Obligation to Register as Company &

TITLE NAME
Role of Promoter
Qaiser Iqbal
Associate Member of Institute of Cost and Management Accounts of Pakistan

QAISER IQBAL
Contents

 Obligation to register certain associations, partnerships as companies Sec 9

 Mode of Forming a Company Sec 14 & 15
 Promoter of a company meaning and functions
 Promoters as described by Act
 Legal Status of Promoters

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Obligation to register certain associations, partnerships
as companies Sec 9
a) An association, partnership or entity consisting of more than
20 persons shall not be formed for the purpose of carrying on
any business that has for its object the acquisition of gain,
unless it is registered as a company under Companies Act
2017.

b) A person guilty of an offence under this section shall be liable

to a penalty not exceeding of level 1 on the standard scale and
also be personally liable for all the liabilities incurred in such
business.

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Exemption
Nothing in this section shall apply to
a) any society, body or association, other than a partnership, formed or
incorporated under any law for the time being in force in Pakistan; or

b) a joint family carrying on joint family business; or

c) a partnership of two or more joint families where the total number of members
of such families, excluding the minor members, does not exceed twenty; or

d) a partnership formed to carry on practice as lawyers, accountants or any other

profession where practice as a limited liability company is not permitted under
the relevant laws or regulations for such practice.

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Mode of forming a company. Sec 14
Any
a) three or more persons associated for any lawful purpose may, by subscribing their names to a
memorandum of association and complying with the requirements of registration, form a public
company; or

b) two or more persons so associated may in the like manner form a private company; or

c) one person may form a single member company by complying with the requirements in respect of
registration of a private company and such other requirement as may be specified.

Explanation
Mode of forming a company
I. Three or more persons may form a public company
II. Two or more persons may form a private company One person may from a single member
company.

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Liability for carrying on business with less than three or,
in the case of a private company, two members. Sec 15
If at any time
a) the number of members of a company is reduced,
i. in the case of a private company, below two or
ii. in the case of any other company, below three

And
b) the company carries on business for more than six months while the number
is so reduced,

Then
every person who is a member of the company during the time that it so carries on
business after those six months
i. shall be severally liable for payment of whole debts of the company (contracted
during that time) and
ii. may be sued therefor without joinder in the suit of any other member.

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QAISER IQBAL 7
 Stages of Incorporation & Promoters

Commencement
Pre Incorporation of Certificate of
of Business
Incorporation Company Incorporation
Certificate

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 Companies
Incorporation

Pre
Incorporation
Incorporation

Promoters Sec
2(50)

On whose
Named Control
Advise

Authority to
Prospectus appoint Major Policy of
Memorandum Decisions
Majority of the Company
BODs

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Promoters of a Company Sec 2 (50)

Promoter means a person

(a) who is named as a subscriber to the memorandum of association of a

company; or

(b) who has been named as such in a prospectus; or

(c) who has control over affairs of the company. Such control can be directly or
indirectly whether as a shareholder, director or otherwise; or

(d) in accordance with whose advice, directions or instructions the board of the
company is accustomed to act.

A person who is acting merely in a professional capacity cant be regarded as

Promoter of the Company

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