Formation of the Company

Presented by Sheheryar Saeed

Visiting Faculty – IBA
Incorporation of Company
The Companies Act, 2017

Companies Incorporation
Regulation, 2017

SECP Guideline on Incorporating

Companies

Pre Incorporation Contracts

 Obligation to Register as Company

Association, partnership Required to be registered

With more than
or entity as the Company under
20 members
the Companies Act, 2017

Exceptions

• any society, body or association, other than a partnership, formed or incorporated under any law for
the time being in force in Pakistan; or
• a joint family carrying on joint family business; or
• 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
• 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.
Effect of Registration (Section 18)

the body corporate is capable of

The status and registered exercising all the functions of an
office of the company are as
Subscriber to the MOA &
incorporated company, having
stated in the application of future members are a perpetual succession and a common
registration body corporate seal;

Person named as director

Perpetual Succession in AOA are deemed to Common Seal
appointed to that office

Subscriber to the MOA

now become initial
shareholders
Minimum number of Members (Sec 14 & 15)
Mode of Forming Minimum the company carries on business for more than
Companies numbers 180 days while the number is so reduced
Public Company 3
Private 2 every person who is a member of the company
SMC 1 during the time that it so carries on business
after those 180 days and is cognizant of the fact
A company formed under this that it is carrying on business with fewer
section may be a company number.
with or without limited shall be severally (individually) liable for
liability, that is to say payment of whole debts of the company
• limited by shares; or contracted during THAT TIME and MAY BE
• limited by guarantee; or SUED therefore without joinder in the suit of
• an unlimited company. any other member.
 Registration of MOA & AOA (Section 16)
File an application to the registrar in
specified form
• Declaration by authorized intermediary or
director that all the rules and regulation
has been complied relating to registration.
• MOA, signed by subscribers, duly
witnessed and dated
• AOA, where required to be signed by
subscribers , witnessed and dated
• Address for correspondence/notification
In case of any deficiency, Registrar will notify to
either file a revised document or remove defects
with the specified time.
If not removed after notification, he may refuse
registration.
On registration – Issue Certificate of Incorporation
(Signed with Registrar or authenticated by registrar’s Official Seal)
The certificate of incorporation shall state—
• the name and registration number of the company;
• the date of its incorporation;
• whether it is a private or a public company;
• whether it is a limited or unlimited company; and
• if it is limited, whether it is limited by shares or limited
by guarantee.
The certificate would be conclusive evidence that all the
requirements have been fulfilled.
If registration of MOA is refused by Registrar, subscribers may file an
appeal to SECP within 30 days from the date of order of refusal.
SECP decision is final and cannot be challenged in any Court.
Companies Incorporation Regulation, 2017
 Steps for Incorporation
Application for reservation
of Name (propose 3 names)
If option 1 not available,
Registrar can choose from
remaining 2 names
Registrar refuses all three
names. Incorporation of the
Company will be on held
If satisfied, issue letter
about availability of name.
Applicant to file application
of incorporation within 60
days of letter
Documents to be filed with Application of Incorporation
• Memorandum of Association;
• Articles of Association, where required;
• Copies of CNIC/NICOP of the subscribers/directors/chief executive
officer or copies of Passport in case of a foreigner;
• Copy of CNIC/NICOP of Nominee only in case of single member
company or copy of Passport in case of a foreigner;
• Copy of CNIC of witness in case of physical filing;
• Authorization for filing of documents for the proposed company by
the subscribers in favor of either one of them or registered
intermediary;
• NOC/Letter of Intent/ License (if any) of the relevant regulatory
authority in case of specialized business as mentioned in regulation 4;
and
• Original paid bank challan evidencing the payment of fee specified in
Seventh Schedule of the Act.
Appointment of First Directors and Chief
Executive Officer
• The subscribers to the memorandum shall determine the number of
directors and the names of the first directors in terms of provisions of
section 157 of the Act.

• The subscriber to the memorandum shall also determine the name of the
first chief executive officer in terms of provisions of section 186 of the Act.

• The number of directors as determined by the subscribers and particulars of

first directors and first chief executive officer shall be stated in the
application for incorporation of company.
Failure to File Certificate for receipt of share money
The registrar shall give following direction to the company:

• to remove the name of the subscriber from the register who has failed to pay the
subscription money;

• either add another shareholder with evidence of payment of share money or to change
status of the company, if required:

Provided that before giving any such direction, an opportunity of hearing shall be granted by the
registrar to the company and the subscriber who has failed to pay share money.

The company shall be required to comply with the direction within fourteen days, failing which
appropriate action under the Act would be initiated by the registrar against the Company:

Provided that the company shall submit revised information in pursuance of the direction along
with the relevant documents within seven days from the last date the direction was required to
be complied with.
Pre Incorporation Contracts

Company & Promoter Position

Promoters
Refer Specific Relief Act 1877
S 27 (e) Specific S 23 (h) Specific
performance of a contract performance may be
Pre can be enforced against obtained by
Contracts Incorporation
Contract the company: when the the company: when the
promoters of a public promoters of a public
company have, before its company have, before its
incorporation, entered into a incorporation, entered into
contract, a contract for the purposes
provided that the company of the company, and such
Third Party has ratified/approved and contract is warranted by
the terms of the
adopted the contract and
the contract is warranted by incorporation.
the terms of the
incorporation.
(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, 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:
Provided that—
(i) nothing in sub-clause (d) shall apply to a person who is acting merely in a professional capacity;
and
(ii) nothing contained in sub-clause (d) shall apply to the Commission, registrar or any authorised
officer by virtue of enforcement or regulation of the provisions of this Act or any rules, regulations,
instructions, directions, orders thereof;