting a charge on the assets of the company or not;

(13) “director” includes any person occupying the position of a director, by whatever name called;

(14) “document” includes summons, notice, requisition, order, other legal process, voucher and register 4[“whether issued, sent or kept in pursuance of this Ordinance or any other law for the time being in force, whether maintained in any medium capable of being retrieved by any electronic means or in any other manner”];

1[“(15A) “financial institution” includes,‑--

(a) a company or an institution whether established under any special enactment and operating within or outside Pakistan which transacts the business of banking or any associated or ancillary business through its branches;

(b) a modaraba, leasing company, investment bank, venture capital company, financing company, housing finance company, a non­-banking finance company: and

(c) such other institution or companies authorised by law to undertake any similar business, as the Federal Government may, by notification in the official Gazette, specify for the purpose;”]

(16) “financial year” in relation to any body corporate, means the period in respect of which any profit and loss account or the income and expenditure account, as the case may be, of the body corporate, laid before it in general meeting, is made up, whether that period is a year or not;


1Ins. & subs. by Ord. 100 of 02, s. 2 & Sch.

2Clause (10) omitted by the Banking and Financial (Amdt. of Laws) Ordinance, 1984 (57 of 1984), s. 2 and Sch.,

3Subs. ibid., for “participation term certificates”.

4Added by Act IV of 2007,s. 13 (w.e.f. 1-7-07)

(17) “form” means a form set out in any of the schedules or prescribed;

(18) “holding company” means a holding company as defined in section 3;

(19) “listed”, in relation to securities, means securities which have been allowed to be traded on a stock exchange;

(20) “listed company” means a company or a body corporate or other body whose securities are listed;

(21) “member” means, in relation to a company having share capital, a subscriber to the memorandum of the company and every person to whom is allotted, or who becomes the holder of any share, scrip or other security which gives him a voting right in the company and whose name is entered in the register of members, and, in relation to a company not having a share capital, any person who has agreed to become a member of the company and whose name is so entered;

(22) “memorandum” means the memorandum of association of a company as originally framed or as altered from time to time in pursuance of the provisions of any previous Companies Act or of this Ordinance;

(23) “modaraba” and “modaraba company” have the same meaning as in the Modaraba Companies and Modaraba (Floatation and Control) Ordinance, 1980 (XXXI of 1980);

(24) “officer” includes any director chief executive, managing agent, secretary or other executive of the company, howsoever designated, but, save in sections 205, 220 to 224, 260, 261, 268, 351, 352, 412, 417, 418, 474 and 482, does not include an auditor;

1[(25) “participatory redeemable capital” means such redeemable capital as is entitled to participate in the profit and loss of a company;]

(26) “prescribed” means,-

(a) as respects the provisions of this Ordinance relating to the winding up of companies and other matters requiring to be determined or decided by the Court, prescribed by rules made by the Supreme Court in consultation with the High Court or, where the Supreme Court advises the Federal Government to do so, by the Federal Government in consultation with the High Courts; and

(b) as respects the other provisions of this Ordinance, prescribed by rules or regulations made by the Federal Government 2[“or the Commission as the case may be”] after previous publication in the official Gazette;


1Subs. by the Banking and Financial (Amdt. of Laws) Ordinance, 1984 (57 of 1984), s. 2 and Sch., for “clause (25)”.

2Ins. by Act IV of 2007, s. 13 (w.e.f. 1-7-07)

(27) “previous Companies Act: includes any Act or Acts relating to companies in force before the Indian Companies Act, 1866 (X of 1866), or the Acts repealed thereby, the Indian Companies Act, 1866 (X of 1866), the Indian Companies Act, 1882 (VI of 1882), the Indian Companies Act, 1913 (VII of 1913), or any law corresponding to any of those Acts and in force in any of the territories now constituting Pakistan before the extension of the Companies Act, 1913 (VII of 1913), to such territories;

(28) “private company” means a company which, by its articles,-

(i) restricts the right to transfer its shares, if any;

(ii) limits the number of its members to fifty not including persons who are in the employment of the company; and

(iii) prohibits any invitation to the public to subscribe for the-shares, if any or debentures 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;

(29) “prospectus” means any document described or issued as prospectus, and includes any notice, circular, advertisement, or other communication, inviting offers from the public for the subscription or purchase of any shares in, or debentures of a body corporate, or inviting deposits from the public, other than deposits invited by a banking company or a financial institution approved by the Federal Government, whether described as prospectus or otherwise;

(30) “public company” means a company which is not a private company;

1[(30A) “redeemable capital” includes finance 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, other than an ordinary share of a company, 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 on terms and conditions of the agreement for the issue of such instrument or certificate or such other certificate or instrument as the Federal Government may, by notification in the official Gazette, specify for the purpose;

2[“(30B) “register” means the register of member of a company and includes the register of debenture-holders or holders of other securities maintained on paper or computer network, floppy, diskette, magnetic cartridge tape, CD-Rom or any other computer readable media;”]


1Ins. by the Banking and Financial (Amdt. of Laws) Ordinance, 1984, (57 of 1984), s. 2 and Sch.

2Ins. by Act IV of 2007, s. 13 (w.e.f. 1-7-07)

(31) “registrar” means a registrar, an additional registrar, a joint registrar, a deputy registrar or an assistant registrar, performing under this Ordinance the duty of registration of companies;

(32) “scheduled bank” has the same meaning as in the State Bank of Pakistan Act, 1956 (XXXIII of 1956);

(33) “secretary” means any individual appointed to perform the secretarial, administrative or other duties ordinarily performed by the secretary of a company;

1[(34) “security” means any share, scrip, debenture, participation term certificate, modaraba certificate, musharika certificate, term finance certificate, bond, pre-organization certificate or such other instrument as the Federal Government may, by notification in the official Gazette, specify for the purpose;]

(35) “share” means share in the share capital of a company;

(36) “special resolution” means a resolution which has been passed by a majority of not less than three-fourths of such members entitled to vote as are present in person or by proxy 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;

(37) “stock exchange” means a stock exchange registered under the Securities and Exchange Ordinance, 1969 (XVII of 1969);

(38) “subsidiary company” or “subsidiary” means a subsidiary company as defined in section 3;

(39) “Table A” means Table A in the First Schedule [.]2

3* * * * * * *

(2) The expression “commencement of this Ordinance” in any provision of this Ordinance means the coming into force of that provision by virtue of a notification under sub-section (3) of Section 1.


1ins. by the Banking and Financial (Amdt. of Laws) Ordinance, 1984, (57 of 1984), s. 2 and Sch., “clause (34).

2Subs. ibid., for semi-colon.

3Clause (40) omitted ibid.

3. Meaning of “subsidiary” and “holding company”.-(1) For purposes of this Ordinance, a company or body corporate shall be deemed to be a subsidiary of another if,---

(a) that other company or body corporate directly or indirectly controls, beneficially owns or holds more than fifty percent. of its voting securities or otherwise has power to elect and appoint more than fifty percent. of its directors; or

(b) the first mentioned company or body corporate is a subsidiary of any company or body corporate which is that other”s subsidiary [:]1

1[Provided that, where a central depository holds more than fifty percent. of the voting seucrities of a company, such company shall not be deemed to be a subsidiary of the central depository save where such voting securities are held beneficially by the central depository in its own behalf.]

(2) For the purpose of this Ordinance, a company shall be deemed to be another”s holding company if, but only if, that other is its subsidiary.

4. Ordinance not to apply to certain corporations. Nothing in this Ordinance shall apply to-

(i) a trading corporation owned or controlled by a Province and carrying on business only within that Province; or

(ii) a co-operative society; or

(iii) a university.

5. Application of Ordinance to non-trading companies with purely provincial objects. The powers conferred by this Ordinance on the Federal Government or the Authority shall, in relation to companies which are not trading corporations and the objects of which are confined to a single Province, be the powers of the Provincial Government.

6. Ordinance to override memorandum, articles, etc. Save as otherwise expressly provided herein,-

(a) the provisions of this Ordinance which come into force by virtue of a notification under sub-section (3) of section 1 shall have effect not withstanding anything contained in 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, agreement or resolution aforesaid shall, to the extent to which it is repugnant to the aforesaid provisions of this Ordinance, become or be void, as the case may be.


1Subs. & added by Act XIX of 1997, s. 34 & Sch.

    7. Jurisdiction of the Courts.-(1) The Court having jurisdiction under this Ordinance shall be the High Court having jurisdiction in the place at which the registered office of the company is situate:

Provided that the Federal Government may, by notification in the official Gazette and subject to such restrictions and conditions as it thinks fit, empower any Civil Court to exercise. all or any of the jurisdictions by this Ordinance conferred upon the Court, and in that case such Court shall, as regards the jurisdiction so conferred, be the Court in respect of companies having their registered office within the territorial jurisdiction of such Court.

(2) 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 six months immediately preceding the presentation of the petition for winding up.

(3) Nothing in this section shall invalidate a proceeding by reason of its being taken in a Court other than the High Court or a Court empowered under sub-section (1).

8. Constitution of Company Benches. There shall in each High Court be one or more Benches, 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 section 7.

9. Procedure of the Court.-(1) Notwithstanding anything contained in any other law, all matters coming before the Court under this Ordinance shall be disposed of, and the judgment pronounced, as expeditiously as possible but not later than ninety days from the date of presentation of the petition or application to the Court and, except in extraordinary circumstances and on grounds to be recorded, the Court shall hear the case from day to day.

Explanation.In this subsection, “judgment” means a final judgment recorded in writing.

(2) The hearing of the matters referred to in subsection (1) shall not be adjourned except for sufficient cause to be recorded or for more than fourteen days at any one time or for more than thirty days in all.

(3) In the exercise of its jurisdiction as aforesaid, the Court shall, in all matters before it, follow the summary procedure.

10. Appeals against Court orders.-(1) Notwithstanding anything contained in any other law, an appeal against any order, decision or judgment of the Court under this Ordinance shall lie to the Supreme Court where the company ordered to be wound up has a paid-up share capital of not less than one million rupees; and, where the company ordered to be wound up has a paid-up capital of less than one million rupees, or has no share capital, such appeal shall lie only if the Supreme Court grants leave to appeal.


(2) Save as provided in sub-section (1), an appeal from any order made or decision given by the Court shall lie in the same manner in which and subject to the same conditions under which appeals lie from any order or decision of the Court.

(3) An appeal preferred under sub-section (2) shall be finally disposed of by the Court hearing the appeal within ninety days of the submission of the appeal.

________

PART III.-CORPORATE LAW AUTHORITY

1*                   *                      *                      *                      *                      *                   * 

212. Powers and functions of the Authority.-(1) The Authority shall exercise and perform such powers and functions as are conferred on it by or under this Ordinance or any other law.

(2) Notwithstanding anything contained in any other law, and without prejudice to the generality of the foregoing provisions, the Federal Government may, by notification in the official Gazette, direct that all or any of the powers and functions conferred on the Federal Government or any officer of the Federal Government under any law shall, subject to such limitations, restrictions or conditions, if any, as it may from time to time impose, be exercised or performed by the Authority.

1*                     *                      *                      *                      *                      *                   * 

 

 

 

 


1Repeal by S.R.O. 1403(I)/98, dt. 31-12-98.

2Section 2, 11, 12, 13, 438, and 506, came into force w.e.f. 1-11-1984, by S.R.O. 941 (I)/84, dt. 31-10-1984, see Gaz. of P. 1984, Ext., Pt. II, p. 1877.

    13. Reference by the Federal Government or Authority to the Court.-(1) Without prejudice to the powers, jurisdiction and authority exercisable by the Federal Government or the Authority under this Ordinance, the Federal Government or the Authority, as the case may be, $nay make a reference to the Court on any question or matter which the Government or the Authority considers to be of special significance requiring orders, determination or action concerning the affairs of a company or any action of any officer thereof.

Explanation.- In this subsection “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.

14. Obligation to register certain associations, partnerships, etc., as companies.-(1) No association, partnership or company 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 company, or by the individual members thereof, unless it is registered as a company under this Ordinance.

(2) Every person who is a member of any association, partnership or company carrying on business in contravention of the provisions of this section shall be punishable with fine which may extend to five thousand rupees and also be personally liable for all the liabilities incurred in such business.


1Section 2, 11, 12, 13, 438, and 506, came into force w.e.f. 1-11-1984, by S.R.O. 941 (I)/84, dt. 31-10-1984, see Gaz. of P. 1984, Ext., Pt. II, p. 1877.

(3) Nothing in this section shall apply to,---

(a) any society, body or association, other than a partnership, formed or incorporated under any other Pakistan law; 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]1

1[(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.]

15. Mode of forming a Company.-(1) Any 2[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 Ordinance in respect of registration, form a public company and any two or more persons so associated may, in like manner, form a private company.

(2) A company formed under sub-section (1) 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

16. 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 the last word of the name in the case of a public limited company, and the parenthesis and words “(Private) Limited” as the last words of the name in the case of a private limited 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) the objects of the company, and except in the case of a trading corporation, the territories to which they extend;

(iv) that the liability of the members is limited; and

(v) the amount of share capital with which the company proposes to be registered, and the division thereof into shares of a fixed amount;


1Subs. & added by Act V of 1999, s. 2.

2Subs. by Ord. 100 of 02, s. 2 & Sch.

(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 takes.

17. Memorandum of company limited by guarantee. In the case of a company limited by guarantee,-

(a) whether or not the company has a share capital, the memorandum shall state--

(i) the name of the company with the parenthesis and words “(Guarantee) Limited” as the last words of its name;

(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) the objects of the company, and, except in the case of a trading corporation, the territories to which they extend;

(iv) that the liability of the members is limited; and

(v) 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 the rights of the contributories among themselves, such amount as may be required, not exceeding a specified amount; and

(b) if the company has a share capital,--

(i) 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;

(ii) no subscriber of the memorandum shall take less than one share; and

(iii) each subscriber shall write opposite to his name the number of shares he takes.

18. Memorandum of unlimited company. In the case of an unlimited company,-

(a) whether or not the company has a share capital, the memorandum shall state--

(i) the name of the 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; and



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(iii) the objects of the company, and, except in the case of a trading corporation, the territories to which they extend; and

(b) if the company has a share capital,-

(i) no subscriber of the memorandum shall take less than one share; and

(ii) each subscriber shall write opposite to his name the number of shares he takes.

19. Printing, signature, etc., of memorandum.-1[(1)] The memorandum shall be-

(a) printed;

(b) divided into paragraphs numbered consecutively;

2[“(c) signed by each subscriber, who shall add his present name, his occupation and father's name or, 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 prescribed, in the presence of a witness who shall attest the signature and shall likewise add his particulars; and”]

(d) dated.

3[(2) Notwithstanding anything contained in this Ordinance 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 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 or a financial institution.

20. Restriction on alteration of memorandum. A company shall not alter the conditions contained in its memorandum except in the cases and in the mode and to the extent specified in this Ordinance.

21. Alteration of memorandum.-(1) Subject to the provisions of this Ordinance, a company may, by special resolution, alter the provisions of its memorandum so as to change the place of its registered office from one Province to another, or from one city or town in a Province to another, or from a part of Pakistan not forming part of a Province to a Province or from a Province to a part of Pakistan not forming part of a Province, or with respect to the objects of the company, so far as may be required to enable it-

(a) to carry on its business more economically or more efficiently; or


1Section 19 was re-numbered as sub-section (1) of that section by the Banking and Financial (Amdt. of Laws) Ordinance, 1984 (57 of 1984), s. 2 and Sch.

2Subs. by Ord. 100 of 02, s. 2 & Sch.

3 New sub-section (2) added. ibid.


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(b) to attain its main purpose by new or improved means; or

(c) to enlarge or change the local area of its operations; or

(d) to carry on some business, not being a business specified in its memorandum, which may conveniently or advantageously be combined with the business of the company; or

(e) to restrict or abandon any of the objects specified in the memorandum; or

(f) to sell or dispose of the whole or any part of the undertaking of the company; or

(g) to amalgamate with any other company or body of persons.

(2) The alteration shall not take effect until and except in so far as it is confirmed by the Authority on petition:

Provided that an alteration so as to change the place of registered office of a company from a place in the Province of the Punjab to the Islamabad Capital Territory or from the latter to a place in the Province of the Punjab, or from one city in a Province to another, shall not require confirmation by the Authority.

(3) Before confirming the alteration, the Authority must be satisfied-

(a) that sufficient notice has been given to every holder of debentures of the company, and to any person or class of persons whose interest will, in the opinion of the Authority, be affected by the alteration; and

(b) that, with respect to every creditor who in the opinion of the Authority is entitled to object, and who signifies his objection in manner directed by the Authority, either his consent to the alteration has been obtained or his debt or claim has been discharged or determined, or has been secured to the satisfaction of the Authority:

Provided that the Authority may, in the case of any person or class of persons, for special reasons, dispense with the notice required by clause (a).

22. Power of Authority when confirming alteration. The Authority may make an order confirming the alteration either wholly or in part, and on such terms and conditions as it thinks fit, and may make such order as to costs as it thinks proper.

23. Exercise of discretion by Authority. The Authority shall in exercising its discretion under sections 21 and 22 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, adjourn the proceedings in order that an arrangement may be made to the satisfaction of the Authority for the purchase of the interests of dissident members; and may give such directions and make such orders as it may think expedient for facilitating or carrying into effect any such arrangement:

Provided that no part of the capital of the company may be expended in any such purchase.


    

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24. Procedure on confirmation of the alteration.-(1) A certified copy of the order confirming the alteration, together with a printed copy of the memorandum as altered, shall, within ninety days from the date of the order, be filed by the company with the registrar, and he shall register the same, and shall certify the registration under his hand, and the certificate shall be conclusive evidence that all the requirements of this Ordinance with respect to the alteration and the confirmation thereof have been complied with, and thenceforth the memorandum so altered shall be the memorandum of the company.

[1*                    *                      *                      *                      *                      *                   * ]

(3) The Authority may by order at any time extend the time for the filing of documents with the registrar under this section for such period as it thinks proper.

25. Effect of failure to register within ninety days. No such alteration shall have any operation until registration thereof has been duly effected in accordance with the provisions of section 24, and if such registration is not effected within ninety days next after the date of the order of the Authority confirming the alteration, or within such further time, as may be allowed by the Authority, in accordance with the provisions of section 24, such alteration and order, if any, and all proceedings connected therewith shall, at the expiration of such period of ninety days or such further time, as the case may be, become null and void:

Provided that the Authority may, on sufficient cause shown, revive the order or alteration, as the case may be, on application made within a further period of ninety days.

ARTICLES OF ASSOCIATION

26. Registration of articles.-(1) 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 registered with the memorandum, articles of association signed by the subscribers to the memorandum and setting out regulations for the company.


1Omitted by Act IV of 2007, s. 13 (w.e.f. 1-7-07)

    

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(2) Articles of association may adopt all or any of the regulations contained in Table A in the First Schedule.

(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 not a 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 Ordinance, 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, 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.

27. Printing, signature, etc. of articles. The articles shall be-

(a) printed;

(b) divided into paragraphs numbered consecutively;

1[“(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 prescribed, if the presence of a witness who shall attest the signature and shall likewise add his particulars; and”]

(d) dated.

28. Alteration of articles. Subject to the provisions of this Ordinance and to the conditions contained in its memorandum, a company may by special resolution alter or add to its articles, and any alteration or addition 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-fourth of the members or of the class of members affected by such alteration, as the case may be, personally or through proxy vote for such alteration.

 

 


1Subs. by Ord. 100 of 02, s. 2 & Sch.

    

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FORM OF MEMORANDUM AND ARTICLES

29. Form of memorandum and articles. The form of-

(a) the memorandum of association of a company limited by shares;

(b) the memorandum and articles of association of a company limited by guarantee and not having a share capital;

(c) the memorandum and articles of association of a company limited by guarantee and having a share capital;

(d) the 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.

GENERAL PROVISIONS WITH RESPECT TO REGISTRATION OF MEMORANDUM AND ARTICLES

30. Registration of memorandum and articles, etc.-(1) The memorandum and the articles, if any, shall be filed with the registrar  1[*  *  *]

(2) A declaration by such person as may be prescribed in this behalf, or by a person named in the articles as a director, or other officer of the company, of compliance with all or any of the requirements of this Ordinance and the rules made thereunder shall be filed with the registrar; and the registrar may accept such a declaration as sufficient evidence of such compliance.

(3) If the registrar is satisfied that the company is being formed for lawful purposes, that none of its objects stated in the memorandum is inappropriate or deceptive or insufficiently expressive and that all the requirements of this Ordinance and the rules made thereunder have been complied with in respect of registration and matters precedent and incidental thereto, he shall retain and register the memorandum and articles, if any.

(4) If registration of the memorandum is refused, the subscribers of the memorandum or any one of them authorised by them in writing 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, a deputy registrar or an assistant registrar, to the registrar; and

 

 


1Omitted by Act IV of 2007, s. 13 (w.e.f. 1-7-07)

    

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(b) where the order of refusal has been passed, or upheld in appeal, by the registrar, to the Authority.

(5) An order of the Authority under subsection (4) shall be final and shall not be called in question before any Court or other authority.

31. 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 Ordinance.

(2) All moneys payable by any member to the company under the memorandum or articles shall be a debt due from him to the company.

32. Effect of registration.-(1) On the registration of the memorandum of a company, the registrar shall certify under his hand that the company is incorporated and, in the case of a limited company, that the company is limited by shares or guarantee, as the case may be.

(2) From the date of incorporation mentioned in the certificate of incorporation, the subscribers of the memorandum, together with such other persons as may from time to time become members of the company, shall be a body corporate by the name contained in the memorandum, capable forthwith of exercising all the functioning of an incorporated company, and having perpetual succession and a common seal, but with such liability on the part of the members to contribute to the assets of the company in the event of its being wound up as is mentioned in this Ordinance.

33. Conclusiveness of certificate of incorporation. A certificate of incorporation given by the registrar in respect of any association shall be conclusive evidence that all the requirements of this Ordinance in respect of registration and of matters precedent and incidental thereto have been complied with, and that the association is a company authorised to be registered and duly registered under this Ordinance.

34. 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.


    

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35. Copies of memorandum and articles to be given to members.-(1) Every company shall send to every member, at his request and within fourteen days thereof, on payment of such sum, not exceeding the prescribed amount, 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 subsection (1), it shall be liable for each offence to a fine not exceeding one hundred rupees.

36. 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 fine which may extend to one thousand rupees for each copy so issued and every officer of the company who is knowingly and wilfully in default shall be liable to the like penalty.

PROVISIONS WITH RESPECT TO NAMES OF COMPANIES

37. Prohibition of certain names.-(1) No company shall be registered by a name which in the opinion of the Authority is inappropriate or deceptive or is designed to exploit or office the religious susceptibilities of the people.

(2) A company shall not be registered by a name identical with that by which a company in existence is already registered, or so nearly resembling that name as to be calculated to deceive, except where the company in existence is in the course of being dissolved and signifies its consent in such manner as the registrar requires.

(3) Except with the prior approval in writing of the Authority, no company shall be registered by a name which contains any words 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 of any such Government;

(c) any connection with any corporation set up by or under any Federal or Provincial law; or

(d) the patronage of, or any connection with, any foreign Government or any international organization.

(4) Whenever a question arises as to whether or not the name of a company is in violation of the foregoing provisions of this section, the decision of the Authority shall be final.

38. Rectification of name of a company. A company which, through inadvertence or otherwise, is registered by a name in contravention of the provisions of section 37;-


    

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(a) may, with the approval of the registrar, change its name; and

(b) shall, if the registrar so directs, within thirty days of the receipt of such direction, change its name with the approval of the registrar:

Provided that the registrar shall, before issuing a direction for the change of name, afford the company an opportunity to make representation against the proposed direction:

Provided further that no direction under clause (b) shall be issued after the expiration of three years from the date of registration of the company or registration by its new name, as the case may be.

39. Change of name by a company. A company may, by special resolution and with the approval of the registrar signified in writing, change its name:

Provided that no such approval shall be required where the only change in the name of a company is the addition thereto or, as the case may be, the deletion therefrom, of the parenthesis and word “(Private)” consequent on the conversion in accordance with the provisions of this Ordinance of a public company into a private company or of a private company into a public company.

40. 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 one year from the date of issue of a certificate by the registrar under subsection (1), continue to mention its former name alongwith 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 clauses (a) and (c) of section 143:

Provided that the addition or deletion, as the case may be, of the parenthesis and word “(Private)” from the name of a company consequent on the conversion in accordance with the provisions of this Ordinance of a public company into a private company or of a private company into a public company shall not be deemed to be a change of name for the purpose of this sub-section.

(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 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.


    

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41. Alteration of names on commencement of Ordinance and change of status of company.-(1) As from the date of commencement of this Ordinance, the name of every existing company shall be deemed to include, before the last word “Limited”, the parenthesis and word “(Private)” in the case of a private company and the parenthesis and word “(Guarantee)” in the case of a company limited by guarantee, and the memorandum of association, the certificate of incorporation and other books and papers shall be deemed to be altered accordingly from that date.

(2) On conversion of a public company into a private company in accordance with the provisions of this Ordinance, the registrar shall add the parenthesis and word “(Private)” before the word “Limited” in the name of the company in the register and shall also issue a certificate to meet the circumstances of the case.

(3) On conversion of a private company into a public company in accordance with the provisions of this Ordinance, the registrar shall omit the parenthesis and word “(Private)” in the name of the company in the register and shall also issue a certificate to meet the circumstances of the case.

(4) If default is made in complying with a direction issued by the registrar under section 38, or with the requirements of subsection (2) of section 40, or in giving effect to the provisions of sub-section (1) of this section, the company, and every director or officer of the company who is knowingly and wilfully in default, shall be liable to a fine not exceeding ten thousand rupees and to a further fine not exceeding two hundred rupees for every day after the first during which the default continues.

ASSOCIATIONS NOT FOR PROFIT

42. Power to dispense with “Limited” in the name of charitable and other companies.—(1) Where it is proved to the satisfaction of the Authority that an association capable of being formed as a limited company has been or is about to be formed for promoting commerce, art, science, religion, sports, social services, charity or any other useful object, and applies or intends to apply its profits, if any, or other income in promoting its objects, and to prohibit the payment of any dividend to its members; the Authority may grant a licence and direct that the association be registered as a company with limited liability, without the addition of the words “Limited”, “(Private) Limited” or “(Guarantee) Limited”, as the case may be, to its name, and the association may be registered accordingly.

(2) A licence under subsection (1) may be granted on such conditions, and subject to such regulations as the Authority thinks fit and those conditions and regulations shall be binding on the association and shall, if the Authority so directs, be inserted in the memorandum and articles, or in one of those documents.

(3) The association shall on registration enjoy all the privileges of a limited company and be subject to all its obligations, except those of using the word or words “Limited”, “(Private) Limited” or “(Guarantee) Limited”, as the case may be; as part of its name.


    

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(4) A licence under this section may at any time be revoked by the Authority, and upon its revocation the registrar shall enter the word or words “Limited”, “(Private) Limited” or “(Guarantee) Limited”, as the case may be, at the end of the name of the association upon the register, and the association shall cease to enjoy the exemptions and privileges granted by the preceding sub-sections:

Provided that, before a licence is so revoked, the Authority shall give to the association notice in writing of its intention, and shall afford the association an opportunity of submitting a representation in opposition to the revocation.

COMPANIES LIMITED BY GUARANTEE

43. Provision as to companies limited by guarantee.-(1) In the case of a company limited by guarantee and not having a share capital, every provision in the memorandum or articles or is 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.

(2) For the purpose of the provisions of this Ordinance relating to the memorandum of a company limited by guarantee and of sub-section (1), 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 specified thereby.

PROVISIONS RELATING TO CONVERSION OF PUBLIC COMPANY INTO PRIVATE COMPANY AND vise versa, AND OTHER MATTERS.

44. Conversion of public company into private company. No public company shall, except with the prior approval of the Authority in writing, and subject to such conditions as may be imposed by the Authority in this behalf, convert itself into a private company.

45. Prospectus or statement in lieu of prospectus to be filed by private company on ceasing to be private company.-(1) If a company, being a private company, alters its articles in such a manner that they no longer include the provisions which, under clause (28) of subsection (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-

(a) shall, as on the date of the alteration, cease to be a private company; and

(b) shall, within a period of fourteen days after the said date, file with the registrar either a prospectus or a statement in lieu of prospectus as specified in sub-section (2) or sub-section (3).

(2) Every prospectus filed under sub-section (1) shall state the matters specified in section 1 of Part I of the Second Schedule and set out the reports specified in section 2 of that Part, and the said sections 1 and 2 shall have effect subject to the provisions contained in section 3 of that Part.


    

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(3) Every statement in lieu of prospectus filed under subsection (1) shall be in the form and contain the particulars set out in section 1 of Part III of the Second Schedule and, in the cases mentioned in section 2 of that Part, set out the reports specified therein, and the said sections 1 and 2 shrill have effect subject to the provisions contained in section 3 of that part.

(4) Where the persons making any such report as is referred to in subsection (2) or subsection (3) have made therein, or have, without giving the reasons indicated therein, made any such adjustments as are mentioned in clause 36 of Part I of the Second Schedule or clause 5 of section 3 of Part III of the Second Schedule, as the case may be, the prospectus or statement in lieu of prospectus filed as aforesaid shall have endorsed thereon or attached thereto a written statement, signed by those persons, setting out the adjustments and giving the reasons therefore.

(5) If default is made in complying with the provisions of any of the preceding subsections, the company, and every officer of the company who is in default, shall be punishable with fine which may extend to five thousand rupees and to a further fine not exceeding one hundred rupees for every day after the first during which the default continues.

(6) Where any prospectus or statement in lieu of prospectus filed under sub-section (1) includes any untrue statement, any person who authorised the filing of such prospectus or statement shall be punishable with imprisonment for a term which may extend to two years, or with fine which may extend to ten thousand rupees, or with both, unless he proves either that the statement was immaterial or that he had reasonable ground to believe, and did, up to the time of the filing of the prospectus or statement, believe, that the statement was true.

(7) For the purposes of sub-section (6),

(a) a statement included in a prospectus or a statement in lieu of prospectus shall be deemed to be untrue if it is misleading id the form and context in which it is included; and

(b) where the omission from a prospectus or a statement in lieu of prospectus of any matter is calculated to mislead, the prospectus or statement in lieu of prospectus shall be deemed, in respect of such omission, to be a prospectus or a statement in lieu of prospectus in which an untrue statement is included.

(8) For the purposes of sub-section (6) and clause (a) of sub-section (7), the expression “included” when used with reference to a prospectus or statement in lieu of prospectus, means included in the prospectus or statement in lieu of prospectus itself or contained in any report or memorandum appearing on the face thereof, or by reference incorporated therein.

46. Consequence of default in complying with conditions constituting a company a private company. Where the articles of a company include the provisions which, under clause (28) of 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, 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 Ordinance, and this Ordinance shall apply to the company as if it were not a private company:



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Provided that the Authority, 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 Authority just and expedient, order that the company be relieved from such consequences as aforesaid.

CARRYING ON BUSINESS WITH LESS THAN THE LEGAL MINIMUM OF MEMBERS.

47. Liability for carrying on business with less than 1[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 1[other than a single member company], below two, or in the case of any other company, below 1[three], and the company carries on business for more than six months 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 six months and is cognisant of the fact that it is carrying on business with fewer than two members or1[three] members, as the case may be, shall be severally liable for the payment of the whole debts of the company contracted during that time, and may be sued therefor without joinder in the suit of any other member.

SERVICE AND AUTHENTICATION OF DOCUMENTS

48. Service of documents on company. A document may be served on a company or an officer thereof by sending it to the company or officer at the registered office of the company by post under a certificate of posting or by registered post, or by leaving it at the registered office of the company.

49. Service of documents on registrar. A document may be served on the registrar by sending it to him at his office by registered post, or by delivering it to him, or leaving it for him at his office, against an acknowledgement of receipt.

50. Service of notice on members, etc.-(1) A notice may be given by a company to any member either personally or by sending it by post to him to his registered address or, if he has no registered address in Pakistan, to the address, if any, within Pakistan supplied by him to the company for the giving of notices to him.

(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 would be delivered in the ordinary course of post.

 

 

 


1Subs. by Ord. 100 of 02, s. 2 & Sch.

    

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(3) If a member has no registered address in Pakistan, and has not supplied to the company an address within Pakistan for the giving of notices to him, a notice addressed to him or to the shareholders generally and advertised in a newspaper circulating in the Province or the part of Pakistan not forming part of a Province in which the registered office of the company is situate shall be deemed to be duly given to him on the day on which the advertisement appears:

Provided that in the case of a listed company such notice shall in addition to its being published as aforesaid be also published at least in one issue each of a daily newspaper in English language and a daily newspaper in Urdu language having circulation in the Province in which the stock exchange on which the company is listed is situate.

(4) A notice may be given by the company to the joint-holders of a share by giving the notice to the joint-holders named first in the register in respect of the share.

(5) A notice may be given by the company to the persons entitled to a share in consequence of the death or insolvency of a member by sending it through the post in a prepaid letter addressed to them by name, or by the title or representatives of the deceased, or assignees of the insolvent, or by any like description, at the address, if any, in Pakistan supplied for the purpose by the person claiming to be so entitled, or until such an address has been so supplied by giving the notice in any manner in which the same might have been given if the death or insolvency had not occurred.

(6) In addition to any other mode provided by this Ordinance for notice of any general meeting, notice of every general meting shall be given in some manner hereinbefore authorised to-

(a) every member of the company except those members who, having no registered address within Pakistan, have not supplied to the company an address within Pakistan for the giving of notice to them;

(b) every person entitled to a share in consequence of the death or insolvency of a member who, but for his death or insolvency, would be entitled to receive, notice of the meeting; and

(c) the auditors of the company.

51. Authentication of documents and proceedings. Save as expressly provided in this Ordinance, a document or proceeding requiring authentication by a company may be signed by the chief executive or a director, secretary or other authorised officer of the company, and need not be under its common seal.


    

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PART V.-PROSPECTUS, ALLOTMENT, ISSUE AND TRANSFER OF SHARES AND DEBENTURES, DEPOSITS, ETC.

PROSPECTUS

52. Prospectus to be dated. A prospectus issued by or on behalf of a company shall be dated, and that date shall, unless the contrary is proved, be taken as the date of publication of the prospectus.

53. Matters to be stated and reports to be set out in prospectus.-(1) Every prospectus issued-

(a) by or on behalf of a company, or ,

(b) by or on behalf of any person who has been engaged or interested in the formation of a company,

shall state the matters specified in section 1 of Part I of the Second Schedule and set out the reports specified in section 2 of that Part and the said sections 1 and 2 shall have effect subject to the provisions contained in section 3 of that Part.

1[(1A) A sufficient number of copies of the prospectus issued under sub-section (1) shall be made available at the registered office of the company, with the stock exchange at which the company is listed or is proposed to be listed and with the bankers to the issue, and the prospectus in its full text or in such abridged form as may be prescribed, shall be published at least in one Urdu and one English daily newspaper.]

(2) No prospectus shall be issued or an advertisement of a prospectus published in a newspaper less than seven days or more than thirty days before the subscription list, as specified in the prospectus, is due to open: 

Provided that the Authority may for special reasons allow a prospectus to be issued or an advertisement of a prospectus to be published more than thirty days before the subscription list is due to open.

(3) If a prospectus is issued which does not comply with the provisions of subsection (1) or subsection (2), every person who is knowingly responsible for the issue of such prospectus shall be liable to a fine not exceeding ten thousand rupees and in the case of a continuing default to a further fine not exceeding two hundred rupees for every day from the day of the issue of the prospectus until a prospectus complying with the requirements aforesaid is issued and a copy thereof is filed with the registrar.

(4) A condition requiring or binding an applicant for shares in or debentures of a company to waive compliance with any of the requirements of this section, or purporting to affect him with notice of any contract, document or matter not specifically referred to in the prospectus, shall be void.

 

 


1Ins. by Act V of 1999, s. 3

    

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(5) No one shall issue any form of application for shares in or debentures of a company, unless the form is accompanied by a prospectus which complies with the requirements of this section:

Provided that this subsection shall not apply if it is shown that the form of application was issued either-

(i) In connection with a bona fide invitation to a person to enter into an underwriting agreement with respect to the shares or debentures; or

(ii) in relation to shares or debentures which were not offered to the public.

(6) If any person acts in contravention of the provisions of sub-section (5) he shall be liable to a fine not exceeding two thousand rupees.

(7) A director or other person responsible for the prospectus shall not incur any liability by reason of any non-compliance with, or contravention of, any of the requirements of this section, if-

(a) as regards any matter not disclosed, he proves that he had no knowledge thereof; or

(b) he proves that the non-compliance or contravention arose from an honest mistake of fact on his part; or

(c) that non-compliance or contravention was in respect of matters which, in the opinion of the registrar or officer dealing with the case, were immaterial, or was otherwise such as ought, in the opinion of the registrar or officer, as the case may be, having regard to all the circumstances of the case, reasonably to be excused;

Provided that no director or other person shall incur any liability in respect of the failure to include in a prospectus a statement with respect to the matters specified in clause 18 of Part I of the Second Schedule, unless it is proved that he had knowledge of the matters not disclosed.

(8) This section shall not apply-

(a) to the issue to existing members or debenture-holders of a company of a prospectus or form of application relating to shares in or debentures of the company, whether an applicant for shares or debentures will or will not have the right to renounce in favour of other persons; or

(b) to the issue of a prospectus or form of application relating to shares or debentures which are, or are to be, in all respects uniform with shares or debentures previously issued and for the time being dealt in or quoted on a stock exchange;

but, subject as aforesaid, this section shall apply to a prospectus or a form of application, whether issued on or with reference to the formation of a company or subsequently.


    

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(9) Nothing in this section shall limit or diminish any liability which any person may incur under the general law or under any other provision of this Ordinance.

54. Expert to be unconnected with formation or management of company. A prospectus inviting persons to subscribe for shares in or debentures of a company shall not include a statement purporting to be made by an expert, unless the expert is a person who is not, and has not been, engaged or interested in the formation or promotion, or in the management, of the company.

55. Expert”s consent to issue of prospectus containing statement by him. A prospectus inviting persons to subscribe for shares in or debentures of a company and including a statement purporting to be made by an expert shall not be issued, unless-

(a) he has given his written consent to the issue thereof with the statement include in the form and context in which it is included, and has not withdrawn consent before the delivery of a copy of the prospectus for registration; and

(b) a statement that he has given and has not withdrawn his consent as aforesaid appears in the prospectus.

56. Penalty and interpretation.-(1) If any prospectus is issued in contravention of section 54 or 55, the company, and every person who is knowingly a party to the issue thereof, shall be punishable with fine not exceeding five thousand rupees.

(2) In sections 54 and 55, the expression “expert” includes an engineer, a valuer, an accountant and every other person whose profession gives authority to a statement made by him.

57. Approval, issue and registration of prospectus.-(1) No listed company, and no company which proposes to make an application to a stock exchange for listing of its 1[securities and no other person] shall issue, circulate or publish any prospectus or other document offering for subscription or publicly offering for sale any security unless approval of the Authority to its issue, circulation or publication has been obtained within the period of sixty days preceding the date of its issue.

1[(2) The Authority may, while according approval under subsection impose such conditions as it may deem necessary].

(3) No prospectus shall be issued by or on behalf of a company unless, on or before the date of its publication, there has been delivered to the registrar a copy thereof signed by every person who is named therein as a director or proposed director of the company or by his agent authorised in writing, and having endorsed thereon or attached thereto-

 

 


1Subs. by Act I of 1995, s. 10.

    

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(a) any consent to the issue of the prospectus required by section 55 from a person as an expert; and

(b) in the case of a prospectus issued generally, also

(i) a copy of every contract required by clause 16 of Part I of the Second Schedule to be specified in the prospectus, or, in the case of a contract not reduced into writing, a memorandum giving full particulars thereof; and

(ii) where the persons making any report required by Part II. of that Schedule have made therein, or have without giving the reasons, indicated therein, any such adjustments as are mentioned in clause 36 of Part I of that Schedule, a written statement signed by those persons setting out the adjustments and giving the reasons therefor.

(4) Every prospectus to which this section applies shall, on the face of it,-

(a) state that a copy has been delivered to the registrar as required by subsection (3);

(b) specify any documents required by this section to be endorsed on or attached to the copy so delivered, or refer to statements included in the prospectus which specify those documents; and

(c) where application has been made, or is proposed to be made, to a stock exchange for the listing of the security, state that such an application has been made or is proposed to be made.

(5) The registrar shall not register a prospectus unless the requirements of sections 52, 53, 54 and 55 and this section have been complied with and the prospectus is accompanied by the consent in writing of the person, if any, named therein as the auditor, legal adviser, attorney, solicitor, banker or broker, being a member of a stock exchange, of the company, to act in that capacity.

(6) If a prospectus is issued, published or circulated without complying with, or in contravention of any provision of this section, the company, and every person who is knowingly a party to the issue, publication or circulation of the prospectus, shall be liable to a fine not exceeding ten thousand rupees and in the case of a continuing default to a further fine not exceeding two hundred rupees for every day from the date of issue, publication or circulation, as the case may be, of the prospectus, until a copy thereof complying with all the requirements of this section has been delivered to the registrar.

58. Terms of contract mentioned in prospectus or statement in lieu of prospectus not to be varied. A company shall not, at any time, vary the terms of contract referred to in the prospectus or a statement in lieu of prospectus except subject to the approval of, or except on authority given by, the company in general meeting.


    

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59. Civil liability for mis-statements in prospectus.-(1) Subject to the provisions of this section, where a prospectus invites persons to subscribe for shares in or debentures of a company; the following persons shall be liable to pay compensation to every person who subscribes for or purchases any share or debentures on the faith of the prospectus for any loss or damage he may have sustained by reason of any untrue statement included therein, namely,-

(a) every person who is a director of the company at the time of the issue of the prospectus;

(b) every person who has authorised himself to be named and is named in the prospectus either as a director, or as having agreed to become a director, either immediately or after an interval of time;

(c) every person who is a promotor of the company; and

(d) every person who has given consent to the issue of the prospectus under section 55 or sub-section (5) of section 57:

Provided that where, under section 55, the consent of a person is required to the issue of a prospectus and he has given that consent, or where, under sub-section (5) of section 57, the consent of a person named in a prospectus is required and he has given that consent, he shall not, by reason of having given such consent, be liable under this subsection as a person who has authorised the issue of the prospectus except in respect of an untrue statement, if any, purporting to be made by him as an expert.

(2) No person shall be liable under sub-section (1), if he proves-

(a) that, having consented to become a director of the company, he withdrew his consent before the issue of the prospectus, and that it was issued without his authority or consent;

(b) that the prospectus was issued without his knowledge or consent, and that on becoming aware of its issue, he forthwith gave reasonsable public notice that it was issued without his knowledge or consent;

(c) that, after the issue of the prospectus and before allotment thereunder, he, on becoming aware of any untrue statement therein, withdrew his consent to the prospectus and gave reasonable public notice of the withdrawal and of the reason therefore or:

(d) that-

(i) as regards every untrue statement not purporting to be made on the authority of an expert or of a public official document or statement, he had reasonable ground to believe, and did up to the time of the allotment of the shares or debentures, as the case may be, believe, that the statement was true; and


    

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(ii) as regards every untrue statement purporting to be a statement by an expert or contained in what purports to be a copy of or an extract from a report or valuation of an expert, it was a correct and fair representation of the statement, or a correct copy of, or a correct and fair extract from, the report or valuation; and he had reasonable ground to believe, and did up to the time of the issue of the prospectus believe, that the person making the statement was competent to make it and that that person had given the consent required by section 55 to the issue of the prospectus and had not withdrawn that consent before delivery of a copy of the prospectus for registration or, to the defendant”s knowledge, before allotment thereunder; and

(iii) as regards every untrue statement purporting to be a statement made by an official person or contained in what purports to be a copy of or extract from a public official document, it was a correct and fair representation of the statement, or a correct copy of, or a correct and fair extract from, the document:

Provided that this subsection shall not apply in the case of a person liable, by reason of his having given a consent required of him by section 55, as a person who has authorised the issue of the prospectus in respect of an untrue statement purporting to be made by him as an expert.

(3) A person who, apart from this subsection would, under subsection (1), be liable by reason of his having given a consent required of him by section 55, as a person who has authorised the issue of the prospectus in respect of an untrue statement purporting to be made by him as an expert, shall not be so liable, if he proves-

(a) that, having given his consent under section 55 to the issue of the prospectus, he withdrew it in writing before delivery of a copy of the prospectus for registration;

(b) that, after delivery of a copy of the prospectus for registration and before allotment thereunder, he, on becoming aware of the untrue statement, withdrew his consent in writing and gave reasonable public notice of the withdrawal and of the reason therefor; or

(c) that he was competent to make the statement and that he had reasonable ground to believe, and did up to the time of the allotment of shares or debentures believe, that the statement was true.

(4) Where-­

(a) the prospectus specifies the name of a person as a director of the company, or as having agreed to become a director thereof, and he has not consented to become a director, or has withdrawn his consent before the issue of the prospectus, and has not authorised or consented to the issue thereof; or

 


    

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(b) the consent of a person is required under section 55 to the issue of the prospectus and he either has not given that consent or has withdrawn it before the issue of the prospectus;

the directors of the company, excluding those without whose knowledge or consent the prospectus was issued, and every other person who authorised the issue thereof; shall be liable to indemnify the person referred to in clause (a) or clause (b), as the case may be; against all damages, costs and expenses to which he may be made liable by reason of his name having been inserted in the prospectus or of the inclusion therein of a statement purporting to be made by him as an expert, as the case may be, or in defending himself against any suit or legal proceeding brought against him in respect thereof:

Provided that a person shall not be deemed for the purposes of this subsection to have authorised the issue of a prospectus by reason only of his having given the consent required by section 55 to the inclusion therein of a statement purporting to be made by him as an expert.

(5) Every person who becomes liable to make any payment by virtue of this section may recover contribution, as in cases of contract, from any other person who, if sued separately, would have been liable to make the same payment, unless the former person was, and the latter person was not, guilty of fraudulent misrepresentation.

(6) For the purposes of this section-

(a) the expression “promoter” means a promoter who was a party to the preparation of prospectus or a portion thereof containing the untrue statement, but does not include any person by reason of his acting in a professional capacity for persons engaged in procuring the formation of the company; and

(b) the expression “expert” has the same meaning as in section 55.

60. Criminal liability for misstatements in prospectus.-(1) Where a prospectus includes any untrue statement, every person who signed or authorised the issue of the prospectus shall be punishable with imprisonment for a term which may extend to two years, or with fine which may extend to ten thousand rupees, or with both, unless he proves either that the statement was immaterial or that he had reasonable ground to believe, and did up to the time of the issue of the prospectus believe, that the statement was true.

(2) A person shall not be deemed for the purposes of this section to have authorised the issue of a prospectus by reason only of his having given-

(a) the consent required by section 55 to the inclusion therein of a statement purporting to be made by him as an expert, or

(b) the consent required by sub-section (5) of section 57.


    

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61. Document containing offer of shares or debentures for sale to be deemed prospectus.-(1) Where a company allots or agrees to allot any shares in or debentures of the company with a view to all or any of those shares or debentures being offered for sale to the public, any document to which the offer for sale to the public is made shall, for all purposes, be deemed to be a prospectus issued by the company; and all enactments and rules of law as to the contents, filing and registration of a prospectus and as to liability in respect of statements in and omissions from a prospectus, or otherwise relating to a prospectus, shall apply with the modifications, specified in subsections (3), (4) and (5), and have effect accordingly, as if the shares or debentures had been offered to the public for subscription and as if persons accepting the offer in respect of any shares or debentures, were subscribers for those shares or debentures, but without prejudice to the liability, if any, of the persons by whom the offer is made in respect of misstatement contained in the document or otherwise in respect thereof.

(2) For the purposes of this Ordinance, it shall, unless the contrary is proved, be evidence that an allotment of, or an agreement to allot, shares or debentures was made with a view to the shares or debentures being offered for sale to the public if it is shown-

(a) that an offer of the shares or debentures or of any of them for sale to the public was made within one year after the allotment or agreement to allot;

(b) that at the date when the offer was made; the whole of the consideration to be received by the company in respect of the shares or debentures had not been received by it; or

(c) that an offer of the shares or debentures or of any of them for sale to the public was made in pursuance of an understanding to which the company was directly or indirectly a party or a condition imposed by any authority in relation to the position, business or privileges of the company.

(3) For the purposes of this section, section 53 shall have effect as if it required a prospectus to state, in addition to the .matters required by that section to be stated in a prospectus,-

(a) the net amount of the consideration received or to be received by the company in respect of the shares or debentures to which the offer relates; and

(b) the place and time at which the contract under which the said shares or debentures have been or are to be allotted may be inspected.

(4) For the purposes of this section, section 57 shall have effect as if the persons making the offer were persons named in a prospectus as directors of a company.

(5) Where a person making an offer to which this section relates is a company or a firm, it shall be sufficient if the document referred to in sub-section (1) is signed on behalf of the company or firm by two directors of the company or by not less than one-half of the partners in the firm, as the case may be, and any such director or partner may sign by his agent authorised in writing.


    

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62. Offer of shares or debentures for sale by certain persons.-(1) No person who holds more than ten percent of the shares or debentures of a company shall offer for sale to the public any share or debenture of the company held by him except with the approval of the Authority.

(2) Any document by which an offer for sale to the public is made by any such person as is referred to in sub-section (1) shall, for all purposes, be deemed to be a prospectus issued by a company, and all enactments and rules of law as to the contents, filing and registration of a prospectus and as to the liability in respect of statements in -and omissions from a prospectus, or otherwise relating to a prospectus, shall apply with the modifications specified in subsections (3) and (4), and have effect accordingly, but without prejudice to the liability, if any, of the persons by whom the offer is made in respect of misstatements contained in the document or otherwise in respect thereof.

(3) For the purposes of this section, section 57 shall have effect as if the person making the offer were a person named in a prospectus as director of a company.

(4) Where a person making an offer to which this section relates is a company or a firm, it shall be sufficient if the document referred to in sub-section (2) is signed on behalf of the company or firm by two directors of the company or not less than one-half of the partners in the firm, as the case may be, and any such director or partner may sign by his agent authorised in writing.

1[(5) A notice, circular, advertisement or other document soliciting bids, offers, proposals or tenders for sale of shares or other securities acquired in the course of normal business or for negotiating sale thereof or expressing an intention to disinvest such shares or other securities issued by a scheduled bank or a financial institution shall not be deemed to be a prospectus or an offer for sale to the public for the purposes of sections 61 and 62].

63. Interpretation of provisions relating to prospectus.-(1) For the purposes of the foregoing provisions relating to a prospectus,-

(a) a statement included in a prospectus shall be deemed to be untrue, if the statement is misleading in the form and context in which it is included; and

(b) where the omission from a prospectus of any matter is calculated to mislead, the prospectus shall be deemed, in respect of such omission, to be a prospectus in which an untrue statement is included.

 

 


1Added by the Banking and Financial (Amdt. of Laws) Ordinance, 1984 (57 of 1984), s. 2 and Sch.

    

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(2) For the purposes of sections 59 and 60 and clause (a) of sub-section (1) of this section, the expression “included”, when used in reference to a prospectus, means included in the prospectus itself or contained in any report or memorandum appearing on the face thereof or by reference incorporated therein or issued herewith.

64. Newspaper advertisement of prospectus. Where any prospectus is published as a newspaper advertisement, it shall not be necessary in the advertisement to comply with the requirement of sub-clause (1) of clause (1) of section 1 of Part I of the Second Schedule in so far as the said provisions require the contents of the memorandum or the signatories thereto, or the number of shares subscribed for by them, to be specified.

65. Construction of references to offering shares or debentures to the public, etc. -(1) Any reference in this Ordinance or in the articles of a company to offering of shares or debentures to the public, or to invitation to the public to subscribe for shares or debentures, shall, unless otherwise expressly provided in this Ordinance, include a reference to offering of shares or debentures to any section of the public or to invitation to any section of public to subscribe for shares or debentures, as the case may be.

Explanation.- The term “section of the public” includes existing members or debenture holders of the company or clients of the person issuing the prospectus.

(2) No offer or invitation shall be treated as made to the public by virtue of subsection (1) if the offer or invitation can properly be regarded, in all the circumstances-

(a) as not being calculated to result, directly or indirectly, in the shares or debentures becoming available for subscription or purchase by persons other than those receiving the offer or invitation; or

(b) otherwise as being a domestic concern of the persons making and receiving the offer or invitation.

(3) Without prejudice to the generality of sub-section (2), a provision in a company”s articles prohibiting invitations to the-public to subscribe for shares or debentures shall not be taken as prohibiting the making to members or debenture holders of an invitation which can properly be regarded in the manner set forth in that subsection.

(4) The provisions of this Ordinance relating to private companies shall be construed in accordance with the provisions contained in sub-sections (1) to (3).


    

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66. Penalty for fraudulently inducing persons to invest money. Any person who, either by knowingly or recklessly making any statement, promise or forecast which is false, deceptive or misleading or by any dishonest concealment of material facts, induces or attempts to induce another person to enter into, or to offer to enter into,-

(a) any agreement for, or with a view to, acquiring, disposing of, subscribing for, or underwriting shares or debentures; or

(b) any agreement the purpose or pretended purpose of which is to secure a profit to any of the parties from the yield of shares or debentures, or by reference to fluctuations in the value of shares or debentures;

shall be punishable with imprisonment of either description for a terns which may extend to three years, or with fine which may extend to twenty thousand rupees, or with both.

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 Authority may, from time to time, specify, either generally or in a particular case.

(2) The Authority 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 sub-section (2), or makes an incorrect statement, declaration or verification in the application for allotment of shares, shall be liable to a fine which may extend to ten thousand rupees.

68. Restriction as to allotment.-(1) No allotment shall be made of any share capital of a company offered to the public for subscription unless the amount stated in the prospectus as the minimum amount which in the opinion of the directors must be raised by the issue of share capital in order to provide for the matters specified in clause (5) of section 1 of Part I of the Second Schedule has been subscribed, and the full amount thereof has been paid to and received in cash by the company.


    

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(2) The amount referred to in sub-section (1) as the amount stated in the prospectus shall be reckoned exclusively of any amount payable otherwise than in cash and is in this Ordinance referred to as the minimum subscription.

(3) All moneys received from applicants for shares shall be deposited and kept in a separate bank account in a scheduled bank until returned in accordance with the provisions of subsection (5) or until the certificate to commence business is obtained under section 146.

(4) The amount payable on application on each share shall be the full nominal amount of the share.

(5) If the conditions aforesaid have not been complied with on the expiration of forty days after the first issue of the prospectus, all moneys received from applicants for shares shall be forthwith repaid to them without surcharge, and, if any such money is not so repaid within fifty days after the issue of the prospectus, the directors of the company shall be jointly and severally liable to repay that money with surcharge at the rate of one and a half percent. for every month or part thereof from the expiration of the fiftieth day:

Provided that a director shall not be liable if he proves that the default in repayment of the money” was not due to any misconduct or negligence on his part.

(6) Any condition purporting to require or bind any applicant for shares to waive compliance with any requirement of this section shall be void.

(7) This section, except sub-section (4) thereof, shall not apply to any allotment of shares subsequent to the first allotment of shares offered to the public for subscription.

(8) In the case of the first allotment of share capital payable in cash of a company which does not issue any invitation to the public to subscribe for its shares, no allotment shall be made unless the minimum subscription, that is to say-

(a) the amount, a any, fixed by the memorandum or articles and specified in the statement in lieu of prospectus as the minimum subscription referred to in sub-section (1) upon which the directors may proceed to allotment; or

(b) 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;.

has been subscribed and the full nominal amount of each share payable in cash has been paid to and received by the company.

(9) Subsection (8) shall not apply to a private company.


    

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(10) In the event of any contravention of any provisions of this section, every promoter, director or other person knowingly responsible for such contravention shall be liable to a fine not exceeding ten thousand rupees and in the case of a continuing contravention to a further fine not exceeding two hundred rupees for every day after the first during which the contravention continues.

(11) For the purpose of this section, the expression “promoter” has the same meaning as in section 59.

69. Statement en lieu of prospectus.-(1) A company having a share capital, which does not issue a prospectus on or with reference to. its formation, or which has issued such a prospectus but has not proceeded to allot any of the shares offered to the public for subscription, shall not allot any of its shares or debentures unless, at least three days before the first allotment of either share or debenture, there has been delivered to the registrar for registration a statement in lieu of prospectus signed by every person who is named therein as a director or proposed director of the company or by his agent authorised in writing, in the form and containing the particulars set out in section 1 of Part II of the Second Schedule and, in the cases mentioned in section 2 of that Part, setting out the reports specified therein, and the said sections 1 and 2 shall have effect subject to the provisions contained in section 3 of that Part.

(2) Every statement in lieu of prospectus delivered under sub-section (1), where the persons making any such report as aforesaid have made therein, or have without giving the reasons indicated therein, made any such adjustments as are mentioned in clause (5) of Part 11 of the Second Schedule, shall have endorsed thereon or attached thereto a written statement signed by those persons, setting out the adjustments and giving the reasons thereof.

(3) This section shall not apply to a private company.

(4) If a company acts in contravention of sub-section (1) or sub-section (2), the company, and every officer of the company who wilfully authorises or permits the contravention, shall be liable to a fine not exceeding five thousand rupees and in the case of a continuing contravention with a further fine not exceeding one hundred rupees for every day after the first during which the contravention continues.

(5) Where a statement in lieu of prospectus delivered to the registrar under sub­-section (1) includes any untrue statement, any person who signed or authorised the delivery of the statement in lieu of prospectus for registration shall be punishable with imprisonment for a term which may extend to two years, or with fine which may extend to ten thousand rupees, or with both, unless he proves either that the statement was immaterial or that he had reasonable ground to believe, and did up to the time of the delivery for registration of the statement in lieu of prospectus believe, that the statement was true.


    

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(6) For the purposes of this action,-

(a) a statement included in a statement in lieu of prospectus shall be deemed to be untrue if it is misleading in the form and context in which it is included; and

(b) where the omission from a statement in lieu of prospectus of any matter is calculated to mislead, the statement in lieu of prospectus shall be deemed, in respect of such omission, to be a statement in lieu of prospectus in which an untrue statement is included.

(7) For the purposes of sub-section (5) and clause (a) of sub-section (6), the expression “included”, when used with reference to a statement in lieu of prospectus, means included in the statement in lieu of prospectus itself or contained in any report or memorandum appearing on the face thereof, or by reference incorporated therein, or issued therewith.

70. Effect of irregular allotment.-(1) An allotment made by a company to an applicant in contravention of the provisions of section 68 or 69 shall be voidable at the instance of the applicant within thirty days after the holding of the statutory meeting of the company and not later, or in any case where the company is not required to hold a statutory meeting or where the allotment is made after the holding of the statutory meeting, within thirty days after the date of the allotment, and not later, and shall be so voidable notwithstanding that the company is in course of being wound up.

(2) If any officer of a company knowingly contravenes or permits or authorises the contravention of any of the provisions of section 68 or 69 with respect to allotment, he shall, without prejudice to any other liability, be liable to compensate the company and the allottee respectively for any loss, damages or costs which the company or the allottee may have sustained or incurred thereby:

Provided that proceedings to recover any such loss, damages or costs shall not be commenced after the expiration of two years from the date of the allotment.

71. 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 take a decision within ten days of the closure of the subscription lists as to what applications have been accepted or are successful and refund the money in the case of the unaccepted or unsuccessful applications within ten days of the date of such decision.

(2) If the refund required by sub-section (1) is not made within the time specified therein, the directors of the company shall be jointly and severally liable to repay that money with surcharge at the rate of one and a half percent. for every month or part thereof from the expiration of the fifteenth day and, in addition, to a fine not exceeding five thousand rupees and in the case of a continuing offence to a further fine not exceeding one hundred rupees for every day after the said fifteenth day on which the default continues:


    

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Provided that a director shall not be liable if he proves that the default in making the refund was not due to any misconduct or negligence on his part.

(3) Any condition purporting to require or bind any applicant for shares or other securities to waive any requirement of this section shall be void.

72. Allotment of shares and debentures to be dealt in on stock 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 debentures offered thereby to be dealt in on any stock 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 applicant for permission by or on behalf of the stock exchange.

(2) Where the permission has not been applied for as aforesaid, 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 one and a half percent. for every month or part thereof from the expiration of the eighth day and, in addition, to a fine not exceeding five thousand rupees and in the case of a continuing offence to a further fine of one hundred rupees for every day after the said eighth day on which the default continues:

Provided that a director shall not be liable if he proves that the default in the repayment of the money was not due to any misconduct or negligence on his part.

(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 subsection, the company and every officer of the company who knowingly and wilfully authorises or permits the default shall be liable to a fine not exceeding five thousand rupees.

(4) Any condition purporting to require or bind any applicant for shares or debentures to waive compliance with any requirement of this section shall be void.

(5) 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.


    

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(6) This section shall have effect--

(a) in relation to any shares or debentures agreed to be taken by a person underwriting an offer thereof by a prospectus as if he had applied therefore 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 subsection (2) to repay the money received from applicant, and reference to the company”s liability under that subsection 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 knowingly and wilfully authorises or permits the default.

73. Return as to allotments.-(1) Whenever a company having a share capital makes allotment of its shares, the company shall, within thirty 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, 1[“and such particulars as may be prscribed”] of each allottee, and the amount paid on each share; and

1[(a) in clause (a), for the commas and words “, the name, father”s name or in the case of a married woman, her husband”s or deceased husband”s name, address and occupation” the words “and such particulars as may be prescribed” shall be substituted; and]

(b) in the case of shares allotted as paid-up otherwise than in cash, produce for the inspection and examination of the registrar 8 contract in writing constituting the title of the allottee to the allotment together with any contract of sale., or for senlices or other consideration in respect of which that allotment was made, such contracts being duly stamped, and file with the registrar copies verified in the prescribed manner of all such contracts and a return stating the number and nominal amount of shares so allotted, the amount to be treated as paid-up, and the consideration for which they have been allotted; and

1[(b) in clause (c), in sub‑clause (i), for the words and commas “the name, father”s name and in the case of a married woman, her husband”s or deceased husband”s name, address and occupation” the words “such particulars as may be prescribed” shall be substituted.]

 

 


1Subs. by Ord. 100 of 02, s. 2 & Sch.

    

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(c) 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 1[“such particulars as may be prescribed.”] of each allottee together with a copy of the resolution authorising the issue of such shares;

(ii) in the case of issue at shares at a discount, a copy of the resolution passed by the company authorising such issue together with a copy of the order of the Authority sanctioning the issue, and where the maximum rate of discount exceeds ten percent. copy of the order of the Authority 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 service 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) Where such a contract as is mentioned in clause (b) of sub-section (1) is not reduced to writing, the company shall, within thirty days after, the allotment, file with the registrar the prescribed particulars of the contract stamped with the same stamp duty as would have been payable if the contract had been reduced to writing, and these particulars shall be deemed to be an instrument within the meaning of the Stamp Act, 1899 (II of 1899), and the registrar may as a condition of filing the particulars, require that the duty payable thereon be adjudicated under section 31 of that Act.

(3) If the registrar is satisfied that in the circumstances of any particular case the period of thirty days specified in sub-sections (1) and (2) 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) and (2) shall have effect in that particular case as if for the said period of thirty days the extended period allowed by the registrar were substituted.

 

 


1Subs. by Ord. 100 of 02, s. 2 & Sch.

 

 

 

  

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(4) If default is made in complying with any requirement of this section, the company and every officer of the company who is knowingly a party to the default shall be laible to a fine not exceeding five hundred rupees for every day during which the default continues.

1[(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 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 subsection, 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 Authority 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 DEBENTURES

74. Limitation of time for issue of certificates.-(1) Every company shall, within ninety days after the allotment of any of its shares, debentures or debenture stock, and within forty-five days after the application for the registration of the transfer of any such shares, debentures or debenture stock, complete and have ready for delivery the certificates of all shares, the debentures, and the certificates of all debenture stock allotted or transferred, and unless sent by post or delivered to the person entitled thereto, within that period, shall give notice of this fact to the shareholders or debenture-holders, as the case may be, immediately thereafter in the manner prescribed, unless the conditions of issue-of the shares, debenture or debenture stock otherwise provide:

Explanation.- The expression “transfer”, for the purposes of this subsection, means a transfer duly stamped and otherwise valid, and does not include such a transfer as the company is for any reason entitled to refuse to register and does not register [:]2

2[Provided that, the company shall, within five days after an application is made for the registration of the transfer of any shares, debentures or debenture stock to a central depository, register such transfer in the name of the central depository.]

(2) if default is made in complying with the requirements of sub-section (1) the company, and every officer of the company who is knowingly a party to the default, shall be liable to a fine not exceeding one hundred rupees for every day during which the default continues.


1Added by the Banking and Financial (Amdt. of Laws) Ordinance, 1984 (57 of 1984), s. 2 and Sch.,

2Subs. and Added by Act XIX of 1997, s. 34 and Sch. (w.e.f. 10-6-97).

    

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75. Issue of duplicate certificates.-(1) A duplicate of a certificate of shares, debentures or debenture stock issued under section 74 shall be issued by the company within forty-five 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 shall not charge fee exceeding the sum prescribed 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, alongwith the reasons within thirty days from the date of the application, to the applicant.

(4) If default is made in complying with the requirements of this section, the company and every officer of the company who is knowingly a party to the default shall be liable to a fine not exceeding five hundred rupees.

(5) If a company with intent to defraud, renews a certificate or issues a duplicate thereof, the company shall be punishable with fine which may extend to twenty thousand rupees and every officer of the company who is in default shall be punishable with imprisonment for a term which may extend to six months, or with fine which may extend to ten thousand rupees, or with both.

TRANSFER OF SHARES AND DEBENTURES

76. Transfer of shares and debentures.-(1) An application for registration of the transfer of shares and debentures in a company may be made either by the transferor or the transferee, and subject to the provisions of this section, the company shall enter in its register of members the name of the transferee in the same manner and subject to the same conditions as if the application was made by the transferee:

Provided that the company shall not register a transfer of shares or debentures unless proper instrument of transfer duly stamped and executed by the transferor and the transferee has been delivered to the company alongwith the script.

(2) Where a transfer-deed is lost, destroyed or mutilated before its lodgement, 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 debentures if the transferee proves to the satisfaction of the directors of the company that the transfer-deed duly executed has been lost, destroyed or mutilated:


    

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Provided that before registering the transfer of shares or debentures the company may demand such indemnity as it may think fit.

(3) All references to the shares or debentures 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 debentures made from time to-time and such register shall be open to inspection by the members and supply of copy thereof in the manner stated in section 150.

(5) Nothing in sub-section (1) shall prevent a company from registering as shareholder or debenture-holder a person to whom the right to any share or debenture of the company has been transmitted by operation of law.

(6) In the case of a public company, a financial institution duly approved by the Authority may be appointed as the transfer agent on behalf of the company.

(7) If a company makes default in complying with any of the provisions of subsections (1) to (4), it shall be liable to a fine not exceeding five thousand rupees and every officer of the company who is knowingly or wilfully a party to such default shall be liable to a like penalty.

77. Directors not to refuse transfer of shares. The directors of a company shall not refuse to transfer any fully paid shares or debentures unless the transfer-deed is, for any reason, defective or invalid:

Provided that the company shall within thirty days 1[or, where the transferee is a central depository, within five days] from the date on which the instrument of transfer was lodged with in notify the defect or invalidity to the transferee who shall, after the removal of such defect or invalidity, be entitled to relodge 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.

78. Notice of refusal to transfer.-(1) If a company refuses to register a transfer of any shares or debentures, the company shall, within thirty 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.

 

 


1Ins. by Act XIX of 1997, s. 34 and Sch., (w.e.f. 10-6-97)

    

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(2) If default is made in complying with section 77 or this section, the company and every officer of the company who is a party to the default shall be liable to a fine not exceeding [twenty] thousand rupees and to a further fine not exceeding 1[one thousand] rupees for every day after the first during which the default continues.

1[“78A. Appeal against refusal for registration of transfer.-(1) The transferor or transferee, or the person who gave intimation of the transmission by operation of law, as the case may be, may appeal to the Commission against any refusal of the company to register the transfer or transmission, or against any failure on its part, within the period referred to in sub-section (1) of section 78 either to register the transfer or transmission or to send notice of its refusal to register the same.

(2) An appeal to the Commission under sub-section (1) may be preferred-

(a) in case the appeal is against the refusal to register a transfer or transmission, within two months of the receipt by him of the notice of refusal; and

(b) in case the appeal is against the failure referred to in sub-section (1) within two months from the expiry of the period referred to in sub-section (1) of section 78.

(3) The Commission shall, after causing reasonable notice to be given to the company and also to, the transferor and the transferee or, as the case may require, to the person giving intimation of the transmission by operation of law and the previous owner, if any, and giving them a reasonable opportunity to make their representation, may, by an order in writing, direct either that the transfer or transmission shall be registered by the company or that it need not be registered by it and in the former case, the company shall give effect to the decision within fifteen days of the receipt of the order.

(4) Before making an order under sub-section (3) on appeal against any refusal of the company to register any transfer or transmission the Commission may require the company to disclose to it the reasons for such refusal.

(5) 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.

(6) If default is made in giving effect to the order of the Commission within the period specified in sub-section (3), every director and officer of the company who is in default, shall be punishable with fine which may extend to five hundred rupees, for every day after the first during which the default continues.”]

 

 

 


1Subs. and Ins. by Ord. 100 of 02, s. 2 and Sch.

    

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79. Transfer to successor-in-interest. The transfer of shares or debentures from a deceased member or holder to his lawful nominee successor-in-interest shall be made on application by such nominee successor duly supported by a document evidencing nomination or lawful award of the relevant property to such nominee or successor and thereupon the nominee -or successor shall be entered as a member:

Provided that the company may, on furnishing of a suitable indemnity by such nominee or successor, proceed to transfer the security in his name and enter him in the register of members.

80. 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 one or more persons the right to acquire the interest in the shares therein specified in the event of his death:

Provided that, where a member nominates more than one person, he shall specify in the nomination the extent of right conferred upon each of the nominees, so however that the number of shares therein specified are possible of ascertainment in whole numbers.

(2) Where any nomination, duly made and deposited with the company as aforesaid, purports to confer upon any person the right to receive the whole or any divisible part of the interest therein mentioned, the said person shall, on the death of the member, become entitled, to the exclusion of all other persons, to become the holder of the shares or the part thereof, as the case may be, and on receipt of proof of the death of the member alongwith the relative scrips, the transmission of the said shares shall be registered in favour of the nominee to the extent of his interests unless-

(a) such nomination is at any time varied by another nomination made and deposited before the death of the member in like manner or expressly cancelled by notice in writing to the company; or

(b) such nomination at any time becomes invalid by reason of the happening of some contingency specified therein;


    

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and if the said person predeceases the member, the nomination shall, so far as it relates to the right conferred upon the said person, become void and of no effect:

Provided that where provision has been duly made in the nomination conferring upon some other person such right in the stead of the person deceased, such right shall, upon the deceased as aforesaid of the said person, pass to such other person.

(3) The person to be nominated as aforesaid shall not be a person other than the following relatives of the member, namely, a spouse, father, mother, brother, sister and son or daughter, including a step or adopted child.

(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.

81. Transfer by nominee or legal representative. A transfer of the shares or debentures or other interest of a deceased member of a company made by his nominee or legal representative shall, although the nominee or legal representative is not himself a member, be valid as if he had been a member at the time of execution of the instrument of transfer.

COMMISSION, DISCOUNT, PREMIUM AND REDEEMABLE PREFERENCE SHARES

82. Power to pay certain commissions, and prohibition of payment of other commissions, discounts, etc.-(1) It shall be lawful for a company to pay a commission to any person in consideration of his subscribing or agreeing to subscribe, whether absolutely or conditionally, for any shares in or debentures of the company, or procuring or agreeing to procure subscriptions, whether absolute or conditional for any shares in or debentures of the company if-

(a) the payment of the commission is authorised by the articles;

(b) the commission paid or agreed to be paid does not exceed such rate percent. of, amount as may generally or in a particular case be fixed by the Authority; and

(c) the amount or rate percent. of the commission paid or agreed to be paid is-

(i) in the case of shares or debentures offered to the public for subscription, disclosed in the prospectus; or

 


    

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(ii) in the case of shares or debentures not offered to the public for subscription, disclosed in the statement in lieu of prospectus, or in a statement in the prescribed form signed in like manner as a statement in lieu of prospectus and delivered before the payment of the commission to the registrar for registration and, where a circular or notice, not being a prospectus, inviting subscription for the shares or debentures, is issued, also disclosed in that circular or notice; and

(d) the number of shares or debentures which persons have agreed for a commission to subscribe absolutely is disclosed in the manner aforesaid.

(2) Save as aforesaid and save as provided in section 84, no company shall allot any of its shares or debentures, or apply any of its moneys, either directly or indirectly, in payment of any commission, discount or allowance, to any person in consideration of his subscribing or agreeing to subscribe, whether absolutely or conditionally, for any shares in or debentures of the company, or procuring or agreeing to procure subscriptions, whether absolute or conditional, for any shares in or debentures of the company, whether the shares, debentures or money be so allotted or applied by being added to the purchase money of any property acquired by the company or to the contract price of any work to be executed for the company, or the money be paid out of the nominal purchase money or contract price, or otherwise.

(3) Nothing in this section shall affect the power of any company to pay such brokerage as it has heretofore been lawful for a company to pay, but brokerage shall not in any case exceed one percent. of the price at which shares or debentures issued have been actually and not merely sold through the broker or shall be paid at not more than such other rate percent. as may from time to time be specified by the Authority, generally or in a particular case.

(4) A vendor, promoter, or other person who receives payment in shares, debentures or money from a company shall have and shall be deemed always to have had power to apply any part of the shares, debentures or money so received in payment of any commission the payment of which, if made directly by the company, would have been legal under this section.

(5) If default is made in complying with the provisions of this section, the company and every officer of the company who knowingly and wilfully is in default shall-

(a) for non-compliance with the provisions of clause (b) of sub-section (1), be liable to a fine not exceeding two thousand rupees;

 


    

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(b) for non-compliance with the provisions of clause (c) or clause (d) of that subsection, be liable to a fine not exceeding one thousand rupees; and

(c) for non-compliance with any other provisions of this section, be liable to a fine not exceeding five hundred rupees.

83. Application of premium received on issue of shares.-(1) Where a company issues shares at a premium, whether in cash or otherwise, a sum equal to the aggregate amount or the value of the premiums on those shares shall be transferred to an account, to be called “the share premium account”; and the provisions of this Ordinance relating to the reduction of the share capital of a company shall, except as provided in this section, apply as if the share premium account were paid-up capital of the company.

(2) The share premium account may, notwithstanding anything contained in sub-section (1), be applied by the company—

(a) in writing off the preliminary expenses of the company;

(b) in writing off the expenses of, or the commission paid or discount allowed on, any issue of shares or debentures of the company;

(c) in providing for the premium payable on the redemption of any redeemable preference shares or debentures of the company; or

(d) in paying up un-issued shares of the company to be issued to members of the company as fully paid bonus shares.

(3) Where a company has, before the commencement of this Ordinance, issued any shares at a premium, this section shall apply as if the shares had been issued after such commencement:

Provided that any part of the premium which has been so applied that it does not at the commencement of this Ordinance form an identifiable part of the company”s reserves within the meaning of the Fourth Schedule or the Fifth Schedule shall be disregarded in determining the sum to be included in the share premium account.

84. Power to issue shares at a discount.-(1) Subject to the provisions of this section, it shall be lawful for a company to issue shares in the company at a discount:

(a) the issue of the shares at a discount must be authorised by resolution passed in general meeting of the company and must be sanctioned by the Authority;


    

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(b) the resolution must specify the maximum rate of discount, 1[*  *  *] at which shares are to be issued;

(c) not less than one year must at the date of issue have elapsed since the date on which the company was entitled to commence business; and

(d) the shares to be issued at a discount must be issued within sixty days after the date on which the issue is sanctioned by the Authority or within such extended time as the Authority may allow.

(2) Where a company has passed a resolution authorising the issue of shares at a discount, it may apply to the Authority for an order sanctioning the issue; and on such application the Authority may, if, having regard to all the circumstances of the case, it thinks proper so to do, make an order sanctioning the issue on such terms and conditions as it thinks 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 balance-sheet issued by the company subsequent to the issue of shares, shall contain particulars of the discount allowed on the issue of the shares or of so much of that discount as has not been written off at the date of the issue of the prospectus or balance-sheet.

(5) If default is made in complying with sub-section (4), the company and every officer of the company who is in default shall be liable to a fine not exceeding two thousand rupees.

85. Redemption of preference shares.-(1) Subject to the provisions of this section, a company limited by shares may redeem the preference shares issued by it:

Provided that-

(a) no such shares shall be redeemed except out of profits of the company which would otherwise be available for dividend or from out of a sinking fund created for this purpose or out of the proceeds of a fresh issue of shares made for the purposes of the redemption or out of sale proceeds of any property of the company;

(b) no such shares shall be redeemed unless they are fully paid;

(c) where any such shares are redeemed otherwise than out of the proceeds of afresh issue, there shall out of profits which would otherwise have been available for dividned be transferred to a reserve fund, to be called “the capital redemption reserve fund”, a sum equal to the amount applied in redeeming the shares, and the provisions of this Ordinance relating to the reduction of the share capital of a company shall, except as provided in this section, apply as if the capital redemption reserve fund were paid-up share capital of the company;

 


   1Omitted by Ord. 100 of 02, s. 2 and Sch. 

    

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(d) where any such shares are redeemed out of the proceeds of afresh issue, the premium, if any payable on redemption must have been provided for out of the profits of the company before the shares we redeemed or out of the share premium account.

(2) If a company fails to comply with the provisions of sub-section (1), the company and every officer of the company who knowingly and wilfully is in default shall be liable to a fine not exceeding five thousand rupees.

(3) The redemption of preference shares under this section by a company shall not be taken as reducing the amount of its authorised share capital.

(4) Subject to the provisions of this section, the redemption of preference shares thereunder may be effected on such terms and in such manner as may be provided by the articles of the company.

FURTHER ISSUE OF CAPITAL

86. Further issue of capital.-(1) Where the directors decided to increase the capital of the company by the issue of further shares, such shares shall be offered to the members in proportion to the existing shares held by each member, irrespective of class, and such offer shall be made by notice specifying the number of shares to which the member is entitled, and limiting a time within which the offer, if not accepted, will be deemed to be declined [:]1

1[Provided that the Federal Government may, on an application made by any public company on the basis of a special resolution passed by it, allow such company to raise its further capital without issue of right shares] 

1[Provided further that a public company may reserve a certain percentage of further issue of its employees under “Employees Stock Option Scheme” to be approved by the Commission in accordance with the rules made under this Ordinance].

(2) The offer of new shares shall be strictly in proportion to the number of existing shares held:

Provided that fractional shares shall not be offered and all fractions less than a share shall be consolidated and disposed of by the company and the proceeds from such disposition shall be paid to such of the entitled shareholders as may have accepted such offer.

(3) The offer of new shares shall be accompanied by a circular duly signed by the directors or an officer of the company authorised by them in this behalf in the form prescribed by the Authority containing material information about the affairs of the company, latest statement of the accounts and setting forth the necessity for issue of further capital.

(4) A copy of the circular referred to in sub-section (3) duly signed by the directors or an officer authorised as aforesaid shall be filed with the registrar before the circular is sent to the shareholders.


   1Subs. and added by Act I of 1995, s. 10. 

    

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(5) The circular referred to in sub-section (3) shall specify a date by which the offer, if not accepted, will be deemed to be declined.

 1[*                   *                      *                      *                      *                      *                      *] 

1[(7) if the whole or any part of the shares offered under subsection (1) is declined or is pot subscribed, the directors may allot and issue such shares in such manner as they may deem fit.]

2[87. Issue of shares in lieu of outstanding balance of any loans, etc. Notwithstanding anything contained in section 86 or the Memorandum and Articles, a company may issue ordinary shares or grant option to convert into ordinary shares the outstanding balance of any loans, advances or credit, as defined in the Banking Companies Ordinance, 1962 (LVII of 1962), or other non-interest bearing securities and obligations outstanding or having a term of not less than three years in the manner provided in any contract with any scheduled bank or a financial institution to the extent of twenty percent. of such balance:

Provided that such shares shall not be issued or option to convert the outstanding balance exercised unless in any two of the preceding three years after expiry of two years from the date of commencement of commercial production, the return on such non-interest bearing securities, obligations, loans, advances or credit has fallen below the minimum rate of return laid down by the State Bank of Pakistan for the said years].

REGULATION OF DEPOSITS

3[88. Deposits not to be invited without issuing an advertisement.-(1) The Federal Government may prescribe the limits up to which, the manner in which and the conditions subject to which deposits may be invited, accepted or retained by a company.

(2) No company shall invite, or allow any other person to invite or cause to be invited on its behalf, any deposit unless-

(a) such deposit is invited or is caused to be invited in accordance with the rules made under sub-section (1); and

(b) an advertisement, including therein a statement showing the financial position of the company, has been issued by the company in such form and in such manner as may be prescribed.

(3) The provisions of this Ordinance relating to a prospectus shall, so far as may be, apply to an advertisement referred to in sub-section (2).

 

 

 


1Omitted and Subs. by Act I of 1995, s. 10.

2Subs. by the Banking and Financial (Amdt. of Laws) Ordinance, 1984 (57 of 1984), s. 2 and Sch., for “section 87”.

3Section 88 come into force on 22-9-87, by S.R.O. 767(I)/87, dated 22-9-87.

    

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(4) Where a company accepts or invites, or allows or causes any other person to accept or invite on its behalf, any deposit in excess of the limits prescribed under sub-section (1) or in contravention of the manner or conditions prescribed under that subsection or in contravention of the provisions of sub-section (2), as the case may be,-

(a) the company shall be punishable,-

(i) where such contravention relates to the acceptance of any deposit, with fine which shall not be less than the amount of the deposit so accepted; and

(ii) where such contravention relates to the invitation for any deposit, with fine which may extend to twenty thousand rupees; and

(b) 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.

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.

(5) Nothing contained in this section shall apply to-

(i) a banking company, or

(ii) such other class of companies as the Authority may specify in this behalf:

PART VI.---SHARE CAPITAL AND DEBENTURES NATURE, NUMBERING AND CERTIFICATE OF SHARES

89. Nature of shares and certificate of shares.-(1) The shares or other interest of any member in a company shall be movable property, transferable in the manner provided by the articles of the company.

(2) Each share in a company shall have a distinctive number.

(3) A certificate under the common seal of the company specifying any shares held by any member shall be prima facieevidence of the title of the member to the shares therein specified.

CLASSES AND KINDS OF SHARES

1[90. Classes and kinds of share capital. A company limited by shares tray have different kinds of share capital and classes therein as provided by its memorandum and articles:

Provided that different rights and privileges in relation to the different classes of shares may only be conferred in such manner as may be prescribed.]

 


1Subs. by Act IV of 1999, s. 14.

    

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GENERAL PROVISIONS AS TO SHARE CAPITAL

91. Only fully paid shares to be issued. No company shall issue partly paid shares:

Provided that where a company has partly paid shares on the commencement of this Ordinance, it-

(i) shall not issue any further share capital until all the shares previously issued have become fully paid-up; and

(ii) shall pay dividend only in proportion to the amount paid up on each share.

92. Power of company limited by shares to alter its share capital.-(1) A company limited by shares, if so authorised by its articles, may alter the conditions of its memorandum so as to-

(a) increase its share 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; or

(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 shares so cancelled:

Provided that, in the event of consolidated or sub-division of shares, the rights attaching to the new shares shall be strictly proportional to the rights attaching 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 attaching 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) The powers conferred by sub-section (1) shall be exercisable by the company only in a general meeting.


    

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1[(3-A) Notwithstanding anything contained in this Ordinance 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 unsubscribed capital is insufficient, the same shall be deemed to have been increased to the extent necessary for issue of shares to a scheduled bank or financial institution in pursuance of any obligation of the company to issue shares to such scheduled bank or financial institution.]

(4) 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 Ordinance.

(5) 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.

93. Notice to registrar of consolidation of share capital, etc.-(1) Where a company having a share capital has consolidated and divided its share capital into shares of larger amount than its existing shares, it shall, within fifteen days of the consolidation and division, file notice with the registrar of the same, specifying the shares consolidated and divided.

(2) If a company makes default in complying with the requirements of sub-section (5) of section 92 or sub-section (1) of this section, it shall be liable to a fine which may extend to one hundred rupees for every day during which the default continues, and every officer of the company who knowingly and wilfully authorises or permits the default shall be liable to the like penalty.

94. Notice of increase of share capital or of members.-(1) Where a company having a share capital has resolved to increase its share capital beyond the authorised capital 1[or such capital is increased under sub-section (3-A) of section 92], and where a company not having a share capital has resolved to increase the number of its members beyond the number previously registered, it shall file with the registrar, within fifteen days after the passing of the resolution, a notice of the increase of capital or members, as the case may be, and the registrar shall record the increase [:]2

3[Provided that where default is made by a company in filing a notice of increase in the authorised capital under subsection (3-A) of section 92, the 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 scheduled bank or 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 such increase.]


1Ins. by the Banking and Financial (Amdt. of Laws) Ordinance, 1984 (57 of 1984), s. 2 and Sch.,

2Subs. ibid., for full-stop.

3Added ibid.

    

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(2) The notice to be given under subsection (1) shall include particulars of the shares to be affected and the conditions, if any, subject to which the new shares are to be issued.

(3) If a company makes default in complying with the requirements of subsection (1), it shall be liable to a fine which may extend to one hundred rupees for every day during which the default continues, and every officer of the company who knowingly and wilfully authorises or permits the default shall be liable to the like penalty.

(4) No resolution referred to in sub-section (1) shall take effect unless the notice required by that subsection to be filed with the registrar is duly sent to him.

95. Prohibition of purchase or grant of financial assistance by a company for purchase of its own or its holding company”s shares.-(1) No company shall have power to buy its own shares or the shares of its holding company [:]1

1[“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, 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.”]

(2) No company limited by shares, other than a private company, not being a subsidiary of a public company, shall give, whether directly or indirectly, and whether by means of a loan, guarantee, the provision of security or otherwise, any financial assistance for the purpose of or in connection with purchase made or to be made by any person of any shares in the company or, where the company is a subsidiary, in its holding company:

Provided that nothing in this subsection shall prevent the company from advancing or securing an advance to any of its salaried 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, if making or securing of such advance is a part of the contract of service of such employee.

(3) If a company acts in contravention of sub-section (1) or sub-section (2), the company and every officer of the company who is knowingly and wilfully in default shall be liable to a fine which may extend to ten thousand rupees if the default relates to a listed company and to two thousand rupees if the default relates to any other company.

 

 


1Subs. and added by Act IV of 2007, s. 13 (w.e.f. 1-7-07).

    

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1[(4) Nothing in this section shall prevent-

(a) a company from redeeming any shares or any other redeemable security issued in accordance with the provisions of this Ordinance, and

(b) a listed company from purchasing its own shares in accordance with the provisions of this Ordinance],

2[“95A. Power of a company to purchase its own shares.-(1) Notwithstanding anything contained in this Ordinance 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 prescribed by the Commission in this behalf, purchase its own shares (hereinafter in this section referred to as “purchase”).

(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 prescribed, 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,-

(i) an allotment of shares as fully paid bonus shares in respect of the treasury shares; and

(ii) the payment of any amount payable on the redemption of the treasury shares, if they are redeemable.

(4) The board of directors shall recommend the purchase to the members. The Decision of the board of directors shall clearly specify the number of shares proposed to be purchased, purpose of purchase i.e., cancellation or holding the shares as treasury shares, the purchase price, period within which purchase shall be made, source of funds, justification for the purchase and effect on the financial position of the company.

(5) The purchase shall be made only under the authority of a special resolution.

(6) The purchase shall be made within a period prescribed by the regulations.


1Susb. and ins. by Act IV of 1999, s. 14.

2Subs. by Ord. I of 2009, s. 2 (valid upto 31-05-09)

    

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(7) The proposal of the board of directors to purchase shares shall be communicated to the Commission and to the stock exchange on which shares of the company are listed on conclusion of the board meeting.

(8) The purchase shall always be made in cash and shall be out of the distributable profits or reserves specifically maintained for the purpose.

(9) The purchase shall be made either through a tender offer or through stock exchange as prescribed by the regulations.

(10) The company may dispose of the treasury shares as prescribed by the regulations.

(11) Where a purchase 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 purchase;

(d) the date of cancellation or reissuance 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) Whosoever contravenes any provision of this section or any regulations framed hereunder shall be punishable with fine which may extend to thirty million rupees and shall also be individually and severally liable for any and all losses or damages arising out of such contravention.”]

REDUCTION OF SHARE CAPITAL

96. Reduction of share capital.-(1) 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, and in particular and with prejudice to the generality of the foregoing powers may-

(i) extinguish or reduce the liability on any of its shares in respect of share capital not paid up; or


    

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(ii) either with or without extinguishing or reducing liability on any of its shares, cancel any paid-up share capital which is lost or unrepresented by available assets; or

(iii) either with or without extinguishing or reducing liability on any of its shares, pay off any paid-up share capital which is in excess of the needs of the company;

and may, if and so far as is necessary, alter its memorandum by reducing the amount of its share capital and of its shares accordingly.

(2) A special resolution under sub-section (1) is in this Ordinance referred to as a resolution for reducing share capital.

97. Application to Court for confirming order. Where a company has passed a resolution for reducing share capital, it may apply by a petition to the Court for an order confirming the reduction.

98. Addition to name of company of “and reduced”. On and from the passing by a company of a resolution for reducing share capital, or where the reduction does not involve either the diminution of any liability in respect of unpaid share capital or the payment to any shareholder of any paid-up share capital, then on and from the making of the order confirming the reduction, the company shall, unless otherwise directed by the Court for any special reasons, add to its name until such date as the Court may fix, the words “and reduced” as the last words thereof, and those words shall, until that date, be deemed to be part of the name of the company:

Provided that, where the reduction does not involve either the diminution of any liability in respect of unpaid share capital, or payment to any shareholder of any paid-up share capital, the Court may, if it thinks expedient, dispense with the addition of the words “and reduced”.

99. Objection by creditors and settlement of list of objecting creditors.-(1) Where the proposed reduction of share capital involves either diminution of liability in respect of unpaid share capital or 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, on the date fixed by the Court, is entitled to any debt or claim which, if that date were the date of commencement of the winding up of the company, would be admissible in proof against the company, 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 day or days 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.


    

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100. 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,-

(i) 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

(ii) 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.

101. Order confirming reduction. If the Court is satisfied with respect to every creditor of the company who under this Ordinance 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.

102. Registration of order and minute of reduction.-(1) The registrar on production to him of an order of the Court confirming the reduction of the share capital of a company, and on the filing with him of a certified copy of the order and of a minute approved by the Court and showing, with respect to the share capital of the company as altered by the order, the amount of the share capital, the number of shares into which it is to be divided and the amount of each share, and the amount, if any, at the date of the registration deemed to be paid-up on each share, shall register the order and minute.

(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) Notice of the registration shall be published in such manner as the Court may direct.

(4) The registrar shall certify under his hand the registration of the order and minute, and his certificate shall be conclusive evidence that all the requirements of this Ordinance 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 minute.

103. Minute to form part of memorandum.-(1) The minute when registered shall be deemed to be substituted for the corresponding part of the memorandum of the company, and shall be valid and alterable as if it had been originally incorporated therein, and shall be embodied in every copy of the memorandum issued after its registration.



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(2) If a company makes default in complying with the requirements of subsection (1), it shall be liable to a fine which may extend to fifty rupees for each copy in respect of which default is made, and every officer of the company who knowingly and wilfully authorises or permits the default shall be liable to the like penalty.

104. 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 reduced 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 minute:

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 Ordinance with respect to winding up by the Court, to pay the amount of his debt or claim, then-

(i) every person who was a member of the company at the date of the registration of the order for reduction and minute 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

(ii) 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 affect the rights of- the contributories among themselves.

105. Penalty on concealment of name of creditor. If any officer of the company wilfully conceals the name of any creditor entitled to object to the reduction, or wilfully 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, or with both.

106. 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.


    

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107. 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 subject to the same conditions in and subject to which a company limited by shares may increase or reduce its share capital under the provisions of this Ordinance.

VARIATION OF SHAREHOLDERS” RIGHTS

108. Variation of shareholders” rights.-(1) The variation of the rights of shareholders of any class shall be effected only in the manner laid down in section 28.

(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 decision of the Court on any such application shall be final.

(5) The company shall, within fifteen days after 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 company and every officer of the company who is knowingly and wilfully in default shall be liable to a fine which may extend to two hundred rupees for-each day during which the default continues.

(6) The expression “variation” includes abrogation, revocation or enhancement.

(7) Section 5 of the Limitation Act, 1908 (IX of 1908), shall apply to an application made under sub-section (2).


    

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REGISTRATION OF UNLIMITED COMPANY AS LIMITED

109. Registration of unlimited company as limited.-(1) Subject to the provisions of this section, any company registered as unlimited may register under this Ordinance as limited or any. company already registered as a limited company may re-register under this Ordinance, but the registration of an unlimited company as a limited company shall not affect the rights, debts, liabilities, obligations or contracts acquired, incurred or entered into by, to, with or on behalf of, the company before the registration.

(2) On registration in pursuance of sub-section (1), the registrar shall close the former registration of the company, and may dispense with the delivery to him of copies of any documents with copies of which he was furnished on the occasion of the original registration of the company; but, save as aforesaid, the registration shall take place in the same manner and shall have effect as if it were the first registration of the company under this Ordinance.

110. Power of unlimited company to provide for reserve share capital on re-registration. An unlimited company having a share capital may, by its resolution for registration as a limited company in pursuance of this Ordinance, increase the nominal amount of its share capital by increasing the nominal amount of each of its shares, but 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.

UNLIMITED LIABILITY OF DIRECTORS

111. 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) If any director or proposer makes default in adding such a statement, or if any promoter or officer of the company makes default in giving such a notice, he shall be liable to a fine which may extend to two thousand rupees 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.

112. Special resolution of limited company making liability of directors unlimited.-(1) 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.


    

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(2) Upon the passing of any such special resolution, the provisions thereof shall be as valid as if they had been originally contained in the memorandum:

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.

SPECIAL PROVISIONS AS TO DEBENTURES

113. Right of debenture-holder and shareholder to have copies of trust-deed-(1) A copy of any trust-deed for securing any issue of debentures shall be forwarded to every holder of any such debentures or holder of shares in the company, at his request on payment of such fee as the company may fix not exceeding the amount prescribed.

(2) If a copy is refused or not forwarded as required under sub-section (1), the company shall be liable to a fine not exceeding five hundred rupees, and to a further fine not exceeding fifty rupees for every day after the first during which the refusal continues, and every officer of the company who knowingly authorises or permits the refusal shall be liable to the like penalty, and the registrar may by order compel immediate supply of a copy.

114. Debentures not to carry voting rights.-(1) Except as otherwise provided in this Ordinance, no company shall, after the commencement of this Ordinance, issue any debentures carrying voting rights at any meeting of the company:

Provided that debentures convertible into ordinary shares may, at the option of the company, carry voting rights:

Provided further that such voting rights shall not be in excess of the voting rights attaching to ordinary shares of equal paid-up value.

Explanation.- Debentures convertible into ordinary shares include debentures with subscription warrants.

(2) Notwithstanding anything contained in this Ordinance, or in the memorandum or articles of any company, no debenture-holder having immediately before the commencement of this Ordinance voting rights shall, after such commencement, exercise any such rights at any meeting of the company, except a meeting of debenture-holders themselves.

115. Perpetual debentures. A condition contained in any debenture or any deed for securing any debentures whether issued or executed before or after the promulgation of this Ordinance, shall not be invalid by reason only that thereby the debentures are made irredeemable or redeemable only on the happening of a .contingency, however remote, or on the expiration of a period however long.



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116. Power to re-issue redeemed debentures in certain cases.-(1) Where either before or after the commencement of this Ordinance a company has redeemed any debentures previously issued, the company, unless the articles or the conditions of issue expressly otherwise provide, or unless the debentures have been redeemed in pursuance of any obligation on the company so to do, not being an obligation enforceable only by the person to whom the redeemed debentures were issued or his assigns, shall have power, and shall be deemed always to have had power, to keep the debentures alive for the purposes of reissue, and where a company has purported to exercise such a power the company shall have power, and shall be deemed always to have had power, to reissue the debentures either by reissuing the same debentures or by issuing other debentures in their place, and upon such reissue the person entitled to the debentures shall have, and shall be deemed always to have had, the same rights and priorities as if the debentures had not previously been issued.

(2) Where with the object of keeping debentures alive for the purpose of reissue they have, either before or after the commencement of this Ordinance, been transferred to a nominee of the company, a transfer from that nominee shall be deemed to be a reissue for the purposes of this section.

(3) Where a company has, either before or after the commencement of this Ordinance, deposited any of its debentures to secure advances from time to time on current account or otherwise, the debentures shall not be deemed to have been redeemed by reason only of the account of the company having ceased to be in debit while the debentures remained so deposited.

(4) The re-issue of a debenture or the issue of another debenture in its place under the power by this section given to, or deemed to have been possessed by, a company, whether the re­issue or issue was made before or after the commencement of this Ordinance, shall be treated as the issue of a new debenture for the purposes of stamp-duty and registration, but it shall not be so treated for the purposes of any provision limiting the amount or number of debentures to be issued:

Provided that any person lending money on the security of a debenture re-issued under this section which appears to be duly stamped may give the debenture in evidence in any proceedings for enforcing his security without payment of the stamp-duty or any penalty in respect thereof, unless he had notice or, but for his negligence, might have discovered, that the debenture was not duly stamped, but in any such case the company shall be liable to pay the proper stamp-duty and penalty.

(5) Nothing in this section shall prejudice any power to issue debentures in the place of any debentures paid off or otherwise satisfied or extinguished, reserved, to a company by its debentures or the securities for the same.


    

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117. Specific performance of contract to subscribe for debentures. A contract with a company to take up and pay for any debentures of the company may be enforced by a decree for specific performance.

118. 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 XI 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 XI 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 fray be, out of the assets of the company available for payment of general creditors.

119. 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.


    

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(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”, in subsections (1), (2) and (3), 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 trust-deed.

(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 trust-deed conferring on him any power, authority or discretion.

(5) Sub-section (4) shall not invalidate-

(a) any release otherwise validly given in respect of anything done or omitted to be done 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 three-fourths 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 Ordinance, 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


    

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(b) to deprive any person of any exemption or right to be indemnified in respect of anything done or omitted to be done by him while any such provision was in force.

(7) While any trustee of a trust-deed remains entitled to the benefit or provision save 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-fourth in value of the debenture-holders present in person or, where proxies are permitted, by proxy, at 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.

1[120. Issue of securities and redeemable capital not based on interest. 

(1) ;2[“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 specified for the purpose by the Federal Government by notification in the official Gazette either severally jointly or through a syndicate, Participation Term Certificates in consideration of any funds, moneys 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 or benefit of the company.

(2) In particular and without prejudice to the generality of the foregoing 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 manners, 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 reserve” 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

 

 


1Subs. by the Banking and Financial (Amdt. of Laws) Ordinance, 1984 (57 of 1984), s. 2 and Sch., for “section 120”.

2Subs. by Act XII of 1994, s. 9.

    

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(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 prescribed 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 as repugnant to any provision of this Ordinance 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 provisions of the this Ordinance 1[* * *] relating to the creation issue. increase or decrease of the capital shall not apply to the redeemable capital].

PART VII.--REGISTRATION OF MORTGAGES, CHARGES, ETC.

121. Certain mortgages and charges to be void if not registered.-(1) Every mortgage, charge or other interest created after the commencement of this Ordinance by a company and being either-

(a) a mortgage or charge for the purpose of securing any issue of debentures; or

(b) a mortgage or charge on uncalled share capital of the company; or

(e) a mortgage or charge on any immovable property wherever situate, or any interest therein; or

(d) a mortgage or charge on any book debts of the company; or

(e) a mortgage or Charge, not being a pledge, on any movable property of the company: or

(f) a floating charge on the undertaking or property of the company, including stock-in-trade; or

(g) a mortgage or charge can a ship or any share in a ship; or

(h) a mortgage or charge on goodwill, on a patent or licence under a patent, on a trade mark, or on a copyright or a licence under a copyright; or

(i) a mortgage or charge or other interest based on agreement for the issue of 2[any instrument in the nature of redeemable capital]; or


1Omitted by Act I of 1995, s. 10.

2Subs. by the Banking and Financial (Amdt. of Laws) Ordinance, 1984 (57 of 1984), s. 2 and Sch., for “participation term certificates”.


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(j) a mortgage or charge or other interest based on a musharika agreement; or

(k) a mortgage or charge or other interest based on a hire-purchase or leasing agreement for acquisition of fixed assets;

shall, so far as any security on the company”s property or undertaking is thereby conferred, be void against the liquidator and any creditor of the company, unless the prescribed particulars of the mortgage or charge, together with a copy of the instrument, if any, verified in the prescribed manner, by which the mortgage or charge is created or evidenced are filed with the registrar for registration in the manner required by this Ordinance within twenty-one days after the date of its creation; but without prejudice to any contract or obligation for repayment of the money thereby secured, and when a mortgage or charge becomes void under this section the money secured thereby shall immediately become payable:

Provided that:

(i) in the case of a mortgage or charge created out of Pakistan comprising solely property situate outside Pakistan, twenty-one days after the date on which the instrument or copy could, in due course of post, and if despatched with due diligence, have been received in Pakistan shall be substituted for twenty-one 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

(ii) where the mortgage or charge is created in Pakistan but comprises property outside Pakistan, the instrument creating or purporting to create the mortgage or charge and a copy thereof verified in the prescribed 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; and

(iii) 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 subsection be treated as a mortgage or charge on those book debts; and

(iv) the holding of debentures entitling the holder to a charge on immovable property shall not be deemed to be an interest in immovable property.


    

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(2) Where any mortgage or charge on any property of a company required to be registered under sub-section (1) has been so registered, any person acquiring such property or any part thereof, or any share or interest therein, shall be deemed to have notice of the said mortgage or charge as from the date of such registration.

122. Registration of charges on properties acquired subject to charge.-(1) Where a company registered in Pakistan acquires any property which is subject to a charge of any such kind as would, if it had been created by the company after the acquisition of the property, have been required to be registered under this Part, the company shall cause the prescribed particulars of the charge, together with a copy, certified in the prescribed manner to be a correct copy of the instrument, if any, by which the charge was created or is evidenced, to be delivered to the registrar for registration in the manner required by this Ordinance within twenty-one days after the date on which the acquisition is completed:

Provided that, if the property is situate and the charge was created outside Pakistan, twenty-­one days after the date on which the copy of the instrument could in due course of post, and if despatched with due diligence, have been received in Pakistan shall be substituted for twenty-one days after the completion of the acquisition as the time within which the particulars and the copy of the instrument are to be delivered to the registrar.

(2) If default is made in complying with this section, the company and every officer of the company who is knowingly and wilfully in default shall be liable to a fine of two thousand rupees.

123. Particulars in case of series of debentures entitling holders pari passuWhere 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 121 if these are filed with the registrar within twenty-one 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 authorizing 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 prescribed manner containing the charge, or if there is no such deed, one of the debentures of the series, and the registrar shall, on payment of the prescribed fee, enter those particulars in the register:


    

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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.

124. Particulars in case of commission, etc. on debentures. Where any commission, allowance or discount has been paid or made either directly or indirectly by the company to any person in consideration of his subscribing or agreeing to subscribe, whether absolutely or conditionally, for any debentures of the company, or procuring or agreeing to procure subscriptions, whether absolute or conditional, for any such debentures, the particulars required to be filed for registration under sections 121 and 123 shall include particulars as to the amount or rate percent. of the commission, discount or allowance so paid or made, but an omission to do this shall not affect the validity of the debentures issued:

Provided that the deposit of any debentures as security for any debt of the company shall not for the purposes of this section be treated as issue of the debentures at a discount.

125. Register of mortgages and charges.-(1) The registrar shall keep, with respect to each company, a register in the prescribed form of all mortgages and charges created by the company and requiring registration under section 121 or section 122 and shall, on payment of the prescribed fee, enter in the register, with respect to every such mortgage, or charge, the date of creation, the amount secured by it, short particulars of the property mortgaged or charged, and the names of the mortgagees or persons entitled to the charge.

(2) A register kept in pursuance of sub-section (1) shall be open to inspection by any person on payment of the prescribed fee.

126. Index to register of mortgages and charges. The registrar shall keep a chronological index, in the prescribed form and with the prescribed particulars, of the mortgages or charges registered with him under this Ordinance.

127. Certificate of registration. The registrar shall give a certificate under his hand of the registration of any mortgage or charge registered in pursuance of section 121, stating the amount thereby secured, and the certificate shall be conclusive evidence that the requirements of sections 121 to 125 as to registration have been complied with.

128. 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 127 to be endorsed on every debenture or certificate of debenture stock which is issued by the comply, and the payment of which is secured by the mortgage or charge so registered:

 


    

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Provided 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.

129. 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 prescribed particulars of every mortgage or charge created by the company and of the issue of debentures of a series, requiring registration under section 121, but registration of any such mortgage or charge may be effected on the application of any person interested therein.

(2) Where the registration is effected 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.

(3) Whenever the terms or conditions or extent or operation of any mortgage or charge registered under subsection (1) 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 prescribed manner, and the provisions of subsection (1) as to registration of mortgage or charge shall apply to such modification of the mortgage or charge as aforesaid.

130. Copy of instrument creating mortgage or charge to 6e kept at registered office. Every company shall cause a copy of every instrument creating any mortgage or charge requiring registration under section 121 and of every instrument evidencing modification of the terms or conditions thereof, to be kept at the registered office of the company:

Provided that, in the case of a series of uniform debentures, a copy of one such debenture shall be sufficient.

131. Rectification of register of mortgages.-(1) The 1[Commission], on being satisfied that the omission to register a mortgage or charge within the time required by section 121, or that the omission or misstatement of any particular with respect to any such mortgage or charge, or the omission to give intimation to the registrar of the payment or satisfaction of a debt for which a charge or mortgage was created, 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 the1[Commission] just and expedient, order that the time for registration be extended, or, as the case may be, that the omission or misstatement be rectified, and may make such order as to the costs of the application as it thinks fit.

(2) A certified copy of the order of the 1[Commission] passed under subsection (1) shall be filed with the registrar within twenty-one days of the date of such order by the company or the person on whose application it is passed.

 


 1Subs. by Ord. 100 of 02, s. 2 and Sch.

    

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(3) Where the 1[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.

132. Registration of payment or satisfaction of mortgages and charges.-(1) It shall be the duty of a company to give intimation to the registrar of the payment or satisfaction, in full, of any charge or mortgage created by the company and requiring registration under sections 121 and 122 within twenty-one days from the date of the payment or satisfaction, in full, thereof.

(2) The registrar shall on receipt of such intimation cause a notice to be sent to the holder of the charge or mortgage calling upon him to show cause, within a time, not exceeding fourteen days, to be fixed by such notice, why the payment or satisfaction of the charge or mortgage should not be recorded.

(3) The registrar shall, if no cause is shown, order that a memorandum of satisfaction be entered in the register and shall if required furnish the company with a copy thereof.

(4) Where cause is shown, the registrar shall record a note to that effect in the register, and shall inform the company that he has done so.

(5) 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 133 otherwise than on receipt of an intimation from the company.

133. 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 mortgages and 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, notwithstanding the fact that no intimation has been received by him from the company.

134. Penalties.-(1) If any company makes default in filing with the registrar for registration the particulars-

(a) of any mortgage or charge created by the company or any modification thereof; or

(b) of the payment or satisfaction of a debt in respect of which a mortgage or charge has been registered under section 121 or section 122; or

 


1Subs. by Ord. 100 of 02, s. 2 and Sch.

    

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(c) of the issues of debentures of a series, requiring registration with the registrar under the foregoing provisions of this Ordinance, then, unless the registration has been effected within the prescribed period on the application of some other person, the company, and every officer of the company or other person who is knowingly a party to the default, shall-

(i) be liable to a fine not exceeding one hundred rupees for every day during which the default in filing of the particulars of satisfaction of a mortgage or charge continues; and

(ii) be liable to a fine not exceeding five hundred rupees for every day during which the default in filing of the particulars of a mortgage or charge or of debentures continues.

(2) Subject as aforesaid, if any company makes default in complying with any of the requirements of .this Ordinance as to the registration with the registrar of any mortgage or charge created by the company, or any modification thereof, the company, and every officer of the company who knowingly and wilfully authorises or permits the default, shall, without prejudice to any other liability, be liable to a fine not exceeding five thousand rupees and to a further fine not exceeding one-hundred rupees for every day after the first during which the default continues.

(3) If any person knowingly and wilfully authorises or permits the delivery of any debenture or certificate of debenture stock requiring registration with the registrar under the foregoing provisions of this Ordinance without a copy of the certificate of registration being endorsed upon it, he shall, without prejudice to any other liability, be liable to a fine not exceeding two thousand rupees.

135. Company”s register of mortgages.-(1) Every company shall keep a register of mortgages and enter therein all mortgages and charges specifically affecting property of the company and all floating charges on the undertaking or on any property of the company, giving in each case a short description of the property mortgaged or charged, the amount of the mortgage or charge and, except in the case of securities to bearer, the names of the mortgagees or persons entitled thereto.

(2) If any officer of the company knowingly and wilfully authorises or permits the omission of any entry required to be made in pursuance of subsection (1), he shall be liable to a fine not exceeding two thousand rupees.


    

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136. Right to inspect copies of instruments creating mortgages and charges and company”s register of mortgages.-(1) The copies kept at the registered office of the company in pursuance of section 130 of instruments creating any mortgage or charge or modification of the terms and conditions thereof requiring registration under this Ordinance with the registrar, and the register of mortgages and charges kept in pursuance of section 135 shall be open at all reasonable times to the inspection of any creditor or member of the company without fee, and the register of mortgages shall also be open to the inspection of any other person on payment of such fee, not exceeding the amount prescribed for each inspection, as the company may fix.

(2) If inspection of the said copies or register is refused, the company shall be liable to a fine not exceeding five hundred rupees and a further fine not exceeding fifty rupees for every day after the first during which the refusal continues, 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.

RECEIVERS AND MANAGERS

137. Registration of appointment of receiver or manager.-(1) If any person obtains an. order for the appointment of a receiver of, or a person to manage, the property of a company, or appoints such a receiver or person under any powers contained in any instrument, he shall, within fifteen days from the date of the order or of the appointment under the powers contained in the instrument, file notice of the fact with the registrar, and the registrar shall, on payment of the prescribed fee, enter the fact in the register of mortgages and charges.

(2) If any person makes default in complying with the requirements of sub-section (1), he shall be liable to a fine not exceeding two hundred rupees for every day during which the default continues.

138. 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 six months while he remains. in possession, and also within thirty days on ceasing to act as receiver, file with the registrar an abstract in the prescribed form 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 it 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.


    

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(3) If default is made in complying with the requirements of sub-section (1) or sub-section (2), the company and every director or other officer of the company and every receiver who knowingly and wilfully authorises or permits the default, shall be liable to a fine not exceeding two thousand rupees and, in the case of a continuing default, to a further tine not exceeding one hundred rupees for every day after the first during which the default continue.

(4) The provisions of sub-sections (1), (2) and (3) 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.

139. Disqualification for appointment as receiver or manager. The following shall not be appointed under any powers contained in an instrument as a receiver or manager of the property of a company, 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 a company in any other way, unless he is granted leave by the Court.

140. Application to Court.-(1) A receiver or manager of the property of a company 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 property of a company 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 subsection, or to limit his liability on contracts entered into without authority or to confer any right to indemnity in respect of that liability.


    

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141. Power of Court to fix remuneration, etc., 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 property of the company:

Provided that the amount of remuneration shall not exceed such limits as may be prescribed.

(2) The power of the Court under subsection (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 therefor;

(b) be exercisable notwithstanding that the receiver or manager had died or ceased to act before the making of the order or the application therefor; 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 subsection (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.

PART VIII.-MANAGEMENT AND ADMINISTRATION REGISTERED OFFICE, PUBLICATION OF NAME, ETC.

142. Registered office of company.-(1) A company shall as from the day on which it begins to carry on business, or as from the twenty-eighth day after the date of its incorporation, whichever is the earlier, have a registered office to which all communications and notices may be addressed.

(2) Notice of the situation of the registered office and of any change therein shall be given within twenty-eight days after the date of the incorporation of the company or of the change as the case may be, to the registrar who shall record the same.


    

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(3) The inclusion in the annual return or any other document of a company of the statement as to the address of its registered office shall not be taken to meet the requirements of sub-section (2).

(4) If a company fails to comply with the requirements of sub-section (1) or (2), it shall be liable to a fine which may extend to two hundred rupees for every day during which such non­compliance continues, and every officer of the company who knowingly and wilfully authorises or permits the default shall be liable to the like penalty.

143. Publication of name by a limited company. Every limited company-

(a) shall paint or affix, and keep painted or affixed, its name on the outside of every office or place in which its business is carried on, in a conspicuous position, in letters easily legible and in English or Urdu characters, and also, if the registered office is situate in a place beyond the local limits of the ordinary original civil jurisdiction of a High Court, in the characters of one of the vernacular languages used in that place;

(b) shall have its name engravers in legible English or Urdu characters on its seal;

(c) shall have its name mentioned in legible English or Urdu characters, in all bill-heads and letter papers and in all documents, notices and other official publications of the company, and in all bills of exchange, hundis, 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.

144. Penalties for non publication of name.-(1) If a limited company does not paint or affix, and keep painted or affixed, its name in manner directed by this Ordinance, it shall be liable to a fine which may extend to two hundred rupees for every day during which its name is not so kept painted or affixed, and every officer of the company who knowingly and wilfully authorises or permits the default shall be liable to the like penalty.

(2) If any officer of a limited company, or any person on its behalf, uses or authorises the use of any seal purporting to be a seal of the company wherein its name is not so engraven as aforesaid, or 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, hundi, 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 manner aforesaid, he shall be liable to a fine which may extend to two thousand rupees, and shall further be personally liable to the holder of any such bill of exchange, hundi, promissory note, cheque or order for money or goods, for the amount thereof, unless the same is duly paid by the company.


    

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145. 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 the amount of the 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 the amount of the capital which has been subscribed and the amount paid up.

(2) Any company which makes default in complying with the requirements of sub-section (1) and every officer of the company who is knowingly a party to the default shall be liable to a fine which may extend to five thousand rupees.

COMMENCEMENT OF BUSINESS BY A PUBLIC COMPANY

146. Restrictions on commencement of business.-(1) A company shall not commence any business or exercise any borrowing powers unless-

(a) shares held subject to the payment of the whole amount thereof in cash have been allotted to an amount not less in the whole than the minimum subscription;

(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 or debentures which have been offered for public subscription by reason of any failure to apply for or to obtain permission for the shares or debentures to be dealt in on any stock exchange;

(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 prescribed form that the aforesaid conditions have been complied with and the registrar has issued a certificate referred to in sub-section (2); 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.

(2) The registrar shall, on the filing of a duly verified declaration in accordance with the provisions of sub-section (1) and after making such enquiries as he may deem fit to satisfy himself that all the requirements of this Ordinance have been complied with in respect of the commencement of business and matters precedent and incidental thereto, certify that the company is entitled to commence business, and that certificate shall be conclusive evidence that the company is so entitled:

Provided that, in the case of a company which has not issued a prospectus inviting the public to subscribe for its shares, the registrar shall not give such a certificate unless a statement in lieu of prospectus has been filed with him.



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(3) 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.

(4) Nothing in this section shall prevent the simultaneous offer for subscription or allotment of any shares and debentures or the receipt of any money payable on application for debentures.

(5) If any company commences business or exercises borrowing powers in contravention of this section, every officer and other person who is responsible for the contravention shall, without prejudice to any other liability, be liable to a fine not exceeding one thousand rupees for every day during which the contravention continues.

(6) Nothing in this section shall apply to a private company, or to a company limited by guarantee and not having a share capital.

REGISTER OF MEMBERS AND DEBENTURE-HOLDERS.

147. Register of members and index.-(1) Every company shall keep in one or more books a register of its members and enter therein the following particulars, namely:-

(i) the name in full, father's name (in the case of a married woman or widow, the name of her husband or deceased husband), nationality, address, and the occupation, if any, of each member, and, in the case of a company having a share capital, a statement of the shares held by each member, distinguishing each share by its number, and of the amount paid or agreed to be considered as paid on the shares of each member;

(ii) the date at which each person was entered in the register as a member;

(iii) the date at which any person ceased to be a member and the reason for ceasing to be a member,

(2) Every company having more than fifty members shall, unless the register of members is in such a form as to constitute in itself an index, keep an index of the names of the members of the company and shall; within fourteen days after the date at which any alternation is made in the register of members, make the necessary alteration in the index.

(3) The index shall, in respect of each member, contain a sufficient indication to enable the entries relating to that member in the register to be readily found.



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(4) If default is made in complying with the requirements of subsection unnecessary delay takes place in entering in the register of members the name and particulars of any person who has become or ceased to be a member of a company, as the case may be, the company shall be liable to a fine not exceeding two hundred rupees for every day during which the default continues; and every officer of the company who knowingly and wilfully authorises or permits the default or causes unnecessary delay in entering in the register the name and particulars of any person who has become or ceased to be a member of a company, as the case may be, shall be liable to the like penalty.

(5) If default is made in complying with the requirements of sub-section (2) or sub-section (3), the company and every officer of the company who knowingly and wilfully authorises or permits the default shall be liable to a fine not exceeding two thousand rupees.

148. Trusts not to be entered on register. No notice of any trust, expressed, implied or constructive, shall be entered on the register of members, or be receivable by the registrar.

149. Register and index of debenture-holders.-(1) Every company shall keep in one or more books a register of the holders of its debentures and enter therein the following particulars, namely:-

(a) the name in full, father's name (in the case of a married woman or widow, the name of her husband or deceased husband), nationality, address, and the occupation, if any, of each debenture-holder;

(b) the debentures held by each holder, distinguishing each debenture by its number and the amount paid or agreed to be considered as paid on the debentures held by each holder;

(c) the date at which each person was entered in the register as a debenture-holder; and

(d) the date at which any person ceased to be a debenture-holder,

(2) Every company having more than fifty debenture-holders shall unless the register of debenture holders is in such a form as to constitute in itself an index, keep an index of the names of the debenture-holders of the company and shall, within fourteen days after the date at which any alteration is made in the register of debenture-holders make the necessary alteration in the index.

(3) The index shall, in respect of each debenture-holder, contain a sufficient indication to enable the entries relating to that holder in the register to be readily found.

(4) If default is made in complying with sub-section (1), (2) or (3), the company and every officer of the company shall be liable to a fine as provided in sub-section (4) or sub-section (5), as the case may be, of section 147.



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(5) This section shall not apply with respect to debentures which, ex facie, are payable to the bearer thereof.

150. Inspection of registers.-(1) The register of members commencing from the date of the registration of the company and the index referred to in section 147, the register of debenture-­holders and the index referred to in section 149 and the registers referred to in sub-section (4) of section 156 shall be kept at the registered office of the company and, except when closed under the provisions of this Ordinance, shall, during business hours, subject to such reasonable restrictions, as the company in general meeting may impose, so that not less than two hours in each day be allowed for inspection, be open to the inspection of members or debenture-holders gratis and to the inspection of any other person on payment of such amount not exceeding the prescribed amount as the company may fix; and any such member, debenture-holder or other person may make extracts therefrom.

(2) Any member or debenture-holder or other person may require a certified copy of the registers and index thereof mentioned in sub-section (1), or of any part thereof, on payment of such amount not exceeding the prescribed amount as the company may fix, and the company shall cause any copy so required by any person to be sent to that person within a period of ten days, exclusive of non-working days and days on which the transfer books of the company are closed, commencing on the day next after the day on which the requirement is received by the company.

(3) If any inspection required under sub-section (1) is refused, or if any copy required under subsection (2) is not sent within the specified period, the company and every officer of the company who is in default shall be liable, in respect of each offence, to a fine not exceeding five hundred rupees and to a further fine not exceeding fifty rupees for every day after the first during which the refusal or default continues; 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.

151. Power to close register. A company may, on giving not less than seven days' previous notice by advertisement in some newspaper having circulation in the Province, or part of Pakistan not forming part of a Province, in which the registered office of the company is situate and, in the case of a listed company, also in a newspaper having circulation in the Province, or other part as aforesaid, in which the stock exchange on which the company is listed is situate, close the register of members or debenture-holders, as the case may be, for any time or times not exceeding in the whole forty-five days in a year and not exceeding thirty days at a time.

152. 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



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(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 debenture-holder;

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-holder or alleged members or debenture-holder, or between members or alleged members, or debenture-holders or alleged debenture-holders, 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) An appeal from a decision on an application under subsection (1), or on an issue raised in any such application and tried separately, shall lie on the grounds mentioned in section 100 of the Code of Civil Procedure, 1908 (Act V of 1908).

(a) if the decision is that of a Civil Court subordinate to a High Court, to the High Court; and

(b) if the decision is that of a Company Bench consisting of a Single Judge, to a Bench consisting of two or more Judges of the High Court.

153. 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 one year, or with fine which may extend to ten thousand rupees, or with both.

154. 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 Ordinance 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.


    

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155. Register to be evidence. The registers referred to in sections 76, 147, 149 and 156 shall be prima facie evidence of any matter which by this Ordinance is directed or authorised to be inserted therein.

156. Annual list of members, etc.-(1) Every company having a share capital. shall, once in each year, prepare and file with the registrar a return containing the particulars specified in Form A of the Third Schedule 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 specified in Form B of the Third Schedule 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-

(a) in the case of a listed company, within forty-five days; and

(b) in the case of any other company, 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) If a company makes default in complying with any requirement of this section, the company and every officer of the company who knowingly and wilfully authorises or permits the default shall be liable-

(a) in the case of a listed company, to a fine not exceeding ten thousand rupees and to a further fine not exceeding two hundred rupees for every day after the first during which the default continues; and

(b) in the case of any other company, to a fine not exceeding two thousand rupees and to a further fine not exceeding fifty rupees for every day after the first during which the default continues.


    

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157. Statutory meeting of company.—(1) Every company limited by shares and every company limited by guarantee and having a share capital shall, within a period of not less than three months, nor more than six months, from the date at which the company is entitled to commence business, hold a general meeting of the members of the company, which shall be called “the statutory meeting”.

(2) The directors shall, at least twenty-one days before the date on which the meeting is held, forward a report, in this Ordinance referred as “the statutory report”, to every member.

(3) The statutory report shall be certified by not less than three directors, one of whom shall be the chief executive of the company, and shall state-

(a) the total number of shares allotted, distinguishing shares allotted otherwise 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 seven 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 advisors 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.


    

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(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 certificate of the auditors of the company as to the correctness of such allotment, receipt of cash, receipts and payments.

(6) The directors shall cause at least five copies of the statutory report, certified 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) If a petition is presented to the Court in manner provided by Part XI for winding up the company on the ground of default in filing the statutory report or in holding the statutory meeting, the Court may, instead of directing that the company be wound up, give directions for the statutory report to be filed or a meeting to be held, or make such other order as may be just.

(11) In the event of any default in complying with the provisions of any of the preceding subsections, the company and every officer of the company who knowingly and wilfully authorises or permits such default shall be liable,-

(a) if the default relates to a listed company, to a fine not less than ten thousand rupees and not exceeding twenty thousand rupees and in the case of a continuing default to a further fine not exceeding two thousand rupees for every day after the first during which the default continues; and

 


    

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(b) if the default relates to any other company, to a fine not exceeding five thousand rupees and in the case of a continuing default to a further fine not exceeding two hundred rupees for every day after the first during which the default continues.

(12) This section shall not apply to a private company but if any such private company is converted into a company of either of the classes mentioned in sub-section (1), this section shall become applicable thereto and a reference in that subsection to the date of commencement of business shall be construed as a reference to the date of such conversion.

1[“(13) The provisions of this section shall not apply to a public company which converts itself from a private company after one year of incorporation.”]

158. Annual general meeting.-(1) Every company shall hold, in addition to any other meeting, a general meeting, as its annual general meeting, within eighteen months from the date of its incorporation and thereafter once at least in every calendar year within a period of 2[four] months following the close of its financial year and not more than fifteen months after the holding of its last preceding annual general meeting:

Provided that, in the case of a listed company, the Authority, and, in any other case, the registrar, may for any special reason extend the time within which any annual general meeting, not being the first such meeting, shall be held by a period not exceeding 3[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:

Provided that the Authority, for any special reason, may, on the application of such company, allow the company to hold a particular meeting at any other place.

(3) The notice of an annual general meeting shall be sent to the shareholders at least twenty-one days before the date fixed for the meeting and, in the case of a listed company, such notice, in addition to its being despatched in the normal course, shall also be published at least in one issue each of a daily newspaper in English language and a daily newspaper in Urdu language having circulation in the Province in which the stock exchange on which the company is listed is situate.

(4) If default is made in complying with any provision of this section, the company and every officer of the company who is knowingly and wilfully a party to the default shall be liable-

(a) if the default relates to a listed company, to a fine not less than 2[fifty] thousand rupees and not exceeding 2[five hundreds] thousand rupees and to a further fine not exceeding two thousand rupees for every day after the first during which the default continues; and

(b) if the default relates to any other company, to a fine not exceeding 2[one hundred] rupees and to a further fine not exceeding 1[five] hundred rupees for every day after the first during which the default continues.


1Subs. by Ord. 100 of 02, s. 2 and Sch.

2Subs. by Act I of 2008, s. 10.


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159. Calling of extraordinary general meeting.-(1) All general meetings of a company, other than the annual general meeting referred to in section 158 and the statutory meeting mentioned in section 157, shall be called extraordinary general meetings.

(2) The directors may at any time call an extraordinary general meeting of the company to consider any matter which requires the approval of the company in a general meeting, and shall, on the requisition of members representing not less than one-tenth of the voting power on the date of deposit of the requisition, forthwith proceed to call an extraordinary general meeting.

(3) The requisition shall state the objects of the meeting, be signed by the requisitionists and deposited at the registered office of the company, and may consist of several documents in like form, each signed by one or more requisitionists.

(4) If the directors do not proceed within twenty-one days from the date of the requisition being so deposited to cause a meeting to be called, the requisitionists, or a majority of them in value, may themselves call the meeting, but in either case any meeting so called shall be held within three months from the date of the deposit of the requisition.

(5) Any meeting called under sub-section (4) by the requisitionists shall be called in the same manner, as nearly as possible, as that in which meetings are to be called by directors.

(6) Any reasonable expense incurred by the requisition ists by reason of the failure of the directors duly to convene a meeting shall be repaid to the requisition ists by the company, and any sum so repaid shall be retained by the company out of any sum due or to become due from the company by way of fees or other remuneration for their services to such of the directors as were in default.

(7) Notice of an extraordinary general meeting shall be sent to the members at least twenty-one days before the date of the meeting, and in the case of a listed company shall also be published in the manner provided for in sub-section (3) of section 158:

Provided that, in the case of an emergency affecting the business of the company, the registrar may, on the application of the directors, authorise such meeting to be held at such shorter notice as he may specify.

(8) Every officer of the company who knowingly or wilfully fails to comply with any of the provisions of this section shall be liable,-

(a) if the default relates to a listed company, to a fine not less than ten thousand rupees and not exceeding twenty thousand rupees and in the case of a continuing default to a further fine which may extend to two thousand rupees for every day after the first during which the default continues; and


    

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(b) if the default relates to any other company, to a fine which may extend to two thousand rupees and in the case of a continuing default to a further fine which may extend to two hundred rupees for every day after the first during which the default continues.

160. 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 of the company;

(ii) to any person entitled to a share in consequence of death of a member if the interest of such person is known to the company; and

(iii) to the auditor or auditors of the company;

in the manner in which notices are required to be served by section 50, 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) where any special business, that is to say business other than consideration of the accounts, balance-sheets and the reports of the directors and auditors, the declaration of a dividend, the appointment and fixation of remuneration of auditors, and the election or appointment of directors, 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;

(c) subject to the provisions of this Ordinance so far as they relate to the election and appointment of directors, the provisions of clause (b) shall apply mutatis mutandis to a meeting where ordinary business, being business other than special business, is to be transacted;

(d) all the members may participate in the meeting either personally or through proxy.



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(2) The quorum of a general meeting shall be--

(a) in the case of a public 1[listed] company, unless the articles provide for a larger number, not less than 1[twenty] members present personally who represent not less than twenty-five percent. of the total voting power, either of their own account or as proxies ; 1[*  *]

(b) in the case of a 1[any other] company, unless the articles provide for a larger number, two members present personally who represent not less than twenty-five percent. of the total voting power, either of their own account or as proxies:

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, being not less than two, shall be a quorum, unless the articles provide otherwise ; [and]1

1[“(c) in the case of a single member company, single member present in person or by proxy”;]

(3) The chairman of the board of directors, 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 number to be the chairman.

(4) 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.

(5) 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.

(6) In the case of a company limited by guarantee and having no share capital, every member thereof shall have one vote.

(7) On a poll, votes may be given either personally or by proxy.

 

 


1Ins., Subs. and omitted by Ord. 100 of 02, s. 2 and Sch.

    

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(8) Every officer of the company who knowingly or wilfully fails to comply with any of he provisions of this section shall liable-

(a) if the default relates to a listed company, to a fine which may extend to 1[fifty] thousand rupees and in the case of a continuing default to a further fine which may extend to two thousand rupees for every day after the first during which the default continues; and

(b) if the default relates to any other company, to a fine not exceeding 1[Ten] thousand rupees and in the case of a continuing default to a further fine which may extend to two hundred rupees for every day after the first during which the default continues.

1[“160A. Circumstances in which proceedings of a general meeting may be declared invalid. The Court may, on a petition by members having not less than ten per cent of the voting power in the company that the proceedings of a general meeting be declared invalid by reason of any 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:

Provide that the petition shall be made within thirty days of the impugned meeting.”]

161. Proxies.-(1) Any member of a company entitled to attend and vote at a meeting of the company shall be entitled to appoint another person, as his proxy to attend and vote instead of him, and a proxy so appointed shall have such rights as respects speaking and voting at the meeting as are available to a member:

Provided that-

(a) this subsection 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) 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.

 

 


1Subs. and Ins. by Ord. 100 of 02, s. 2 and Sch.

    

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(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 39 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 proxis shall be lodged with the company not later than forty-eight hours before the time of the meeting and any provision to the contrary in the company”s articles shall be void.

(6) 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 167, 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 company”s articles shall be void.

(7) 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.

1*                    *                      *                      *                      *                      *                     * 

(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 notice 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 every officer of the company who knowingly and wilfully is a party to the default or contravention liable to a fine which may extend to five thousand rupees if the default relates to a listed company and to a fine which may extend to two thousand rupees if the default relates to any other company.

 

 


1Omitted by Ord. 100 of 02, s. 2 and Sch.

    

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162. Representation of corporations at meetings of companies and of creditors.-(1) A company which is a member of another company may, by resolution of the directors, authorise any of its officials or any other person to act as its representative at any meeting of that other company, and the person so authorised shall be entitled to exercise the same powers on behalf of the company which he represents as if he were an individual shareholder of that other company.

(2) A company which is a creditor of another company may authorise any of its officials or any other person to act as its representative at any meeting of the creditors of that other company held in pursuance of this Ordinance or any other meeting to which it is entitled to attend in pursuance of the provisions contained in any debenture or trust deed or any other document and the person so authorised shall be entitled to exercise the same powers as are available to the company which he represents.

163. Representation of Federal Government, etc., at meetings of companies.-(1) The Federal Government, or a Provisional Government, as the case may be, if a member of a company, may appoint such person 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) A person appointed to act as aforesaid shall, for the purpose of this Ordinance, 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 Federal Government or the Provincial Government, as the case may be, may exercise as a member of the company.

164. Notice of resolution.-(1) With the notice for a meeting, the company shall send to the members copies of draft resolutions, other than routine or procedural resolutions, which are proposed for consideration in the meeting.

(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 (cast fifteen days before the .meeting;

and the company shall forthwith circulate such resolution to all the members.

(3) In the event of any default in complying with any of the provisions of this section, the company and every officer of the company who is knowingly or wilfully a party to such default shall be liable to a fine which may extend to five thousand rupees if the default relates to a listed company and to a fine which may extend to two thousand rupees if the default relates to any other company.


    

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165. 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.

166. Chairman's declaration of result of voting by show of hands to be evidence. At any general meeting, a declaration by the chairman that on a show of hands, a resolution has or has not been carried, or has or has not been carried either unanimously or by a particular majority, and an entry to that effect in the books containing the minutes of the proceedings of the company, shall, until the contrary is proved, be evidence of the fact, without proof of the number or proportion of the votes cast in favour of or against such resolution.

167. 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 persons or person specified below, that is to say-

(a) in the case of a public company, by at least five members having the right to vote on the resolution and present in person or by proxy;

(b) in the case of a private company, by one member having the right to vote on the resolution and present in person or by proxy if not more than seven such members are personally present, and by two such members present in person or by proxy if more than seven such members are personally present;

(c) by any member or members present in person or by proxy and having not less than one-tenth of the total voting power in respect of the resolution; or

(d) by any member or members present in person or by proxy and holding shares in the company conferring a right to vote on the resolution, being shares on which an aggregate sum has been paid up which is not less than one-tenth of the total sum paid up on all the shares conferring that right.

(2) The demand for a poll may be withdrawn at any time by the person err persons who made the demand.

168. 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.



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(3) Subject to the provisions of this Ordinance, 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.

169. Resolution 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 directors of a company; 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.

170. Power of 1[Commission] to call meetings.-(1) if default is made in holding the statutory meeting, annual general meeting or any extraordinary general meeting on the requisition of members in accordance with section 157, section 158 or section 159, as the case may be, the 1[Commission] may, notwithstanding anything contained in this Ordinance or in the articles of the company, either of 1[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 1[Commission] many think fit, and give such ancillary or consequential directions as the 1[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 1[Commission] directs the same to be recovered from any officer of the company which he is hereby authorised to do.

171. Penalty for default in complying with the directions of the 1[Commission] for holding the meeting.--If default is made in complying with any directions of the 1[Commission] under section 170, the company and every officer of the company who is in default shall be liable to a fine which may extend to ten thousand rupees and in the case of a continuing default to a further fine which may extend to two hundred rupees for every day after the first during which the default continues.


1Subs. by Ord. 100 of 02, s. 2 and Sch.


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172. Filing of resolution, etc.-(1) A printed or typed copy of every special resolution shall, within fifteen days from the passing thereof, be filed with the registrar duly authenticated by the chief executive 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 prescribed amount as the company may determine.

(4) In the event of any default in complying with the provisions of sub-section (1), the company and every officer who is knowingly and wilfully in default shall be liable to a fine which may extend to one hundred rupees for every day during which the default continues.

(5) In the event of any default in complying with the provisions of sub-section (2) or (3), the company and every officer who is knowingly and wilfully in default shall be liable to a fine which may extend to one thousand rupees for each default.

173. Minutes of proceedings of general meetings and directors.-(1) Every company shall cause a fair and accurate summary of the minutes of all proceedings of general meetings and meetings of its directors and committee of directors, alongwith the names of those participating in such meetings, to be entered in properly maintained books. 1[“A copy of the minutes of meeting of the Board of Directors shall be furnished to every director within fourteen days of the date of meeting.”]

(2) Any such minute, if purporting to be signed by the chairman, of the meeting at which the proceedings were had, or by the chairman of the next succeeding meeting, shall be evidence of the proceedings.

(3) Until the contrary is proved, every general meeting of the company or meeting of directors or committee of directors in respect of the proceedings whereof -minutes have been so made shall be deemed to have been duly called and held, and- all proceedings had thereat to have been duly had, and all appointments of directors or liquidators shall be deemed to be valid.

(4) The books containing the minutes of proceedings of the general meetings of a company and those of the meetings of the directors and committee of directors shall be kept at the registered office of the company.

(5) In the event of failure to comply with the provisions of sub-section (1) or subsection (4), the company and every officer of the company who. is knowingly in default shall be liable to a fine which may extend to five thousand rupees and to a further fine which may extend to one hundred rupees for every day after the first day during which the failure continues.


1Ins. by Ord. 100 of 02, s. 2 and Sch.


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(6) 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.

(7) 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 prescribed amount as may be fixed by the company.

(8) If any inspection required under sub-section (6) is refused, or if any copy required under sub-section (7) is not furnished within the time specified therein, the company and every officer of the company who is knowingly and wilfully in default shall be liable in respect of each offence to a fine which may extend to one thousand rupees and to a further fine which may extend to fifty rupees for every day after the first day during which the default continues, and the registrar may direct immediate inspection or supply of copy, as the case may be.

DIRECTORS

174. 1[“Minimum number of directors of a company.-(1) Notwithstanding anything contained in any other law for the time being in force,‑

(a) every single member company shall have at least one director;

(b) every other private company shall have not less than two directors; and

(c) every public company other than a listed company shall have not less than three directors, appointed and elected in the manner provided in this Ordinance.

(2) Every listed company shall have not less than seven directors to be elected in a general meeting in the manner provided in this Ordinance.”]

175. Only natural persons to be directors. Only a natural person shall be a director and no director shall be the variable representative of a body corporate.

176. First directors acid their tern.-(1) In default of and subject to any provisions in the articles of a company and section 174, the number of directors and the names of the first directors shall be determined in writing by a majority of the subscribers of the memorandum, and until so determined, all the subscribers of the memorandum who are natural persons shall be deemed to be the directors of the company.

(2) The first directors shall hold office until the election of directors in the first annual general meeting.

177. Retirement of directors. On the date of the first annual general meeting of a company all directors of the company for the time being who are subject to election shall stand retired from office and thereafter all such directors shall retire on the expiry of the term laid down in section 180:


1Subs. by Ord. 100 of 02, s.2 and Sch.


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Provided that the directors so retiring shall continue to perform their functions until their successors are elected:

Provided further that 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 the circumstances of the case to the registrar within fifteen days of the expiry of the term laid down in section 180.

178. Procedure for election of directors.-(1) The directors of a company shall, subject to section 174, fix the number of elected directors of the company not later than thirty-five days before the convening of the general meeting at which directors are to be elected, and the number so fixed shall not be changed except with the prior approval of a general meeting of the company.

(2) The notice of the meeting at which directors are proposed to be elected shall among other matters, expressly state-

(a) the number of elected directors fixed under sub-section (1); and

(b) the names of the retiring directors.

(3) Any person 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 manner provided for sending of a notice of general meeting in the normal manner or in the case of a listed company by publication at least in one issue each of a daily newspaper in English language and a daily newspaper in Urdu language having circulation in the Province in which the stock exchange on which its securities are listed is situate.

(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



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(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.

1[“(6) The directors of a company 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.”].

2[“178A. Fresh election of directors on request of substantial acquire.-(1) Notwithstanding anything contained in this Ordinance, where a person acquire 12.5% or more voting shares in a listed company in his own name, he may apply to the Commission for requiring the company to hold fresh election of directors in accordance with the procedure laid down in section 178 in the forthcoming annual general meeting of the company.

(2) the Commission may, if it deems appropriate in the interest of the company, its minority shareholders or the capital markets generally, direct the company to hold the election of directors in the manner provided under section 178 and the company shall comply with such direction.

(3) The person on whose request fresh election of directors is held shall not sell or otherwise dispose of the shares acquired by him for at least one year from the date of election of directors held under sub-section (2).”]

179. Circumstances in which election of directors may be declared invalid. The Court may, on the application of members holding not less than twenty 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.

180. Term of office of directors.-(1) A director elected under section 178 shall hold office for a period of three years unless he earlier resigns, becomes disqualified from being a director or otherwise ceases to hold office.

(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.

181. Removal of director. A company may by resolution in general meeting remove a director appointed under section 176 or section 180 or elected in the manner provided for in section 178:

Provided that a resolution for removing a director shall not be deemed to have been passed 3[if] the number of votes cast1[against it is equal to, or exceeds”]


1Added, subs. and omitted by Ord. 100 of 02, s. 2 and Sch.

2Ins. by Act IV of 2007, s. 13 (w.e.f. 1-7-07)

3Subs. by Act I of 2003, s. 7.


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(i)   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 178; or

(ii)   the total number of votes for the time being computed in the manner laid down in sub-section (5) of section 178 divided by the number of directors for the time being, if the resolution relates to removal of a director appointed under section 176 or section 180.

182. Creditors may nominate directors. 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.

183. Certain provisions not to apply to directors representing special interests. Nothing in section 178, section 180 or section 181 shall apply to-

(a)   directors nominated 1[*  *  *] or by a corporation or company formed under any law in force and owned or co strolled, whether directly or indirectly, by the Federal Government or a Provincial Government on the board of directors of a company in or to which the said Corporation or such corporation or company has made investment or otherwise extended credit facilities;

(b)   directors nominated by the Federal Government or a Provincial Government 2[“or the Commission] on the board of directors of the company; or 

(c)   directors nominated by foreign equity holders on the board of the Pakistan Industrial Credit and Investment Corporation Limited, or of any other company set up under a regional co-operation or other co-operation arrangement approved by the Federal Government:

Provided that, where a director referred to in clause (a), (b) or (c) is nominated, such number of the votes computed in the manner laid down in sub-section (5) of section 178 as is equal to the minimum number of votes which would have been sufficient to elect such director if he had offered himself for election shall stand excluded from the total number of votes otherwise available at an election of the directors to the authority or person nominating him:

Provided further that a director nominated under this section shall hold office during the pleasure of the corporation, company, Government or authority which nominates him.

 


1Added, subs. and omitted by Ord. 100 of 02, s. 2 and Sch.

  2Ins. by Act IV of 2007, s. 13 (w.e.f. 1-7-07)

    

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184. Consent to act as director to be filed with registrar.—1[(1) No person shall be appointed or nominated 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 person has given his consent in writing for such appointment or nomination;

“(2) Within fourteen days from the date of appointment or nomination, as the case may be, the company shall file with the registrar a list of persons who have consented to act as director or chief executive of the company alongwith their consent to do so in the prescribed form.”]

(3) This section shall not apply to a private company, not being a private company which is a subsidiary of a public company.

185. Validity of acts of directors. No act of a director, or of a meeting of directors attended by him, shall be invalid merely on the ground of any defect subsequently discovered in his appointment to 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 rectified.

186. Penalties. Whoever knowingly and wilfully contravenes or fails to comply with any of the provisions of sections 174 to 185 or is a party to the contravention of the said provisions shall be liable to a fine which may extend to ten thousand rupees and may also be debarred by the authority which imposes the fine from becoming or continuing a director of the company for a period not exceeding three years.

187. Ineligibility of certain persons to become director. No person shall be appointed 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 un-discharged 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 Ordinance;

(g) has betrayed lack of fiduciary behaviour and a declaration to this effect has been made by the Court under section 217 at any time during the preceding five years;

(h) is not a member:

 

 


1Omitted and subs. by Ord. 100 of 02, s. 2 and Sch.

    

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Provided that clause (h) shall not apply in the case of-

(i) a person representing the Government or an institution or authority which is a member;

(ii) a whole-time director who is an employee of the company;

(iii) a chief executive; or

(iv) a person representing a creditor; 1[and]

1[“(i) has been declared by a Court of competent jurisdiction as defaulter in repayment of loan to a financial institution, exceeding such amount as may be notified by the Commission from time to time; and

(j) is 2[* * *] engaged in the business of brokerage, or is a spouse of such 2[“person or is a sponsor, director or officer of a corporate brokerage house “]

Provided that clauses (i) and (j) shall be applicable only in case of a listed company.”] =2[“Provided further that the prohibition contained in clause (j) shall not apply where the company is a stock exchange.”]

188. Vacation of office 6y the directors.-(1) A director shall ipso facto (cease to hold office if-

(a) he becomes ineligible to be appointed a director on any one or more of the grounds enumerated in clauses (a) to (h) of section 187;

(b) he absents himself from three consecutive meetings of the directors or from all the meetings of the directors for a continuous period of three months, whichever is the longer, without leave of absence from the directors;

(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 a banker; or

(ii) accepts a loan or guarantee from the company in contravention of section 195.

(2) Nothing contained in sub-section (1) 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 subsection.

 

 


1Subs. and added by Ord. 100 of 02, s. 2 and Sch.

2Omitted, subs. and added by Act I of 2008, s. 10.

    

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189. Penalty for unqualified person acting as director, etc. 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, he shall be liable in respect of each day during which he so describes or represents or acts, or allows or causes himself to be described, as such, to fine which may extend to two hundred rupees.

190. Ineligibility of bankrupt to act as director, etc. If any person being an un-discharged insolvent acts as chief executive, director or managing agent of a company, he shall be liable to imprisonment for a term not exceeding two years, or to a fine not exceeding ten thousand rupees, or to both.

(2) In this section the expression “company” includes a, company incorporated outside Pakistan which has a place of business in Pakistan.

191. Restriction on director's remuneration, etc.-(1) The remuneration of a director for performing extra services, including the holding of the office of chairman, shall be determined by the directors or the company in general meeting 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 directors or a committee of directors shall not exceed the scale approved by the company or the directors, as the case may be, in accordance with the provisions of the articles.

192. Restriction on assignment of office by directors.-(1) If in the case of any company provision is made by the articles or by any agreement entered into between any person and the company for empowering a director of the company to assign his office as such to another person, any assignment of office made in pursuance of the said provision shall, notwithstanding anything contained in the said provision, be of no effect unless and until it is approved by a special resolution of the company.



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(2) Notwithstanding anything contained in sub-section (1), the appointment by a director, with the approval of the directors, of an alternate or substitute director to act for him during his absence from Pakistan of not less than three months, 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. .

193. Proceedings of directors.-(1) The quorum for a meeting of directors of a listed company shall not be less than one-third of their number or four, whichever is greater.

(2) The directors of a public company shall meet at least 1[“once in each quarter of a year”]

(3) If a meeting of directors is conducted in the absence of a quorum specified .in sub-section (1), or a meeting of directors is not held as required by sub-section (2), the chairman of the directors and the directors shall be liable--

(a) to a fine not exceeding ten thousand rupees and in the case of a continuing default to a further fine not exceeding one hundred rupees for every day after the first during which the default continues, if the contravention relates to a listed company; or

(b) to a fine not exceeding two thousand rupees and in the case of a continuing default to a further fine not exceeding fifty rupees for every day after the first during which the default continues, if the contravention relates to a non-listed company.

194. Liabilities, etc., of directors and officers. Save as provided in this section, any provision, whether contained in the articles of a company or in any contract with a company or otherwise, for exempting any director, chief executive or officer of the company or any person, whether an officer of the company or not, employed by the company as auditor, 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:

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 or auditor 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 488 in which relief is granted to him.


1Subs. by Ord. 100 of 02, s. 2 and Sch.


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*195. Loans to directors, etc.-(1) Save as otherwise provided in sub-section (2), no company, hereafter in this section referred to as “the lending company” shall, directly or indirectly, make any loan to, or give any guarantee or provide any security in connection with a loan made by any other person to, or to any other person by,-

(a) any director of the lending company or of a company which is its holding company or any partner or relative of any such director;

(b) any firm in which any such director or relative is a partner;

(c) any private company of which any such director is a director or member;

(d) any body corporate at a general meeting of which not less than twenty-five percent. of the total voting -power may be exercised or controlled by any such director or his relative, or by two or more such directors together or by their relatives; or

(e) any body corporate, the directors or chief executive whereof are or is accustomed to act in accordance with the directions or instructions of the chief executive, or of any director or directors, of the lending company:

Provided that a company may, with the approval of the Authority, make a loan or give any guarantee or provide any security in connection with a loan made by any other person to a director who is in the whole-time employment of the company for the purpose of acquisition or construction of a dwelling house or land therefore or for defraying the cost of any conveyance for personal use or household effects or for defraying any expense on his medical treatment or the medical treatment of any relative as are ordinarily made or provided by the company to its employees.

Explanation.- ”Relative” in relation to a director means his spouse and minor children.

(2) Sub-section (1) shall not apply to-

(a) any loan made, guarantee given or security provided-

(i) by a private company, unless it is a subsidiary of a public company; or

(ii) by a banking company;

(b) any loan made by a holding company to its subsidiary; or

(c) any guarantee given or security provided by a holding company in reaped of any loan made to its subsidiary.

 

 


1For giving effect to the provisions of section 195 of the Companies Ordinance, 1984 (XLVII of 1984) See S.R.O. 178 (I)/86, dated 23rdFebruary, 1986.

    

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(3) Where any loan made, guarantee given or security provided by a lending company and outstanding at the commencement of this Ordinance could not have been made, given or provided, if this section had then been in force, the lending company shall within six months from the commencement of this Ordinance enforce the repayment of the loan made or, as the case may be, of the loan in connection with which the guarantee was given or the security was provided, notwithstanding any agreement to the contrary:

Provided that this subsection shall not apply where the loan made, guarantee given or security provided to a whole-time director is approved by the Authority as provided in the proviso to sub-section (1).

(4) Every person shall within fourteen days of his appointment as director or chief executive of a company file with the registrar the particulars of any loan taken, or guarantee or security obtained, prior to his becoming director or chief executive of the lending company which could not have been taken or obtained without the prior approval of the Authority had he at the time of taking the loan or obtaining the guarantee or security been the director or chief executive of the lending company.

(5) Every person who is knowingly 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 five thousand rupees or with simple imprisonment for a term which may extend to six months:

Provided that where any such loan, or any loan in connection with which any such guarantee or security has been given or provided by the lending company, has been repaid in full, no punishment by way of imprisonment shall be imposed under this subsection, and where the loan has been repaid in part, the maximum punishment which may be imposed under this subsection by way of imprisonment shall be proportionately reduced.

(6) All persons who are knowingly parties to any contravention of sub-section (1) or (3) shall be liable, jointly and severally, to the lending company for the repayment of the loan or for making good the sum 1[“with mark‑up 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.

(7) 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.

 


1Ins. by Ord. 100 of 02, s. 2 and Sch.

    

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(8) No officer of the lending company or of the borrowing body corporate shall be punishable under sub-section (5) or shall incur the liability referred to in sub-section (6) in respect of any loan made, guarantee given or security provided after the commencement of this Ordinance in contravention of clause (d) or (c) of subsection (1), unless at the time when the loan was made, the guarantee was given or the security was provided by the lending company, he knew or had express notice that clause was being contravened thereby.

1[196. Powers of directors.-(1) The business of a company shall be managed by the directors, who may pay all expenses incurred in promoting and registering the company, and may exercise all such powers of the company as arc not by this Ordinance, or by the articles, or by a special resolution, required to be exercised by the company in general meeting.

(2) The directors of a company 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 make calls on shareholders in respect of moneys unpaid on their shares;

(b) to issue shares;

(c) to issue debentures or 2[any instrument in the nature of redeemable Capital];

(d) to borrow moneys otherwise than on debentures;

(e) to invest the funds of the company;

(f) to make loans;

(g) to authorise a director or the firm of which he is 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;

(h) to approve annual or half-yearly c other periodical accounts as are required to be circulated to the members;

(i) to approve bonus to employees;

(j) to incur capital expenditure exceeding 3[*  *  *] on any single item or dispose of a fixed asset 3[“in accordance with the limits as prescribed by the Commission from time to time,]

 


1For giving effect to the provisions of section 196 of the Companies Ordinance, 1984 (XLVII of 1984) See S.R.O. 178 (I)/86, dated 23rdFebruary, 1986.

2Subs. by the Banking and Financial (Amdt. of Laws) Ordinance, 1984 (57 of 1984), s. 2 and Sch., for “participation Term Certificate”.

3Omitted and Subs. by Ord. 100 of 02, s. 2 and Sch.

    

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Provided that the acceptance by a banking company in the ordinary course of its business of deposits of money from the public repayable on demand or otherwise and withdrawable by cheque, draft, order or otherwise, or the placing of moneys on deposit by a banking company with another banking company on such conditions as the directors may prescribe, shall not be deemed to be a borrowing of moneys or, as the case may be, a making of loans by a banking company within the meaning of this section. [;]1

2[“(k) to undertake obligations under leasing contracts exceeding one million rupees:

(l) to declare interim dividend; and

(m) having regard to such amount as may be determined to be material (as construed in the 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”].

(3) The directors of a public company or of a subsidiary of a public 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 sizable part thereof, unless the main business of the company comprises of such selling or leasing; and

(b) 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 195.

(4) Whosoever contravenes any provision of this section shall be punishable with a fine which may extend to 1[one hundred] rupees and shall be individually and severally liable for losses or damages arising out of such action.

197. Prohibition regarding making of political contributions.-(1) Notwithstanding anything contained in this Ordinance, a company shall not contribute any amount-

(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-

(i) the company shall be liable to a fine which may extend to ten thousand rupees; and


1Ins. by Act IV of 1999, s. 14.

2Subs. and added by Ord. 100 of 02, s. 2 and Sch.


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(ii) every director and officer of the company who is knowingly and wilfully 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 fine.

CHIEF EXECUTIVE

198. Appointment of first chief executive.-(1) Every company, other than a company managed by a managing agent, shall have a chief executive appointed in the manner provided in this section and section 199.

(2) The directors of every company shall as from the date from which it commences business or as from a date not later than the fifteenth day after the date of its incorporation, whichever is earlier, appoint any individual to be the chief executive of the company.

(3) The chief executive appointed as aforesaid 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 directors at the time of his appointment, for such period.

199. Appointment of subsequent chief executive.-(1) Within fourteen days from the date of election of directors under section 178 or the office of the chief executive falling vacant, as the case may be, the directors of a company 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.

(2) On the expiry of his term of office under section 198 or sub-section (1), a chief executive shall be eligible for reappointment.

(3) The chief executive retiring under section 198 or this section shall continue to perform his functions until his successor is appointed unless non-appointment of his successor is due to any fault on his part or his office is expressly terminated.

200. Terms of appointment of chief executive and filling up of casual vacancy.-(1) The terms and conditions of appointment of a chief executive shall be determined by the directors or the company in general meeting in accordance with the provisions in the company's articles.

(2) 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.

201. Restriction on appointment of chief executive. No person who is ineligible to become a director of a company under section 187 shall be appointed or continue as the chief executive of any company.

202. Removal of chief executive. The directors of a company 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.

203. 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.



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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 parents, children, brothers or sisters.

(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.

204. Penalty. Whoever contravenes or fails to comply with any of the provisions of sections 198 to 203 or is a party to the contravention of the said provisions shall be liable to a fine which may extend to ten thousand rupees and may also be debarred by the authority which imposes the fine from becoming a director or chief executive of a company for a period not exceeding three years.

1[“204A. Certain companies to have secretaries 2[and share registers.-2[(1)] A listed company shall have a whole time secretary and a single member company shall have a secretary possessing such qualifications as may be prescribed.]

2[“(2) Listed companies shall have an independent share registrar possessing such qualifications and performing such functions as may be specified by the Commission.”]

REGISTER OF DIRECTORS AND OTHER OFFICERS

205. Register of directors, officers, etc.-(1) Every company shall keep at its registered office a register of its directors and officers, including the chief executive, managing agent, secretary, chief accountant, auditors and legal adviser, containing with respect to each of them 1[“such particulars as may be prescribed.”]-

1[* * * * * * *]

(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 in sub-section (1) and, within the periods respectively mentioned in this section, the company shall file with the registrar a return in duplicate in the prescribed form containing the particulars specified in the, said register and notification in the prescribed from of any change among the directors, the chief executive, managing agent, chief accountant, secretary, auditor or legal adviser or in any of the particulars contained in the register.

(3) The period within which the said return is to be filed with the registrar shall be a period of fourteen days from the date of incorporation of the company and the period within which the said notification of a change is to be sent shall be fourteen days from the happening thereof.

(4) The register to be kept under this section shall 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, be open to the inspection of any member of the company without charge and of any other person on payment of the prescribed fee or such lesser sum as the company may specify for each inspection.


1Ins., subs. and omitted by Ord. 100 of 02, s. 2 and Sch.

2Added, numbered and added by Act IV of 2007, s. 13 (w.e.f. 1-7-07)