An Overview of Companies Act 2017 Pakistan (Upto Date)

• Title of the Act
• Definitions used in various provisions
• Overriding effect

• Which court has jurisdiction?
• Company benches
• Procedure for Petition, Application, and Appeals

• Power and function of SECP under the Act read with Securities and Exchange Commission of Pakistan Act, 1997
• Reference by Federal Govt. or SECP to Court on significant matters

• Obligation to register certain associations, and partnerships as companies
• Provisions related to the company name, use of prohibited words in names, and change of name by companies
• Mode of forming companies and working with less than the required number of members
• Company incorporation/registration procedure
• Registration of Memorandum of Association (MOA) and Articles of Association (AOA) and the effect of their registration
• Commencement of business by public companies
• Registered office and its publication
• Capital of a company & its publication
• Business objects of the company
• Contents of memorandum of a company limited by shares, a company limited by guarantee, and unlimited company
• Alteration of MOA
• Contents of articles of a company limited by shares, a company limited by guarantee, and an unlimited company
• Alteration of AOA
• Conversion of a company of one class to another issuance of the certificate of change of status
• Formation of Not for Profit entities
• Service and Authentication of documents (company, registrar, member & proceedings)

• Prospectus
• Classes and kinds of shares (share capital)
• Variation of rights of shareholders
• Nature of shares and other securities
• Certificate of shares and number of shares certificates
• Debentures
• Charge on assets of companies
• Powers and liabilities of trustees
• Issuance of non-interest-based redeemable capital
• Procedure for Allotment
• Return of money for unallotted shares
• Transfer of shares
• Board’s power to refuse the transfer of shares and notice of refusal
• Issuance of shares on commission, premium, and discount
• Further issue of capital
• Right Issue of shares
• Alteration of share capital
• Invitation to deposits
• Procedure for Reduction of share capital
• Unlimited liability of directors in limited company

• The requirement to register a mortgage or charge
• Particulars in case of a series of debentures
• Register of mortgages and charges
• Index to register of mortgages and charges
• Modification of charge
• Rectification of charge
• Satisfaction of charge
• Appointment of receivers and managers and their remuneration
• Qualification of receivers and managers
• Power and Duties of Receivers and Managers

• Register and index of members & debenture holder
• Maintenance of Registers
• Inspection of registers
• Book closure
• Court’s power to rectify register
• Punishment of fraudulent entry
• Evidentiary value of entries in registers
• The annual return of the company
• Record of an ultimate beneficial owner

Meetings and Proceedings

• Statutory meeting of a public company
• Annual general meeting (AGM)
• Extra-ordinary general meeting (EGM)
• Notice of general meetings
• The quorum for general meetings
• Voting in person or through proxy
• Voting procedure
• Representation of bodies
• Special resolution and filing the resolution with the registrar
• Resolution by circulation
• Record of resolutions and inspection

Provisions related to Directors

• Number of directors
• The first director and their term/retirement
• Subsequent directors and their election
• Election procedure
• Filling casual vacancy
• Fresh election
• Ineligibility directors
• Nominee and alternate director
• Duties of directors
• Conflict of interest and disclosure
• Independent directors
• Removal of director
• CCG compliance
• Consent to act as directors
• Validity of acts
• Restriction on remuneration
• Proceedings of directors

Provisions related to the CEO

• Qualification of CEO
• Appointment of 1st and subsequent CEO and his term
• Removal of CEO
• Prohibition of competing business

Company Secretary and Share Registrar

• Public companies to have a secretary
• Listed to have share registrar
• Bar on a sole agent
• Register of Directors and officers

Provisions regarding Investments and Contracts

• Investment in associated company or undertaking
• Contracts by Company
• Related party transactions
• Securities and deposits
• Public interest company
• Provident fund and other contributory funds

Provisions related to Accounts

• Books to be kept by the company
• Inspection by SECP
• Financial statements (FS)
• Classification of companies
• Contents of FS and directors’ report and statement of compliance and their contents
• Consolidate FS and financial year of holding and subsidiary company
• Rights of holding company reps and members
• FS of Modaraba company to include Modaraba accounts
• Approval and authentication of FS and send a copy to the registrar
• Right of member to copy of FS and auditors’ report
• Penalty for improper issue, circulation & publication of FS
• Quarterly FS of a listed company
• Power of commission to require an additional statement of accounts and reports
• Right of debenture holders to get a copy of FS
• Penalties

Dividends

• Certain restrictions on the declaration of dividends
• Dividend out of profit only and to registered shareholders only
• Directors not to withhold declared dividend
• Unclaimed shares modaraba cert. and dividend to vest in Fed. Govt.
• Establishment of investor education and awareness fund

Audit and Auditors

• Appointment removal and fee
• Qualification and disqualification
• Right to information
• Duties
• Audit of cost accounts
• Signature of auditor’s report
• Penalty for non-compliance by companies
• Penalty for non-compliance by auditor

Powers of Registrar

• Power of registrar to call for information and explanation
• Seizure of documents by the registrar, inspector, or investigation officer

Investigation and Related Matters

• Investigation into affairs of a company
• Investigation in other cases
• Serious fraud investigation
• Inspector to be a court for certain purposes
• Power of investigation into affairs of associated company
• Duty of officers to assist the inspector
• Inspector’s report and prosecution
• Power of commission to initiate action against management
• Effect of the court order
• No compensation for annulment or modification of a contract and loss of office

Powers of Court

• Application for winding up
• Proceeding for recovery of damages and property
• Expenses of investigation
• Inspector’s report to be evidence
• Imposition of restrictions on shares and debentures and transfer thereof in certain cases
• Saving for legal advisors and bankers
• Effect of winding up petition on Enquiries and investigation
• Application provisions to liquidators & foreign companies

• Mediation and conciliation panel
• Dispute resolution through mediation
• Companies’ power to refer matters to arbitration
• Compromise with creditors and members
• Commission’s power to enforce compromise and arrangements
• Info about compromise and arrangement with members and creditors
• Power of commission to facilitate reconstruction or amalgamation
• Notice to registrar of applications related to compromises, arrangements, reconstruction, or amalgamation
• The amalgamation of wholly owned subsidiaries in holding

• Application to court and court power to issue an interim order
• Claim for damages inadmissible
• Application of certain sec. to proceedings under this part
• Management by administrator
• Rehabilitation of sick public sector companies

• Modes of winding up
• Liabilities as contributories of present and past members
• Liabilities of directors with unlimited directors
• Liability of contributories with fully paid shares
• Nature of liability of contributory
• Contributories in case of death of member and insolvency and winding up of body corporate member

Winding up by Court

• Circumstances of winding up by court
• Company when deemed unable to pay debts
• Transfer of proceedings to other courts

Petition for winding up

• Provision as to winding up petition
• Right to present a petition in case of voluntary or under court supervision
• Commencement of winding up by court

Power of court hearing petition

• The court may grant an injunction
• Court powers on hearing petition
• Copy of WU order to be filed with the registrar
• Stay of suits on winding up order
• The court may require expeditious disposal of suits
• Effect of WU order
• Stay of WU
• The court may ascertain the wishes of creditors or contributories

Official liquidators (OL)

• Appointment, removal, remuneration, and title
• General provisions as to OL
• Statement of affairs to be made to OL
• Report by OL and court directions on the report
• Settlement of contributories list and application of assets
• Custody of the company’s properties
• Power to require delivery of property and summon person suspected to have the property of the company
• Power to order public examination of promoters, directors
• Power to arrest absconding contributory and order payment of debts by him
• Power of Court to make calls
• Power to order payment into the bank
• Power of regulation of account with the court
• Order of contributory conclusive evidence
• Power to exclude creditors not proving in time
• Adjustment of contributories’ rights
• Power-to-order costs
• Power and duties of OL
• OL to keep a book containing proceedings of meetings
• OL account
• Exercise and control of OL Powers
• Distribution by OL
• Dissolution of company
• Saving of other proceedings

Enforcement of Order

• Power to enforce orders and enforcement by other courts
• Mode of dealing with enforcement orders of other courts
• Circumstances of voluntary WU
• Commencement of Voluntary WU
• Effect of Voluntary WU on the Status of the Company
• Notice of resolution of Voluntary WU
• Declaration of insolvency in case of the proposal of Voluntary WU
• The Distinction between Members and Creditors Vol. WU
• Appointment of Liquidator and filling a vacancy in the office of liquidator
• Notice by the liquidator of his appointment
• Power of liquidator to accept shares as consideration for the sale of property of the company
• Duty of liquidator where the company found insolvent
• Duty of liquidator call General Meeting
• Final meeting and dissolution
• Alternative provisions as to annual final meeting in case of insolvency

Provisions applicable to creditors in Voluntary Winding Up

• Applicable provision
• Meeting of creditors
• Appointment and remuneration of the liquidator
• Cessation of BoD power and power to fill the vacancy of liquidator
• Duty of liquidator call meeting of creditors and members
• Final meeting and dissolution

General Provisions for all Kinds of Winding Up Proceedings

• Distribution of company property
• Application of sec. 320-321 to Vol. WU
• Power of court to appoint and remove liquidator in Voluntary Winding-up
• Notice of liquidator of his appointment
• Arrangements when binding on company and creditors
• Power to apply to the court to have questions determined or powers exercised
• Court Application by the liquidator to public examination of promoters and directors
• Cost of Vol WU
• Saving for rights of creditors and contributories
• Power of court to adopt proceedings of Voluntary Winding-up

Winding up under Court Supervision

• Power to order Winding up under the supervision of the Court
• Effect of petition for WU under supervision
• The court may have regard to the wishes of creditors and contributories
• Power to replace the liquidator
• Effect of supervision order
• Appointment of Voluntary liquidator as Official Liquidator in certain cases
• Status of a company being wound up

Proof and Ranking of claims

• Debts of all descriptions to be proved
• Application of insolvency rules in case of an insolvent company
• Preferential payment and avoidance of transfers
• Disclaimer of onerous property

Effect of Winding Up on Antecedents and other transactions

• Fraudulent preferences
• Liabilities and rights of certain fraudulently preferred persons
• Avoidance of certain attachments and executions
• Effect of floating charge

Offenses antecedent to or during Winding up

• Power of court to assess damages against delinquent directors
• Liability for fraudulent conduct of business
• Liability to extend to partners or directors in a firm or body corporate in certain cases
• Penalty for fraud by officers of the company which has gone into liquidation
• Liability where proper account not kept
• Penalty for falsification of books
• Prosecution of delinquent directors
• Penalty for false evidence
• Penal provisions

Supplementary provisions as to Winding-up

• Liquidator to exercise certain powers subject to sanction
• Meetings to ascertain the wishes of creditors and contributories
• Company documents to be evidence
• Summary disposal of certain suits by liquidator
• Limitation and court fee
• Inspection of docs
• Disposal of books and papers of company
• Power of court to declare dissolution void
• Info as to pending liquidations
• Payment by liquidator into the bank
• Unclaimed dividends and undistributed assets are to be paid to accounts maintained
• Books of accounts and other proceedings to be kept by the liquidator
• Application of audit provisions
• Enforcement of duty of liquidator to make a return
• Notification that the company is in liquidation
• Court or person before whom affidavit may be sworn
• Power to make rules
• Inactive Company
• Registrar may strike defunct company off the register
• The easy exit of the defunct company

• Meaning and WU of unregistered companies
• Contributories in WU of unregistered companies
• Power to stay or restrain proceedings
• Suits stayed on WU order
• Directions as to property in certain cases
• Provisions of this part cumulative

• Application of this part to foreign companies
• Documents to be delivered to the registrar
• Return as to alteration of documents
• Accounting of foreign companies
• Certain obligations of foreign companies
• Power of commission to require info
• Service on foreign company
• The company’s failure to comply with this part not to affect liability under contracts
• Provision related to names, inquiries to apply to foreign companies
• Intimation of ceasing to have a place of business
• Penalties
• Interpretation of provisions of this part

Prospectus related to Foreign Securities

• Issue of prospectus
• Restriction on canvassing for the sale of securities
• Registration of charges
• Notice of appointment of the receiver
• Notice of liquidation

• Certification of Shariah-compliant companies and securities
• Companies’ Global Register of Beneficial Ownership
• Prevention of offenses related to fraud, Money Laundering, and Terrorism Financing
• Free zone company
• Filing of documents through an intermediary
• Acceptance of advances by real estate companies engaged in Real Estate projects
• Agri promotion companies
• Power to give exemptions by Fed. Govt
• The quota for disabled persons in PSCs
• Valuation by registered valuers
• Security clearance of shareholders and directors

Registration offices and fees

• Registration offices
• Production of documents kept by the registrar
• Registrar not to accept defective docs
• Special return to rectify the data
• Jurisdiction in disputes related to shareholding and directorship
• Approval of share transfer by licensed agents
• Acceptance of docs after the prescribed time
• Company registration and Filing Fees
• Power to specify fees chargeable by companies
• Electronic filing
• Destruction of physical record
• Electronically supply of information, docs, and notices to members
• Enforcing compliance with provisions of the Act
• Power of court trying offense to direct compliance with the provisions

Legal Proceedings and Offenses

• Offenses to be cognizable
• Complaints to court in certain cases by the registrar, commission, creditor, or member
• Penalty to be imposed by the Commission
• Adjudication of offenses and standard scale of penalty
• Appeal against an order passed by an officer of the Commission
• Appeal before the Appellate Bench
• Adjudication of offenses involving imprisonment
• Powers of the Commission regarding inquiries and proceedings
• Procedure for trial of a corporate body
• Recovery of penalty
• Prosecution of offenses by the Commission
• Appeal against acquittal
• Payment of compensation in case of frivolous and vexatious prosecution
• Application of fines and penalties
• Production and inspection of books where offense suspected
• Power to require limited company to give security for cost
• Power of the court to grant relief in certain cases
• Enforcement of court orders
• Enforcement of court orders by other courts
• Protection of good faith acts
• Penalty for false statement, falsification, forgery, fraud, deception
• Penalty for wrongful withholding of property
• Directors’ liability for allotment of shares against inadequate consideration
• Punishment for non-compliance with the court directive
• Penalty for ultra-vires business
• Penalty for improper use of the word “limited”
• Penalty where no specific penalty is provided
• Power to accord approval subject to conditions
• Delegation of powers
• Application of act to companies governed by special enactments

Schedules, Table, Forms, General Rules

• Forms
• Power to alter schedules
• Fed Govt power to make rules
• Repeal and savings
• Power to issue directives, circulars, guidelines
• Power of commission to permit the use of Urdu words of abbreviations
• Power to make regulations
• Validation of laws
• Former registration offices and registers continued
• Removal of difficulty