Company's Incorporation
What is a company?
Company is legally an entity apart from its members, capable of rights and duties of its own, and endowed with the potential of perpetual succession. It is an ‘intricate, centralised, economic, administrative structure run by professional managers who hire capital from the investors”. In other words a company means certain persons registered under the Companies Ordinance, 1984. The Companies Ordinance, 1984. This is the most potent statute dealing with the company registration process in Pakistan. Its primary purpose is the promotion of investment and development of economy of Pakistan, and also the healthy growth of the corporate enterprises and the protection of investors and creditors. Kinds of Companies. With the increasing complexities of the corporate world, companies take on diverse forms with the passage of time. However, the basic two genres of company remain as follows: • Private Limited Company Any one or more persons may by subscribing to a memorandum of association for a lawful purpose may form a private company. (The Companies Ordinance, 1984) • Public Limited Company Any three or more persons may form a public limited company, and any seven or more persons may form a listed public company in the same manner and purpose. (The Companies Ordinance, 1984) Both the companies stated above might either be limited by share, or guarantee, or unlimited. Company as a mode of business-Advantage. Where greater mobilization of capital is required, which the resources of a few persons cannot provide, the formation of a company is advisable as this is the only form of business organization which offers the privilege of limiting of members’ liability for debts of the company. Why is it important to register a company? The Companies Ordinance, 1984 strictly lays down that no company shall be formed for the acquisition of gain through its mode of business unless it is registered as a company under the ‘Ordinance’. Hence any person who shall do so in contravention of the provisions of the ‘Ordinance’ shall be liable for the payment of fine which may extend to Rs. 5000 and also for all the liabilities incurred in the business. Company Registration Offices. (CRO’s) For the convenience of the general public and the promoters of companies, Securities & Exchange of Pakistan (SECP) has established seven company registrations offices (CROs) at Islamabad, Karachi, Lahore, Peshawar, Faisalabad, Multan and Quetta. The main function of the CROs is to provide services and guidance in connection with the registration of new companies and also to ensure that their directors comply with the statutory requirements as provided under the Companies Ordinance 1984. The record of the companies maintained by the given CROs’ is public record, and investors, shareholders and other concerned, may inspect the record of any company whenever needed by them and, they may also obtain certified copies of any specific document in accordance with the prescribed procedure. The Formation, Incorporation and Registration of a Company. For the sake of convenience, this procedure can be further classified into: a) The Pre-Incorporation Stage. b) The Post-Incorporation Stage. Both these stages entail the filing of various documents, fees and stamp duties with the Company Registrar. Pre-Incorporation Stage Certain persons called promoters under take the task of forming a company. In order to register a company the promoters must prepare and file certain documents with the registrar of companies and pay fees and stamp duties. Such documents are to be filed with the Registrar in the province or the part of Pakistan not forming part of a province, as the case may be, in which the registered office of the company is stated by the memorandum to be situated, under section 30 of the Companies Ordinance, 1984. Registration Procedure for A Company APPLICATION FOR AVAILABILITY OF NAME • Application for the availability of the company name must be made to the Registrar accompanied with original challan fee payment of Rs.200 • The name must not be inappropriate, deceptive, designed to exploit or defend any religion, be identical or have a close resemblance with that of an existing company name. • On receiving the application, the Registrar issues a certificate of availability of name within 2 days if he thinks fit. • The name is reserved for 30 days from the receiving of the certificate of the availability of name. • On failure of the promoters to get the company registered within 30 days from the receipt of such certificate, the Registrar may allocate such name to any other applicant seeking the same name. Memorandum of Association • The promoters of the company prepare the memorandum of association. • It is the most important document of the company. • It is the charter of the company and defines its powers and states its objectives. The mandatory contents of the memorandum of association are as follows: 1. The name clause The name clause must include: a) The word “Limited” as the last word in case of a Public Limited Company. b) The words “(Private) Limited” as the last words in the case of a Private Limited Company. c) The words “(SMC-Private) Limited” as the last words of a Single Member Private Limited Company. 2. Registered Office Details This clause must state the address details of the company offices. 3. Object Clause This is the most important part of the memorandum of association and is to be worded immensely carefully. A company cannot legally take up any business that is not authorised by its object clause. The object clause cannot contain any thing contrary to the provisions of the Companies Ordinance, 1984. It is generally very lengthy and the scope of the company’s activities is widened by including the words “and the doing of all such other things incidental or conductive of the environment of the above objects.” 4. Liability Clause The clause must include whether the company is limited by share or guarantee. The effect of this statement is in the event if the company is wound up, the members of the company will not be liable to contribute more than the amount, if any, unpaid on their shares, in case of a company limited by shares. In the case of a company limited by guarantee, the members undertake to contribute a specific amount to the assets of the company. 5. Share Capital Clause The following information is provided in this clause, except for guarantee companies having no share capital and unlimited companies: a) The amount of share capital with which the company is formed and registered. b) The division of share capital into shares of fixed amounts. The memorandum of association must be signed by the subscribers i.e. the first members of the association. Articles of Association • Following the memorandum of association, are the articles of association, which pertain to the internal management of the company. • The Articles provide a description of the regulations and by-laws with which the company intends to conduct and regulate its daily working on various issues e.g. transfer of shares, general meetings, voting, notices, etc. • The subscribers to the memorandum of association must sign the Articles of Association. • These members may also adopt all or any of the regulations specified in Table A if the First Schedule of the Companies Ordinance, 1984, in case they do not prepare the articles of association. Documents required to be filed for: A) A Private Limited Company I. Photocopies of National Identity Cards or passports in case of foreigners, of all the promoters/subscribers and witnesses to the memorandum and articles of association. II. 4 copies of Memorandum & Article of Association of the Company duly signed by each subscriber in the presence of one witness. One copy should be affixed with special adhesive stamps at the rates prescribed under the Stamp Act, 1899 (Table-1).(Annex.1) III. Photocopy of certificate of availability of the name issued by the Registrar. IV. Form 1 (Annex-2) in triplicate duly filled and signed. This form is the declaration of compliance with the pre-requisites for formation of the Company. Form 1 is also required to be witnessed by one person and it should be affixed with a stamp of Rs. 50/-.This declaration can be made by any one of the following persons: a) An advocate entitled to appear before a High Court/Supreme Court b) A Chartered Accountant/ A Cost and Management Accountant practicing in Pakistan. V. The Company is required to notify the whereabouts of its registered office on Form 21 (Annex-3) within 28 days from the date of its incorporation, but to facilitate communication and for the sake of convenience, this form is normally submitted with the registration documents. VI. Form 29 (Annex-4) particulars of directors and other officers. In fact the directors are required to be elected by subscribers within 14 days from the date of incorporation, but to facilitate communication and for convenience, this form is normally submitted with the registration documents. VII. Original paid challan towards registration/filing/certified copies fee in the authorized branches of Habib Bank Limited or a bank draft/pay order drawn in favor of the Securities and Exchange Commission of Pakistan of the prescribed amount. (Table-II).(Annex.5) VIII. Letter of authority on one hundred rupees stamp paper, duly notarized and signed by all promoters, in favor of Advocate/Consultancy firm/or any other person to make good the deficiencies, if any, in memorandum and articles of association as may be pointed out by the Registrar concerned and for the collection of the certificate of incorporation. B) For Public Limited Company In addition to the documents required to be filed for a private limited company, the public limited company requires the following to be filed as well. a) Form 27(Annex.6) i.e. List of persons consenting to act as director. b) Form 28(Annex.7) i.e. Consent to act as director/chief executive. Private companies after incorporation 1-Private companies may commence business from the date of incorporation 2. The first annual general meeting is required to be held within eighteen months of incorporation (Section158). Consequently Form-A (Annex.19) is to be filed with the registrar within 30 days. 3. Subsequent annual general meetings are to be held once every year, within a period of six months following the close of its financial year, and not more than 15 months after the holding of the last AGM. 4. The first election of directors is to be conducted at the first annual general meeting. Re-election should take place every three years. (Section 176 & 178) 5. An annual return prescribed on Form-A is required to be filed with the registrar at the end of each year. 6. In the case of increase in paid-up capital, the company is required to offer new shares to its members. A circular (under section 86(3)) shall be issued to all the members. A copy of this will also be filed with the registrar concerned, and thereafter Form-3 (Annex.20) to be filed within 30 days of the allotment of shares. 7. Any appointment or change in the Directors, Chief Executive, Auditors, Chief Accountant is required to be notified to the concerned registrar by filing Form- 29. This is to be done within 14 working days for any appointment or change. 8. The first auditors of the company must be appointed within 60 days of the date of incorporation. Subsequent auditors must then be appointed only at the annual general meetings. 9. Every mortgage or charge created by the company on its property should be registered with the concerned registrar. Any changes thereafter in this should also be registered. Public companies after incorporation. 1. A public company may not commence business unless a “Certificate of Commencement of Business” is obtained from the Registrar concerned. 2. A statutory meeting is required to be held within a period of not less than 3 months and not more than 6 months from the date at which it becomes entitled to commence business. A statutory report is required to be forwarded to the members at least 21 days before this meeting.5 duly certified copies of the statutory report shall be delivered to the registrar immediately after sending the report to the members. 3. The first audited accounts are required to be shown in the first annual general meeting to be held within 18 months from the date of incorporation. Five duly attested copies of the accounts and an Annual Return in form “A” it to filed with the registrar within 30 days of the date of the AGM. 4. Subsequent AGMs shall be held once every year in which audited accounts are presented. Every AGM must be held within six months of the closing of the financial year and not more than 15 months after the last meeting. 5. The procedure of appointing of directors is exactly the same as shown in private companies above. 6. Any change in Directors/Chief Executives, Auditors, Secretaries, Chief Accountants, and Legal Advisors etc shall be conducted in the same manner as discussed in private companies. 7. Again the procedure stated in increase of paid-in capital described above should also be followed. |
Company Registration in Pakistan
The information looks outdated. The company incorporation is a little bit more complex than that.
Should anyone intend to register a Company, contact me on 0323-5114494. |
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