Summary of Companies Ordinance, 1984

SUMMARY OF COMPANIES ORDINANCE, 1984
SEC. PARTICULARS KEY POINTS TIME PERIOD CONSTRAINTS (IF ANY) PENALTY (IF ANY)
PART I - PRELIMINARY
1 Short title, extent and commencement 1) Extending to the whole of Pakistan
2) Ordinance enforced with immediate effect
2 Definitions 1) Key Definitions
a) Associated Companies / Undertakings
b) Body Corporate
c) Chief Executive
d) Financial Institution
e) Member
f) Private Company
g) Prospectus
h) Special Resolution
3 Meaning of "subsidiary" and "holding company" 1) Holding company has more than 50% voting power or power to appoint more than 50 %
directors.
2) Central depository not deemed to be holding company if it holds more than 50% voting
securities unless they are beneficially owned by it.
4 Ordinance not to apply to certain corporations 1) Ordinance not to apply to:
a) Trading corporation owned/controlled by a Province & conducting business only within
that Province.
b) A co-operative society.
c) A university.
5 Application of Ordinance to non-trading 1) The Provincial Govt. can exercise the powers of the Federal Govt./Commission in relation
companies with purely provincial objects to non-trading companies with purely provincial objects.
6 Ordinance to override memorandum, articles, etc 1) The Ordinance shall override memorandum, articles, etc. where they are opposed to the
Ordinance.
PART II - JURISDICTION OF COURTS
7 Jurisdiction of the Courts 1) High Court to have jurisdiction unless Federal Govt. empowers any civil court.
2) The Court having jurisdiction in the place which has longest been registered office during
the 6 months before presenting the winding up petition shall be empowered to wind up
that company.
3) Proceeding of a court cannot be invalidated by reason of the court not being empowered
under this section.
8 Constitution of Company Benches 1) The Chief Justice of the High Court shall constitute the company benches.
9 Procedure of the Court 1) The disposal of all matters coming to court to be expedited. All matters to be disposed of in 90 days at most from the date
of petition presentation/ application to Court except in
extraordinary circumstances/grounds.
2) Hearing not to be adjourned except for sufficient cause. Period of adjournment not more than
- 14 days at one time, or
- 30 days in all.
3) The court shall hear the case from day to day and follow the summary procedure.
10 Appeals against Court orders 1) Appeals to be disposed of within 90 days of the submission of
Appeals shall be made to the Supreme Court where paid up capital is at least Rs. 1 million, the appeal.
otherwise such appeal can only be made if the Supreme Court grants leave to appeal.
PART III - CORPORATE LAW AUTHORITY
11 ( Deleted)
12 Powers and functions of the Commission 1) All powers/functions conferred on the Commission by any law can be exercised by it.
2) The powers of the Federal Govt., through its notification in the official Gazette, can be
exercised by the Commission.
13 Reference by the Federal Government or 1) The Federal Govt./Commission may refer any matter/question of special significance to
Commission to the Court the Court.
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PART IV - INCORPORATION OF COMPANIES AND MATTERS INCIDENTAL THERETO

14 Obligation to register certain associations, 1) Association, partnerships, etc. of more than 20 persons carrying on business for profit
partnerships, etc., as companies must be registered as a company In case of contravention, every member shall be,
2) Exceptions are: - fined upto Rs. 5,000, and
a) Any society, association, etc. other than a partnership, incorporated under any other - personally liable for liabilities incurred in such business.
Pakistan law.
b) Joint family carrying on joint family business.
c) A partnership of at least two joint families (Maximum total of 20 members, excluding
minors)
d) A partnership formed for practicing any profession for which relevant laws do not
permit practice as a limited liability company.
MEMORANDUM OF ASSOCIATION
15 Mode of forming a company 1) At least 3 associated persons for a lawful purpose may form a public company and at least
1 such person may form a private company by subscribing their names to a memorandum
and registering it.
2) The company may be:
a) a co. limited by shares, or
b) a co. limited by guarantee, or
c) an unlimited company.
16 Memorandum of company limited by shares 1) The memorandum shall state:
a) Name of the company.
b) Province or place where registered office is situated.
c) Objects of the company and, except for a trading corporation, the territories to which
they extend.
d) The fact that the liability of the members is limited.
e) Proposed share capital and its division into shares of a fixed amount
2) Every subscriber to take at least 1 share and write the no. of shares taken by him, opposite
his name, in the memorandum
17 Memorandum of company limited by guarantee 1) The memorandum shall state, whether the company has share capital or not,
they extend.
d) The fact that the liability of the members is limited.
e) The fact that each member undertakes to contribute to the assets of the company, in case
of winding up while he is a member, or if the company is wound up within 1 year after he
ceases membership, not exceeding a specified amount,
- for the payments of the debts incurred during his membership,
- for the payments of costs of winding up,
- for adjustment of contributories' rights among themselves
2) In case of share capital, the memorandum shall also state proposed share capital and its
division into shares of a fixed amount
18 Memorandum of unlimited company 1) The memorandum shall state, whether the company has share capital or not,
they extend.
2) In case of share capital, every subscriber to take at least 1 share and write the no. of shares
taken by him, opposite his name, in the memorandum.
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19 Printing, signature, etc. of memorandum 1) The memorandum shall be printed, dated, divided into paragraphs and signed by each
subscriber and a witness (who shall attest the signature) giving the following particulars
for both,
a) present name in full
b) his occupation
c) his father's name, or for a married or widowed woman, husband's or deceased husband's
name, in full.
d) his nationality
e) his usual residential address
f) other prescribed particulars.
2) The memorandum and articles shall deem to include power raise resources from a
scheduled bank/financial institution by,
a) obtaining loans, advances or credit, and
b) issuing other non-interest based securities
20 Restriction on alteration of memorandum 1) Memorandum can only be altered in the cases, mode and to the extent specified in the
Ordinance
21 Alteration of memorandum 1) Company may alter its memorandum by special resolution to,
a) change its registered office from,
- one province to another, or
- one city in a province to another, or
- a province to a part of Pakistan not forming part of a province & vice versa.
b) change the objects of the company to enable it to,
- carry on its business more economically/efficiently
- attain its main purpose by new or improved means
- enlarge/change local area of operations
- carry on some business (not specified in the memorandum) which may be
conveniently/advantageously be combined with company's business
- restrict/abandon any of the objects in the memorandum.
- sell/dispose whole or part of the company.
- amalgamate with any other company.
2) The alteration must be confirmed by the Commission on petition except if alteration is for
change of its registered office from,
a) a place in Punjab to Islamabad Capital Territory and vice versa, or
b) one city in a province to another.
3) Before confirming the alteration, the Commission must be satisfied that,
a) sufficient notice has been given to every person who interest will be affected by the
alteration, except for special reasons.
b) either the consent to the alteration has been obtained or debt/claim has been
discharged/secured with regards to every creditor entitled to object and also signifies his
objection.
22 Powers of Commission when confirming 1) The Commission may confirm whole or part of the alteration and on term and conditions
alteration that it thinks fit.
23 Exercise of discretion by Commission 1) The Commission may, with regards to the rights/interests of the members & creditors,
adjourn the proceedings of memorandum alteration so that an arrangement may be made
to purchase the interest of the dissident members and may give directions/orders to
facilitate such arrangement. However, capital of the company cannot be expended in such
a purchase.
24 Procedure on confirmation of the alteration 1) Company shall file a certified copy of the order confirming the alteration & a printed copy To be filed within 90 days from the date of the order.
of the altered memorandum with the registrar who shall register it
2) For alteration involving change of registered office from
a) one province to another
b) a province to Islamabad Capital Territory and vice versa,
a certified copy of the order confirming such alteration shall be filed with the registrar of
both areas. Each registrar shall register the order & the registrar, in the place from which
the registered office is being transferred, shall transfer all the relevant documents filed in
his office to the other registrar
3) The Commission may extend the time for filing of documents with the registrar.
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25 Effect of failure to register within ninety days 1) Alteration of the memorandum must be registered within,
a) 90 days, or
b) the extended period allowed by the Commission
otherwise, the alteration shall be null and void.
2) The Commission may, on application, revive the order/alteration on application Application must be made with a further period of 90 days.
ARTICLES OF ASSOCIATION
26 Registration of articles 1) Articles, signed by the subscribers to the memorandum,
a) may be registered by a company limited by shares, and
b) must be registered by a company limited by guarantee or an unlimited company
with the memorandum.
2) Articles may adopt all or any of the regulations contained in Table A (First Schedule)
3) Articles shall state proposed share capital (if the company has a share capital) & the
proposed no. of members (if the company doesn't have a share capital) in case of,
a) an unlimited company
b) a company limited by guarantee
4) Articles shall be clear, explicit & list and enumerate the voting/other rights of different
classes of its shares and other securities.
27 Printing, signature, etc., of articles 1)
The articles shall be printed, dated, divided into paragraphs and signed by each subscriber
and a witness (who shall attest the signature) giving the following particulars for both,
a) present name in full
b) his occupation
c) his father's name, or for a married or widowed woman, husband's or deceased husband's
name, in full.
d) his nationality
e) his usual residential address
f) other prescribed particulars.
28 Alteration of articles 1) Company may alter its articles through special resolution, except where the such alteration
affects the substantive rights/liabilities of member/class of members, it shall only be
carried out if a majority of 3/4ths of the affected members/class of members vote for such
alteration.
FORMS OF MEMORANDUM AND ARTICLES
29 Forms of memorandum and articles 1) Memorandum of company limited by shares (Table B - First Schedule)
2) Memorandum & articles of company limited by guarantee without share capital (Table C -
First Schedule)
3) Memorandum & articles of company limited by guarantee with share capital (Table D -
First Schedule)
4) Memorandum & articles of unlimited company with share capital (Table E - First
Schedule)
GENERAL PROVISIONS WITH RESPECT TO REGISTRATION OF MEMORANDUM AND ARTICLES
30 Registration of memorandum and articles, etc. 1) Memorandum, articles & a declaration of compliance with the requirements of the
Ordinance and Rules made by the director or other officer to be filed with the registrar.
2) The registrar shall retain and register the memorandum and articles if the registrar is
satisfied that,
a) company is formed for lawful purposes
b) its objects are not inappropriate/deceptive/insufficiently expressive
c) it has complied with the Ordinance and Rules with regard to registration and related
matters
3) On refusal of registration of memorandum, the subscribers may,
a) supply the deficiency & remove the defect pointed out, or,
b) appeal against the refusal to,
- the Commission (whose order shall be final) if order passed by the registrar,
- the registrar in any other case.
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31 Effect of memorandum and articles 1) The registered memorandum & articles shall bind the members & the company to observe
and abide by all their provisions
2) Money payable by any member to the company under the memorandum & articles shall be
his debt to the company.
32 Effect of registration 1) The registrar shall certify the incorporation of the company & that the company is limited
by shares or guarantee (in case of a limited company) when the memorandum is
registered.
2) After incorporation, the subscribers and members shall be a body corporate,
a) capable of exercising all the functions of an incorporated company
b) having perpetual succession & a common seal, but
c) with a liability to contribute to the assets of the company in the event of its winding up
33 Conclusiveness of certificate of incorporation 1) Certificate of incorporation given by the registrar is conclusive evidence that,
a) all requirements of the Ordinance have been complied with, and
b) the association is a company duly registered under the Ordinance
34 Effect of alteration in memorandum or articles 1) No member shall be bound by an alteration in the memorandum and articles if the
alteration requires him to,
a) take more shares than those held by him on the date of the alteration, or,
b) increase his liability to contribute to the share capital, or,
c) pay money to the company.
except where the member agrees to be bound by the alteration in writing.
35 Copies of memorandum and articles to be given 1) Every company shall send a copy of the memorandum & articles to every member at his Copies must be sent within 14 days of the request thereof
to members request and on payment of the prescribed amount In case of default, a fine upto Rs. 100 for each offence
36 Alteration of memorandum or articles to be noted 1) Every copy of the memorandum or articles issued after the date of alteration shall conform In case of default, the company and every officer (who defaults
in every copy to the altered memorandum or articles knowingly & willfully) shall be liable to a fine upto Rs. 1,000
for each contravening copy issued.
PROVISIONS WITH RESPECT TO NAMES OF COMPANIES
37 Prohibition of certain names 1) The name of the company must not be,
a) inappropriate
b) deceptive
c) designed to exploit/offend the religious vulnerabilities of the people
d) identical with that of a company already registered or resembling that name so as to
deceive except where such company is being dissolved and signifies its consent in this
regard.
2) Prior written approval of the Commission is required where the company proposes to be
registered with a name that suggests/is calculated to suggest,
a) patronage of any Pakistani or Foreign Head of State (past or present)
b) connection with the Govt. or any dept./authority thereof.
c) connection with any corporation set up under any Federal or Provincial law
d) patronage or connection with any Foreign Govt. or international organisation
3) The decision of the Commission shall be final regarding the question of the validity of the
name.
38 Rectification of name of a company 1) A company registered with an invalid name,
a) may change its name with the registrar's approval Name must be changed within 30 days of the receipt of
b) shall, if directed by the registrar, change its name with the his approval registrar's direction
2) However, the registrar shall give the company an opportunity to make a representation The registrar cannot issue a direction after the expiration of 3
before issuing its direction for the change in name. years from the date of registration of the company or the new
name
39 Change of name by a company 1) Name may be changed by,
a) special resolution, and
b) written approval of the registrar
2) No approval is required where the only change in name is the addition or deletion of
"(Private)"
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40 Registration of change of name and effect thereof 1) When name is changed, registrar shall enter the new name on the register in place of the The company shall continue to mention its former name
former name & issue an altered certificate of incorporation alongwith its new name for 1 year from the date of issue of
altered certificate of incorporation. This requirement is not
applicable to the change in name where the only change is the
addition or deletion of "(Private)"
2) The change in name shall not affect,
a) any rights & obligations of the company
b) any legal proceeding involving the company
41 Alteration of names on commencement of 1) The names of all existing companies at the date of commencement of this Ordinance shall Default in compliance with the directions of the registrar in
Ordinance and change of status of company be deemed to include "(Private)/(Guarantee) Limited" as the case may be & the certificate Section 38, failure to mention its former name with its new
of incorporation, other books and papers are deemed to be accordingly altered. name as required by Section 40(2) or failure to comply with the
requirements regarding the name of the existing companies at
the date of commencement of the Ordinance in Section 41(1)
will render the company and every director or officer (willfully
and knowingly in default) liable to a fine upto Rs. 10,000 & a
further fine upto Rs. 200 for every day the default continues
2) The registrar shall, on conversion of a public company to a private company & vice versa,
add or delete the words "(Private)" before the word "Limited" in his register & issue a
revised certificate
ASSOCIATIONS NOT FOR PROFIT
42 Power to dispense will "Limited" in the name of 1)
charitable and other companies
If the Commission is satisfied that purpose of forming an association is the promotion of
commerce, art, science, religion, sports, social services, charity or any other useful object
and applies/intends to apply its profits in promoting its objects and prohibits payment of
any dividends to its members, the Commission may grant a license to that effect and direct
that the association be registered as a limited liability company without addition of the
words "Limited", "(Private) Limited" or "(Guarantee) Limited" as the case may be.
2)
The conditions/regulations of the license so granted shall be binding on the association &
shall be inserted in the memorandum/articles if the Commission directs so.
3) An association so registered shall enjoy all the privileges and be subject to all the
obligations of a limited company except the requirement of using "Limited", "(Private)
Limited" or "(Guarantee) Limited" as part of its name.
4) The Commission may revoke the license at any time only after giving the association a
written notice of its intention and giving an opportunity to them for representation against
the revocation.
COMPANIES LIMITED BY GUARANTEE
43 Provision as to companies limited by guarantee 1) In a company limited by guarantee and without share capital, a provision in the
memorandum or articles giving the right to any non-member to participate in the divisible
profits of the company shall be void.
2) A provision in the memorandum, articles or any resolution dividing the undertaking into
shares or interests shall be treated as a provision for a share capital even if it does not
specify the nominal amount or number of shares/interests.
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PROVISIONS RELATING TO CONVERSION OF PUBLIC COMPANY INTO PRIVATE COMPANY AND VICE VERSA, AND OTHER MATTERS
44 Conversion of public company into private 1) A public company can convert itself into a private company only with prior written
company approval of the Commission.
45 Prospectus or statement in lieu of prospectus to 1) If a private company alters its articles in such a way that it ceases to fall in the definition
be filed by private company on ceasing to be of a private company, it shall,
private company a) cease to be a private company from the date of alteration of articles.
b) file a prospectus/statement in lieu of prospectus with the registrar. To be filed within 14 days after the date of alteration of
articles
2)
Prospectus should be in accordance with Part I of the Second Schedule whereas Statement
in lieu of Prospectus should be in accordance with Part III of the Second Schedule.
3) If any adjustments are made in the reports forming part of the Prospectus/Statement in lieu In case of default, the company and every officer in default shall
of Prospectus by the persons making those reports, a written statement, signed by those be fined upto Rs. 5,000 & a further fine upto Rs. 100 for every
persons, setting out the adjustments and giving reasons therefor, shall be attached day the default continues
to/endorsed on the Prospectus or Statement in lieu of Prospectus
4) If a statement is misleading in form and context, or there is an omission calculated to
mislead, then the Prospectus/Statement in lieu of Prospectus is deemed to contain an
untrue statement.
5) A person who authorised the filing of a Prospectus/Statement in lieu of Prospectus is In case of an untrue statement in the prospectus/statement in
punishable, unless he proves that, lieu of prospectus, that person shall be (1) fined upto Rs.
- either the statement was immaterial, or 10,000, (2) imprisoned upto 2 years, or (3) punished with both
- he had reasonable ground to believe, & believed, that the statement was true upto the
time of filing of the Prospectus/Statement in lieu of Prospectus
46 Consequence of default in complying with 1) If a private company defaults in complying with any of the provisions of its articles which
conditions constituting a company a private render it a private company, the company shall cease to avail the privileges/exemptions
company conferred on private companies and the Ordinance shall apply to the company as if it were
a not a private company, unless the Commission grants relief, on application, from such
consequences being satisfied that,
a) the non-compliance was accidental
b) the non-compliance was due to inadvertence
c) the non-compliance was due to some other sufficient cause
d) on other grounds it is just and equitable to grant relief
CARRYING ON BUSINESS WITH LESS THAN THE LEGAL MINIMUM OF MEMBERS
47 Liability for carrying on business with less than 1) If a company at any time carries on business with less than, Severally liable to pay for the whole debt contracted during
three or, in the case of a private company, two a) 2 members in case of a private company (other than a single member company), or, the defaulting period and liable to be sued
members b) 3 member in any other case
for more than 6 months, every such member who was a member during the time after the
aforementioned 6 months and was aware of the contravention shall be severally liable
SERVICE AND AUTHENTICATION OF DOCUMENTS

48 Service of documents on company 1) A document is said to be served on the company or its officer if it is sent to the company's
registered office by,
a) post under a certificate of posting
b) registered post
c) leaving it at the company’s registered office
49 Service of documents on registrar 1) A document is said to be served on the registrar if it is sent to him at his office by,
a) registered post
b) delivering it to him
c) leaving it for him at his office against an acknowledgement of receipt
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50 Service of notice on members, etc. 1) A notice may be given to a member,

a) personally, or
b) by sending it by post to his registered address,
c) in case of absence of a registered address, any address (within Pakistan) supplied by
him to the company for this purpose.
2)
If a notice is sent by post, it is deemed to be served, at the time at which the letter would
be delivered in the ordinary course of post (unless proved otherwise), to the member if,
a) it is properly addressed,
b) it is prepaid
c) a letter containing the notice is posted
3)
In case of a member without an address, registered or otherwise, a notice is deemed to be
given to him on the day when the notice is advertised in a newspaper circulating in the
area where the registered office of the company is situated. However, a listed company
must also publish that notice in at least 1 daily English and 1 daily Urdu newspaper
circulated in the area where the stock exchange (in which the company is listed) is
situated.
4) A notice may be given to joint shareholders by giving the notice to the joint-holder named
first in the share register.
5) A notice may be given to a person entitled to a share due to the death or insolvency of a
member by sending it through post in a prepaid letter addressed to him by,
a) name
b) title/representatives of the deceased (in case of death) or assignees of the insolvent (in
case of insolvency)
c) any like description,
to an address in Pakistan supplied by such person, or until such an address is supplied,
notice may be given in any manner it would have been given had the death or insolvency
not occurred.
6) Notice must also be given for any General Meeting to,
a) every member except those who have no registered or any other address (for purpose of
receiving notice) in Pakistan
b) every person entitled to a share due to the death or insolvency of a member
c) auditors of the company
51 Authentication of documents and proceedings A document/proceeding signed by,
a) the chief executive
b) a director
c) secretary
d) other authorised officer
is deemed to be authentic (unless otherwise required by the Ordinance) and need not be
under the common seal of the company.
PART V - PROSPECTUS, ALLOTMENT, ISSUE AND TRANSFER OF SHARES AND DEBENTURES, DEPOSITS, ETC.
PROSPECTUS
52 Prospectus to be dated 1) A prospectus shall be dated & that date shall be taken as the date of its publication, unless
proved otherwise.
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53 Matters to be stated and reports to be set out in 1) Every prospectus shall be issued in accordance with Part I of the Second Schedule
prospectus 2) A sufficient number of copies shall be made available,
a) at the registered office,
b) with the stock exchange where the company is listed/proposed to be listed, &
c) with the bankers to the issue
3) The prospectus (in full or abridged form) shall be published in at least 1 Urdu & 1 English A prospectus or its advertisement in a newspaper can only be If a prospectus is not in accordance with Part I of the Second
daily newspaper. published between 7 to 30 days before the subscription list is Schedule or it (or its advertisement) is published in
due to open unless the Commission (for special reasons) contravention with the requirements of this section, then every
allows it to be published more than 30 days before the person knowingly responsible for the issue of such prospectus
subscription list is due to open. shall be fined upto Rs. 10,000 & a further fine upto Rs. 200 for
every day the default continues (i.e., until a compliant
prospectus is issued and its copy delivered to the registrar)
4) Any condition in the prospectus requiring an applicant to waive compliance of the

requirement of this section or affecting him with any matter not specifically mentioned in
the prospectus shall be void.
5) Any form of application for the share/debentures of a company must be accompanied by a Any person contravening against the requirements for the form
compliant prospectus unless the form of application was issued, of application for shares/debentures shall be fined upto Rs.
a) to invite a person (in good faith) into an underwriting agreement w.r.t. the 2,000.
shares/debentures
b) for shares/debentures not offered to the public
6) A director or other person responsible for the prospectus shall not incur a liability for non-
compliance of the Ordinance's requirements if,
a) he proves that he had no knowledge of any undisclosed matter
b) he proves that non-compliance was because of an honest mistake on his part
c) the non-compliance was in respect of immaterial or reasonably excusable matters in the
opinion of the registrar/other officer
7) This section shall not apply to the prospectus or form of application,
a) issued to existing members/debenture-holders
b) relating to shares/debentures that are (or are to be) uniform with shares/debentures
previously issued and presently quoted on a stock exchange.
54 Expert to be unconnected with formation or 1) An expert whose statement is included in the prospectus must be independent and
management of company unconnected with the formation/management of the company
55 Expert's consent to issue of prospectus 1) A statement made by an expert can only be included in the prospectus if,
containing statement by him a) his written consent to the issue has been included in the prospectus and has not
withdrawn his consent before registration of the prospectus' copy.
b) a statement that he has consented & not withdrawn such consent is included in the
prospectus
56 Penalty and interpretation Every person whose profession gives authority to a statement made by him is an expert. If prospectus is issued in contravention with Section 54 & 55,
the company and every person who was knowingly a party to
the issue shall be fined upto Rs. 5,000
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57 Approval, issue and registration of prospectus 1) Approval of the Commission must be obtained for the issue, circulation or publication of Such approval must be obtained within 60 days prior to the
any prospectus/document offering any security for subscription/sale date of its issue
Prospectus issued in contravention of this section shall render
the company and every person who is knowingly a party to the
issue liable to a fine upto Rs. 10,000 & a further fine upto Rs.
200 for every day the default continues (i.e., until a copy of a
compliant prospectus has been delivered to the registrar)
2) A copy of the prospectus signed by a director/proposed director or his authorized agent
and having the following attached must be delivered to the registrar on or before its
publication date:
a) consent of the expert to the issue
b) in case of a generally issued prospectus,
- copy of every contract required to be included in the prospectus by Part I of the Second
Schedule (Clause 16)
- If any adjustments are made in the reports required by Part II of the Second Schedule
by the persons making those reports, a written statement, signed by those persons, setting
out the adjustments and giving reasons therefor
3) Every prospectus, on its face, shall,
a) state that its copy has been delivered to the registrar
b) specify any documents attached to the delivered copy or refer to the statements that
specify those documents
c) state that an application has been (or proposed to be made) to a stock exchange for the
listing of the security (in case such an application is made or proposed to be made)
4) The registrar shall only register a prospectus which,
a) complies with the requirements of Section 52, 53, 54, 55 & 57
b) is accompanied by the written consent of the following persons named therein acting in
their respective capacity:
- the auditor of the company
- the legal advisor of the company
- the attorney of the company
- the solicitor of the company
- the banker of the company
- the broker of the company (being a member of a stock exchange)
58 Terms of contract mentioned in prospectus or 1) A company cannot vary the terms of contract mentioned in the prospectus/statement in
statement in lieu of prospectus not to be varied lieu of prospectus without the approval of (or authority given by) the company in a general
meeting.
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59 Civil liability for misstatements in prospectus 1) The following persons shall be liable for any loss/damage sustained by the subscriber of
shares/debentures because of an untrue statement in the prospectus:
a) every director at the time of the issue of prospectus
b) every person who has given authorization to have himself named (& is named) in the
prospectus, either as,
- a director
- having agreed to become a director (immediately or after a certain time interval)
c) every promoter of the company
d) every person who has given consent to the issue under Section 55 or Section 57(5).
However, such persons shall not be held liable as persons who have authorised the issue of
the prospectus except in respect of an untrue statement made by them.
2) No person mentioned above (except for a consenting expert who is liable because he
authorised the issue of the prospectus in respect of an untrue statement made by him) shall
be liable for the aforementioned loss/damage if he proves that,
a) having consented to become a director, withdrew his consent before the issue of the
prospectus and thus it was issued without his authority/consent
b) prospectus was issued without his knowledge/consent and he gave reasonable public
notice of that fact.
c) after the issue of the prospectus and before allotment, he withdrew his consent (on
becoming aware of an untrue statement in the prospectus) and gave reasonable public
notice of that fact
d) in relation to every untrue statement,
- not made by an expert/public official, he had reasonable ground to believe (& believed
upto the time of allotment) that the statement was true
- made by an expert, he had reasonable ground to believe (& believed upto the time of
issue of the prospectus) that the expert was competent, had given his consent and had not
withdrawn it, (1) before a copy of the prospectus was delivered for registration or, (2)
before allotment
- made by (public) official person, it was a correct & fair representation of the statement
3) A consenting expert who is liable because he authorised the issue of the prospectus in
respect of an untrue statement made by him shall not be so liable, if he proves that,
a) having consented to issue of the prospectus, withdrew it (in writing) before the issue of
the prospectus and thus it was issued without his authority/consent before a copy of the
prospectus was delivered for registration
b) after the copy was delivered for registration and before allotment, he withdrew his
consent in writing (on becoming aware of the untrue statement) and gave reasonable
public notice of the withdrawal & its reasons
c) he was competent & had reasonable ground to believe (& believed upto the time of
allotment) that the statement was true
4)
The directors (except those who neither consented to nor had knowledge of the issue of the
prospectus) & every other person who authorised the issue (excluding the expert who is
deemed not to have authorised the issue because he only consented to the inclusion of his
statement in the prospectus), shall indemnify the following persons against all damages,
costs & expenses which the said persons may be liable to because (1) their name was in
the prospectus, (2) their statement as an expert was in the prospectus, or (3) they are
defending themselves in a suit/legal proceeding in respect thereof:
a) every person who is named as (or having agreed to become) a director & (1) has not
consented to become a director, or (2) has withdrawn his consent before the issue & thus,
has not authorized/consented to the issue
b) an expert (whose consent to the issue is required) who has either, (1) not given that
consent, or (2) has withdrawn it before the issue
5) Every person who becomes liable under this section may recover contribution from any
other person who, if sued separately, would be liable to make the same payment (unless
the first person misrepresents fraudulently and the other does not) .
Page 11 of 59
6)
A promoter is a party to the preparation of the prospectus but excludes persons acting in a
professional capacity for persons engaged in procuring the company's formation.
60 Criminal liability for misstatements in prospectus 1) In case of an untrue statement, every person who signed/authorized the issue {excluding
the persons mentioned in Section 55 & 57(5) who are deemed not to have authorised the
issue because they only gave their consent as required under the respective sections} shall,
unless he proves that either, (1) the statement was immaterial, or (2)he had reasonable
ground to believe (believed upto the time of the issue) that the statement was true,
a) be imprisoned for upto 2 years,

b) be fined upto Rs. 10,000, or
c) be punished with both of the above
61 Document containing offer of shares or 1) Any document by which offer for sale is made is deemed to be a prospectus and all the
debentures for sale to be deemed prospectus rules/provisions relevant to a prospectus shall be applicable to that document alongwith
the following modifications,
a) the document (deemed prospectus) should also state,
- net consideration received (or to be received) in respect of shares/debentures under the
offer
- the place and time at which the contract of allotment of said shares/debentures may be
inspected.
b) the persons making the offer are deemed to be named as directors in the deemed
prospectus under Section 57's application to the deemed prospectus
c) in case the person making the offer is a company/firm, the deemed prospectus must be
signed by at least,
- 2 directors (or their authorized agents in writing) of that company, or
- half the partners (or their authorized agents in writing) of that firm
2) The following shall be evidence that allotment of (or an agreement to allot)
shares/debentures was made for the purposes of offer for sale to the public:
a) an offer for sale was made to the public within 1 year after the allotment (or agreement
to allot)
b) the whole of the consideration to be received by the company was not received by it at
the date when the offer was made
c) an offer for sale was made to the public in pursuance of,
- an understanding to which the company was a party
- a condition imposed on the company's business or privileges by any authority
62 Offer of shares or debentures for sale by certain 1) A person holding more than 10% shares/debentures must obtain the Commission's
persons approval to offer his shares/debentures to the public for sale.
2) Any document by which offer for sale is made by such a person is deemed to be a
prospectus and all the rules/provisions relevant to a prospectus shall be applicable to that
document alongwith the following modifications,
a) the person making the offer is deemed to be named as director in the deemed prospectus
under Section 57's application to the deemed prospectus
b) in case the person making the offer is a company/firm, the deemed prospectus must be
signed by at least,
- 2 directors (or their authorized agents in writing) of that company, or
- half the partners (or their authorized agents in writing) of that firm
3) Any document,
a) advertising offers for sale of securities acquired in the course of normal business, or
b) advertising offers for negotiating sale of such securities, or
c) expressing an intention to disinvest,
- such shares, or
- other securities issued by a schedule bank/financial institution
shall not be deemed to be prospectus or offer for sale to the public
62A Issue of securities outside Pakistan 1) A company must obtain prior approval of the Commission to issue any security outside
Pakistan.
Page 12 of 59
63 Interpretation of provisions relating to prospectus 1) A prospectus shall be deemed to include an untrue statement if,
a) a statement is included in it which is misleading in form and context in which it is
included
b) a matter is omitted from the prospectus and is calculated to mislead
64 Newspaper advertisement of prospectus 1) Where a prospectus is published as a newspaper advertisement, the following need not be
specified therein,
a) contents of the memorandum & its signatories
b) the number of shares subscribed for by them
65 Construction of references to offering shares or 1) Any reference in the Ordinance or articles to (1) the offer of shares/debentures to the
debentures to the public etc public, or (2) invitation to public for subscription shall include reference to the fact that
the said offer or invitation is to 'any section of the public' (which includes existing
members/debenture holders, or clients of the person issuing the prospectus)
2) An offer or invitation is not said to be made to the public if it can be regarded,
a) as calculated to result in shares/debentures becoming available (for
subscription/purchase) to only those persons receiving the offer/invitation
b) in all respects, as a domestic concern of the persons making & receiving the
offer/invitation.
3) A provision in the articles prohibiting public invitations to share/debenture subscription
shall not be taken as prohibiting invitation to existing members/debenture-holders in the
manner set out above.
66 Penalty for fraudulently inducing persons to 1) Any person who,
invest money a) knowingly or recklessly makes a misleading statement, or
b) dishonestly conceals facts
& as a result, induces (or attempts to do so) another person to enter (or offer to enter)
into,
a) any agreement for (1) acquiring, (2) disposing of, (3) subscribing for, or (4)
underwriting shares/debentures
b) any agreement for securing a profit from (1) the yield of share/debentures, or (2)
fluctuations in their value
shall be,
a) be imprisoned for upto 3 years,
b) be fined upto Rs. 20,000, or
c) be punished with both of the above
ALLOTMENT
67 Application for, and allotment of, shares and 1) An application for the allotment of shares/debentures (in pursuance of a prospectus) shall
debentures not be made for less than the nominal amount specified the Commission Whoever,
2) The Commission may specify the form of the application which shall then form part of the - applies for less than the nominal amount of the shares as
prospectus specified by the Commission, or
3) All of the applicants certificates, statements & declarations shall be binding on him - does not apply in the form specified by the Commission, or
4) An application made for shares/debentures (in pursuance of a prospectus) is irrevocable - makes an incorrect statement, declaration or verification in the
application,
shall be fined upto Rs. 10,000
Page 13 of 59
68 Restriction as to allotment 1) Allotment of share capital can only be made if the minimum subscription has been In case of contravention of this section, every promoter, director
subscribed and its full amount received in cash by the company. Any amount or other person knowingly responsible for the contravention
received/receivable in any form other than cash shall not form part of the minimum shall be fined upto Rs. 10,000 & a further fine upto Rs. 200 for
subscription. every day the contravention continues
2) Cash received from applicants for the shares shall be deposited & kept in a separate bank
account in a scheduled bank until,
a) returned to the applicants because of non-compliance of the requirement of allotment
b) certificate to commence business is obtained

3) Amount payable for each share shall be its full nominal amount
4) If any of the aforementioned conditions are not complied with on the expiration of 40 days
after the first issue of prospectus, all money shall be repaid to the applicants without
surcharge within 50 days of the issue of prospectus. Otherwise, the directors (except those
who can prove that the default was not due to any misconduct/negligence on their part)
shall be jointly and severally liable to repay that money with 1.5% surcharge for every
month or part thereof starting from the 51st day.
5) Any condition requiring an applicant to waive compliance of the requirement of this

section shall be void.
6) The requirements of this section (except for the requirement of full nominal amount of a
share being the amount payable for each share) shall not apply to any allotment of shares
subsequent to the first allotment.
7) For the first allotment of share capital (payable in cash) where public invitation is not
made, the minimum subscription must have been subscribed & full nominal amount of
each share received in cash (not applicable to private companies). Here, minimum
subscription means,
a) amount fixed by memorandum or articles & specified in statement in lieu of prospectus
as minimum subscription
b) if no such amount is fixed, the whole amount of the share capital issued (or agreed to be
issued) for cash.
69 Statement in lieu of prospectus 1) To allot shares/debentures, a statement in lieu of prospectus (prepared in accordance with In case of contravention, the company and every officer who
Part II of the Second Schedule), signed by (1) every director, (2) proposed director or (3) willfully authorises and permits the contravention shall be fined
his authorised agent (in writing), must be delivered to the registrar for registration by a upto Rs. 5,000 & a further fine upto Rs. 100 for every day till
company having share capital which, the contravention continues
a) does not issue a prospectus on its formation, or In case of an untrue statement, any person who signed or
authorised the delivery of the statement in lieu of prospectus for
b) has issued a prospectus but has not proceeded to allot any shares offered to the public registration shall, unless he proves that either, (1) the statement
2) If any adjustments are made in the reports required by Part II of the Second Schedule by was immaterial, or (2) he had reasonable ground to believe
(believed upto the time of the delivery for registration) that the
the persons making those reports, a written statement, signed by those persons, setting out
statement was true,
3) the
Thisadjustments andapplicable
section is not giving reasons therefor
to private must be attached to the statement in lieu of
companies
4) A statement in lieu of prospectus shall be deemed to include an untrue statement if, - be imprisoned for upto 2 years,
a) a statement is included in it which is misleading in form and context in which it is - be fined upto Rs. 10,000, or
included - be punished with both of the above
b) a matter is omitted from the prospectus and is calculated to mislead
70 Effect of irregular allotment 1) An irregular allotment (contravening with Sections 68 & 69) shall be voidable (at the In case of contravention of the allotment provision of Sections
instance of the applicant), within 30 days (& not later), 68 & 69, every officer who knowingly contravenes, permits or
a) of holding the statutory meeting authorizes the contravention shall be liable to compensate (1)
b) of the date of allotment, where holding of statutory meeting is not required the company & (2) the allottee for any losses, damages or
even if the company is being wound up costs sustained by them because of this contravention.
However, the proceeding to recover any such losses must be
commenced within 2 years of the allotment.
Page 14 of 59
71 Repayment of money received for shares not 1) If the public are invited to subscribe for the company's securities, it shall decide on If the refund is not made within the specified time, the directors
allotted successful applications within 10 days of the closure of the subscription list & refund the (except those who can prove that the default was not due to any
money to unsuccessful candidates within 10 days of such decision misconduct/negligence on their part) shall be,
2) Any condition requiring an applicant to waive compliance of the requirement of this - jointly & severally liable to repay the money with 1.5%
section shall be void. surcharge for every month or part thereof starting from the 16th
day
- fined upto Rs. 5,000 & a further fine upto Rs. 100 for every
day (after the 15th day) the contravention continues
72 Allotment of shares and debentures to be dealt in 1) If a prospectus states that an application has been (or will be) made to any stock exchange Where such permission is not applied for, the company shall
on stock exchange for dealing the securities offered under the prospectus, any allotment made shall be void if repay all the money received at once. If the money is not repaid
the permission has not been, within 8 days of becoming liable, the directors (except those
a) applied before the 7th day of the first issue of prospectus who can prove that the default was not due to any
b) granted before the end of, misconduct/negligence on their part) shall be,
- 21 days from the closing date of the subscription lists, or - jointly & severally liable to repay the money with 1.5%
- 42 days from the closing date of the subscription lists if the stock exchange notifies the surcharge for every month or part thereof starting from the 9th
applicant in the first 21 days that the permission will be granted (after those first 21 days) day, &
- fined upto Rs. 5,000 & a further fine upto Rs. 100 for every
day (after the 8th day) the default continues
2) All money shall be deposited in a separate account in a scheduled bank till the company
may become liable to repay it If money is not deposited in a separate account in a schedule
bank for the time that the company may become liable to repay
it, the company & every officer who knowingly & willfully
authorises/permits the default shall be fined upto Rs. 5,000
3) Any condition requiring an applicant to waive compliance of the requirement of this
section shall be void.
4) The permission is not said to be refused if it is intimated that it will be given further
consideration
5) Where a person underwriting an offer by a prospectus agrees to take the securities, he shall
be deemed to have applied for them through the prospectus
6) Where a prospectus offers share for sales, any reference to,
a) allotment will be substituted with sale
b) to the company regarding contravention of this section will be substituted with the
person who makes the offer
Page 15 of 59
73 Return as to allotments 1) Whenever shares are allotted by a company with share capital, the company shall, within In case of contravention of this section, the company & every
30 days, officer of the company, knowingly a party to the default, shall
a) file a return of allotment with the registrar, stating (1) the no. and nominal amount of be fined upto Rs. 500 for every day the default continues
the shares, (2) prescribed particulars of the allottee and (3) the amount paid on each share
b) in case of shares for non-cash consideration,

- produce a written contract having (1) the allottee's title and (2) any duly stamped
contracts of the non-cash consideration for the inspection & examination of the registrar
- file with the registrar (1) verified copies of all such contracts, & (2) return stating the
no. & nominal amount of the shares, amount to be treated as paid up & consideration for
the shares
a) file with the registrar,
- in case of bonus shares, a return stating (1) the no. & nominal amount of the shares, (2)
prescribed particulars of the allottee, & (3) a copy of the resolution authorising the issue of
the shares
- in case of shares issued at discount, (1) a copy of the resolution authorizing such issue,
(2) copy of the Commission's order sanctioning the issue, & (3) if the maximum discount
rate exceeds 10%, a copy of the Commission's order permitting the issue at the higher
%age
2) Shares are only said to be paid for in cash if the company has actually received cash for
them. However, where a person (who has been issued shares) sells property or render
services to the company, the amount paid by the company for the property or services shall
be deducted from the cash paid by the person for the shares & only the balance is treated
as cash received for the shares
3) Where a contract is not in writing, the company shall file the prescribed particulars (duly
stamped) of the contract with the registrar within 30 days of the allotment
4) The registrar may extend the 30-day requirement of the provisions above if he is satisfied
that that period is inadequate to fulfill the requirements of this section & then those
requirements must be fulfilled within the extended period.
5) This section shall also apply to shares issued/allotted to a scheduled bank/financial
institution pursuant to the company’s obligation to issue shares to such scheduled
bank/financial institution. In case the company defaults in filing an allotment return, the
scheduled bank/financial institution may file the said return (together with the
Commission-specified documents) with the registrar. Such return shall be deemed to have
been filed by the company & scheduled bank/financial institution shall be entitled to
recover any fee paid by it to the registrar from the company
CERTIFICATE OF SHARES AND DEBENTURES

74 Limitation of time for issue of certificates 1) The share/debenture certificates shall be complete & ready for delivery within, In case of contravention, the company & every officer
- 90 days of allotment of shares (knowingly a party to the default) shall be fined upto Rs. 100
- 45 days of the application for the registration of share transfer for every day the default continues
& if they are (1) not sent by post or (2) not delivered to the entitled person within this
period, the share/debenture holders shall be given notice of this fact immediately
2) Share/debenture transfer to a central depository shall be registered within 5 days of the
application for the registration of that transfer.
75 Issue of duplicate certificates 1) A duplicate share certificate shall be issued within 45 days of the application (after making In case of contravention, the company & every officer
necessary inquiry, the fee of which shall not exceed the prescribed amount & actual (knowingly a party to the default) shall be fined upto Rs. 500
expenses of the inquiry), if the original certificate is,
- proved to be lost or destroyed In case the company renews a certificate or issues its duplicate
- surrendered to the company being (1) defaced (2) mutilated or, (3) torn within intent to defraud, (1) it shall be fined upto Rs. 20,000 &
(2) every defaulting officer shall,
- be imprisoned for upto 6 months,
2) If unable to issue duplicate certificate, the company shall inform the applicant of (1) this - be fined upto Rs. 10,000, or
fact and (2) its reasons, within 30 days of the application - be punished with both of the above
Page 16 of 59
TRANSFER OF SHARES AND DEBENTURES

76 Transfer of shares and debentures 1) The company shall enter the name of the transferee in the member's register on application
for the registration of share/debenture transfer (irrespective of whether that application was In case of contravention, the company & every officer
made by the transferee or the transferor), only if the following are delivered to it, (knowingly or willfully a party to the default) shall be fined
upto Rs. 5,000
a) a transfer deed which is (1) duly stamped, & (2) executed by the transferor & transferee,
&
b) the scrip
2) In case a transfer deed is (1) lost, (2) destroyed or (3) mutilated before its lodgment, the
company may register the share/debenture transfer on an duly stamped application by the
transferee, only if the directors (who shall give such indemnity to the company if it so
requires) are satisfied that the transfer deed is indeed (1) lost, (2) destroyed or (3)
mutilated
3) A share/debenture transfer register shall be maintained at the registered office of the
company which shall be open to member's inspection & the supply of its copy to them in
the prescribed manner
4) A person to whom a share/debenture is transmitted by operation of law must be registered
as a shareholder by the company
5) A public company may appoint a financial institution (duly approved by the Commission)
as its transfer agent
77 Directors not to refuse transfer of shares 1) The directors shall not refuse the transfer of shares/debentures unless,
a) shares/debentures are not fully paid up
b) the transfer deed is defective or invalid
2) If the transfer of shares/debentures is refused, the company shall notify the
defect/invalidity to the transferee within 30 days (or within 5 days, in case the transferee is
a central depository) of the date of the lodgment of the transfer deed, who can relodge the
transfer deed after the removal of that defect/invalidity
78 Notice of refusal to transfer 1) If the registration of the transfer of shares/debentures is refused, the company shall send a In case of contravention, the company & every defaulting
notice of refusal (indicating its reasons) to the transferee within 30 days of the date of the officer shall be fined upto Rs. 20,000 & Rs. 1,000 for every day
lodgment of the transfer deed the contravention continues
78A Appeal against refusal for registration of transfer 1) The (1) transferor, (2) transferee or (3) person who intimates the transmission by operation In case of contravention, every defaulting director & officer
of law, may appeal to the Commission if the company, shall be fined upto Rs. 500 for every day the default continues
a) refuses to register the transfer/transmission
b) fails to register the transmission/transmission within the time prescribed in Section 78

c) fails to send notice of refusal within the time prescribed in Section 78
2) The appeal to the Commission must be made within 2 months of the,
a) receipt of the refusal notice, if the company refuses to register a transfer/transmission

b) expiry of the prescribed time period in Section 78, in the other cases
3)
The Commission may, after reviewing the reasons for the refusal as & if required, direct
the company (by a written order, also giving directions for the payments of costs or
otherwise, as required) to either register the transmission/transmission (within 15 days of
the receipt of the order) or not register it, only after giving reasonable notice to,
a) the company
b) the transferor and transferee
c) the person who intimates the transmission by operation of law (& the previous owner, if
any)
& giving a reasonable opportunity to make their representation
79 Transfer to successor-in-interest 1) Shares/debentures may be transferred from a deceased holder to his lawful nominee
successor-in-interest on application by such nominee alongwith documents evidencing
nomination & the company may (on receiving a suitable indemnity from the nominee, if
required) enter him in the member's register
Page 17 of 59
80 Transfer to nominee of a deceased member 1) A person may, on becoming a member, nominate one or more persons to acquire the
interest in his shares in the event of his death & deposit that nomination with the company.
Where a person nominates more than one person, he shall specify the extent of each of the
nominees' right's on those shares.
2) On the death of a member, any such nominated person shall become the shareholder on
providing proof of death alongwith the relative scrips & that transmission shall be
registered in the nominee's favour unless such nomination,
a) is varied by another nomination which is deposited before the death of the (original)
member
b) becomes invalid at any time by the occurrence of any contingency specified in that
nomination
3) Any such nomination becomes void if the nominee dies before the member unless the
nomination provides for such an eventuality and confers the rights on the shares upon
another person in case of the nominee's death.
4) Only the following relatives of the member can be nominated: (1) the spouse (2) parents
(3) siblings (4) children (including step/adopted child)
81 Transfer by nominee or legal representative 1) Transfer of shares by a deceased member's nominee or legal representative is as valid as if
he were a member at the time of the execution of the transfer deed.
COMMISSION, DISCOUNT, PREMIUM AND REDEEMABLE PREFERENCES SHARES
82 Power to pay certain commissions, and 1) The commission paid by the company to any person for his subscription of the company's
prohibition of payment of other commissions, shares is lawful only if, In case of default, the company & every officer (knowingly or
discounts, etc. a) the payment of commission is authorised by the articles willfully in default) shall,
b) the commission paid does not exceed the rate fixed by the Commission - be fined upto Rs. 2,000, if the commission paid exceeds the
c) the amount or rate of commission paid is, rate fixed by the Commission
- disclosed in the prospectus (in case shares are offered to the public) - be fined upto Rs. 1,000, if the (1) amount/rate of
- disclosed in the statement in lieu of prospectus & the statement delivered to the commission, or (2) the number of shares subscribed absolutely
registrar for registration before the payment of the commission (in case shares are not for commission is not disclosed appropriately
offered to the public) - be fined upto Rs. 500, in case of contravention of other
- disclosed in the circular or notice inviting subscription for the shares provisions of this section
d) the number of shares which the persons have agreed to subscribe absolutely for a
commission is disclosed in documents described above
2) A company shall not allot its shares to any person (who subscribes to its shares) in order to
pay for the commission, discount or allowance due to him
3) A company may pay brokerage,
a) not exceeding 1% of the price at which the shares issued have been actually (& not
merely) sold through the broker
b) at more than the rate specified by the Commission
4) A vendor, promoter or other person who receives payment in shares shall have the power
to apply any part of those shares to pay for any commission which would have been lawful
had the payment been made directly by the company
83 Application of premium received on issue of 1) The premium on shares issued at a premium shall be transferred to "the share premium
shares account" & the provisions relating to reduction of the share capital shall apply to that
account as if it were paid-up capital of the company
2) The share premium account shall be applied in,
a) writing off preliminary expenses
b) writing off (1) expenses of (2) commission paid on (3) discount allowed on any
share/debenture issue
c) providing for the premium on redemption of redeemable preference shares/debentures

d) paying up unpaid shares to be issued to the members as fully paid bonus shares
3) If shares were issued at premium before the commencement of this ordinance, they will be
treated by this section as if they were issued after that commencement, except for that part
of the premium which, as per the 5th Schedule, does not form part of the company's
reserves & thus, will not be included in the share premium account
Page 18 of 59
84 Power to issue shares at a discount 1) Shares issued at a discount shall be lawful only if,
a) the share issue at a discount is (1) authorized by a resolution passed in the general
meeting & (2) sanctioned by the Commission
b) the resolution specifies the maximum discount rate
c) at least 1 year has passed since the date of commencement of business
d) such shares (issued at a discount) must be issued within 60 days of (1) the date when
the issue was sanctioned by the Commission, or (2) such extended time as allowed by the
Commission
2) The company may apply to the Commission to sanction the share issue at a discount after
passing the resolution authorizing that issue & on such application the Commission may
make a sanction order
3) Shares issued at a discount shall not be deemed to be reduction of capital
4) Every (1) prospectus relevant to that issue (2) balance sheet issued subsequent to the share In case of default, the company & every defaulting officer, shall
issue, shall contain particulars of, be fined upto Rs. 2,000
a) discount allowed or
b) the discount that has, as yet, not been written off at the date of (1) issue of prospectus
(2) balance sheet
85 Redemption of preference shares 1) Preference shares can only be redeemed if, In case of default, the company & every officer (knowingly or
a) they are redeemed (1) out of the profits of the company which, otherwise, would have willfully in default) shall be fined upto Rs. 5,000
been available for dividend, or (2) from out of a sinking fund created for this purpose, or
(3) from out of proceeds of a fresh issue of shares made for the purpose of that
redemption, or (4) from out of proceeds from the sale of any property
b) they are fully paid
c) in case the shares are not redeemed out of proceeds of a fresh issue, the amount applied
in redeeming the shares shall be transferred out of the profits (which, otherwise, would
have been available for dividend) to "the capital redemption reserve fund" & that reserve
shall be treated as paid-up share capital for the purpose of the provisions relating to the
reduction of share capital
d) in case the shares are redeemed out of proceeds of a fresh issue, the premium payable
(if any) on redemption must have been provided for (1) out of the profits or (2) out of the
shares premium account before the shares are redeemed
2) Redemption of share capital shall not be taken as reduction in authorized share capital
3) Preference shares may be redeemed in the manner provided by the articles subject to this
Ordinance
Page 19 of 59
FURTHER ISSUE OF CAPITAL

86 Further issue of capital 1) In case of further issue of share capital, such shares shall be offered to existing member in
proportion to the shares held by them through notice specifying (1) the number of shares
to which the member is entitled & (2) the time limit at the end of which the offer will be
deemed to be declined, if not accepted. The exceptions are as follows:
a) Further capital may be raised without issue of right shares only if it is allowed by the
Federal Government on application (based on a special resolution) by a public company
b) Certain percentage of further issue is reserved by a public company for its employees
under "Employees Stock Option Scheme" (the scheme being approved by the Commission
under the rules of this Ordinance)
2) The offer of new shares shall strictly be proportional to the number of existing shares held
3) Fractional shares shall not be issued & all fractions (less than a share) shall be (1)
consolidated & disposed, & (2) its disposal proceeds paid to entitled members who had
accepted the offer
4) The offer shall be accompanied by a circular duly signed by the directors (or their
authorised officer in this behalf) in the Commission-prescribed form containing
a) containing material information about the affairs of the company
b) containing latest statements of the accounts
c) specifying the necessity of the issue of further capital
d) specifying the date by which the offer will be deemed to be declined if it is not accepted
5) A copy of that circular duly signed by the directors (or their authorised officer) shall be
filed with the registrar before its issue to the members
6) The shares that are (1) declined, or (2) not subscribed under this section, may be allotted &
issued in such manner that the directors deem fit
87 Issue of shares in lieu of outstanding balance of 1) A company may (1) issue ordinary shares or (2) grant the option, to convert (into shares)
any loans, etc. upto 20 % the balance of any loans, advances or credit etc. (1) outstanding for or (2)
having a term of at least 3 years, to a scheduled bank/financial institution only if the return
on such loans, advances etc. has fallen below the minimum rate of return specified by the
SBP in any 2 of the 3 years preceding the end of the 2nd year from the date of
commencement of commercial production
REGULATION OF DEPOSITS
88 Deposits not to be invited without issuing an 1) The Federal Govt. may prescribe (1) the limits, (2) the manner & (3) the conditions subject
advertisement to which deposits may be invited, accepted or retained In case of default, the company shall be,
2) A company cannot invite any deposit unless, - fined upto the amount of the deposit accepted, if default
- the deposit is invited in accordance with the prescription of the Federal Govt. relates to acceptance of any deposit
- an advertisement, in the prescribed manner & form, (including a statement showing the - fined upto Rs. 20,000, if default relates to invitation of any
financial position of the company) has been issued by the company deposit
& every defaulting officer shall be imprisoned for upto 2 years
& fined
3) The provisions relating to a prospectus shall apply to that advertisement
4) Deposit means any money (1) deposited with, or (2) borrowed by the company except a
loan,
a) raised by debenture issue
b) obtained from a banking company/financial institution
5) This section is not applicable to,
a) a banking company
b) class of companies specified by the Commission
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PART IV - SHARE CAPITAL AND DEBENTURES

NATURE, NUMBERING AND CERTIFICATE OF SHARES
89 Nature of shares and certificate of shares 1) Shares shall be moveable property, transferable in the manner provided by the articles
2) Each share shall have a distinctive number
3) A share certificate (under the company's common seal & specifying any shares held by
any member) shall be prima facie evidence of member's title to the shares
CLASSES AND KINDS OF SHARES
90 Classes and kinds of shares capital 1) A company limited by shares can have different kinds & classes of share capital as
provided by its memorandum & articles but different rights/privileges with respect to
different share classes can only be conferred in the prescribed manner
GENERAL PROVISIONS AS TO SHARE CAPITAL
91 Only fully paid shares to be issued 1) Only fully paid shares can be issued. However, if a company has partly paid shares on the
commencement of this Ordinance, it shall,
a) not issue further share capital until all previously issued shares have become fully paid
up, &
b) pay dividend only in proportion to the paid up amount of each share
92 Power of company limited by shares to alter its 1) If authorised by its articles, a company limited by shares may alter its memorandum (in a
share capital general meeting & file a notice thereof with the registrar within 15 days of such alteration)
to,
a) increase its share capital, with the rights of the new shares being the same as that of the
previous shares of the same class
b) consolidate & divide all or part of its share capital into shares of larger amount, with
their rights strictly in proportion to the rights of the previous shares
c) sub-divide its shares into shares of smaller amount, with their rights strictly in
proportion to the rights of the previous shares
d) cancel shares which have not been taken by any person at the date of passing of the
resolution to cancel them, & diminish its share capital by the amount of shares cancelled
2) The new shares issued shall rank pari passu, in all matters, with the existing class of
shares to which the new shares belong
3) If (1) authorised share capital is fully subscribed or, (2) unsubscribed capital is
insufficient, they shall be deemed to have increased to the extent of shares issued to a
scheduled bank/financial institution in pursuance of any obligation to issue shares to them
4) Cancellation of shares shall not be deemed to be a reduction of share capital

93 Notice to register of consolidation of share 1) In case of consolidation & division of share capital into shares of larger amount, a notice In case of default in filing the notice with the registrar (as
capital, etc. thereof (specifying the shares consolidated & divided) shall be filed with the registrar required in this & the previous section), the company & every
within 15 days of the consolidation & division officer (who willfully & knowingly authorises or permits the
default) shall be fined upto Rs. 100 for every day the default
continues
94 Notice of increase of share capital or of members 1) In case of a company which resolves an (1) increase of share capital, authorised or
otherwise, or (2) increase in number of members, a notice of increase in capital or
members {including (1) particulars of the shares to be affected & (2) the conditions
subject to which the new shares are to be issued} shall be filed with the registrar within 15
days of passing that resolution (which shall not take effect unless the notice required to be In case of default in filing the notice with the registrar, the
filed with registrar is sent to him) & the registrar shall record the increase company & every officer (who willfully & knowingly
authorises or permits the default) shall be fined upto Rs. 100 for
every day the default continues
2) In case of default in filing a notice of increase in authorised share capital due to shares
issued to scheduled bank/financial institution, that notice may be filed with the registrar by
that scheduled bank/financial institution. Such notice shall be deemed to have been filed
by the company & the scheduled bank/financial institution shall be entitled to recover any
fee paid by it to the registrar from the company
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95 Prohibition of purchase or grant of financial 1) A company cannot buy (1) its own share, or (2) the shares of its holding company In case of default, the company & every officer (who defaults
assistance by a company for purchase of its willfully & knowingly) shall be fined upto,
own or its holding company’s shares 2) A company limited by shares, except for a private company which is not a public - Rs. 10,000 in case the default relates to a listed company
company's subsidiary, cannot give any financial assistance to any person to purchase any - Rs. 2,000 in case the default relates to any other company
shares of the company or its holding company, as the case maybe, except in the case that
the company gives an advance to its salaried employees (including a chief executive who
was not a director before his appointment as chief executive & excluding all directors) to
purchase of shares of (1) the company (2) its subsidiary, or (3) holding company if giving
such an advance is part of the employee's service contract
3) This section shall not prevent,

a) a company from redeeming its shares or securities in accordance with this Ordinance
b) a listed company from purchasing its own shares in accordance with this Ordinance
95A Power of company to purchase its own shares 1) A listed company can purchase its own shares only if, In case of default, the company shall be fined upto Rs.
a) it is authorized by a special resolution indicating (1) the maximum number of shares to 1,000,000 & every officer (who defaults willfully &
be purchased, (2) the maximum price at which the purchase may be made & (3)the period knowingly) shall be,
within which the purchase is to be made - imprisoned for upto 6 months
b) the notice of the meeting in which the special resolution is to be passed includes an - fined upto Rs. 1,000,000
explanatory statement contains (1) justification for the purchase, (2) funding source, (3) - be punished with both of the above
effect on the financial position of the company & (4) nature & extent of every director's
interest
c) the purchase is (1) in cash & (2) out of distributable profits
d) in case of the purchase is on premium, that premium is charged to (1) Share Premium
Account, or (2) distributable profits (if there is no Share Premium Account)
e) in case the purchase is made at a price lower than the nominal amount of shares (at a
discount), the difference is charged to "Capital Re-purchase Reserve Account" (described
below)
f) the company has prescribed (1) debt equity & (2) current ratios
g) the majority of directors (including the chief executive) have made a declaration of
solvency (duly verified by an affidavit) after inquiring into the company’s affairs & have
formed an opinion (after that inquiry) that the company is (1) a going concern & (2) is
capable of meeting its liabilities on time during the period upto the next financial year end
h) the purchase is made through a tender system with the mode of tender being decided by
a special resolution passed in a general meeting
i) the share so purchased are cancelled immediately, with the share capital being
diminished by the nominal amount of such shares and the second effect/impact being a
transfer from the distributable profits to the Capital Re-purchase Reserve Account
j) maintains a register of shares so purchased stating (1) number of shares purchased (2)
consideration paid for such shares (3) mode of purchase & (4) cancellation date of such
shares
k) a return is filed with the registrar & the Commission within 30 days of the purchase
containing (1) prescribed particulars relating to the purchase & (2) the declaration of
solvency mentioned above
l) the Capital Re-purchase Reserve Account is treated as paid up capital for the purpose of
the provisions of this Ordinance relating to reduction of capital, except where that reserve
may be applied in paying up its unissued shares as fully paid bonus shares allotted to the
members
Page 22 of 59
REDUCTION OF SHARE CAPITAL

96 Reduction of share capital 1) Share capital may be reduced by a special resolution (referred to as a resolution for
reducing share capital) if (1) it is confirmed by the court, (2) authorized by the articles &
the company may,
a) extinguish/reduce the liability on shares in respect of unpaid share capital
b) cancel any paid-up share capital which is (1) lost, or (2) unrepresented by available
assets (with or without extinguishing/reducing the liability on its shares)
c) pay off any paid-up share capital which is in excess of the company's needs (with or
without extinguishing/reducing the liability on its shares)
d) if required, alter its memorandum by reducing the amount of its (1) share capital & (2)
shares accordingly
97 Application to Court for confirming order 1) After passing a resolution for reducing share capital, a petition may be applied to the court
for an order confirming the reduction
98 Addition to name of company of 'and reduced' 1) A company shall add the words "and reduced" to its name until the date fixed by the court,
after
a) passing of a resolution for reducing share capital
b) the order confirming the reduction is made, in case the reduction does not involve either
(1) extinguishing/reducing the liability on shares in respect of unpaid share capital, or (2)
payment of any paid-up share capital, except where the requirement of adding those words
is dispensed by the Court
99 Objection by creditors and settlement of list of 1) If,
objecting creditors a) proposed reduction involves either (1) extinguishing/reducing the liability on shares in
respect of unpaid share capital, or (2) payment of any paid-up share capital, or
b) the court so directs, in any other case, then

every creditor entitled to any debt/claim on a date fixed by the court, which (i.e., the
debt/claim) would be admissible in proof against the company if that date were the date of
its winding up, shall be entitled to object to the reduction
2) The court shall settle a list of such creditors entitled to object & ascertain,
a) their names
b) the nature & amount of their debts/claims
& may publish notices fixing a day (or days) within which
a) the creditors, that were not included in the list, can claim to be entered,
b) the creditors are to be excluded from objecting to the reduction
100 Power to dispense with consent of creditor on 1) If a creditor, who is on the list of creditors, does not consent to the reduction, the court
security being given for his debt may dispense with his consent if the company secures the payment of his debt/claim by
setting aside,
a) the full amount of the debt/claim, if the company (1) admits to that full amount, or (2)
does not admit to it, but is willing to provide for it
b) the amount fixed by the court after inquiry & adjudication, if the company (1) does not
admit to the full amount of the debt/claim, (2) is not willing to provide for it, or (3) cannot
ascertain the amount or the amount is contingent
101 Order confirming reduction 2) The court may make an order confirming the reduction, if it is satisfied that every creditor,
who is entitled to object to the reduction, has either,
a) consented to the reduction
b) had his debt/claim (1) discharged, (2) determined or (3) secured
Page 23 of 59
102 Registration of order and minute of reduction 1) The registrar shall register the order the minute of reduction when,
a) the court order confirming the reduction of share capital is produced to him,
b) a certified copy of (1) the order (2) a court-approved minute showing (with respect to
the altered share capital)
- the amount of share capital
- the number of shares it is to be divided into
- the amount of each share
- if any, the amount deemed to be paid-up on each share at the registration date
2) A resolution for reducing share capital, as confirmed by court order, shall be effective only
after its registration
3) Notice of the registration must be published in the manner directed by the court
4) It shall be conclusively evident from the certificate of registration of the order & the
minute given by the registrar that,
a) the respective requirements of this Ordinance has been complied with &
b) the share capital is such as is stated in the minute
103 Minute to form part of memorandum 1) The registered minute (1) is deemed to substitute the corresponding part of the In case of default, the company & every officer (who defaults
memorandum (2) shall be valid & alterable, & (3) shall form part of the every copy of the willfully & knowingly) shall be fined upto Rs. 50 for each
memorandum issued after the registration of the minute defaulting copy
104 Liability of members in respect of reduced shares 1) A member (past or present) shall not be liable to pay any contribution exceeding the
difference between,
a) the amount paid, or the reduced amount which is deemed to have been paid, on the
share, &
b) the amount of the share fixed by the minute
2) However, if the company (after the reduction of share capital) is unable to repay the
debt/claim of a creditor, who is entitled to object to the reduction but not entered into the
list of creditors, because of (1) his ignorance to the proceeding of reduction, or (2) the
nature or effect of his claim, then
a) every person, who was a member at the date of registration of the reduction order & the
minute, shall be liable to contribute to the repayment of that debt/claim to the extent of the
amount that he would have been liable to contribute in the event that the company had
commenced winding up before that registration
b) if the company is wound up, the persons on the list of contributories settled by the court
(on application of the creditor alongwith proof of his ignorance) shall be liable as if they
were ordinary contributories in a winding up
3) The rights of the contributories among themselves shall not be affected by the application
of this section
105 Penalty on concealment of name of creditor 1) No officer can, In case of contravention, every defaulting officer shall be,
a) willfully conceal the name of any creditor entitled to object to the reduction - imprisoned for upto 1 year
b) willfully misrepresent the nature or amount the debt/claim of any creditor - fined
c) aid such concealment or misrepresentation - be punished with both of the above
106 Publication of reasons for reduction 1) If the court so requires, the company shall publish (in the court-specified manner),
a) the reasons for reduction
b) the causes which led to reduction
107 Increase and reduction of share capital in case of 1) A guarantee limited company (1) having share capital, & (2) if so authorised by its
company limited by guarantee having share articles, increase or reduce its share capital in accordance with the provisions of this
capital Ordinance relating to increase in or reduction of share capital
Page 24 of 59
VARIATION OF SHAREHOLDERS' RIGHTS

108 Variation of shareholders' rights 1) Shareholder rights can only be varied after alteration of articles in the manner required by
this Ordinance (Section 28)
2) At least 10% of the class of shareholders aggrieved by the variation (including abrogation, The application must be made within 30 days of the date of
revocation or enhancement) in their rights can apply to the court for an order cancelling resolution varying the rights
the resolution. However, the court shall only pass such order if it is satisfied that,
a) some facts were withheld by the company which would have had affected the
shareholders' decision of passing the resolution
b) the variation would unfairly prejudice the class of shareholders who have applied to the
court
3) The aggrieved shareholders may, in writing, authorize one or more shareholders of their
class to make the application to the court
4) The decision of the court on the application shall be final
5) The company shall forward a copy of any order made on the application to the registrar Such copy will be forwarded within 15 days of the order In case of default, the company & every officer (who defaults
being served on the company willfully & knowingly) shall be fined upto Rs. 200 for every
day the default continues
6) Limitation Act, 1908 (Section 5) shall apply to the application
REGISTRATION OF UNLIMITED COMPANY AS LIMITED
109 Registration of unlimited company as limited 1) An unlimited company may register as a limited company under this Ordinance without
affecting (1) the rights (2) debts (3) liabilities (4) obligations or (5) contracts of the
company before the registration. The same goes for a limited company re-registering itself
as a limited liability company under this Ordinance.
2) On registration, the registrar (1) shall close the previous registration & (2) may forego the
delivery of copies, to himself, of those documents which were furnished to him on the
previous registration
110 Power of unlimited company to provide for 1) An unlimited company with a share capital may increase the nominal amount of each of its
reserve share capital on re-registration shares through its resolution for registration as a limited company. However, the amount
by which the share capital is so increased cannot be called up other than in the event of the
company being wound up
UNLIMITED LIABILITY OF DIRECTORS
111 Limited company may have directors with 1) The director's liability can be unlimited in a limited company, if so provided in the
unlimited liability memorandum & in such a company, In case of default, the defaulter shall be,
a) the directors - fined upto Rs. 2,000, &
b) the member - liable for any damage that the person so elected may
who proposes a person for the election as a director shall add a statement to that sustain from such default, without affecting the liability of
proposal stating that the liability of the person becoming director will be unlimited & the that person
promoters/officers (or any one of them) shall give him a written notice, before that person
accepts directorship, that his liability is unlimited
112 Special resolution of limited company making 1) A limited company may alter its memorandum to make its directors' liability unlimited,
liability of directors unlimited a) by special resolution
b) if authorized by its articles to do so
2) However, that alteration shall not apply to a director holding that office from before the
date of alteration,
a) unless he consents to it
b) until the expiry of the term of his directorship on that date
SPECIAL PROVISIONS AS TO DEBENTURES
113 Right of debenture-holder and shareholder to 1) On (1) the request of any share/debenture holder & (2) the payment of the prescribed fee, a
have copies of trust-deed copy of any trust deed securing any debenture issue shall be forwarded to that
share/debenture holder In case of default, the company & every defaulting officer fined,
- upto Rs. 500
- upto Rs. 50 for each day the default continues
& the registrar may order the immediate supply of a copy
Page 25 of 59
114 Debentures not to carry voting rights 1) Debentures cannot carry voting rights at any meeting, except where they are convertible
into ordinary shares (including debentures with subscription warrants), they may carry
voting rights (at the company's option) such that those voting rights do not exceed the
voting rights of ordinary shares of the same paid-up value
2) A debenture-holder with voting rights, before the commencement of this Ordinance, shall
not exercise them at any meeting other than a meeting of the debenture-holders themselves
115 Perpetual debentures 1) A condition, in any debentures or any deed securing any debentures, making them (1)
irredeemable, (2) redeemable only on the happening of a contingency, or (3) redeemable
only on the expiration of a period, shall not be invalid only because of these reasons
116 Power to re-issue redeemed debentures in certain 1) After redeeming any debentures previously issued, the company shall have the power to
cases keep the debentures alive for reissue, unless,
a) the articles or the conditions of the issue provide otherwise
b) the debentures have been redeemed to fulfill an obligation (not being an obligation
enforceable only by the person whom the redeemed debentures were issued to) to do so
2) In pursuance of exercising the power to reissue redeemed debentures,

a) the company can either (1) reissue the same debentures, or (2) issue other debentures in
their place, &
b) the person entitled to the debentures on reissue shall have the same rights & priorities
as if the debentures had not been issued previously
3) If the redeemed debentures are (1) kept alive for the purpose of reissue & (2) transferred to
a nominee of the company, a transfer from that nominee shall be deemed to reissue of
those debentures
4) If a company has deposited any of its debentures to secure advances on current account or
otherwise, they will not be deemed to be redeemed only because of that account ceased to
be in debit while the debentures were deposited there
5) The requirement of stamp-duty & registration of reissue of a debenture or issue of another
debenture in its place shall be the same as that of issue of a new debenture
6) If a person who has lent money on the security of a reissued debenture, which appears to
be duly stamped but isn't, may give it as evidence in a proceeding for enforcing his
security & shall not pay either the stamp-duty or penalty thereof, unless,
a) he had noticed that the debenture was not duly stamped

b) he might have discovered that the debenture was not duly stamped, had he not been
negligent
7) This section shall not affect the company's power to issue debentures in place of any
debentures,
a) paid off,
b) satisfied
c) extinguished
d) re-served to a company by its debentures for the same
117 Specific performance of contract to subscribe for 1) A contract with a company to subscribe for any debentures of the other company may be
debentures enforced by a legal order for specific performance
118 Payment of certain debts out of assets subject to 1) If,
floating charge in priority to claims under the a) a receiver is appointed on behalf of debenture-holders secured by a floating charge, or
charge
b) any property subject to the charge is possessed by (or on behalf of) these debenture-
holders, then
the debts, which are to be paid in priority to all other debts in the event of winding up,
shall be paid immediately, before any claim for principal or interest on the debentures is
paid, out of any assets coming into the (1) hands of the receiver, or (2) the other person
taking possession of any property, unless the company is in course of being wound up. All
payments shall be recovered, as far as possible, from the assets available to pay the general
creditors
Page 26 of 59
2) The time periods for such payments shall be effected from the (1) appointment date of the
receiver, or (2) date of possession of the property
119 Powers and liabilities of trustee 1) The trustee under the trust-deed for securing issue of debentures shall have the right to sue
for redemption money & interest,
a) on the due date to (1) repay the debenture loan, (2) pay interest payable thereon, or (3)
repay or pay them both, where the issuer of the debentures binds himself as mortgager
b) where the issuer has failed to provide further sufficient security (after the trustee has
given him a reasonable opportunity to do so), in case (1) the mortgaged property is
destroyed (wholly or partially), or (2) the security becomes insufficient as per the Transfer
of Property Act, 1882 (Section 66), other than because of wrongful act or default of the
issuer
c) where the trustee is deprived of the security (wholly or partially) due to any wrongful
act or default by the issuer, &
d) where the issuer fails to (1) deliver the mortgaged property to the trustee, or (2) secure
the possession of that property without disturbance by the issuer or a person claiming a
superior title than him
2) If the trustee sues because (1) the due date for repayment has arrived, or (2) the issuer has
failed to provide further sufficient security, the court (at its discretion) can stay the suit
until the trustee has tried all his available remedies, except where he (1) abandons his
security & (2) retransfers the mortgaged property (if necessary)
3) The trustee can sell the mortgaged property (or any of its parts), if authorised by the trust
deed, without the intervention of the court, where the issuer defaults in paying (1) the
redemption amount according to the repayment schedule, or (2) the accrued interest on due
date
4) An issuer means the company that (1) issues debentures, (2) secures them by mortgage its
property/assets or both, & (3) appoints a trustee under a trust deed
5) Any provision in the trust deed which exempts or indemnifies the trustee against liability
for breach of trust (where he fails to exercise due care & diligence in exercising his powers
under that trust deed) is void. However, the following acts/clauses are valid,
a) if the trustee is released validly for any of his acts committed before that release is
given
b) if there is a provision in the trust deed enabling such a release to be given,
- if agreed by a majority of at least 3/4th (in value) of the debenture holders present in a
meeting summoned for this purpose
- on (1) specific acts/omissions, (2) the trustee's death, or (3) ceasing to act as such
c) any provision in the trust deed in force before the commencement of this Ordinance,
only if the following persons remain the trustees of that deed:
- any person who was entitled to the benefit of that provision before the commencement
of this Ordinance
- all trustees of the deed (present & future), or the named/proposed trustees of that deed,
if it is so decided by a resolution passed by a majority of at least 3/4th (in value) of the
debenture holders present in a meeting summoned (for this purpose) in accordance with
the (1) provision of the deed, or (2) court-approved manner (in case there is no provision
for calling meetings in the deed)
Page 27 of 59
120 Issue of securities and redeemable capital not 1) A company may, (1) by public offer, or (2) upon terms & conditions of a written
based on interest agreement, issue Participation Term Certificates (either severally, jointly or through a
syndicate) to (1) scheduled banks (2) financial institutions, or (3) other persons specified
by the Federal Govt. in the official Gazette, in consideration of
funds/money/accommodations received (or to be received) in any form
2) The agreement (mentioned above) for redeemable capital may provide for any or all of the
following matters,
a) mode & basis of repayment of redeemable capital within a certain time period
b) arrangement of profit/loss sharing
c) creation of "participation reserve" (in case of participatory redeemable capital) in which
all providers of such capital shall participate for interim & final adjustment on its maturity
date
d) the right of the providers to convert the outstanding balance of such capital into
ordinary shares at the break-up price calculated in the prescribed manner, if there is a net
loss on the participatory redeemable capital on its maturity date
3) The (1) terms & condition of the issue of redeemable capital, & (2) rights of their holders,
cannot be challenged/questioned by the company or its shareholders
4) The provisions of this Ordinance relating to (1) creation, (2) issue, (3) increase, or (4)
decrease of capital are not applicable to the redeemable capital
Page 28 of 59
PART VII - REGISTRATION OF MORTGAGES, CHARGES ETC.

121 Certain mortgages and charges to be void if not 1) Where a mortgage/charge/other interest is created after the commencement of this
registered Ordinance, (1) the prescribed particulars of the mortgage/charge, & (2) a duly verified
copy of the instrument by which the mortgage/charge is created, must be filed with the
registrar (for registration) within 21 days of the creation of charge, otherwise that
mortgage/charge/other interest shall be void against (1) the liquidator (2) any creditor &
the money it secures shall become payable immediately. The mortgage/charge/other
interest created for the following purposes must be registered:
a) for securing any issue of debentures

b) on uncalled share capital
c) on any immovable property or any interest in it
d) on any book debts
e) on any movable property (where that mortgage/charge is not a pledge)
f) on the undertaking or property, including stock-in-trade
g) on a ship or any share in a ship
h) on (1) goodwill, (2) a patent or a license under a patent, (3) a trademark, (4) a copyright
or a license under a copyright
i) on an agreement for the issue of redeemable capital
j) on a musharika agreement
k) on a hire-purchase/leasing agreement for acquisition of fixed assets
2) However,
a) in case a mortgage/charge (1) is created out of Pakistan, & (2) comprises solely of
property situated outside Pakistan, the time period within which the particulars &
instrument or copy are to filed with the registrar shall be 21 days after the date on which
the instrument/copy could have been received in Pakistan in due course of post, had it
been dispatched with due diligence
b) in case a mortgage/charge (1) is created in Pakistan, but (2) comprises solely of
property situated outside Pakistan, the instrument creating the mortgage/charge & its duly
verified copy may be filed for registration, even if further proceedings are required to
make that mortgage/charge effectual in accordance with the law of the country where the
property is situated
c) in case the payment of any book debts are secured by a negotiable instrument, the
deposit of that instrument to secure an advance shall not be treated as a mortgage/charge
on those book debts
d) the holding of debentures entitling the holder to a charge on immovable property is not
deemed to be an interest in immovable property
3) If a person acquires a property (or a part/share/interest in it) on which there is a
mortgage/charge which is duly registered, he shall be deemed to have notice of the said
mortgage/charge from the date of such registration
122 Registration of charges on properties acquired 1) If a company, registered in Pakistan, acquires any property which is subject to any charge, In case of default, the company & every officer (who defaults
subject to charge it shall cause (1) the prescribed particulars of the charge, & (2) a certified copy of the willfully & knowingly) shall be fined upto Rs. 2,000
charge-creating instrument, to be delivered to the registrar for registration within 21 days
after the date on which the acquisition is completed, except where mortgage/charge (1) is
created out of Pakistan, & (2) comprises solely of property situated outside Pakistan, the
time period within which the particulars & instrument or copy are to filed with the
registrar shall be 21 days after the date on which the instrument/copy could have been
received in Pakistan in due course of post, had it been dispatched with due diligence
Page 29 of 59
123 Particulars in case of series of debentures 1) If a series of debentures contains any charge, the benefit to which the debenture-holders
entitling holders pari passu are entitled pari passu, then the charge can be registered with the registrar within 21 days
of the (1) execution of the deed containing the charge, or (2) execution of any debentures
of the series (if there is no deed containing the charge), by filing (1) duly verified copy of
the deed containing the charge, (2) one of the debentures of the series (if there is no deed
containing the charge), & (3) the following particulars:
a) the total amount secured by the series

b) the (1) dates of the resolution authorising the issue of the series, & (2) date of the
covering deed (in any) by which the security is created
c) a general description of the property charged
d) the names of the trustees (if any) for the debenture-holders
& the registrar shall enter those particulars in the register on the payment of the
prescribed fee. However, if the debentures of the series are issued more than once,
particulars of the (1) date of each issue, (2) amount of each issue, shall be filed with the
registrar for entry in the register but the debentures shall not be invalidated if the
particulars are not so filed
124 Particulars in case of commission, etc. on 1) If any commission/allowance/discount has been paid to any person for his subscription of
debentures the company's debentures, the particulars to be filed for registration shall include the
amount or rate of commission/allowance/discount paid but the debentures shall not be
invalidated if the particulars are not so filed
2) Debentures deposited as security for any debt of the company shall not be treated as issue
of debentures as discount
125 Register of mortgages and charges 1) The registrar shall (1) keep a register (in the prescribed form) of all mortgages & charges
created (& requiring registration) by the company, & (2) enter the following particulars in
the register for every such mortgage/charge on payment of the prescribed fee:
a) the date of creation

b) the amount secured by it
c) short particulars of the property mortgaged/charged
d) the names of the mortgagees/persons entitled to the charge
2) Any person can inspect the register on paying the prescribed fee
126 Index to register of mortgages and charges 1) A chronological index of the mortgages/charges registered with the registrar shall be
maintained by him (1) in the prescribed form &, (2) with the prescribed particulars
127 Certificate of registration 1) The registrar shall give a certificate of registration of any mortgage/charge, stating the
amount secured by it, which will be conclusive evidence that the registration requirements
have been complied with.
128 Endorsement of certificate of registration on 1) A copy of every certificate of registration of the mortgage/charge must be endorsed on
debenture or certificate of debenture stock every debenture (or debenture certificate) issued by the company, the payment of which is
secured by that mortgage/charge, except for any debenture (or debenture certificate) issued
before the creation of the mortgage/charge
129 Duty of company and right of interested party as 1) The mortgage/charge may be registered on application of any person interested therein &
regards registration where it is so registered, the person shall be entitled to recover any registration fee paid by
him to the registrar
2) In case the terms or conditions of any mortgage/charge registered on application of any
person other than the company are modified, the company shall send (1) the particulars of
such modification, & (2) a duly verified copy of the instrument evidencing the
modification, to the registrar
130 Copy of instrument creating mortgage or charge 1) A copy of (1) every instrument creating any mortgage/charge requiring registration, & (2)
to be kept at registered office every instrument evidencing modification of the terms & conditions of any
mortgage/charge, shall be kept at the registered office. However, in the case of a series of
uniform debentures, a copy of one such debenture shall be sufficient
Page 30 of 59
131 Rectification of register of mortgages 1) If,

a) a mortgage/charge is not registered in the prescribed time limit (in Section 121)
b) an omission/misstatement is made with respect to a mortgage/charge
c) payment/satisfaction of a debt for which a mortgage/charge is not intimated to the
registrar,
& on application by (1) the company, or (2) any interested person, the Commission is
satisfied that the aforementioned acts were,
a) accidental,
b) due to inadvertence (or some other sufficient cause),
c) not detrimental to the position of the creditors or shareholders, or
d) such that it is just & equitable to grant relief, then
the Commission may order that (1) the registration period be extended, or (2) the
omission/misstatement be rectified
2) A certified copy of the Commission's order shall be filed with the registrar by (1) the Certified copy to be filed within 21 days of the Commission's
company, or (2) any interested person, as the case maybe order
3) The Commission's order extending the time for the registration of the mortgage/charge
shall not detrimentally affect any right to the concerned property acquired prior to the time
when mortgage/charge is actually registered
132 Registration of payment or satisfaction of 1) The company shall intimate the payment/satisfaction (in full) of any charge/mortgage Intimation to be made within 21 days from the full
mortgages and charges created (requiring registration under Section 121 & 122). payment/satisfaction date
2) On being intimated, the registrar shall make a show-cause notice be sent to holder of the The notice should be replied to within the time fixed (a
charge/mortgage inquiring as to why the payment/satisfaction of the charge/mortgage maximum of 14 days) by that notice
should not be recorded & where no cause is shown, the registrar shall order that a
memorandum of satisfaction be entered in the registrar. If required, its copy may be
furnished to the company. However, if a cause is shown, the registrar shall record a
relevant note in the registrar & inform the company about it.
3) This section does not affect the registrar's power to make entries of satisfaction/release in
the absence of intimation from the company.
133 Power of Registrar to make entries of 1) If the registrar is satisfied that,
satisfaction and release in absence of intimation a) the debt, for which the charge was given, has been paid/satisfied (in whole or in part),
from company or
b) part of the property has (1) been released from the charge, or (2) ceased to be part of the
property, then
he may enter in the register of mortgages and charges (even if it is not intimated by the
company), a memorandum
a) of satisfaction (in whole or in part)
b) of the fact that the property has (1) been released from the charge, or (2) ceased to be
part of the property
134 Penalties 1) The company & every other defaulter, shall be fined upto,
a) Rs. 100 for every day the default continues, with regard to filing the particulars of
satisfaction of a mortgage/charge
b) Rs. 500 for every day the default continues, with regard to filing the particulars of a
mortgage/charge or debentures
if it defaults in filing the following particulars for registration,
a) particulars of any mortgage/charge (1) created, or (2) modified
b) particulars of the payment/satisfaction of a debt for which the mortgage/charge was
registered under section 121 & 122
c) particulars of issue of debentures of a series
2) If a company defaults in registering mortgages or charges with the registrar in accordance
with this Ordinance, the company & every defaulting officer, shall be fined upto,
a) upto Rs. 5,000

b) upto Rs. 100 for each day the default continues
3) If a person (knowingly & willfully) delivers any debenture or certificate of debenture
stock (that require registration with the registrar under this Ordinance) without endorsing a
copy of the certificate of registration upon it, he shall be fined upto Rs. 2,000
Page 31 of 59
135 Company's register of mortgages 1) A register of mortgages shall be kept by the every company, where all mortgages, charges
& floating charges on the undertaking or property of the company shall be entered In case of default, every officer (who defaults willfully &
providing the following particulars, knowingly) shall be fined upto Rs. 2,000
a) a short description of the property mortgaged/charged
b) the amount of the mortgage/charge
c) the names of the mortgagees or persons entitled thereto, except in the case of securities
to bearer
136 Right to inspect copies of instruments creating 1) Any member or creditor can inspect the following at all reasonable times without fee, If the inspection is refused,
mortgages and charges and company's register of a) copies of instruments, creating any mortgage/charge/modification of terms & conditions - the company & every defaulting officer shall be fined (1) upto
mortgages thereof, that require registration with the registrar under this Ordinance Rs. 500, & (2) upto Rs. 50 for each day the default
b) the register of mortgages & charges kept by the company continues, &
- the registrar may order for immediate inspection of the
copies or register
2) Any other person can inspect the registrar of mortgages & charges kept by the company on
the payment of a prescribed fee fixed by the company
RECEIVERS AND MANAGERS
137 Registration of appointment of receiver or 1) Any person (1) obtaining an order to appoint a receiver or manager of the company’s Notice to be filed within 15 days of (1) the order, or (2) the In case of default by any person, he shall be fined upto Rs. 200
manager property, or (2) appointing a receiver or manager under any powers contained in any appointment under any powers contained in any instrument, for each day the default continues
instrument, shall file a notice of the fact to the registrar, who shall enter it in his register of as the case may be
mortgages & charges on receiving the prescribed fee.
138 Filing of accounts of receiver or manager 1) Every receiver/manager who has taken possession of the company's property shall file Such an abstract must be filed within 30 days of, In case of default, the company & every defaulting
an abstract of his receipts & payments during the period (to which the abstract - expiry of every 6 months while he remains in possession director/officer & receiver shall be fined,
relates) with the registrar of the property - upto Rs. 2,000
- ceasing to act as receiver/manager - upto Rs. 100 for each day the default continues
2) When a receiver/manager ceases to act as receiver/manager, he shall file a notice of the
fact with the registrar within 15 days of ceasing to act as such, which the registrar shall
enter in his register of mortgages & charges
3) Every document, in which the name of the company appears, shall contain a statement that
a receiver/manager has been appointed, in case he is so appointed.
139 Disqualification for appointment as receiver or 1) The following persons shall not be appointed as receiver/manager of the property of a
manager company,
a) a minor,
b) a person with an unsound (& so declared by a competent court)
c) a body corporate
d) a director of the company
e) an undischarged insolvent, except where he is granted leave by the court which
adjudged him as an insolvent
f) a person disqualified by a court from (1) taking part in, or (2)being concerned with, the
management, except where he is granted leave by the Court (having jurisdiction under this
Ordinance)
140 Application to Court 1) A receiver/manager may apply to the Court for directions relating to any matter with
regards to the performance of his functions & the Court may (on such application) give
such direction (or order declaring their rights) as it thinks fit
2) A receiver/manager shall be personally liable on any contract he enters in performing his
functions, except in case where he is indemnified out of the assets. However, this does not,
a) limit his right to indemnity established under any other section

b) (1) limit his liability on unauthorised contracts which he enters into, or (2) confer
indemnity rights upon him with regards to that liability
Page 32 of 59
141 Powers of Court to fix remuneration, etc., of 1) The Court may (on application by a receiver/manager) order a fixed amount of
receiver or manager remuneration (not exceeding prescribed limits) to be paid to that receiver/manager
2) The court order fixing the remuneration of a receiver/manager shall,
a) extend to any period before the making of the (1) order, or (2) application,
b) be exercisable even if the receiver/manager has (1) died, or (2) ceased to act as such,
before the making of the (1) order, or (2) application, and
c) extend to requiring him (or his representative) to account for any amount (or such part
of it as specified by the order), that has been paid to the receiver/manager in excess his
remuneration fixed for any period before the order was made only when the Court is of the
opinion that the order must be passed because of special circumstances,
except where a previous order has been made in that respect

3) The court may on application made by the (1) liquidator, (2) receiver/manager, or (3)
registrar,
a) vary/amend its order fixing the remuneration, (However, the order cannot be varied to
increase the remuneration payable)
b) & issue instructions to the receiver with regards to his duties/functions or any other
matter.
PART VIII - MANAGEMENT AND ADMINISTRATION
REGISTERED OFFICE, PUBLICATION OF NAMES, ETC.
142 Registered office of company 1) A company shall have a registered office from In case of default, the company & every defaulting officer,
a) the day on which it begins to carry out business shall be fined upto Rs. 200 for each day the default
b) from the 28th day after its incorporation date continues
whichever is earlier
2) A notice of the (1) situation of the registered office, & (2) any change of its situation shall Notice to be given within 28 days of the (1) date of
be given to the registrar who will record that fact. The inclusion of the address of the incorporation, or (2) the date of change, as the case may be
registered office in the annual return shall not deemed to fulfill this requirement
143 Publication of name by a limited company 1) Every limited company shall paint/affix its name outside every office/place in which its
business is carried on,
a) in a conspicuous/noticeable position,
b) in easily legible English or Urdu letters, &
c) in one of the vernacular/local/native languages used in the place where the registered
office is situated, if that place is beyond the local limits of a High Court
2) Every limited company shall have its name,
a) engrave on its seal in legible English or Urdu characters
b) mentioned (in legible English or Urdu characters) in all official publications &
documents of the company (like bill-heads, letters, notices, instruments of exchange,
invoices, receipts, etc.)
144 Penalties of non-publication of name 1) In case the company defaults in painting/affixing the its name as required by this
Ordinance, the company & every defaulting officer shall be fined upto Rs. 200 for each
day the default continues
2) Any officer/person shall (1) be fined upto Rs. 2,000, & (2) be personally liable to the
holder of any instrument of exchange for its amount, unless it is paid by the company
a) uses (or authorises the use) of any seal of the company in which the company's name is
not engraven as required by this Ordinance
b) issues any official publications or document in which the company's name is not
mentioned as required by this Ordinance
145 Publication of authorised as well as paid-up- 1) If any notice, advertisement or other official publication states the amount of authorised In case of default, the company & every defaulting officer shall
capital capital of the company, it shall also state, be fined upto Rs. 5,000
a) the amount of subscribed capital &
b) the amount of paid up in (1) an equally prominent position, & (2) equally conspicuous
characters
Page 33 of 59
COMMENCEMENT OF BUSINESS BY A PUBLIC COMPANY

146 Restrictions on commencement of business 1) A company can (1) commence business, or (2) borrow, only when,
a) the whole of minimum subscription has been allotted for cash
b) every director has fully paid for all shares which are (1) taken by him, & (2) required to
be paid in cash
c) the company is not liable to repay the applicants for any securities (offered for public
subscription) because it failed to (1) apply for, or (2) obtain permission for listing in any
stock exchange
d) a duly verified declaration (in the prescribed form) has been filed by the (1) chief
executive or one of the directors, & (2) secretary with the registrar, who has issued a
certificate for commencement of business after satisfying himself that all the requirements
of the Ordinance have been met with regards of its commencement
d) a statement in lieu of prospectus has been filed with the registrar, in case the company
has not issued a prospectus to invite public subscription for its shares
2) In case of a company which has not issued a prospectus to invite public subscription for its
shares, the registrar shall issue a certificate for commencement of business only when a
statement in lieu of prospectus has been filed with him
3) Any contract entered into by the company before the commencement of its business is
only provisional & will become binding only on the date when it becomes entitled to
commence business
4) This section shall not prevent,
a) the (1) simultaneous offer for subscription, or (2) simultaneous allotment, of any shares
& debentures
b) the receipt of money payable on application for debentures
5) This section shall not apply to,
a) a private company, or
b) a company limited by guarantee without share capital
REGISTER OF MEMBERS AND DEBENTURE HOLDERS
147 Register of members and index 1) Every company shall maintain a register of its members & enter the following particulars
of its members, In case a company,
a) name in full - fails to comply with the requirements regarding the
b) his father's name, or for a married or widowed woman, husband's or deceased particulars to be recorded in the members' register
husband's name, in full. - unnecessarily delays entering the name & particulars of any
c) his nationality person (1) becoming, or (2) or ceasing to become a member,
d) his address & occupation as the case may be
e) in case the company has a share capital, a statement of (1) shares held by each member the company & every defaulting officer shall be fined upto
(distinguishing each share by its number), & (2) the amount paid on the shares of each Rs. 200 for each day the default continues
member
f) the date on which each person became a member
g) the (1) date on which any person ceased to be a member, & (2) the reason for ceasing to
be a member
2) If a company has more than 50 members, it shall maintain an index of the members' The index is to be altered as necessary within 14 days of the
names, except when the members' register has already incorporated an index within itself, date of alteration of the members' register In case a company fails to comply with the requirements
& such index shall be updated when the members' register is altered relating to,
3) The index should contain sufficient indication so that entries relating to any member can - maintenance & updation of index in case of a company with
be readily found more than 50 members, &
- the index containing sufficient indication to readily trace out
any member
the company & every defaulting officer shall be fined upto
Rs. 2,000
148 Trusts not to be entered on register 1) A notice of any trust shall not be,
a) entered into the members' register
b) receivable by the registrar
Page 34 of 59
149 Register and index of debenture-holders 1) Every company shall maintain a register of its debenture-holders & enter the following
particulars of its debenture-holders, In case a company,
a) name in full - fails to comply with the requirements regarding the
b) his father's name, or for a married or widowed woman, husband's or deceased particulars to be recorded in the debenture-holders' register
husband's name, in full. - unnecessarily delays entering the name & particulars of any
c) his nationality person (1) becoming, or (2) or ceasing to become a debenture-
d) his address & occupation holder, as the case may be
e) (1) debentures held by each holder (distinguishing each debenture by its number), & (2) the company & every defaulting officer shall be fined upto
the amount paid on the debentures of each holder Rs. 200 for each day the default continues
f) the date on which each person became a debenture-holder
g) the date on which any person ceased to be a debenture-holder
2) If a company has more than 50 debenture-holders, it shall maintain an index of the The index is to be altered as necessary within 14 days of the
debenture-holders' names, except when the debenture-holders' register has already date of alteration of the debenture-holders' register
incorporated an index within itself, & such index shall be updated when the debenture- In case a company fails to comply with the requirements
holders' register is altered relating to,
3) The index should contain sufficient indication so that entries relating to any debenture- - maintenance & updation of index in case of a company with
holder can be readily found more than 50 debenture-holders, &
4) This section shall not apply to debentures which are payable to its bearer - the index containing sufficient indication to readily trace out
any debenture-holder
the company & every defaulting officer shall be fined upto
Rs. 2,000
150 Inspection of registers 1) The following registers shall be kept at the registered office & be open to inspection by (1)
members/debentures-holders without any fee, & (2) any other person for a fee fixed by the
company (not exceeding the prescribed amount), who may make extracts from those In case of contravention of this section, the company & every
registers, defaulting officer shall be fined,
a) the members' register - upto Rs. 500, &
b) the index of members' register - upto Rs. 50 for each day the default continues
c) the debenture-holders' register & the registrar order the copies to be sent to the persons
d) the index of debenture-holders' register requiring them
e) the register containing particulars specified in Form A of the 3rd Schedule, in case of a
company with share capital
f) the register containing particulars specified in Form B of the 3rd Schedule, in case of a
company without share capital
2) Any member/debenture-holder or other person may require a certified copy of the The required copy shall be sent within 10 days (excluding
aforementioned registers & index by paying a fee fixed by the company (not exceeding the non-working days & days on which the company's transfer
prescribed amount) & the company is obliged to send the required copy to that person books are closed) from the date on which the requirement was
received by the company
151 Power to close register 1) A company may close its members' or debenture-holders' register after giving a 7-days The registers may be closed for any time, for a maximum of ,
prior notice by advertising in some newspaper circulating in the area where the - 45 days in a year, &
registered office of the company is situated. However, a listed company must also - 30 days at a time
publish that notice in a newspaper circulated in the area where the stock exchange (in
which the company is listed) is situated.
Page 35 of 59
152 Power of Court to rectify register 1) Any aggrieved person may apply to the Court to rectify the members' or debenture-
holders' register if,
a) any person's name is (1) fraudulently, or (2) without sufficient cause, is entered/omitted
from the aforementioned registers
b) the fact of any person has become or ceased to be a member has been entered in the
register (1) after unnecessary delay, or (2) in default
2) The Court may either (1) refuse the application, or (2) order the register's rectification after
the company pays the damages to the aggrieved party
3) The Court may decide any question regarding the title of any person (a party to the
application) whose name has been entered into or omitted from the register. The Court,
without application, may generally decide on any question for rectification of the register
4) An appeal (1) against a decision on the application, or (2) against an issue raised in such
application & tried separately, shall be made in accordance with Section 100 of the Code
of Civil Procedure, 1908,
a) to a High Court, if the decision has been made by a Civil Court subordinate to the High
Court
b) to a bench having 2 or more judges of a High Court, if the decision has been made by a
company bench having 1 judge
153 Punishment for fraudulent entries in and 1) Any person who (1) fraudulently, or (2) without sufficient cause,
omission from register a) enters the name or other particulars of any person in the members'/debenture-holders'
register
b) omits the name or other particulars of any person from the members'/debenture-holders'
register
shall be,
a) imprisoned upto 1 year, or
b) fined upto Rs. 10,000, or
c) punished with both of the above
154 Notice to register of rectification of register 1) When the Court makes an order to a company (which is required to file a list of its The notice must be filed with the registrar within 15 days of
members with the registrar) for the rectification of members' register, the Court shall, the receipt of the order of rectification
a) cause a copy of that order to be forwarded to the company, &
b) order the company to file a notice of the rectification with the registrar
155 Register to be evidence 1) The following registers shall be prima facie evidence of any matter that is
required/directed by this Ordinance to be entered in them:
a) the register for the transfer of shares & debentures
b) the members' register
c) the index of members' register
d) the debenture-holders' register
e) the index of debenture-holders' register
f) the register containing particulars specified in Form A of the 3rd Schedule, in case of a
g) the register containing particulars specified in Form B of the 3rd Schedule, in case of a
Page 36 of 59
156 Annual list of members, etc. 1) A company, with share capital, shall prepare & file a return (once every year) with the The returns, both for companies with & without share In case of contravention of this section, the company &
registrar, having the particulars specified in Form A of the 3rd Schedule capital, shall be filed with the registrar within (1) 45 days, every defaulting officer shall,
a) as on the date of the Annual General Meeting, or (in case of a listed company), which may be extended by a - be fined upto (1) Rs. 10,000 & (2) Rs. 200 for each day the
b) as on the last day of the calendar year, where (1) no such meeting is held, or (2) if maximum of 15 days by the registrar for special reasons, & default continues, in case of a listed company
such meeting is held, it is not concluded (2) 30 days (in case of any other company), of - be fined upto (1) Rs. 2,000 & (2) Rs. 50 for each day the
- the date of the Annual General Meeting, or default continues, in case of any other company
- the last day of the calendar year, where (1) no such meeting
is held, or (2) if such meeting is held, it is not concluded
2) A company, without share capital, shall prepare & file a return (once every year) with the
registrar, having the particulars specified in Form B of the 3rd Schedule
a) as on the date of the Annual General Meeting, or
b) as on the last day of the calendar year, where (1) no such meeting is held, or (2) if such
meeting is held, it is not concluded
3) A company shall maintain,
a) a register containing particulars specified in Form A of the 3rd Schedule, in case of a
b) a register containing particulars specified in Form B of the 3rd Schedule, in case of a
Page 37 of 59
MEETINGS AND PROCEEDINGS

157 Statutory meeting of company 1) Every company limited (1) by shares, & (2) by guarantee having share capital, shall hold a The statutory meeting shall be held within a period, between
general meeting of the members called "the statutory meeting" 3 to 6 months, from the date of commencement of business In case of contravention of this section, the company & every
by the company defaulting officer shall,
2) The directors shall forward a statutory report to every member The statutory report shall be forwarded to every member, at - be fined (1) at least Rs. 10,000 & a maximum of Rs. 20,000
least 21 days before the statutory meeting (2) upto Rs. 200 for each day the default continues, in case of a
listed company
3) The statutory report shall be certified by at least 3 directors, one of whom shall be the - be fined upto (1) Rs. 5,000 & (2) Rs. 200 for each day the
chief executive default continues, in case of any other company
4) The statutory report shall state,
a) the total number of shares allotted (distinguishing the shares not allotted for cash) &
their consideration
b) the total cash received on all the shares allotted
c) an abstract of the receipts & payments made up to a date within 7 days of statutory
report date, where the receipts & payments are classified under the distinctive headings of
(1) shares, (2) debentures, & (3) other sources
d) particulars of balance remaining in hand
e) an account/estimate of the preliminary expenses, showing separately commission or
discount paid on issue or sale of shares/debentures
f) the names, addresses & occupations (& changes therein since the incorporation date) of
the company's (1) directors, (2) chief executive, (3) secretary, (4) auditors, & (5) legal
advisors
g) the (1) particulars of any contract which is to be modified after approval in the statutory
meeting, & (2) particulars of the modification/proposed modification
h) the extent to which underwriting contracts (1) have been carried out, & (2) have not
been carried out & the reasons thereof for not carrying them out
i) the particulars of any commission/brokerage paid, in relation to the issue or sale of
shares to any (1) director, (2) chief executive, (3) secretary, (4) officer, or (5) private
company in which anyone of the aforementioned persons is a director
j) a brief account of the company's state of affairs since incorporation
k) the business plan, including any change/proposed change which affects (1) the
shareholders' interests, & (2) the company's business prospects
5) The statutory report shall be accompanied by auditors' certificate certifying the correctness
of the following :
a) the shares allotted by the company
b) cash received in respect of those shares
c) receipts & payments of the company
6) 5 copies of the statutory report shall be delivered to the registrar (for registration) by the The copies are to be delivered immediately after sending the
directors report to the members
7) The directors shall produce a list at the statutory meeting's commencement, which shall (1)
remain open & accessible to any member during the meeting, & (2) contain the following
particulars of the members:
a) name
b) occupation
c) nationality
d) address
8) The members can discuss any matter (1) relating to the company's formation, or (2) arising
from the statutory report, in the statutory meeting whether a prior notice has been given or
not but they cannot pass a resolution for which no prior notice has been given
9) (1) The meeting may be adjourned from time to time, (2) a resolution (for which a prior
notice has been given regardless of whether it was given before or after the original
meeting) may be passed, & (3) the adjourned meeting shall have the same powers as an
original meeting
Page 38 of 59
10) If a petition for winding up a company is presented to the Court because of default in (1)
filing the statutory report, or (2) holding the statutory meeting, the Court may direct that
(1) the statutory report be filed, (2) a meeting be held, or (3) make another just order,
instead of directing the company to be wound up
11) This section shall not apply to a private company unless it is converted into a company to
which this section applies & on such conversion, this section shall become applicable to
that company & the date of commencement of business shall be replaced by the date of
such conversion for the purposes of this section
12) This section shall not apply to a public company which has converted itself from a private
company after 1 year of incorporation
158 Annual general meeting 1) Every company limited shall hold a general meeting called "the annual general meeting The AGM shall be held within 18 months from the date of
(AGM)" incorporation & after that, once every year within (1) 4
months from the financial year end, & (2) 15 months from In case of contravention of this section, the company & every
the date of the last AGM defaulting officer shall,
2) The time within which the AGM is to be held may be extended, for special reason, by, The extended time period shall be a maximum of 60 days - be fined (1)at least Rs. 20,000 & a maximum of Rs. 50,000
a) the Commission, in case of a listed company (2) upto Rs. 2,000 for each day the default continues, in case
b) the registrar, in case of any other company of a listed company
- be fined upto (1) Rs. 10,000 & (2) Rs. 500 for each day the
default continues, in case of any other company
3) An AGM of a listed company shall be held in the town where the registered office is
located, unless the Commission, on application, allows the meeting to be held elsewhere,
for any special reason
4) (1) The AGM's notice shall be sent to the members before the fixed date of the meeting, &
(2) in case of a listed company, such notice shall also be published in 1 daily English & 1
daily Urdu newspaper, having circulation in the province in which the Stock exchange of
the company is situated
159 Calling of extra ordinary general meeting 1) All meetings, other than AGM & statutory meetings, shall be called, "extraordinary In case of contravention of this section, the company & every
general meetings (EGM)" defaulting officer shall,
2) The directors (1) can call an EGM at any time for any matter (requiring approval of the - be fined (1) at least Rs. 10,000 & a maximum of Rs. 20,000
company in a general meeting), & (2) shall immediately proceed to call an EGM on the (2) upto Rs. 2,000 for each day the default continues, in case of
requisition of members having at least 10% voting power a listed company
3) The requisition shall state (1) the objects of the meeting, (2) be signed by the
requisitionists, & (3) be deposited at the registered office, alongwith any documents - be fined upto (1) Rs. 2,000 & (2) Rs. 200 for each day the
signed by the one or more requisitionists default continues, in case of any other company
4) In case the directors fail to proceed to call an EGM within 21 days from the date of the
requistion's deposit, (1) the requisitionists, or (2) their majority by value, may call the
meeting within 3 months from the date of the requisition's deposit.
5) Any EGM called, because of failure of directors to call such a meeting, shall be called in
the same manner (as nearly as possible) as the meetings that are called by the directors &
any reasonable expense incurred by the requisitionists to convene the meeting shall by
reimbursed to them by the company, which shall deduct the amount of such
reimbursement from the remuneration/fee of the defaulting directors
6) (1) The EGM's notice shall be sent to the members before the date of the meeting, & (2) in
case of a listed company, such notice shall also be published in 1 daily English & 1 daily
Urdu newspaper, having circulation in the province in which the Stock exchange of the
company is situated
7) The registrar may, on application of the directors, authorise the EGM to be held on a
shorter notice in case of an emergency affecting the company's business
Page 39 of 59
160 Provisions as to meetings and votes 1) In case of (1) the general meetings, or (2) meetings of a class of members, In case of contravention of this section, the company &
a) notice specifying the (1) place, (2) day, & (3) hour of the meeting, & a statement of every defaulting officer shall,
the business to be dealt with at the meeting, shall be given to (1) every member, (2) - be fined (1)upto Rs. 50,000 (2) upto Rs. 2,000 for each day the
anyone entitled to a share because of a member's death, & (3) the auditor/auditors. default continues, in case of a listed company
However, the proceeding of any meeting shall not be invalidated because of (1)accidental - be fined upto (1) Rs. 10,000 & (2) Rs. 200 for each day the
omission to give notice to any member, or (2) non-receipt of notice by any member default continues, in case of any other company
b) a statement containing all the material facts of any special business, i.e., business
excluding (1) consideration of accounts, balance sheets, auditors' & directors' reports, (2)
dividend declaration, (3) auditor's appointment & fixation of their remuneration, & (4)
election & appointment of directors, shall be annexed to the notice, which shall include (1)
the nature & extent of any director's, direct or indirect, interest, if any, in that special
business, & (2) the time & place, where the document requiring approval by the meeting,
may be inspected, in case such approval is an item of special business
c) all members can participate in the meeting, either (1) personally, or (2) through proxy
2) The quorum of a general meeting of (1) a public listed company shall be at least 10
members representing at least 25% of total voting power, unless the articles provide for a
larger number, (2) any other company shall be 2 members representing at least 25% of
total voting power, unless the articles provide for a larger number, & (3) a single member
company shall be that single member
3) In case of companies other than single member companies, if quorum is not present within
30 minutes of time set for the meeting, the meeting shall be (1) dissolved, in case it was
called upon members' requisition, & (2) adjourned till the same day in the next week at the
same time & place. However, if the quorum is not present in the adjourned meeting within
30 minutes from the appointed time, the members that are present, being at least 2, shall
form the quorum, unless otherwise provided in the articles
4) The chairman at every general meeting shall be,

a) chairman of the board of directors, or
b) any director elected as chairman, if (1) there is no chairman of the board of directors, or
(2) he is not present within 15 minutes of the time set for the meeting, or (3) he is
unwilling to act as chairman
c) one of the members chosen by the members, if (1) none of the directors is present, or (2)
none of the directors are willing to act as chairman
5) In a company with share capital, every member shall have votes in proportion to the paid-
up value of voting shares/securities held by him
6) Fractional votes shall not be considered during voting
7) A member holding voting shares/securities can (1) neither be debarred from voting, (2) nor
anything in the articles shall have effect of debarring him
8) Every member of a company limited by guarantee, without share capital, shall have 1 vote
9) Votes may be given (1) personally, or (2) by proxy, on a poll

160A Circumstances in which proceedings of a General 1) On a petition by members having at least 10% of the voting power, the Court may declare Such petition should be made within 30 days of such meeting
Meeting may be declared invalid the proceeding of a general meeting invalid & direct holding of a fresh general meeting
because of (1) any material defect or omission in the notice, or (2) irregularity in the
proceedings of the meeting which prevented them from using their rights
Page 40 of 59
161 Proxies 1) Any member who is entitled to attend & vote at a meeting is entitled to, The proxies are to be lodged with the company 48 hours The company & every defaulting officer shall be fined upto
a) appoint a proxy (who shall have the same rights of speaking & voting as those that are before the meeting irrespective of any contradictory provision (1) Rs. 5,000 (for listed company), (2) Rs. 2,000 (for any other
available to member appointing him) to attend & vote instead of him. However, in the articles company), in case of,
this is not applicable to a company without share capital. - failure to issue notices in time,
b) inspect, during business hours, all proxies lodged - issue of notices with material omission/defect, or
2) A member cannot more than one proxy for any one meeting & if more than one (1) proxy - other contravention of this section which would prevent
is appointed, & (2) instrument is deposited with the company, all such instruments shall be participation & using full rights by a member/proxy
invalid
3) A proxy must be a member unless otherwise provided by the articles
4) Every notice of a meeting shall,
- set out the right of (1) the member to appoint a proxy, & (2) such proxy to attend, speak
& vote in the member's place at the meeting
- be accompanied by a proxy form
5) The instrument for appointing a proxy shall,
a) be in writing,
b) be signed by the appointer (or his duly authorised attorney in writing), &
c) if the appointer is a body corporate, be (1) under its seal, (2) signed by an officer, or (2)
signed by its duly authorised attorney
d) not be questioned because of non-compliance with any special requirements of the
articles, if that instrument is as per the form set out in Table A of the 1st Schedule
(Regulation 39)
6) The members or proxies are entitled to,
a) demand a poll on any question, or
b) abstain from voting or exercising their full voting rights with regards to a question on
which poll is demanded,
& any contradictory provision in the articles is void
7) This section shall also apply to the meeting of a particular class of members with
respective modifications
162 Representation of corporations at meetings of 1) If a company is another company's member, it may authorise, by the directors' resolution,
companies and of creditors any (1) of its officials, or (2) other person, to represent it at any meeting of that other
company, & the authorised person shall have the same powers as that of an individual
shareholder of that other company
2) If a company is another company's creditor, it may authorise, by the directors' resolution,
any (1) of its officials, or (2) other person, to represent it at any (1) creditors' meeting of
that other company, or (2) any other meeting which it is entitled to attend under any
debenture/trust deed/other document, & the authorised person shall have the same powers
as are available to the creditor company
163 Representation of Federal Government, etc., at 1) If the Federal/Provincial Government is another company's member, it may appoint any
meetings of companies person to represent it at (1) any meeting of that company, or (2) any meeting of any class
of members & such person shall be deemed to be a member (having all the powers &
rights of a member)
164 Notice of resolution 1) Copies of proposed draft resolutions (other than routine/procedural resolution) shall be In case of contravention of this section, the company & every
sent to the members alongwith the notice of the meeting defaulting officer shall be fined upto,
2) Members, with at least 10% voting power, may give notice of a resolution. The - Rs. 5,000 in case of a listed company
proposed resolution & supporting statements shall be forwarded to the company (which - Rs. 2,000 in case of any other company
will immediately be circulated such resolution to all the members),
a) alongwith the requisition of the meeting, in case of a meeting requisitioned by the
members
b) 15 days before the meeting, in any other case
165 Voting to be by show of hands in first instance 1) At any general meeting, a resolution shall be decided on a show of hands, unless a poll is
demanded
166 Chairman's declaration of result of voting by 1) (1) A chairman's declaration of the result of voting, & (2) an entry (to that effect) in the
show of hands to be evidence books where minutes of the meeting are recorded, at any general meeting, shall be
evidence of the result (in the absence of any proof of the number/proportion of votes cast
in favor of or against such resolution) unless proved otherwise, i.e., whether, on a show of
hands, a resolution,
a) has been carried or not
Page 41 of 59
b) has been carried or not, either (1) unanimously, or (2) by a particular majority
167 Demand for poll 1) The chairman of the meeting, (1) may, on his own motion, & (2) shall, on the demand of
the following persons, order that a poll be taken, either before or on declaration of the
voting result of any resolution on a show of hands:
a) in case of a public company, at least 5 members who, (1) have the right to vote, & (2)
are present (in person or by proxy)
b) in case of a private company, (1) where a maximum of 7 members are present, 1
member who, (a) has the right to vote, & (b) is present (in person or by proxy), (2) where
more than 7 members are present, 2 members who, (a) have the right to vote, & (b) are
present (in person or by proxy)
c) any member/members (present in person or by proxy) having at least 10% of the total
voting power
d) any member/members (present in person or by proxy) holding paid-up shares (that
confer a right to vote on the resolution) such that the aggregate of the amount paid-up on
them, is at least 10% of the total sum paid up on all shares of that class
2) The person/persons who made the demand for the poll may withdraw it at any time
168 Time of taking poll 1) A poll that is demanded, The poll directed by the chairman, on any question other
a) (1) on the chairman's election, or (2) on a question of adjournment, shall be taken than (1) chairman's election, or (2) adjournment, shall be
immediately taken within 14 days of the day on which the poll was so
b) on any other question, at a time directed by the chairman demanded
2) When a poll is taken, (1) the chairman (or his nominee), & (2) a representative of the
members (who demanded the poll), shall scrutinize the votes of the poll & the chairman
shall announce the results
3) The chairman can regulate the manner in which the poll is conducted (subject to the
requirements of this Ordinance)
4) The poll's result is deemed to be the meeting's decision on the resolution (on which the
poll was taken)
169 Resolution passed at adjourned meeting 1) Any resolution passed at an adjourned meeting of (1) a company, (2) the holders of any
class of shares, (3) directors, or (4) creditors, shall be deemed to be passed on the date on
which it was passed & not on an earlier date
170 Power of registrar to call meetings 1) The Commission may, if default is made in holding the following meetings, either (1) of
its own motion, or (2) director's/member's application, call (or direct the calling of) the
said meetings, & give such directions (which may include directions that 1 member shall
be deemed to constitute a meeting) it thinks are necessary to, (1) call, (2) hold, (3)
conduct, & (4) prepare any document with regards to, the meeting:
a) statutory meeting, in accordance with section 157
b) annual general meeting, in accordance with section 158
c) extraordinary general meeting, in accordance with section 159
2) Any meeting that takes place in accordance with the aforementioned directions shall be
deemed to a meeting called, held & conducted by the company, & all related expenses of
that meeting shall be paid by that company, unless the Commission directs any of that
company's officers to bear the expenses
171 Penalty for default in complying with the In case of default in complying with the Commission's
directions of the registrar for holding the meeting directions under section 170, the company & every defaulting
officer shall be fined upto,
- Rs. 10,000, &
- Rs. 200 for each day the default continues
Page 42 of 59
172 Filing of resolution, etc. A copy of every special resolution,

a) duly authenticated by (1) the chief executive, or (2) secretary, shall be filed with the The copy shall be delivered within 15 days of passing of the In case of default in filing the copy of the special resolution
registrar resolution with the registrar, the company & every defaulting officer
b) shall be annexed to every copy of registered articles issued after the resolution's date shall be fined upto Rs. 100 for each day the default continues
c) shall be forwarded to any member (on his request) after payment of a company-
determined fee (not exceeding the prescribe fee)
In case of default in (1) annexing a copy of the special

resolution with every copy of registered articles subsequently
issued, & (2) forwarding a copy of the special resolution to any
requesting member, the company & every defaulting officer
shall be fined upto Rs. 1,000 for each default
173 Minutes of proceedings of general meetings and 1) Every company shall maintain proper books in which (1) a summary of minutes, & (2) the In case of defaulting in relation to maintenance of books
directors name of the participants, of all the (1) general meetings, (2) directors' meetings, & (3) containing the minutes of the meetings, the company & every
committee of directors' meetings, will be entered defaulting officer shall be fined,
2) Every director must be furnished with a copy of the minutes of the directors' meetings The copy shall be provided to the directors within 14 days - upto Rs. 5,000, &
of the date of that meeting - upto Rs. 100 for each day the default continues
3) Any minute shall be evidence of the meeting, if it is signed by the chairman,
a) of the meeting to which the minute pertains
b) of the next succeeding meeting
4) Every (1) general meeting, (2) directors' meeting, & (3) committee of directors' meeting,
of which minutes have been made, shall be deemed to have been held, & all appointments
of the directors/liquidators shall be deemed to be valid, unless proved otherwise
5) The books containing the minutes of all the (1) general meetings, (2) directors' meetings,
& (3) committee of directors' meetings shall be,
a) kept at the registered office
b) open to members' inspection during business hours free of charge, subject to reasonable
restrictions imposed by (1) its articles, or (2) general meeting, such that at least 2 hours in
each day are allowed for inspection In case
6) Any member shall be entitled to receive a certified copy of the minutes of any general The certified copy of the minutes shall be provided to the - an inspection of the books containing the minutes is refused,
meeting at a fixed charge not exceeding the prescribed amount member within 7 days of his request (in that behalf) which or
can be made after 7 days of the meeting - any copy is not provided to any member on his request,
the company & every defaulting officer shall be fined,
- upto Rs. 1,000, &
- upto Rs. 50 for each day the default continues
& the registrar may direct (1) immediate inspection, or (2)
supply of copy, of the minutes
DIRECTORS
174 Minimum number of directors of a company 1) Every,
a) single member company shall appoint & elect at least 1 director
b) other private company shall appoint & elect at least 2 directors
c) public non-listed company shall appoint & elect at least 3 directors
d) listed company shall elect at least 7 directors in a general meeting
in the manner provided in this Ordinance
175 Only natural persons to be directors 1) Directors,
a) must be natural persons
b) cannot be variable representatives of body corporates
176 First directors and their term 1) The majority of subscribers (of the memorandum) shall, in writing, determine
a) the number of directors
b) the names of first directors
& until so determined, all the subscribers (being natural persons) shall be deemed to be
the directors of the company
2) The first directors shall hold office till the directors' election in the 1st AGM
Page 43 of 59
177 Retirement of directors 1) All the first directors shall retire on the date of the 1st AGM & after that, all directors shall
retire after holding office for 3 years, unless they (1) resign earlier, (2) become
disqualified (from being a director), or (3) otherwise cease to hold office
2) The retiring directors shall,
a) continue to perform their functions until the new directors are elected
b) take immediate steps to hold the directors' election
c) report any impediment/obstacles, in holding such elections, to the registrar The impediment/obstacles in holding such elections shall be
reported to the registrar within 15 days of expiry,
- of 3 years of holding office
- of the date of early retirement
- of the date of becoming disqualified from being a director
- of the date of otherwise ceasing to be a director
178 Procedure for election of directors 1) The number of elected directors shall be fixed by the directors, keeping in view the The number of elected directors must be fixed at least 35 days
minimum number of directors as required by this Ordinance, & the number so fixed can before the general meeting in which the directors are to be
only be changed with prior approval of a general meeting elected
2) The notice of the meeting in which the directors are to be elected shall state,
a) the number of elected directors that has been fixed, &
b) the names of the retiring directors
3) Any person who wishes to stand in the election of directors (whether that person is a The notice of a person's intention to stand in the directors'
retiring director or otherwise) shall file a notice of his intention to stand in those elections elections must be filed with the company at least 14 days
with the company. However, such notice may be withdrawn at any time before the before the date of the meeting in which the directors' elections
meeting by the person who filed the notice are to be held
4) Any aforementioned notices received by the company shall be transmitted to the members, The notices shall be transmitted to the members at least 7
days before the date of the meeting
a) in the manner that notices for general meeting are sent to the members
b) in case of a listed company, by publishing that notice in at least 1 daily English & 1
daily Urdu newspaper circulated in the area where the stock exchange (in which the
company is listed) is situated
5) The directors of a company with share capital shall be elected by the members in a general
meeting in the following manner, unless the number of persons who offer themselves for
election is not more than the fixed number of elected directors:
a) the number of votes held by a member shall be the product of (1) voting shares held by
him, & (2) the fixed number of directors to be elected
b) a member may (1) give all his votes to the same candidate, or (2) divide his votes
between the candidates as he may choose
c) the candidate with the highest number of votes shall be declared as director, then the
candidate with the next highest number of votes shall also be declared as director & so on
until the fixed number of directors as so elected
6) The directors of a company without share capital shall be elected by the members in a
general meeting in the manner provided by the articles
179 Circumstances in which election of directors may 1) On an application by members having at least 20% of the voting power, the Court may Such application should be made within 30 days of such
be declared invalid declare the election of directors invalid if it is satisfied that there has been a material election
irregularity in the holding of those elections
180 Term of office of directors 1) All elected directors shall retire after holding office for 3 years, unless they (1) resign
earlier, (2) become disqualified (from being a director), or (3) otherwise cease to hold
office
2) A casual vacancy may be filled by the directors, & the person so appointed shall hold
office for the remainder of the term of the director whom he replaced
Page 44 of 59
181 Removal of director 1) The following directors may be removed by resolution in a general meeting
a) the first directors
b) the directors filling a casual vacancy
c) the directors elected in a directors' election in a general meeting
2) The resolution for removing the directors can only be passed if the number of votes cast
equal/exceed,
a) in case the resolution relates to an elected director, the minimum number of votes by
which a director was elected in the immediately preceding elections, or
b) in case the resolution relates to (1) the first directors, or (2) the directors filling a casual
vacancy,
- the total number of votes, being the product of (1) voting shares held by the members,
& (2) the fixed number of directors to be elected, for the time being, divided by,
- the number of directors for the time being

182 Creditors may nominate directors 1) A company may have directors that are nominated by (1) their creditors, & (2) other
special interests under contractual arrangements
183 Certain provisions not to apply to directors 1) The provisions relating to (1) the election of directors (Section 178), (2) the term of
representing special interests directors' office (Section 180), or (3) the removal of directors, shall not be applicable to
the directors,
a) nominated by a company owned/controlled (directly or indirectly) by (1) the Federal
Government, or (2) a Provincial Government, where such a Government-controlled
company has (1) invested in that other company, or (2)provided credit facilties to it
b) nominated by (1) the Federal Government, or (2) a Provincial Government,
c) nominated by foreign equity holders in the board of directors of (1) Pakistan Industrial
Credit & Investment Corporation (PICIC) Limited, or (2) any other company set up under
a Federal Government-approved regional (or other) co-operation arrangement
2) The number of votes available to the nominee director at an election of directors shall be
equal to,
a) the total number of votes available to him, less/excluding
b) the minimum number of votes that would have been sufficient to become an elected
director in a directors' election in a general meeting
3) The nominee director shall hold office as long as the nominating (1) company, (2)
government, or (3) authority, so pleases
184 Consent to act as director to be filed with 1) On (1) appointing/nominating a director/chief executive, or (2) naming any person as Such list & written consent must be filed within 14 days of
registrar director/chief executive (or proposed director/chief executive), written consent must be the appointment/nomination
obtained from such persons & filed with the registrar alongwith their list
2) This section is not applicable to a private company but is applicable to a private company
which is a subsidiary of a public company
185 Validity of acts of directors 1) All acts (1) of a director, or (2) of a directors' meeting attended by him, shall be valid,
even if a defect in his appointment as director is subsequently discovered. However, when
the defect comes to notice, the director cannot exercise the rights of his office till the
defect is rectified
186 Penalties Whoever contravenes with the provisions of the Sections 174 to
185,
- shall be fined upto Rs. 10,000, &
- may also be debarred from becoming/continuing as a director
for a maximum of 3 years
Page 45 of 59
187 Ineligibility of certain persons to become 1) The following persons cannot be appointed as a director:
director a) a minor
b) a person of unsound mind
c) a person who has applied for insolvency & the application is pending
d) an undischarged insolvent
e) a person convicted by a court of law for an offence involving moral turpitude
f) a person debarred from holding such office under any provision of this Ordinance
g) a person who has betrayed lack of fiduciary behaviour & the Court has made a
declaration to that effect at any time in the previous 5 years
h) a person who is not a member, unless that person (1) represents the
Government/institution/authority which is a member, (2) is a whole-time director who is
an employee, (3) is a chief executive, (4) represents a creditor
i) in case of a listed company, a person declared as defaulter in repayment of loan to a
financial institution by a Court, where the loan exceeds the limit notified by the
Commission
j) in case of a listed company, a member of the Stock Exchange, being a broker or his (or
her) spouse
188 Vacation of office by the directors 1) A director shall cease to hold office if,
a) he becomes ineligible to be appointed as director
b) he absents himself, without leave of absence from the directors, from (1) 3 consecutive
directors' meetings, or (2) all the director's meetings for 3 continuous months, whichever
of the two is longer
c) (1) he, (2) any firm where he is a partner, or (3) any private company where he is a
director, accepts
- or holds any office of profit, except that of (1) chief executive, (2) legal/technical
advisor, or (3) banker, without the sanction of the company (in general meeting)
- accepts a loan/guarantee from the company in contravention of provisions of this
Ordinance relating to loans to directors
2) This section shall not prevent a company from providing additional grounds for the
directors' office to be vacated in its articles
189 Penalty for unqualified person acting as director, Any person who (1) is unqualified to act as a director/chief
etc. executive, or (2) has vacated such office, shall be fined upto Rs.
200 for each day he,
- describes/represents himself as a director/chief executive
- acts as a director/chief executive
- allows himself to be described as a director/chief executive
190 Ineligibility of bankrupt to act as director, etc. An undischarged insolvent acting as a (1) chief executive, (2)
director, or (3) managing agent, of a company (which includes a
company incorporated outside Pakistan having a business place
in Pakistan), shall,
- be imprisoned for upto 2 years,
- be fined upto Rs. 10,000, or
- be punished with both of the above
191 Restriction on director's remuneration, etc. 1) The director's remuneration for,
a) performing extra services (including being chairman) shall be determined in the general
meeting by (1) the directors, or (2) the company, as per the company's articles
b) attending (1) directors', or (2) committee of directors', meetings, shall not exceed the
scale approved by (1) the directors, or (2) the company, as per the company's articles
192 Restriction on assignment of office by directors 1) An assignment by the director of his office to another person because of (1) a provision in
the articles, or (2) an agreement to that effect between that person & the company, must be
approved by a special resolution
2) The appointment of (1) an alternate, or (2) a substitute director, by a director to act in his
place during his minimum 3-month absence from Pakistan, the appointment being
approved by the directors, is not an assignment of directors' office. The alternate director
so appointed shall vacate such office as soon as the director appointing him returns to
Pakistan
Page 46 of 59
193 Proceedings of directors 1) In case of a listed company, the minimum number of directors that must form the quorum In case of contravention of this section, the (1) directors, & (2)
of director's meeting shall be the greater of, the chairman of directors shall,
a) 4, or - in case of a listed company, be fined upto (1) Rs. 10,000, &
b) 1/3rd of the directors of the company (2) Rs. 100 for each day the default continues
- in case of a non-listed company, be fined upto (1) Rs. 2,000, &
(2) Rs. 50 for each day the default continues
2) In case of a public company, the directors' meeting shall be conducted once every 3
months
194 Liabilities, etc., of directors and officers 1) If any (1) director, (2) chief executive, (3) officer, or (4) auditor, is exempted/indemnified
against any liability by a provision in (1) the articles or (2) any contract with the company,
being a liability which he may incur because of his (1) negligence, (2) default, (3) breach
of duty, or (4) breach of trust, any such provision shall be void, unless that provision
indemnifies the aforementioned persons against any liability incurred by him in,
a) defending any civil/criminal proceedings, (1) which is adjudged in his favour, or (2) in
which he is acquitted
b) connection with any application to the (1) Court, (2) Officer, (3) Commission, or (4)
registrar, which/who grants him relief on the grounds that he acted honestly/reasonably &
thus ought to be excused for his (1) negligence, (2) default, (3) breach of duty, or (4)
breach of trust (Section 488)
Page 47 of 59
195 Loans to directors, etc. 1) A company (the lending company) cannot, directly or indirectly, (1) make any loan to, (2)
give any guarantee involving, or (3) provide any security involving, the following persons,
Every person in contravention of this section shall,
a) any (1) director or (his partner/relative) of the lending company, or (2) director (or - be fined upto Rs. 5,000, or
his partner/relative) of the lending company's holding company - be imprisoned for upto 6 months
b) any firm where the aforementioned director (or his relative) is a partner However, the defaulter shall
c) any private company where the aforementioned director is a (1) director, or (2) member - not be imprisoned if the loan (1) made, (2) for which guarantee
was given, or (3) for which security was provided,
d) any body corporate, is fully repaid
- at the general meeting of which, the aforementioned directors (or their relatives) can - if the loan (1) made, (2) for which guarantee was given, or (3)
exercise at least 25 % of the total voting power for which security was provided, is partly repaid, be
- where the directors/chief executive customarily act on the directions of the lending imprisoned after proportionate reduction of the imprisonment
company's (1) chief executive, or (2) director(s) term
All persons involved in the contravention of Sub-section (1) &
(3) of this section shall be liable to the lending company for the
repayment of the loan,
2) The lending company, with the Commission's approval, may (1) make any loan to, (2) - given by the lending company
give any guarantee involving, or (3) provide any security involving a loan made by any - on which a guarantee/security was provided by the lending
person to, a whole-time employee-director, company, with an interest of at least the borrowing cost of
- for the (1) acquisition, or (2) construction of a dwelling house (or land for it) the lending company
- to pay for the cost of any (1) personal conveyance, (2) household items, (3) medical
treatment of himself (or his relatives)
as are normally provided to the company's employees
3) The aforementioned provisions shall not apply to,
a) (1) any loan made, (2) guarantee given, or (3) security provided, by a private company,
not being a subsidiary of a public company
b) (1) any loan made, (2) guarantee given, or (3) security provided, by a banking company
c) any loan made by a holding company to its subsidiary

d) (1) any guarantee given, or (2) security provided, by a holding company for any loan
made to its subsidiary
e) any book debt of the nature of a loan/advance from its inception
4) Relative means the director's (1) spouse, & (2) minor children
5) The repayment of any loan (1) made, (2) for which guarantee was given, or (3) for which The repayment must be enforced within 6 months of the
security was provided, by a lending company before the commencement of this Ordinance, commencement of this Ordinance
shall be enforced even if there is an agreement to the contrary, unless (1) the loan, (2)
guarantee, or (3) security was provided to a whole-time director & approved by the
Commission
6) Every person appointed as director/chief executive of the lending company, shall file with The said particulars shall be filed with the registrar, by the
the registrar, the particulars of any (1) loan taken, or (2) guarantee/security obtained prior director/chief executive within 14 days of his appointment as
to such appointment, which could not have been obtained without the Commission's prior such
approval if he held the position of a director/chief executive when he obtained the
loan/guarantee/security
7) No officer of (1) the lending company, or (2) the borrowing body corporate, shall be
penalized with the punishments provided in this section, for any (1) loan made, (2)
guarantee given, or (3) security provided involving a body corporate,
a) at the general meeting of which, the aforementioned directors (or their relatives) can
exercise at least 25 % of the total voting power
b) where the directors/chief executive customarily act on the directions of the lending
company's (1) chief executive, or (2) director(s)
unless he knew of the contravention at the time of the transaction
Page 48 of 59
196 Powers of directors 1) The directors, Anyone contravening with this section shall be,
a) shall manage the company's business - fined upto Rs. 100,000, &
b) may pay all promotion & registration expenses - (1) individually & (2) severally liable for losses/damages
c) may exercise all those powers of the company which it is not required to exercise (in a arising out of such contravention
general meeting) by (1) this Ordinance, (2) the articles, or (3) a special resolution
2) The directors shall, by passing a resolution at their meeting,
a) make calls on shareholders money unpaid on their shares
b) issue shares
c) issue (1) debentures, (2) participation term certificates, or (3) or any redeemable capital
instrument
d) borrow money (otherwise than on debentures)
e) invest the company's funds
f) make loans
g) authorise (1) a director, (2) the firm in which he is a partner, (3) any partner of such
firm, or (4) a private company in which he is a member/director, to enter into any contract
with the company for (1) sale of goods, (2) purchase of goods, (3) supply of goods, or (4)
rendering services
h) approve (1) annual, (2) half-yearly, or (3) other periodical account which are required to
be circulated to the members
i) approve bonus to employees
j) (1) incur capital expenditure on any single item, or (2) dispose of a fixed asset, within
the Commission-prescribed limits
k) undertake leasing contracts exceeding Rs. 1,000,000
l) declare interim dividend
m) write off material (1) bad debts, (2) advances, (3) receivables, (4) inventories, & (5)
other assets
n) determine the terms/circumstances in which a (1) law suit may be compromised, (2)
claim/right of the company may be released/extinguished/relinquished
3) The following shall not be deemed to be (1) borrowing of money, or (2) making of loan,
by a banking company for the purposes of this section:
a) acceptance of deposits, in the ordinary course of the business, from the public which are
(1) repayable on demand (or otherwise) & (2) withdrawable by cheque/draft/order (or
otherwise)
b) placement of money/deposit, in the ordinary course of the business, with another
banking company on conditions prescribed by the directors
4) In case of a public company (or a subsidiary of a public company), the directors must
obtain general meeting's consent to,
a) sell/lease/dispose the undertaking (or sizeable part of it) unless selling/leasing is the
company's main business
b) (1) remit, (2) give any relief, or (3) give any time extension, for the repayment of any
outstanding debt against any person specified in Section 195 (1)
197 Prohibition regarding making of political 1) A company cannot contribute any amounts towards, In case of contravention of this section,
contributions - any political party - the company shall be fined upto Rs. 10,000
- any (1) individual, or (2) body, for any political purpose - every defaulting director/officer shall be (1) imprisoned upto 2
years, & (2) fined
197A Prohibition regarding distribution of gifts 1) A company cannot distribute any gifts in its meeting, to its members In case of default, the company & every defaulting officer shall
be fined upto Rs. 500,000
CHIEF EXECUTIVE
198 Appointment of first chief executive 1) Every company shall appoint a chief executive, except for the company managed by a The directors shall appoint the chief executive from the earlier
managing agent of the following dates:
2) The first chief executive shall hold office upto (1) the 1st AGM, or (2) upto such - date of commencement of business
shorter period as is fixed by the directors at the time of his appointment, unless he, - a date, not being later than 15 days from the incorporation
a) resigns earlier, or date
b) otherwise ceases to hold office
Page 49 of 59
199 Appointment of subsequent chief executive 1) The directors shall appoint any person (including an elected director) to be the chief Such appointment shall be made within 14 days of,
executive - the date of directors' election
2) The chief executive shall be eligible for reappointment on expiry of his office term - the date of the vacancy of the chief executive's office
3) The retiring chief executive shall continue to perform his functions till his successor is
appointed, except when the non-appointment of his successor is because,
a) of the retiring chief executive's fault The appointment of the chief executive shall be for a
b) the retiring chief executive's office is expressly terminated maximum period of 3 years from the date of such
appointment
200 Terms of appointment of chief executive and 1) The terms/conditions of the chief executive's appointment is determined, in accordance
filling up of casual vacancy with the articles, by,
a) the directors, or
b) the company in a general meeting
2) If the chief executive is not already a director, he shall,
a) be deemed to be a director
b) be (1) entitled to all the rights/privileges, & (2) subject to all the liabilities, of a director
201 Restriction on appointment of chief executive 1) Any person who is ineligible to become a director is also ineligible to become a chief
executive
202 Removal of chief executive 1) A chief executive can be removed before the expiration of the term of his office, by,
a) a resolution passed by at least 3/4th of the total directors
b) a special resolution passed by the company
203 Chief executive not to engage in business 1) In case of a public company,
competing with company's business a) its chief executive cannot engage (directly or indirectly) in any business (1) of the same
nature as that of that public company, & (2) which directly competes with the business
carried on by that company (or its subsidiary)
b) when its chief executive is appointed, he shall immediately on his appointment disclose
(in writing) to the company, (1) the nature of the competing business, & (2) his interest in
it
2) A business is deemed to be carried on indirectly by the chief executive if it is carried out
by his (1) spouse or, (2) minor children
204 Penalty Anyone who contravenes with the sections relating to,
- appointment of first chief executive
- appointment of subsequent chief executive
- terms of appointment of chief executive
- restriction on appointment of chief executive due to his
ineligibility
- removal of chief executive
- chief executive not to engage in business competing with
company's business
(1) shall be fined upto Rs. 10,000, & (2) may also be debarred
from becoming director/chief executive for a maximum 3 years
204A Certain companies to have secretaries 1) A listed company shall have a whole time secretary
2) A single member company shall have such a qualified secretary as may be prescribed
Page 50 of 59
REGISTER OF DIRECTORS AND OTHER OFFICERS

205 Register of directors, officers, etc. 1) Every company shall maintain a register of directors & officers, containing their In case of contravention of this section, the company & every
prescribed particulars, at its registered office, where the officers would include, defaulting officer shall be fined,
a) the chief executive, - upto Rs. 500, &
b) managing agent, - upto Rs. 50 for each day the default continues
c) secretary, & in case of refusal to allow inspection of the register, the
d) chief accountant, registrar may order the immediate inspection of that register,
e) auditors, & - on application made by the person to whom inspection was
f) legal advisor refused, &
- upon notice to the company
2) Every aforementioned person shall, on (1) his appointment or (2) any change in it,
a) furnish the particulars required for the register of directors & officers, to the company The prescribed particulars are required to be filed within 10
days of (1) the appointment, or (2) the change in it, as the
b) file a (1) prescribed return, or (2) prescribed notification, in case of change, case may be
(containing the particulars required for the aforementioned register) in duplicate with the
registrar The return/notification is to filed within 14 days, of
3) The register shall be open to inspection by (1) members without any fee, & (2) any - incorporation date of the company, in case of return
other person for a fee fixed by the company (not exceeding the prescribed amount), during - happening of change of appointment, in case of notification
business hours, subject to reasonable restrictions imposed by (1) its articles, or (2) general
meeting, such that at least 2 hours in each day are allowed for inspection
BAR ON APPOINTMENT OF MANAGING AGENTS, SOLE PURCHASE AND SALES AGENTS, ETC.
206 Bar on appointment of managing agents, sole 1) A company (whether incorporated in Pakistan or not) cannot appoint any managing agent
purchase, sales agents, etc. (a person/firm/company entitled to the management of the company's affairs) through an
agreement/contract, except where that managing agent is wholly owned/controlled by the
Federal/Provincial Government Anyone contravening with this section shall be,
2) The Federal Government may, through notification in the Official Gazette, exempt the - imprisoned upto 2 years
following class of agreements/contracts from the aforementioned restriction, - fined upto Rs. 100,000, or
a) an agreement/contract with an investment advisor with regards to investment - punished with both
company (registered under the rules relating to Securities & Exchange Ordinance, 1969) & in case the defaulter is a company/body corporate, then all
its (1) directors, (2) chief executive, or (3)
b) an agreement/contract (approved by the Federal Government) with a foreign officers/agents/partners, shall stand guilty of the contravention,
collaborator with regards to a hotel-owning company in Pakistan unless he proves that he,
c) an agreement/contract (approved by the Federal Government) with regards to a - was not aware of the offence
company formed (in collaboration with public sector financial institutions) for setting up - exercised all due diligence to prevent the offence from being
an industrial undertaking which is likely to contribute (in the Government's opinion) to committed
Pakistan's economic development
3) A company (whether incorporated in Pakistan or not & carrying on business in Pakistan)
cannot appoint a sole agent for (1) purchasing, (2) selling, or (3) distribution, without the
Commission's approval, except where the major portion of the business of the company
(being incorporated outside Pakistan) is conducted outside Pakistan
TERMS OF APPOINTMENT OF MANAGING AGENT
207 Terms and conditions of appointment of 1) The appointment of a managing agent under the Government's exemption, shall be subject
managing agent to the term/conditions as imposed by the Federal Government In case of contravention of those terms/conditions,
- the company & every defaulting officer shall be fined upto
Rs. 20,000, &
- the defaulting officer shall be liable (jointly & severally) to
the company for any loss that it has incurred because of such
contravention
Page 51 of 59
MISCELLANEOUS PROVISIONS REGARDING INVESTMENTS, CONTRACTS, OFFICERS AND SHAREHOLDINGS, TRADING AND INTERESTS
208 Investments in associated companies and 1) A special resolution indicating the (1) nature, (2) period, (3) amount, & (4) terms &
undertakings conditions of the investment must be passed before a company makes any investment in
any associated companies/undertakings In case of contravention of this section, every director shall,
2) Any change in the (1) nature, or (2) terms & conditions of an investment can only be - be fined upto Rs. 1,000,000, &
made after passing a special resolution to that effect. '- shall (jointly & severally with other directors) reimburse
3) The return of an investment, which is a loan, shall be at least equal to the borrowing cost any loss incurred by the company due to the making of an
of the lending/investing company investment in contravention of this section
4) Investments include loans, advances, equity, or any amount which is not normal trade
credit by nature
5) This section shall not apply to,
a) a banking company
b) any other Commission-approved financial institution
c) a private company which is not a public company's subsidiary
d) a company whose main business is acquisition of shares and various other securities
209 Investments of company to be held in its own 1) All investments made by a company on its own behalf shall, In case of default, the company & every defaulting officer
name a) be made & held in its own name, & shall be fined,
b) if not held in its own name before the Ordinance's commencement, be (1) transferred - upto Rs. 5,000, &
to its own name, or (2) disposed of, within 1 year of the Ordinance's commencement, - upto Rs. 200 for each day the default continues
except where, & in case of refusal to allow inspection of the register, the
a) the company has, (1) a right to appoint (or get elected) a director of any other company, registrar, on application, may direct the immediate inspection of
& (2) exercised that right by appointing/electing its nominee as such, such shares of the that register
other company, having a maximum amount equal to the nominal amount of the
qualification shares required to be held by a director, may be registered/held,
- jointly in (1) its own name, & (2) the name of such nominee, or
- in the name of such nominee alone
b) a holding company holds any shares in its subsidiary in the name of its nominee(s), if it
necessary to do so for ensuring that the number of members of that subsidiary is not
reduced below,
- 3, in case of a public company
- 2, in case of a private company
c) an investing company (i.e., a company whose main business is the purchase & sale of
securities) makes investments
2) This section shall not prevent a company from,
a) depositing any shares/securities with the banker of that company for the purpose of
collecting any dividend/interest on them
b) (1) depositing with, (2) transferring to, or (3) holding in the name of, a scheduled
bank/financial institution, (which are approved by the Commission), shares/securities to
facilitate their transfer. However, if the transfer is not made within 6 months of the date
when those shares/securities are so (1) deposited, (2) transferred, or (3) held, the company
shall have the shares/securities retransferred to itself & hold them in its name, as soon as
practicable after the expiry of those 6 months.
c) (1) depositing with, or (2) transferring to, any person, any shares/securities as a security
for the (1) repayment of any loan made to the company, or (2) performance of any
obligation of the company.
d) (1) depositing with, (2) transferring to, (3) holding in the name of, or (4) registering in
the name of, a central depository, any shares/securities
3) A register shall be maintained for the investments made by the company in
shares/securities, & are not held in its own name, which shall state,
a) the (1) nature, (2) value, & (3) other particulars required to identify such shares &
securities
b) the bank/person in whose name/custody the said shares/securities are held
Page 52 of 59
4) The aforementioned register shall be open to members'/debenture-holders'/creditors'

inspection during business hours free of charge, subject to reasonable restrictions imposed
by (1) its articles, or (2) general meeting, such that at least 2 hours in each day are allowed
for inspection
210 Form of contract 1) A contract made/discharged/varied on behalf of a company may be,
a) in writing, signed by any person authorised to do so, if that contract, had it been made
between two private persons, would have been legally required to be in writing (& signed
by the parties charged with the contract)
b) made by parole, by any person authorised to do so, if that contract, had it been made
between two private persons, would have been legally valid even if the contract was (1)
made by parole only, & (2) not in writing
2) The aforementioned contracts shall be (1) legally effective, & (2) binding on,
a) the company
b) its successors
c) (1) all other parties to the contract, & (2) their heirs/legal representatives
211 Bills of exchange and promissory notes 1) A (1) bill of exchange, (2) hundi, or (3) promissory note shall be deemed to have been
made/drawn/accepted/endorsed on behalf of the company, if a person (authorised by the
company) does so
212 Execution of deeds 1) A company may, by writing under its common seal, empower any person to execute deeds
on its behalf in any place (whether in or outside Pakistan) as its attorney. Every deed so
executed by the attorney (whether under his seal, where it is so required, or not) shall (1)
be binding on the company, & (2) have the same effect as if the deed were under its
common seal.
213 Power for company to have official seal for use 1) If a company's objects require/comprise business transactions outside Pakistan, it may
abroad have an official seal for use outside Pakistan, if it is so authorised by its articles. That
official seal shall (1) be a facsimile (fax) of the common seal of the company, & (2) also
include the name of every territory where it is to be used on its face
2) A company may (by writing under its common seal) authorise any person outside Pakistan
to affix the aforementioned official seal to any deed/document to which the company is a
party
3) The authority of the aforementioned authorised person shall continue during the period,
a) mentioned in the instrument conferring that authority, or

b) in case no period is mentioned in that instrument, till notice of the (1) revocation, or (2)
determination, of the agent's authority has been given to the person dealing with the
authorised person
4) The person affixing the seal shall, by writing under his hand, certify the (1) date, & (2)
place of affixing that seal
5) The deed/document to which an official seal has been affixed, is binding on the company,
as it would have been binding on the company if that deed was sealed under the company's
common seal
Page 53 of 59
214 Disclosure of interest by director 1) Every director, who is concerned/interested in any contract/arrangement entered (or to be If a director fails to disclose the nature of his interest at a
entered) into (1) by, or (2) on behalf of the company, shall disclose the nature of his directors' meeting in accordance with this section, he shall be
concern/interest at the director's meeting. A director shall be deemed to be interested in a fined upto Rs. 5,000
contract of the company, if his spouse/minor children are so concerned/interest in that
contract.
2) A director shall disclose his interest/concern,
a) in case of a contract/arrangement which is yet to be entered into, (1) at the director's
meeting in which the question of entering into the contract is initially taken into
consideration, or (2) if the director became interested in that contract/arrangement after
that meeting, at the first director's meeting held after he became so concerned/interested
b) in case of any other contract, at the first director's meeting held after he became so
concerned/interested
3) A general notice given to the directors, stating the following, shall be deemed to be
sufficient disclosure of concern/interest in any contract/arrangement,
a) the interested director is a (1) director/member of a specified body corporate, or (2)
member of a specified firm, &
b) that director is to be regarded as interested/concerned in any contract/arrangement,
which may be entered into with that body corporate/firm, after the date of the notice
4) The aforementioned general notice shall expire at the end of the financial year in which it
is given. However, it can be renewed for one more financial year at a time, by a fresh
notice given in the last month of the financial year in which the previous notice is to expire
5) The general notice & its renewal shall only take effect,
a) when it is given at a directors' meeting, or
b) when the interested director takes reasonable steps to ensure that the (1) notice, or (2)
its renewal, is brought up & read at the first directors' meeting held after giving the notice
or its renewal
6) This section shall not restrict a director from having any concern/interest in any
contract/arrangement with the company
215 Interest of other officers, etc. 1) Any officer other than the director, who is subject to Section 214, cannot be In case of contravention, the defaulting officer shall be fined
interested/concerned in any proposed contract/arrangement unless he, upto Rs. 5,000
a) discloses the (1) nature, & (2) extent, of his interest in the transaction
b) obtains prior approval of the directors
216 Interested director not to participate or vote in 1) An interested/concerned director, in the capacity of a director, can (1) neither participate in In case of contravention with this section, every defaulting
proceedings of directors the discussion or voting on any contract/arrangement in which he is interested, (2) nor his director shall be fined upto Rs. 5,000
presence be recognised with regard to forming a quorum at the time of the aforementioned
discussion/vote. In case, that director does vote, his vote shall be void.
2) The aforementioned condition does not apply to,

a) a private company which is (1) neither a public company's subsidiary (2) nor its holding
company
b) any indemnity contract against any loss incurred by the directors by becoming/being
sureties of the company
c) any contract/arrangement with a public company in which a director is interested only
because (1) he is a director of that public company, (2) does not hold shares in that public
company more than are required to qualify him for his appointment as a director, and (3)
has been nominated as such a director by the company which is entering (or has entered)
into the contract with the said public company
217 Declaring a director to be lacking fiduciary 1) The Court may declare a director as lacking fiduciary behaviour if he contravenes with
behaviour sections relating to,
a) disclosure of interest by directors (Section 214)
b) failure to approve a contract/arrangement entered into by an officer who is
interested/concerned in that contract/arrangement [Section 215(1)]
c) the prohibition of participation or voting by an interested director in proceedings of
directors (Section 216)
Page 54 of 59
218 Disclosure to members of directors interest in 1) In case of a company appoints/enters into or varies a contract for the appointment of a (1) In case of default, the company & every defaulting officer shall
contract appointing chief executive, managing chief executive, (2) managing agent, (3) whole-time director, and (4) secretary, where a be fined upto Rs. 5,000
agent or secretary director is interested in that contract/appointment , it shall attach (1) an abstract of the
terms of the appointment/contract/variation, and (2) a memorandum specifying the nature
of interest of the director
2) In case of a company appoints/enters into or varies a contract for the appointment of a The abstract alongwith the memorandum shall be sent to the
chief executive, it shall send, to every member, members within 21 days
a) an abstract of the terms of appointment/contract/variation, and - of the appointment/contract/variation
b) a memorandum specifying the nature of a directors interest in the contract/ - of the director becoming interested in the contract/
appointment/variation if a director is so interested appointment/variation, in case the director becomes interested
after such contract/appointment/variation have been made
3) All contracts for the appointment of a (1) managing agent, (2) secretary, or (3) chief
executive shall be,
a) kept at the registered office
b) open to inspection of any member who may require their extracts/certified copies on the
payment of a fee as that required in the case of the members' register and the provisions of
the inspection of registers (Section 150) shall become applicable
4) This section shall apply to any directors' resolution appointing (or varying any previous
contract of) a (1) managing director, (2) secretary, (3) chief executive, or (4) whole time
director
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
ACCOUNTS
230 Books of accounts to be kept by the 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
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
Page 55 of 59
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-sheet, etc., and the auditor's report
244 Penalty for improper issue, circulation or
publication of balance-sheet or profit and loss
account
245 Quarterly accounts of listed companies
246 Power of Commission to require submission of
additional statements of accounts and reports
247 Rights of debenture-holders, etc., as to receipt

and inspection of report, etc.
DIVIDEND AND MANNER AND TIME OF PAYMENT THEREOF
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 payments of dividend

AUDIT
252 Appointment and remuneration of auditors
253 Provisions as to resolutions relating to
appointment and removal of auditors
254 Qualification and disqualification of auditors
255 Powers and duties of auditors
256 Reading and inspection of auditor's 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
POWER OF REGISTRAR TO CALL FOR INFORMATION, ETC.
261 Power of registrar to call for information or
explanation
262 Seizure of documents by registrar
SCHEDULES
FIRST SCHEDULE
Table Regulation for Management of a company
A limited by shares
Table Memorandum of Association of company limited
B by shares
Table Memorandum and Articles of Association of a
C company limited by guarantee and not having a
share capital
Table Memorandum and Articles of Association of a
D company limited by guarantee and having a share
capital
Page 56 of 59
Table Memorandum and Articles of Association of an

E unlimited company having a share capital
Table ( Repealed)
F
SECOND SCHEDULE
Part I Matters to be specified in prospectus and reports
to be set out therein
Part Form of statement in lieu of prospectus to be
II 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 therein
Part Form of statement in lieu of prospectus to be
III delivered to registrar by a private company on
becoming a public company and reports to be set
out therein
THIRD SCHEDULE
Form Annual return of company having share capital
A
Form Annual return of company not having share
B capital
FOURTH SCHEDULE
Requirements as to balance sheet and profit and
loss account of listed companies
FIFTH SCHEDULE
Requirements as to balance sheet and profit and
loss account of non-listed companies
SIXTH SCHEDULE
Table of fees to be paid to the registrar and the
Commission
SEVENTH SCHEDULE
Enactments repealed
EIGHTH SCHEDULE
Amendment of Ordinance XVII of 1969
Page 57 of 59
PARTICULARS
PART I - PRELIMINARY
PART II - JURISDICTION OF COURTS
PART III - CORPORATE LAW AUTHORITY
PART IV - INCORPORATION OF COMPANIES AND MATTERS INCIDENTAL THERETO
MEMORANDUM OF ASSOCIATION
ARTICLES OF ASSOCIATION
FORMS OF MEMORANDUM AND ARTICLES
GENERAL PROVISIONS WITH RESPECT TO REGISTRATION OF MEMORANDUM AND
ARTICLES
PROVISIONS WITH RESPECT TO NAMES OF COMPANIES
ASSOCIATIONS NOT FOR PROFIT
COMPANIES LIMITED BY GUARANTEE
PROVISIONS RELATING TO CONVERSION OF PUBLIC COMPANY INTO PRIVATE
COMPANY AND VICE VERSA, AND OTHER MATTERS
CARRYING ON BUSINESS WITH LESS THAN THE LEGAL MINIMUM OF MEMBERS
SERVICE AND AUTHENTICATION OF DOCUMENTS
PART V - PROSPECTUS, ALLOTMENT, ISSUE AND TRANSFER OF SHARES AND
DEBENTURES, DEPOSITS, ETC.
PROSPECTUS
ALLOTMENT
CERTIFICATE OF SHARES AND DEBENTURES
TRANSFER OF SHARES AND DEBENTURES
COMMISSION, DISCOUNT, PREMIUM AND REDEEMABLE PREFERENCES SHARES
FURTHER ISSUE OF CAPITAL
REGULATION OF DEPOSITS
PART IV - SHARE CAPITAL AND DEBENTURES
NATURE, NUMBERING AND CERTIFICATE OF SHARES
CLASSES AND KINDS OF SHARES
GENERAL PROVISIONS AS TO SHARE CAPITAL
REDUCTION OF SHARE CAPITAL
VARIATION OF SHAREHOLDERS' RIGHTS
REGISTRATION OF UNLIMITED COMPANY AS LIMITED
UNLIMITED LIABILITY OF DIRECTORS
SPECIAL PROVISIONS AS TO DEBENTURES
PART VII - REGISTRATION OF MORTGAGES, CHARGES ETC.
RECEIVERS AND MANAGERS
PARTICULARS
PART VIII - MANAGEMENT AND ADMINISTRATION
REGISTERED OFFICE, PUBLICATION OF NAMES, ETC.
COMMENCEMENT OF BUSINESS BY A PUBLIC COMPANY
REGISTER OF MEMBERS AND DEBENTURE HOLDERS
MEETINGS AND PROCEEDINGS
DIRECTORS
CHIEF EXECUTIVE
REGISTER OF DIRECTORS AND OTHER OFFICERS
BAR ON APPOINTMENT OF MANAGING AGENTS, SOLE PURCHASE AND SALES AGENTS,
ETC.
TERMS OF APPOINTMENT OF MANAGING AGENT
MISCELLANEOUS PROVISIONS REGARDING INVESTMENTS, CONTRACTS, OFFICERS AND
SHAREHOLDINGS, TRADING AND INTERESTS
ACCOUNTS
DIVIDEND AND MANNER AND TIME OF PAYMENT THEREOF
AUDIT
POWER OF REGISTRAR TO CALL FOR INFORMATION, ETC.
INVESTIGATION AND RELATED MATTERS
SCHEDULES
FIRST SCHEDULE
SECOND SCHEDULE
THIRD SCHEDULE
FOURTH SCHEDULE
FIFTH SCHEDULE
SIXTH SCHEDULE
SEVENTH SCHEDULE
EIGHTH SCHEDULE

Summary of Companies Ordinance, 1984

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Summary of Companies Ordinance, 1984

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SUMMARY OF COMPANIES ORDINANCE, 1984

PART IV - INCORPORATION OF COMPANIES AND MATTERS INCIDENTAL THERETO

SERVICE AND AUTHENTICATION OF DOCUMENTS

50 Service of notice on members, etc. 1) A notice may be given to a member,

4) Any condition in the prospectus requiring an applicant to waive compliance of the

a) be imprisoned for upto 2 years,

b) certificate to commence business is obtained

5) Any condition requiring an applicant to waive compliance of the requirement of this

b) in case of shares for non-cash consideration,

CERTIFICATE OF SHARES AND DEBENTURES

TRANSFER OF SHARES AND DEBENTURES

b) fails to register the transmission/transmission within the time prescribed in Section 78

a) receipt of the refusal notice, if the company refuses to register a transfer/transmission

c) providing for the premium on redemption of redeemable preference shares/debentures

FURTHER ISSUE OF CAPITAL

PART IV - SHARE CAPITAL AND DEBENTURES

4) Cancellation of shares shall not be deemed to be a reduction of share capital

3) This section shall not prevent,

REDUCTION OF SHARE CAPITAL

b) the court so directs, in any other case, then

VARIATION OF SHAREHOLDERS' RIGHTS

2) In pursuance of exercising the power to reissue redeemed debentures,

a) he had noticed that the debenture was not duly stamped

PART VII - REGISTRATION OF MORTGAGES, CHARGES ETC.

a) for securing any issue of debentures

a) the total amount secured by the series

a) the date of creation

131 Rectification of register of mortgages 1) If,

a) upto Rs. 5,000

a) limit his right to indemnity established under any other section

except where a previous order has been made in that respect

COMMENCEMENT OF BUSINESS BY A PUBLIC COMPANY

MEETINGS AND PROCEEDINGS

4) The chairman at every general meeting shall be,

9) Votes may be given (1) personally, or (2) by proxy, on a poll

172 Filing of resolution, etc. A copy of every special resolution,

In case of default in (1) annexing a copy of the special

- the number of directors for the time being

c) any loan made by a holding company to its subsidiary

REGISTER OF DIRECTORS AND OTHER OFFICERS

4) The aforementioned register shall be open to members'/debenture-holders'/creditors'

a) mentioned in the instrument conferring that authority, or

2) The aforementioned condition does not apply to,

229 Penalty for contravention of section 226, 227 or

231 Inspection of books of account by registrar, etc.

232 Default in compliance with provisions of section

239 Rights of holding company's representatives and

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

249 Dividend to be paid only out of profits

251 Period for payments of dividend

Table Memorandum and Articles of Association of an

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