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FORMATION OF A

COMPANY
Memorandum

of Association
Article of Association
Registration of Memorandum and Article
Effect of Registration
Prohibition of Certain Names

Uzair A.K. Ghouri

COMPANIES
Single Member
Company
Private
Other Private
Company
Company
Listed
Company
Public
Unlisted
Company
Uzair A.K. Ghouri

MEMBERS LIMIT

Private Company
Single

Member Company (SMC) only one member


is required.
Other Private Companies require minimum two
(2) members

Public Company
Listed

Companies require minimum 7 members


Unlisted Companies require minimum 3 members

Uzair A.K. Ghouri

PRIVATE COMPANY

u/s 2(1) (28) a company which by its articles


Restrict

the right to transfer shares


Set limit of maximum numbers of member to 50
Prohibit any invitation to the public to subscribe
for the shares, if any, or debentures of the
company

Uzair A.K. Ghouri

PUBLIC COMPANY

u/s 2 (1) (30) a company which is not a


private company
Right

to transfer shares
No Upper limit for members
Invitation is allowable for public to subscribe the
shares, if any, or debentures of the company

Uzair A.K. Ghouri

PRINCIPAL CHARACTERISTICS OF
A COMPANY

Separate legal entity


Perpetual Succession: it never dies
Capacity to sue and being sued
Common seal

Uzair A.K. Ghouri

STAGES OF FORMATION

Promotion Stage
Name Registration
Memorandum of Association
Article of Association
Other Documents

Uzair A.K. Ghouri

PROMOTION STAGE

Discovery of a business opportunity and


arrangement of funds, property, etc.
Persons who initiate the work of forming a
company are called promoters

Uzair A.K. Ghouri

NAME OF A COMPANY

This is the First Step of Incorporation


Application to be made to SECP
Prescribed Fees
200

for online
500 for Physical Submission

Uzair A.K. Ghouri

RESTRICTION AS TO NAMES

Should not be inappropriate, deceptive or


design to exploit religion susceptibilities of
people
Should not have close resemblance or
identical to name of existing companies

Uzair A.K. Ghouri

MEMORANDUM OF ASSOCIATION

It is the constitution and fundamental law of


the company on the basis of which the
company regulates its external affairs
It contains
Name

of the Company
Province of registered office or part of Pakistan
not forming part of Province
Object of the Company (Company cannot go
beyond the objects so mentioned in
memorandum)
Liabilities of members
Authorized Share Capital
Uzair A.K. Ghouri

REQUIREMENTS FOR
MEMORANDUM

Shall be printed
Divided into paragraph
Signed by each subscriber

Uzair A.K. Ghouri

ARTICLE OF ASSOCIATION

Rules, Regulation and By-Laws for internal


management of a Company
Subordinate to memorandum
Contains:
Minutes

of the Meeting
Voting rights
Directors
Auditors
Dividends and Reserves etc.

Uzair A.K. Ghouri

REQUIREMENTS FOR ARTICLES

In case of company limited by shares


Can

adopt Table A
Prepare its own articles
Prepare a combination of the above

Uzair A.K. Ghouri

DIFFERENCE BETWEEN
MEMORANDUM AND ARTICLE

Memorandum is the charter of the Company


whereas articles contain rules for internal
management
Articles are subordinate to Memorandum
Its mandatory to have memorandum but not
articles
Memorandum defines external relationships
whereas articles reflects internal
management

Uzair A.K. Ghouri

CERTIFICATE OF
INCORPORATION

If the registrar is satisfied:


from

all legal formalities, and


formed for Lawful purpose

He will issue a certificate of


incorporation

Uzair A.K. Ghouri

INCORPORATION SIGNIFIES

Separate Legal Entity


Perpetual Succession
Common Seal

Uzair A.K. Ghouri