INCORPORATION OF

COMPANIES
PART IV OF COMPANIES ACT, 2017.
OUTLINE OF FORMATION

• Names
• Obligation
• Rectifying of Name
• Registration and Effect

• Mode of forming a company

• Type
• Liability

• Provisions to MOA and AOA

• Formation process of incorporation till commencement
• MOA AOA structure

• Conversion of company
• Public to private and vice versa
OBLIGATION TO REGISTER AS COMPANY

• Section 9 subsection (1) requires that No association, partnership and entity having more
than twenty members can run any business unless it has register as Company, violation of
this is a punishable offences
• 9(3) states that this provision in not applied to:
• Society and association incorporated by any law
• Joint family businesses
• Partnership of joint families where members do not exceed 20.
PROVISIONS WITH RESPECT TO NAMES OF
COMPANIES
• 10(1) prohibits companies to register by certain names if notified by commission or in opinion
of registrar as:
• (a) identical with or resemble or similar to the name of a company; or
• (b) inappropriate; or
• (c) undesirable; or
• (d) deceptive; or
• (e) designed to exploit or offend religious susceptibilities of the people; or
• (f) any other ground as may be specified.
PROVISIONS WITH RESPECT TO NAMES OF
COMPANIES
• 10(2) requires a company shall not keep it name in connection with some organization until get prior
approval in writing from commission, Words in company name shall not suggest the following
• Patronage
• Connection with Government
• Federal and Provincial Corporation
• Patronage with foreign Government
• Modarba management company
• Any other business requiring license from commission
PROVISIONS WITH RESPECT TO NAMES OF
COMPANIES
• 10(3) Regarding violation of company name commission decision is final
• 10(4) For reservation of name application shall be filed to registrar for period of not exceeding
sixty days.
• 10(5) If reserved name is found incorrect, reservation shall be cancelled, after incorporation of
company, names should be directed to change.
• 10(6) If applied name is refused then a person may make an appeal to commission within thirty
days of refusal.
• 10(7) Any order of commission in response to appeal shall be final and not be called in question.
RECTIFICATION OF NAME OF COMPANY

• 11(1) states that if a name of company is registered in contradiction to provision of

section 10 through inadvertence and name was get registered by providing false
information, so it may change the name
• with approval of registrar
• A company may change it name with approval of registrar within thirty days after receiving
such direction to change of name.

• 11(2) If company fails to comply with direction, registrar enter in register a new name for
company selected by him.
CHANGE OF NAME AND REGISTRATION

• 12 requires that a company may change its name by passing special resolution along with
the approval of registrar.
• In case of omission and addition in name only, does not require approval from registrar.

• 13(1) Registrar enters a new name in place of old name of company in register, and issue
a certificate of incorporation with new name
• 13(2) Company after changing its name should mentioned its old name with new for a
period of ninety days from the issuance of certificate
• 13(3) The change of name shall not affect any rights or obligations of the company.
MODE OF FORMING A COMPANY

• 14(1) deals with way/ manner of forming a company

• Three or more persons may form a PUBLIC company to conduct lawful business activities
• Two or more persons may form a PRIVATE company
• One person may form a SINGLE MEMBER company
• 14(2) requires a company formed in above manner can be :
• a company limited by shares; or
• a company limited by guarantee; or
• an unlimited company
KINDS OF COMPANIES

• (49) “private company” means a company which, by its articles-

•
• (a) restricts the right to transfer its shares;
•
• (b) limits the number of its members to fifty not including persons who are in the employment of the
company; and
•
• (c) prohibits any invitation to the public to subscribe for the shares, if any, or debentures or redeemable
capital of the company:
• (52) “public company” means a company which is not a private company;
•
• (53) “public interest company” means a company which falls under the criteria as laid
down in the Third Schedule to this Act or deemed to be such company under section 216;
• (54) “public sector company” means a company, whether public or private, which is directly
or indirectly controlled, beneficially owned or not less than fifty-one percent of the voting
securities or voting power of which are held by the Government or any agency of the
Government or a statutory body, or in respect of which the Government or any agency of
the Government or a statutory body, has otherwise power to elect, nominate or appoint
majority of its directors and includes a public sector association not for profit, licenced
under section 42:

• (65) “single member company” means a company which has only one member;
PROVISIONS WITH RESPECT TO REGISTRATION
OF MEMORANDUM AND ARTICLES
• 16(1) requires that a person/ promoter shall submit application on specified form with
registrar for incorporation of company, that includes following details and documents:
• compliance with all or any of the requirements of this Act and the rules and regulations
made in respect of registration
• memorandum of association of the proposed company signed by all subscribers, duly
witnessed and dated;
• articles of association signed by the subscribers duly witnessed and dated;
• an address for correspondence till the registered office is established and notified.
PROVISIONS WITH RESPECT TO REGISTRATION
OF MEMORANDUM AND ARTICLES
• 16(5) state that on registration of the memorandum of a company, the registrar issue a
certificate, signed and authenticated by registrar, that the company is incorporated.
• 16(6) describe the certificate of incorporation includes:
• 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.
PROVISIONS WITH RESPECT TO REGISTRATION
OF MEMORANDUM AND ARTICLES
• 18(1) The registration of the company has the following effects:
• (a) the subscribers to the memorandum, become members of the company, are a body corporate stated in the
certificate of incorporation;
• (b) the body corporate is capable of exercising all the functions of an incorporated company, having perpetual
succession and a common seal;
• (c) the status and registered office of the company are similar, as stated in the application for registration;
• (d) in case of a company having share capital, the subscribers to the memorandum become holders of the initial
shares; and
• (e) the persons named in the articles of association as proposed directors, are deemed to have been appointed to
that office.
 COMMENCEMENT OF BUSINESS BY A PUBLIC
COMPANY
• 19(1) A public company shall not start its operations or exercise any borrowing powers unless—
• (a) Shares held for payment of the whole amount in cash, have been allotted to an amount not less in the
whole than the minimum subscription and the money has been received by the company;
• (b) Every director of the company has paid to the company full amount on each of the shares, in cash;
• (c) No money is or may become liable to be repaid to applicants for any shares which have been offered
for public subscription;
• (d) There has been filed with the registrar a duly verified declaration by the chief executive or one of the
directors and the secretary in the specified form that the aforesaid conditions have been complied with;
• (e) Company who has not issued prospectus shall submit to registrar a Statement in lieu of prospectus.
COMMENCEMENT OF BUSINESS BY A PUBLIC
COMPANY
• 19(2) The registrar shall, on filing of a duly verified declaration in accordance with the
above provisions, accept and register all the relevant documents.
• 19(3) The acceptance and registration of documents under sub-section (2) shall be a
conclusive evidence that the company is entitled to start its operations and exercise any
borrowing powers.
• 19(4) states that these above conditions are not applied to company limited by guarantee.
MEMORANDUM AND ARTICLES OF ASSOCIATION

• 27 (A)state a memorandum of company limited by shares should include the following:

• the name of the company with the word ―Limited‖ as last word of the name in the case
of a public limited company, the parenthesis and words ―(Private) Limited‖ as last words
of the name in the case of a private limited company, and the parenthesis and words
―(SMC-Private) Limited‖ as last words of the name in the case of a single member
company;
• Province of Pakistan where company has registered office
• Principal line of Business
MOA (27)

• an undertaking as may be specified

• the liability of the members is limited; and
• the amount of share capital with which the company proposes to be registered and the
division thereof into shares of a fixed amount;
• 27(B)no subscriber of the memorandum shall take less than one share; and
• 27(C) each subscriber of the memorandum shall write opposite to his name the number
of shares he agrees to take.
 ARTICLES OF ASSOCIATION
• 36(1) In the case of company limited by shares and there shall, in the case of a company limited by
guarantee or an unlimited company, after registering with the memorandum, articles of association
shall be signed by the subscribers to the memorandum and set out the regulations for the company.
• 36(2) Articles of association of a company limited by shares may adopt all or any of the
regulations contained in Table A in the First Schedule to this Act.
• 36(6) The articles of every company shall be explicit and without ambiguity and, without
prejudice to the generality of the foregoing, shall list and enumerate the voting and other rights
attached to the different classes of shares and other securities, if any, issued or to be issued by it.
CONVERSION OF A COMPANY OF ANY CLASS
INTO A COMPANY OF OTHER CLASS
• 46(1) A public company may be converted into a private company with the prior approval
of the Commission in writing by passing a special resolution and alter its MOA and AOA in
a manner that comply with the provisions of private company.
• 46(2) On an application for change in status of a company, if the Commission is satisfied
that the company is entitled to be converted, such conversion shall be allowed by an order
in writing
• 46(3) A copy of the conversion order, duly certified by an authorized officer of the
Commission, shall be forwarded to the company and to the registrar within seven days from
the date of the order.
CONVERSION OF A COMPANY OF ANY CLASS
INTO A COMPANY OF OTHER CLASS
• 46(4 )A copy of altered MOA and AOA should be filed with the registrar within fifteen
days from the date of the order and he register the new.
• 46(5) A private company, alters its articles in a manner that they no longer include the
provisions of which are required to be included in the articles of private company, the
company shall—
• (a) as on the date of the alteration of MOA and AOA, cease to be a private company; and
• (b) file with the registrar a copy of the memorandum and articles of association as altered
along with the special resolution.