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Old Friday, December 10, 2010
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Thumbs up 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.
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Old Saturday, January 07, 2017
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Default 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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