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Companies Ordinance, 1984
THE COMPANIES ORDINANCE, 1984 Ordinance number XLVII OF 1984

An ordinanc e to consolidate and amend the law relating to companies and certain other associations Preamble: Wh e r e a s it is expedient to consolidate and amendthe law relating to companies and certain other associations for the purpose of healthy growth of the corporate enterprises, protection of investors and creditors, promotion of investment and development of economy and matters arising out of or connected therewith; An d w h e r e a s the President is satisfied that circumstances exist which render it necessary to take immediate action;No w , t h e r e f o r e , in pursuance of the Proclamation of the fifth day of July, 1977, and in exercise of all powers enabling him in that behalf, the President is pleased to make and promulgate the following Ordinance:
PART I PRELIMINARY 1. SHORT TITLE, EXTENT AND COMMENCEMENT:

1) 2) 3) This Ordinance may be called the Companies Ordinance, 1984. It extends to the whole of Pakistan. This section shall come into force at once and the remaining provisions of this Ordinance shall come into force on such date as the Federal Government may, by notification in the official Gazette, appoint, and different dates may be so appointed for different provisions. In this Ordinance, unless there is anything repugnant in the subject or context 1. "ARTICLES" means the articles of association of a company as originally framed or as altered in accordance with the provisions of any previous Companies Act, or of this Ordinance, including, so far as they apply to the company, the regulations contained in Table A in the First Schedule. 2. "ASSOCIATED COMPANIES" and "ASSOCIATED UNDERTAKINGS" mean any two or more companies or undertakings, or a company and an undertaking, interconnected with each other in the following manner, namely: (i) if a person who is the owner or a partner or director of a company or undertaking, or who, directly or indirectly, holds or controls shares carrying not less than twenty per cent of the voting power in such company or undertaking, is also the owner or partner or director of another company or undertaking, or, directly or indirectly, holds or controls shares carrying not less than twenty per cent of the voting power in that company or undertaking; or (ii) if the companies or undertakings are under common management or control or one is the subsidiary of another; or (iii) if the undertaking is a modaraba managed by the company; and a person who is the owner of or a partner or director in a company or undertaking or, who so holds or controls shares carrying not less than ten per cent of the voting power in a company or undertaking, shall be deemed to be an "associated person" of every such other person and of the person who is the owner of or a partner or director in such other company or undertaking, or who so holds or controls such shares in such other company or undertaking: Provided that shares shall be deemed to be owned, held or controlled by a person if they are owned, held or controlled by that person or by the spouse or minor children of the person: Provided further that (i) directorship of a person or persons by virtue of nomination by the Federal Government or a Provincial Government or a financial institution directly or indirectly owned or controlled by such Government; or (ii) shares owned by the National Investment Trust or the Investment Corporation of Pakistan or a financial institution directly or indirectly owned or controlled by the Federal Government or a Provincial Government or shares registered in the name of a central depository, where such shares are not beneficially owned by the central depository; shall not be taken into account for determining the status of a company, undertaking or person as an associated company, associated undertaking or associated person; 3. [ ] 4. "BODY CORPORATE" or "CORPORATION" includes a company incorporated outside Pakistan, but does not include (i) a corporation sole; or (ii) a co-operative society registered under any law relating to the registration of co-operative societies; or (iii) any other body corporate, not being a company as defined in this Ordinance, which the
2. DEFINITIONS:
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Federal Government may, by notification in the official Gazette, specify in this behalf. BOOK AND PAPER , BOOK OR PAPER or "BOOKS OF ACCOUNT" include accounts, deeds, vouchers, writings and documents, maintained on paper or computer network, floppy, diskette, magnetic cartridge tape, CD-ROM or any other computer readable media. 5A) CENTRAL DEPOSITORY means a central depository as defined in section 2(ca) of the Securities and Exchange Ordinance, 1969, and registered with the Commission under section 32A of that Ordinance. CENTRAL DEPOSITORY means a company formed to establish and operate a system for the central handling of securities, whether or not listed on an exchange, whereby such securities are deposited with and held in custody by, or registered in the name of, thecompany as a nominee for the depositors and dealings in respect of such securities areaffected by means of entries in securities accounts without the physical delivery ofscrip. [Section 2 (ca) Securities and Exchange Ordinance, 1969] 6. "CHIEF EXECUTIVE", in relation to a company means an individual who, subject to the control and directions of the directors, is entrusted with the whole, or substantially the whole, of the powers of management of the affairs of the company, and includes a director or any other person occupying the position of a chief executive, by whatever name called, and whether under a contract of service or otherwise. 6A) COMMISSION means the Securities and Exchange Commission of Pakistan established under section 3 of the Securities and Exchange Commission of Pakistan Act, 1997. 7. "COMPANY" means a company formed and registered under this Ordinance or an existing company. 8. "COMPANY LIMITED BY SHARES" means a company having the liability of its members limited by the memorandum to the amount, if any, unpaid on the shares respectively held by them. 9. "COMPANY LIMITED BY GUARANTEE" means a company having the liability of its members limited by the memorandum to such amount as the members may respectively thereby undertake to contribute to the assets of the company in the event of its winding up. 10. [ ] 11. "COURT" means the court having jurisdiction under this Ordinance. 12. "DEBENTURE" includes debenture stock, bonds, term finance certificates and any other securities, other than a share, of a company, whether constituting a charge on the assets of the company or not. 13. "DIRECTOR" includes any person occupying the position of a director, by whatever name called. 14. "DOCUMENT" includes summons, notice, requisition, order, other legal process, voucher and register whether issued, sent or kept in pursuance of this Ordinance or any other law for the time being in force, whether maintained in any medium capable of being retrieved by any electronic means or in any other manner. 15. "EXISTING COMPANY" means a company formed and registered under any previous Companies Act. 15A) FINANCIAL INSTITUTION includes, a) a company or an institution whether established under any special enactment and operating within or outside Pakistan which transacts the business of banking or any associated or ancillary business through its branches, b) a modaraba, leasing company, investment bank, venture capital company, financing company, housing finance company, a non-banking finance company; and c) such other institution or companies authorized by law to undertake any similar business, as the Federal Government may, by notification in the official Gazette, specify for the purpose. 16. "FINANCIAL YEAR" in relation to anybody corporate, means the period in respect of which any profit and loss account or the income and expenditure account, as the case may be, of the body corporate, laid before it in general meeting, is made up, whether that period is a year or not. 17. "FORM" means a form set out in any of the schedules or prescribed; 18. "HOLDING COMPANY" means a holding company as defined in section 3; 19. "LISTED" in relation to securities, means securities which have been allowed to be traded on a stock exchange; 20. "LISTED COMPANY" means a company or a body corporate or other body whose securities are listed; 21. "MEMBER" means, in relation to a company having share capital, a subscriber to the memorandum of the company and every person to whom is allotted, or who becomes the holder of, any share, scrip or other security which gives him a voting right in the company and whose name is entered in the register of members, and, in relation to a company not having a share capital, any person who has agreed to become a member of the company and whose name is so entered. 22. "MEMORANDUM" means the memorandum of association of a company as originally framed or as alteredfrom time to time in pursuance of the provisions of any previous Companies Act or of this Ordinance. 23. "MODARABA" and "MODARABA COMPANY" have the same meaning as in the Modaraba Companies and Modaraba (Floatation and Control) Ordinance, 1980. 5.
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24. "OFFICER" includes any director, chief executive, managing agent, secretary or other executive of the company, howsoever designated, but,save in sections 205, 220 to 224, 260, 261, 268, 351, 352, 417, 418, 474 and 482, does not include an auditor. 25. "PARTICIPATORY REDEEMABLE CAPITAL" means such redeemable capital as is entitled to participate in the profit and loss of a company. 26. "PRESCRIBED" means, a) as respects the provisions of this Ordinance relating to the winding up of companies and other matters requiring to be determined or decided by the Court, prescribed by rules made by the Supreme Court in consultation with the High Courts or, where the Supreme Court advises the Federal Government to do so, by the Federal Government in consultation with the High Courts; and b) as respects the other provisions of this Ordinance, prescribed by rules or regulations made by the Federal Government or the Commission as the case may be after previous publication in the official Gazette; 27. "PREVIOUS COMPANIES ACT" includes any Act or Acts relating to companies in force before the Indian Companies Act, 1866, or the Acts repealed thereby, the Indian Companies Act, 1866, the Indian Companies Act, 1882, the Indian Companies Act, 1913, or any law corresponding to any of those Acts and in force in any of the territories now constituting Pakistan before the extension of the Companies Act, 1913, to such territories. 28. "PRIVATE COMPANY" means a company which, by its articles, (i) restricts the right to transfer its shares, if any; (ii) limits the number of its members to fifty not including persons who are in the employment of the company; and (iii) prohibits any invitation to the public to subscribe for the shares, if any, or debentures of the company: Provided that, where two or more persons hold one or more shares in a company jointly, they shall, for the purposes of this definition, be treated as a single member. 29. "PROSPECTUS" means any document described or issued as prospectus, and includes any notice, circular, advertisement, or other communication, inviting offers from the public for the subscription or purchase of any shares in, or debentures of, a body corporate, or inviting deposits from the public, other than deposits invited by a banking company or a financial institution approved by the Federal Government, whether described as prospectus or otherwise. 30. "PUBLIC COMPANY" means a company which is not a private company. 30A)"REDEEMABLE CAPITAL" includes finance obtained on the basis of participation term certificate (PTC), musharika certificate, term finance certificate (TFC), or any other security or obligation not based on interest, other than an ordinary share of a company, representing an instrument or a certificate of specified denomination, called the face value or nominal value, evidencing investment of the holder in the capital of the company on terms and conditions of the agreement for the issue of such instrument or certificate or such other certificate or instrument as the Federal Government may, by notification in the official Gazette, specify for the purpose. 30B) REGISTER means the register of members of a company and includes the register of debentureholders or holders of other securities maintained on paper or computer network, floppy, diskette, magnetic cartridge tape, CD-ROM or any other computer readable media. 31. "REGISTRAR" means a registrar, an additional registrar, a joint registrar, a deputy registrar or an assistant registrar, performing under this Ordinance the duty of registration of companies. 32. "SCHEDULED BANK" has the same meaning as in the State Bank of Pakistan Act, 1956. 33. "SECRETARY" means any individual appointed to perform the secretarial, administrative or other duties ordinarily performed by the secretary of a company. 34. "SECURITY" means any share, scrip, debenture, participation term certificate, modaraba certificate, musharika certificate, term finance certificate, bond, pre-organization certificate or such other instrument as the Federal Government may, by notification in the official Gazette, specify for the purpose. 35. "SHARE" means share in the share capital of a company; 36. "SPECIAL RESOLUTION" means a resolution which has been passed by a majority of not less than threefourths of such members entitled to vote as are present in person or by proxy at a general meeting of which not less than twenty-one days notice specifying the intention to propose the resolution as a special resolution has been duly given: Provided that, if all the members entitled to attend and vote at any such meeting so agree, a resolution may be proposed and passed as a special resolution at a meeting of which less then twenty-one days notice has been given.
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37. "STOCK EXCHANGE" means a stock exchange registered under the Securities and Exchange Ordinance, 1969. 38. "SUBSIDIARY COMPANY" or "subsidiary" means a subsidiary company as defined in section 3. 39. "TABLE A" means Table A in the First Schedule. 40. [ ] The expression "commencement of this Ordinance" in any provision of this Ordinance means the coming into force of that provision by virtue of a notification under sub-section (3) of section 1. For purposes of this Ordinance, a company or body corporate shall be deemed to be a subsidiary of another if a) that other company or body corporate directly or indirectly controls, beneficially owns or holds more than fifty per cent of its voting securities or otherwise has power to elect and appoint more than fifty per cent of its directors; or b) the first mentioned company or body corporate is a subsidiary of any company or body corporate which is that other's subsidiary: Provided that, where a central depository holds more than fifty per cent of the voting securities of a company, such company shall not be deemed to be a subsidiary of the central depository save where such voting securities are held beneficially by the central depository in its own behalf. For the purpose of this Ordinance, a company shall be deemed to be another's holding company if, but only if, that other is its subsidiary.
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3. MEANING OF "SUBSIDIARY" AND "HOLDING COMPANY":

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4. ORDINANCE NOT TO APPLY TO CERTAIN CORPORATIONS:

Nothing in this Ordinance shall apply to i. a trading corporationowned or controlled by a Province and carrying on business only within that Province; or ii. a co-operative society; or iii. a university
5. APPLICATION OF ORDINANCE TO NON-TRADING COMPANIES WITH PURELY PROVINCIAL OBJECTS:

The powers conferred by this Ordinance on the Federal Government or the Commission shall, in relation to companies which are not trading corporations and the objects of which are confined to a single Province, be the powers of the Provincial Government.
6. ORDINANCE TO OVERRIDE MEMORANDUM, ARTICLES, ETC:

Save as otherwise expressly provided herein, a) the provisions of this Ordinance which come into force by virtue of a notification under sub-section (3) of section 1 shall have effect notwithstanding anything contained in the memorandum or articles of a company, or in any contract or agreement executed by it, or in any resolution passed by the company in general meeting or by its directors, whether the same be registered, executed or passed, as the case may be, before or after the coming into force of the said provisions; and b) any provision contained in the memorandum, articles, agreement or resolution aforesaid shall, to the extent to which it is repugnant to the aforesaid provisions of this Ordinance, become or be void, as the case may be.
PART II JURISDICTION OF COURTS

7. JURISDICTION OF THE COURTS:
1) The Court having jurisdiction under this Ordinance shall be the High Court having jurisdiction in the place at which the registered office of the company is situate: Provided that the Federal Government may, by notification in the official Gazette and subject to such restrictions and conditions as it thinks fit, empower any civil court to exercise all or any of the jurisdiction by this Ordinance conferred upon the Court, and in that case such court shall, as regards the jurisdiction so conferred, be the Court in respect of companies having their registered office within the territorial jurisdiction of such court. For the purposes of jurisdiction to wind up companies, the expression "registered office" means the place which has longest been the registered office of the company during the six months immediately preceding the presentation of the petition for winding up. Nothing in this section shall invalidate a proceeding by reason of its being taken in a court other than the High Court or a court empowered under sub-section (1).
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8. CONSTITUTION OF COMPANY BENCHES:

There shall in each High Court be one or more benches, each to be known as the Company Bench, to be constituted by the Chief Justice of the High Court to exercise the jurisdiction vested in the High Court under section 7.
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9. PROCEDURE OF THE COURT:
1) Notwithstanding anything contained in any other law, all matters coming before the Court under this Ordinance shall be disposed of, and the judgment pronounced, as expeditiously as possible but not later than ninety days from the date of presentation of the petition or application to the Court and, except in extraordinary circumstances and on grounds to be recorded, the Court shall hear the case from day to day. E x p l a n a t i o n : In this sub-section, "judgment" means a final judgment recorded in writing. The hearing of the matters referred to in sub-section (1) shall not be adjourned except for sufficient cause to be recorded or for more than fourteen days at any one time or for more than thirty days in all. In the exercise of its jurisdiction as aforesaid, the Court shall, in all matters before it, follow the summary procedure. Notwithstanding anything contained in any other law, an appeal against any order, decision or judgment of the Court under this Ordinance shall lie to the Supreme Court where the company ordered to be wound up has a paid-up share capital of not less than one million rupees; and, where the company ordered to be wound up has a paid-up capital of less than one million rupees, or has no share capital, such appeal shall lie only if the Supreme Court grants leave to appeal. Save as provided in sub-section (1), an appeal from any order made or decision given by the Court shall lie in the same manner in which and subject to the same conditions under which appeals lie from any order or decision of the Court. An appeal preferred under sub-section (2) shall be finally disposed of by the Court hearing the appeal within ninety days of the submission of the appeal.
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10. APPEALS AGAINST COURT ORDERS:

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PART III SECURITIES AND EXCHANGE COMMISSION OF PAKISTAN (REFERRED AS) CORPORATE LAW AUTHORITY Securities and Exchange Commission of Pakistan [SEC] is a body corporate with perpetual succession and a common seal, and may sue and be sued in its own name and, subject to and for the purpose of SCE Act, may enter into contract and may acquire, purchase, take, hold and enjoy movable and immovable property of every description and may convey, assign, surrender, yield up, charge, mortgage, demise, reassign, transfer or otherwise dispose of or deal with any movable or immovable property or any interest vestal in it, upon such terms as it deems fit. CONSTITUTION OF SEC:
Date of establishment Head office Commissioners Chairman Term of office Divisions CROs Policy Board Term of Office Revenue : : : : : : : : : : January 01, 1999 Islamabad Including chairman not less than 5 and more than 7 (majority from private sector) Appointed by Federal Government from commissioners 3 years, may be reappointed Company Law, Security Market, Specialized Companies, Enforcement and Monitoring, Insurance, Support Services Islamabad, Karachi, Lahore, Peshawar, Quetta, Faisalabad, Multan. 7 members [3 from private sectors 4 being ex-officio (i)Secretary Finance (ii) Secretary Law (iii) Chairman SEC (iv) Deputy Governor of SBP 4 year for members from private sector, may be reappointed. Fee under CO 1984 and other statutes administered by SEC.
11. Deleted. 12. POWERS AND FUNCTIONS OF THE COMMISSION:

1) 2) The Commission shall exercise and perform such powers and functions as are conferred on it by or under this Ordinance or any other law. Notwithstanding anything contained in any other law, and without prejudice to the generality of the foregoing provisions, the Federal Government may, by notification in the official Gazette, direct that all or any of the powers and functions conferred on the Federal Government or any officer of the Federal Government under any law shall, subject to such limitations, restrictions or conditions, if any, as it may from time to time impose, be exercised or performed by the Commission.
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13. REFERENCE BY THE FEDERAL GOVERNMENT OR COMMISSION TO THE COURT:
1) Without prejudice to the powers, jurisdiction and authority exercisable by the Federal Government or the Commission under this Ordinance, the Federal Government or the Commission, as the case may be, may make a reference to the Court, on any question or matter which the Government or the Commission considers to be of special significancerequiring orders, determination or action concerning the affairs of a company or any action of any officer thereof. E x p l a n a t i o n : In this sub-section "officer" includes an auditor, liquidator or agent of the company. Where a reference is made to the Court under sub-section (1), the Court may make such order as it may deem just and equitable under the circumstances.
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PART IV INCORPORATION OF COMPANIES AND M ATTERS INCIDENTAL THERETO 14. OBLIGATION TO REGISTER CERTAIN ASSOCIATIONS, PARTNERSHIPS, ETC., AS COMPANIES:
1) No association, partnership or company consisting of more than twenty persons shall be formed for the purpose of carrying on any business that has for its object the acquisition of gain by the association, partnership or company, or by the individual members thereof, unless it is registered as a company under this Ordinance. Every person who is a member of any association, partnership or company carrying on business in contravention of the provisions of this section shall be punishable with fine which may extend to five thousand rupees and also be personally liable for all the liabilities incurred in such business. Nothing in this section shall apply to a) any society, body or association, other than a partnership, formed or incorporated under any other Pakistan law; or b) a joint family carrying on joint family business; or c) 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 d) 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.
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MEMORANDUM OF ASSOCIATION 15. MODE OF FORMING A COMPANY:

1) Any three or more persons associated for any lawful purpose may, by subscribing their names to a memorandum of association and complying with the requirements of this Ordinance in respect of registration, form a public company and any one, or more persons so associated may, in like manner, from a private company. A company formed under sub-section (1) may be a company with or without limited liability, that is to say, a) a company limited by shares; or b) a company limited by guarantee; or c) anunlimited company.
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16. MEMORANDUM OF COMPANY LIMITED BY SHARES:

In the case of a company limited by shares, a) the memorandum shall state (i) the name of the company with the word "limited" as the last word of the name in the case of a public limited company, and the parenthesis and words "(Private) Limited" as the last words of the name in the case of a private limited company; (ii) 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 to be situate; (iii) the objects of the company, and, except in the case of a trading corporation, the territories to which they extend; (iv) that the liability of the members is limited ; and (v) the amount of share capital with which the company proposes to be registered, and the division thereof into shares of a fixed amount; b) no subscriber of the memorandum shall take less than one share; and c) each subscriber of the memorandum shall write opposite to his name the number of shares he takes.
17. MEMORANDUM OF COMPANY LIMITED BY GUARANTEE:

In the case of a company limited by guarantee, a) whether or not the company has a share capital, the memorandum shall state
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(i) the name of the company with the parenthesis and words "(Guarantee) Limited" as the last words of its name; (ii) 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 to be situate; (iii) the objects of the company, and, except in the case of a trading corporation, the territories to which they extend; (iv) that the liability of the members is limited ; and (v) that each member undertakes to contribute to the assets of the company in the event of its being wound up while he is a member, or within one year afterwards, for payment of the debts and liabilities of the company contracted before he ceases to be a member, and of the costs, charges and expenses of winding up, and for adjustment of the rights of the contributories among themselves, such amount as may be required, not exceeding a specified amount; and b) if the company has a share capital, (i) the memorandum shall also state the amount of share capital with which the company proposes to be registered and the division thereof into shares of a fixed amount; (ii) no subscriber of the memorandum shall take less than one share; and (iii) each subscriber shall write opposite to his name the number of shares he takes.
18. MEMORANDUM OF UNLIMITED COMPANY:

In the case of an unlimited company a) whether or not the company has a share capital, the memorandum shall state (i) the name of the company; (ii) 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 to be situate; and (iii) the objects of the company, and, except in the case of a trading corporation, the territories to which they extend; and b) if the company has a share capital (i) no subscriber of the memorandum shall take less than one share; and (ii) each subscriber shall write opposite to his name the number of shares he takes.
19. PRINTING, SIGNATURE, ETC. OF MEMORANDUM:

1) The memorandum shall be a) printed; b) divided into paragraphs numbered consecutively; c) signed by each subscriber, who shall add his present name in full, his occupation and father s name or, in the case of a married woman or widow, her husband s or deceased husband s name in full, his nationality and his usual residential address and such other particulars as may be prescribed, in the presence of a witness who shall attest the signature and shall likewise add his particulars; and d) dated Notwithstanding anything contained in this Ordinance or in any other law for the time being in force or the memorandum and articles, the memorandum and articles of a company shall be deemed to include, and always to have included, the power to enter into any arrangement for obtaining loans, advances or credit, as defined in the Banking Companies Ordinance, 1962, and to issue other securities not based on interest for raising resources from a scheduled bank or a financial institution.
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THE COMPANIES (GENERAL PROVISIONS AND FORMS) RULES, 1985 Rule 2A ADDITIONAL PARTICULARS TO BE SPECIFIED BY A SUBSCRIBER (Section 19, 27)
In addition to the particulars to be added as contained in clause (c) of sub-section (1) of section 19 and clause (c) of sub-section (1) of section 27, a subscriber shall specify his national identity card number or in the case of foreign national, his passport number: Provided that in case of a person other than a natural person, the address of its registered office or principal office shall be specified and the authorized representative signing the documents shall also add his particulars as stated in this rule.
20. RESTRICTION ON ALTERATION OF MEMORANDUM:

A company shall not alter the conditions contained in its memorandum except in the cases and in the mode and to the extent specified in this Ordinance. 21. ALTERATION OF MEMORANDUM: 1) Subject to the provisions of this Ordinance, a company may, by special resolution, alter the provisions of its memorandum so as to change the place of its registered office from one Province to another, or from one city or town in a Province to another, or from a part of Pakistan not forming part of a Province to a Province
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or from a Province to a part of Pakistan not forming part of a Province, or with respect to the objects of the company so far as may be required to enable it a) to carry on its business more economically or more efficiently; or b) to attain its main purpose by new or improved means; or c) to enlarge or change the local area of its operations; or d) to carry on some business, not being a business specified in its memorandum, which may conveniently or advantageously be combined with the business of the company; or e) to restrict or abandon any of the objects specified in the memorandum; or f) to sell or dispose of the whole or any part of the undertaking of the company; or g) to amalgamate with any other company or body of persons The alteration shall not take effect until and except in so far as it is the confirmed by Commission on petition: Provided that an alteration so as to change the place of registered office of a company from a place in the Province of the Punjab to the Islamabad Capital Territory or from the latter to a place in the Province of the Punjab, or from one city in a Province to another, shall not require confirmation by the Commission. Before confirming the alteration, the Commission must be satisfied a) that sufficient notice has been given to every holder of debentures of the company, and to any person or class of persons whose interest will, in the opinion of the Commission, be affected by the alteration; and b) that, with respect to every creditor who in the opinion of the Commission is entitled to object, and who signifies his objection in manner directed by the Commission, either his consent to the alteration has been obtained or his debt or claim has been discharged or determined, or has been secured to the satisfaction of the Commission: Provided that the Commission may, in the case of any person or class of persons, for special reasons, dispense with the notice required by clause (a).
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THE COMPANIES (GENERAL PROVISIONS AND FORMS) RULES, 1985 Rule 3 APPLICATION FOR CONFIRMATION OF ALTERATION OF MEMORANDUM UNDER SECTION 21
1) An application for confirmation of the alteration of any of the provisions of the memorandum of the company under sub-section (2) of section 21 shall be submitted to the Commission by a responsible officer not later than sixty days from the date on which the special resolution seeking such alteration was passed. The application shall contain the following information correct as on the day immediately preceding the day of the passing of the special resolution and signed by a responsible officer, namely: (i) name and address of the company; (ii) number and date of incorporation; (iii) subscribed and paid-up capital; (iv) redeemable capital; (v) business actually being carried on and the clause in the memorandum justifying it; and (vi) reasons for the proposed alteration The following documents correct as on the day immediately preceding the day of the passing of the special resolution and certified by a responsible officer shall be submitted along with the application, namely: (i) a copy of the memorandum and the articles; (ii) a copy of the special resolution; (iii) minutes of the meeting at which the special resolution was adopted; (iv) particulars of dissenting shareholders or creditors together with their objections; (v) a copy of the latest audited balance sheet; (vi) statement in comparative form showing the existing provisions of the memorandum as are proposed to be altered and the provisions as would appear after the proposed alterations have been made, indicating the clause of sub-section (1) of section 21 under which each alteration is considered permissible by the company along with brief reasons explaining how it considers it permissible; (vii) pattern of holding of its shares in Form 34 (viii) names and addresses of each of its creditors to whom an amount exceeding fifty thousand rupees is due with the amount mentioned against each along with their consent to the alteration; and (ix) names and addresses of the persons likely to be affected along with their consent to the alteration.
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22. POWER OF COMMISSION WHEN CONFIRMING ALTERATION:
The Commission may make an order confirming the alteration either wholly or in part, and on such terms and conditions as it thinks fit, and may make such order as to costs as it thinks proper.
23. EXERCISE OF DISCRETION BY COMMISSION:

The Commission shall in exercising its discretion under sections 21 and 22 have regard to the rights and interests of the members of the company or of any class of them, as well as to the right and interests of the creditors, and may, if it thinks fit, adjourn the proceedings in order that an arrangement may be made to the satisfaction of the Commission for the purchase of the interests of dissident members; and may give such directions and make such orders as it may think expedient for facilitating or carrying into effect any such arrangement: Provided that no part of the capital of the company may be expended in any such purchase
24. PROCEDURE ON CONFIRMATION OF THE ALTERATION:

1) A certified copy of the order confirming the alteration, together with a printed copy of the memorandum as altered, shall, within ninety days from the date of the order, be filed by the company with the registrar, and he shall register the same, and shall certify the registration under his hand, and the certificate shall be conclusive evidence that all the requirements of thisOrdinance with respect to the alteration and the confirmation thereof have been complied with, and thenceforth the memorandum so altered shall be the memorandum of the company. The Commission may by order at any time extend the time for the filing of documents with the registrar under this section for such period as it thinks proper.
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25. EFFECT OF FAILURE TO REGISTER WITHIN NINETY DAYS:

No such alteration shall have any operation until registration thereof has been duly effected in accordance with the provisions of section 24, and if such registration is not effected within ninety days next after the date of the order of the Commission confirming the alteration, or within such further time, as may be allowed by the Commission, in accordance with the provisions of section 24, such alteration and order, if any, and all proceedings connected therewith shall, at the expiration of such period of ninety days or such further time, as the case may be, become null and void: Provided that the Commission may, on sufficient cause shown, revive the order or alteration, as the case may be, on application made within a further period of ninety days.
ARTICLES OF ASSOCIATION 26. REGISTRATION OF ARTICLES:

1) There may, in the case of a company limited by shares, and there shall, in the case of a company limited by guarantee or an unlimited company, be registered with the memorandum, articles of association signed by the subscribers to the memorandum and setting out regulations for the company. Articles of association may adopt all or any of the regulations contained in Table A in the First Schedule. In the case of an unlimited company or a company limited by guarantee, the articles, if the company has a share capital, shall state the amount of share capital with which the company proposes to be registered. In the case of an unlimited company or a company limited by guarantee, if the company has not a share capital, the articles shall state the number of members with which the company proposes to be registered. In the case of a company limited by shares and registered after the commencement of this Ordinance, if articles are not registered, or, if articles are registered, in so far as the articles do not exclude or modify the regulations in Table A in the First Schedule, those regulations shall, so far as applicable, be the regulations of the company in the same manner and to the same extent as if they were contained in duly registered articles. 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.
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27. PRINTING, SIGNATURE, ETC. OF ARTICLES:

The articles shall be a) printed; b) divided into paragraphs numbered consecutively; c) signed by each subscriber, who shall add his present name in full, his occupation and father s name or, in the case of a married woman or widow, her husband s or deceased husband s name in full, his nationality and his usual residential address and such other particulars as may be prescribed, in the presence of a witness who shall attest the signature and shall likewise add his particulars; and] d) dated
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28. ALTERATION OF ARTICLES:
Subject to the provisions of this Ordinance and to the conditions contained in its memorandum, a company may by special resolution alter or add to its articles, and any alteration or addition so made shall be as valid as if originally contained in the articles, and be subject in like manner to alteration by special resolution: Provided that, where such alteration affects the substantive rights or liabilities of members or of a class of members, it shall be carried out only if a majority of at least three-fourths of the members or of the class of members affected by such alteration, as the case may be, personally or through proxy vote for such alteration.
FORMS OF MEMORANDUM AND ARTICLES 29. FORM OF MEMORANDUM AND ARTICLES:

The form of a) the memorandum of association of a company limited by shares; b) the memorandum and articles of association of a company limited by guarantee and not having a share capital; c) the memorandum and articles of association of a company limited by guarantee and having a share capital; d) the memorandum and articles of association of an unlimited company having a share capital, shall be respectively in accordance with the forms set out in Tables B, C, D and E in the First Schedule or as near thereto as circumstances admit
GENERAL PROVISIONS WITH RESPECT TO REGISTRATION OF MEMORANDUM AND ARTICLES 30. REGISTRATION OF MEMORANDUM AND ARTICLES, ETC:
1) 2) The memorandum and the articles, if any, shall be filed with the registrar. A declaration by such person as may be prescribed in this behalf, or by a person named in the articles as a director, or other officer of the company, of compliance with all or any of the requirements of this Ordinance and the rules made thereunder shallbe filed with the registrar; and the registrar may accept such a declaration as sufficient evidence of such compliance. If the registrar is satisfied that the company is being formed for lawful purposes, that none of its objects stated in the memorandum is inappropriate or deceptive or insufficiently expressive and that all the requirements of this Ordinance and the rules made thereunder have been complied with in respect of registration and matters precedent and incidental thereto, he shall retain and register the memorandum and articles, if any. If registration of the memorandum is refused, the subscribers of the memorandum or any one of them authorized by them in writing may either supply the deficiency and remove the defect pointed out, or within thirty days of the order of refusal prefer an appeal a) where the order of refusal has been passed by an additional registrar, a joint registrar, a deputy registrar or an assistant registrar, to the registrar; and b) where the order of refusal has been passed, or up-held in appeal, by the registrar, to the Commission An order of the Commission under sub-section (4) shall be final and shall not be called in question before any Court or other authority.
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THE COMPANIES (GENERAL PROVISIONS AND FORMS) RULES, 1985 Rule 4 REGISTRATION OF MEMORANDUM, ETC., UNDER SECTION 30:
1) The memorandum and the articles filed under sub-section (1) of section 30, shall be properly stamped as required by the Stamp Act, 1899, and shall be accompanied by three copies thereof duly subscribed and witnessed along with the declaration made under sub-section (2) of that section. The declaration required to be made under sub-section (2) of section 30 shall be made in Form 1 by a person engaged in the formation of the company who is (i) an advocate, entitled to appear before any High Court in Pakistan or the Supreme Court; or (ii) a member of the Institute of Chartered Accountants of Pakistan (ICAP) or the Institute of Cost and Management Accountants of Pakistan (ICAMP) practicing in Pakistan; or (iii) a person named in the articles as a director or other officer of the company. The registrar may require any person who makes a declaration under sub-section (2) of section 30 or is a promoter or director of the proposed company or is a witness to the signatures of the subscribers to the memorandum to furnish such information, clarification or document as he may deem necessary to satisfy himself for purposes of sub-section (3) of that section. The memorandum and articles shall, when registered, bind the company and the members thereof to the same extent as if they respectively had been signed by each member and contained a covenant on the part
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31. EFFECT OF MEMORANDUM AND ARTICLES:

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of each member, his heirs, and legal representatives, to observe and be bound by all the provisions of the memorandum and of the articles, subject to the provisions of this Ordinance. All money payable by any member to the company under the memorandum or articles shall be a debt due from him to the company. On the registration of the memorandum of a company, the registrar shall certify under his hand that the company is incorporated and, in the case of a limited company, that the company is limited by shares or guarantee, as the case may be. From the date of incorporation mentioned in the certificate of incorporation, the subscribers of the memorandum, together with such other persons as may form time to time become members of the company, shall be a body corporate bythe name contained in the memorandum, capable forthwith of exercising all the functions of an incorporated company, and having perpetual succession and a common seal, but with such liability on the part of the members to contribute to the assets of the company in the event of its being wound up as is mentioned in this Ordinance.
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32. EFFECT OF REGISTRATION:

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33. CONCLUSIVENESS OF CERTIFICATES OF INCORPORATION:

Acertificate of incorporation given by the registrar in respect of any association shall be conclusive evidence that all the requirements of this Ordinance in respect of registration and of matters precedent and incidental thereto have been complied with, and that the association is a company authorized to be registered and duly registered under this Ordinance.
34. EFFECT OF ALTERATION IN MEMORANDUM OR ARTICLES:

Notwithstanding anything contained in the memorandum or articles of a company, no member of the company shall be bound by an alteration made in the memorandum or articles after the date on which he became a member if and so far as the alteration requires him to take or subscribe for more shares than the number held by him at the date on which the alteration is made, or in any way increases his liability as at that date to contribute to the share capital of, or otherwise to pay money to, the company: Provided that this section shall not apply in any case where the member agrees in writing either before or after the alteration is made to be bound thereby.
35. COPIES OF MEMORANDUM AND ARTICLES TO BE GIVEN TO MEMBERS:

1) Every company shall send to every member, at his request and within fourteen days thereof, on payment of such sum, not exceeding the prescribed amount, as the company may fix, a copy of the memorandum and the articles, if any. If a company makes default in complying with the requirements of sub-section (1), it shall be liable for each offence to a fine not exceeding one hundred rupees. Where an alteration is made in the memorandum or articles of a company, every copy of the memorandum or articles issued after the date of the alteration shall conform to the memorandum or articles as so altered. If, where any such alteration has been made, the company at any time after the date of the alteration issues any copies of the memorandum or articles which do not conform to the memorandum or articles as so altered, it shall be liable to a fine which may extend to one thousand rupees for each copy so issued and every officer of the company who is knowingly and willfully in default shall be liable to the like penalty.
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36. ALTERATION OF MEMORANDUM OR ARTICLES TO BE NOTED IN EVERY COPY:

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PROVISIONS WITH RESPECT TO NAMES OF COMPANIES 37. PROHIBITION OF CERTAIN NAMES:

1) 2) No company shall be registered by a name which in the opinion of the Commission is inappropriate or deceptive or is designed to exploit or offend the religious susceptibilities of the people. A company shall not be registered by a name identical with that by which a company in existence is already registered, or so nearly resembling that name as to be calculated to deceive, except where the company in existence is in the course of being dissolved and signifies its consent in such manner as the registrar requires. Except with the prior approval in writing of the Commission, no company shall be registered by a name which contains any words suggesting or calculated to suggest (i) the patronage of any, past or present, Pakistani or foreign, Head of State; (ii) any connection with the Federal Government or a Provincial Government or any department or authority of any such Government; (iii) any connection with any corporationset upby or under any Federal or Provincial law; or (iv) the patronage of, or any connection with, any foreign Government or any international organization. Whenever a question arises as to whether or not the name of a company is in violation of the foregoing provisions of this section, the decision of the Commission shall be final.
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THE COMPANIES (GENERAL PROVISIONS AND FORMS) RULES, 1985 Rule 5 ENQUIRIES AS TO AVAILABILITY OF COMPANY NAMES FOR REGISTRATION UNDER SECTIONS 37 AND 38
The promoters of a company desirous of having company registered, or a responsibleofficer of a company intending to change its name, may make an application to the registrar concerned asking for information as to whether the proposed name is or is not available for adoption, and the registrar shall, subject to the provisions of sub-section (4) of section 37 and of section 38, furnish the information ordinarily within two days of the receipt of the application.
38. RECTIFICATION OF NAME OF A COMPANY :

A company which, through inadvertence or otherwise, is registered by a name in contravention of the provisions of section 37, a) may, with the approval of the registrar, change its name; and b) shall, if the registrar so directs, within thirty days of the receipt of such direction, change its name with the approval of the registrar: Provided that the registrar shall, before issuing a direction for the change of name, afford the company an opportunity to make representation against the proposed direction: Provided further that no direction under clause (b) shall be issued after the expiration of three years from the date of registration of the company or registration by its new name, as the case may be
39. CHANGE OF NAME BY A COMPANY:

A company may, by special resolution and with the approval of the registrar signified in writing, change its name: Provided that no such approval shall be required where the only change in the name of a company is the addition thereto or, as the case may be, the deletion therefrom, of the parenthesis and word "(Private)" consequent on the conversion in accordance with the provisions of this Ordinance of a public company into a private company or of a private company into a public company.
40. REGISTRATION OF CHANGE OF NAME AND EFFECT THEREOF:

1) Where a company changes its name, the registrar shall enter the new name on the register in place of the former name, and shall issue a certificate of incorporation altered to meet the circumstances of the case; and, on the issue of such a certificate, the change of name shall be complete. Where a company changes its name it shall, for a period of one year from the date of issue of a certificate by the registrar under sub-section (1), continue to mention its formername alongwith its new name on the outside of every office or place in which its business is carried on and in every document or notice referred to in clauses (a) and (c) of section 143: Provided that the addition or deletion, as the case may be, of the parenthesis and word "(Private)" from the name of a company consequent on the conversion in accordance with the provisions of this Ordinance of a public company into a private company or of a private company into a public company shall not be deemed to be a change of name for the purpose of this sub-section. The change of name shall not affect any rights or obligations of the company, or render defective any legal proceedings by or against the company; and any legal proceedings that might have been continued or commenced against the company by its former name may be continued by or commenced against the company by its new name.
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41. ALTERATION OF NAMES ON COMMENCEMENT OF ORDINANCE AND CHANGE OF STATUS OF COMPANY:

1) As from the date of commencement of this Ordinance, the name of every existing company shall be deemed to include, before the last word "Limited", the parenthesis and word "(Private)" in the case of a private company and the parenthesis and word "(Guarantee)" in the case of a company limited by guarantee, and the memorandum of association, the certificate of incorporation and other books and papers shall be deemed to be altered accordingly from that date. On conversion of a public company into a private company in accordance with the provisions of this Ordinance, the registrar shall add the parenthesis and word "(Private)" before the word "Limited" in the name of the company in the register and shall also issue a certificate to meet the circumstances of the case. On conversion of a private company into a public company in accordance with the provisions of this Ordinance, the registrar shall omit the parenthesis and word "(Private)" in the name of the company in the register and shall also issue a certificate to meet the circumstances of the case. If default is made in complying with a direction issued by the registrar under section 38, or with the requirements of sub-section (2) of section 40, or in giving effect to the provisions of sub-section (1) of this section, the company, and every director or officer of the company who is knowingly and willfully in default, shall be liable to a fine not exceeding ten thousand rupees and to a further finenot exceedingtwo hundred rupees for every day after the first during which the default continues.
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ASSOCIATIONS NOT FOR PROFIT 42. POWER TO DISPENSE WITH "LIMITED" IN THE NAME OF CHARITABLE AND OTHER COMPANIES:
1) Where it is proved to the satisfaction of the Commission that an association capable of being formed as a limited company has been or is about to be formed for promoting commerce, art, science, religion, sports, social services, charity or any other useful object, and applies or intends to apply its profits, if any, or other income in promoting its objects, and to prohibit the payment of any dividend to its members, the Commission may grant a licence and direct that the association be registered as a company with limited liability, without the addition of the words "Limited","(Private)Limited" or "(Guarantee) Limited", as the case may be, to its name, and the association may be registered accordingly. A licence under sub-section (1) may be granted on such conditions and subject to such regulations as the Commission thinks fit and those conditions and regulations shall be binding on the association and shall, if the Commission so directs, be inserted in the memorandum and articles, or in one of those documents. The association shall on registration enjoy all the privileges of a limited company and be subject to all its obligations, except those of using the word or words "Limited", "(Private) Limited " or "(Guarantee) Limited", as the case may be, as part of its name. A licence under this section may at any time be revoked by the Commission and upon its revocation the registrar shall enter the word or words "Limited", "(Private) Limited" or "(Guarantee) Limited", as the case maybe, at the end of the name of the association upon the register, and the association shall cease to enjoy the exemptions and privileges granted by the preceding sub-sections: Provided that, before a licence is so revoked, the Commission shall give to the association notice in writing of its intention, and shall afford the association an opportunity of submitting a representation in opposition to the revocation
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THE COMPANIES (GENERAL PROVISIONS AND FORMS) RULES, 1985 Rule 6 Application for grant of a licence under section 42 in case of charitable and other associations:
1) The promoters or members of an association desirous of obtaining a licence under section 42 shall make an application to the Commission in writing duly singed by them or by any person authorized by the association in this behalf. The application shall be accompanied by (i) three copies of the draft memorandum and the articles of the proposed association; (ii) a list of promoters of the association with their occupations and addresses; (iii) a declaration by a person specified in sub-rule (2) of rule 4 to the effect that he has scrutinized the application and the accompanying documents, and that he is satisfied that the same are drawn up in conformitywith the provisions of the Ordinance and fulfill the conditions for the grant of licence laid therein and these rules; (iv) the names of companies, associations and other institutions in which the promoters of the proposed association hold any office stating the office held in each case; (v) if the association is already in existence, a copy each of the audited balance-sheet, income and expenditure account and the annual report on the working of the association for the financial year immediately preceding the date of the application; (vi) an estimate of the future annual income and expenditure of the proposed company, specifying the sources of income and objects of expenditure; and (vii) a brief statement of the work already done by the association or proposed to be done after its being granted the licence and registration. The Commission on being satisfied, after such enquiry and after obtaining such further information as it may consider necessary, that it shall be in the public interest so to do, may grant the licence applied for subject to such conditions as it may deem fit to impose. In particular and without prejudice to the generality of the power of the Commission under section 42 and sub-rule (3), a licence shall be granted subject, besides others, to the following conditions, namely:(i) the association shall be formed as a public company; (ii) payment of remuneration for services or otherwise to its members, whether holding an office in the company or not, shall be prohibited; (iii) no change in the memorandum and the articles shall be made except with the prior approval of the Commission; (iv) the limit of liability of its members shall not be less than a reasonable amount having regard to all the circumstances of the case; and (v) patronage of any government or authority, express or implied, shall not be claimed unless
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such government or authority has signified its consent thereto in writing. 5) The conditions imposed under sub-rule (4) shall be included in the memorandum.
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COMPANIES LIMITED BY GUARANTEE

43. PROVISION AS TO COMPANIES LIMITED BY GUARANTEE:
1) In the case of a company limited by guarantee and not having a share capital, every provision in the memorandum or articles or in any resolution of the company purporting to give any person a right to participate in the divisible profits of the company otherwise than as a member shall be void. For the purpose of the provisions of this Ordinance relating to the memorandum of a company limited by guarantee and of sub-section (1), every provision in the memorandum or articles, or in any resolution, of a company limited by guarantee purporting to divide the undertaking of the company into shares or interests shall be treated as a provision for a sharecapital, notwithstanding that the nominal amount or number of the shares or interests is not specified thereby.
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PROVISIONS RELATING TO CONVERSION OF PUBLIC COMPANY INTOPRIVATE COMPANY AND V I CE V E R S A AND OTHER MATTERS 44. CONVERSION OF PUBLIC COMPANY INTO PRIVATE COMPANY:
No public company shall, except with the prior approval of the Commission in writing, and subject to such conditions as may be imposed by the Commission in this behalf, convert itself into a private company.
THE COMPANIES (GENERAL PROVISIONS AND FORMS) RULES, 1985 Rule 6 CONVERSION OF A PUBLIC COMPANY INTO A PRIVATE COMPANY UNDER SECTION 44
Where the alteration of the articles of a company has the effect of converting a public company into a private company, the company shall, not later than sixty days from the date on which the special resolution seeking such alteration was passed, make an application in Form 2 to the Commission for its approval under section 44.
45. PROSPECTUS OR STATEMENT IN LIEU OF PROSPECTUS TO BE FILED BY PRIVATE COMPANY ON CEASING TO BE PRIVATE COMPANY:
1) If a company, being a private company, alters its articles in such a manner that they no longer include the provisionswhich, under clause (28) of sub-section (1) of section 2, are required to be included in the articles of a company in order to constitute it a private company, the company a) shall, as on the date of the alteration, cease to be a private company; and b) shall, within a period of fourteen days after the said date, file with the registrar either a prospectus or a statement in lieu of prospectus as specified in sub-section (2) or sub-section (3) Every prospectus filed under sub-section (1) shall state the matters specified in section 1 of Part I of the Second Schedule and set out the reports specified in section 2 of that Part, and the said sections 1 and 2 shall have effect subject to the provisions contained in section 3 of that Part. Every statement in lieu of prospectus filed under sub-section (1) shall be in the form and contain the particulars set out in section 1 of Part III of the Second Schedule and, in the cases mentioned in section 2 of that Part, set out the reports specified therein, and the said sections 1 and 2 shall have effect subject to the provisions contained in section 3 of that Part. Where the persons making any such report as is referred to in sub-section (2) or sub-section (3) have made therein, or have, without giving the reasons indicated therein, made any such adjustments as are mentioned in clause 36 of Part I of the Second Schedule or clause 5 of section 3 of Part III of the Second Schedule, as the case may be, the prospectus or statement in lieu of prospectus filed as aforesaid shall have endorsed thereon or attached thereto a written statement, signed by those persons, setting out the adjustments and giving the reasons therefore. If default is made in complying with the provisions of any of the preceding sub-sections, the company, and every officer of the company who is in default, shall be punishable with fine which may extend to five thousand rupees and to a further fine not exceeding one hundred rupees for every day after the first during which the default continues. Where any prospectus or statement in lieu of prospectus filed under sub-section (1) includes any untrue statement, any person who authorized the filing of such prospectus or statement shall be punishable with imprisonment for a term which may extend to two years, or with fine which may extend to ten thousand rupees, or with both, unless he proves either that the statement was immaterial or that he had reasonable ground to believe, and did, upto the time of the filing of the prospectus or statement, believe, that the statement was true. For the purposes of sub-section (6),(i) a statement included in a prospectus or a statement in lieu of prospectus shall be deemed to be untrue if it is misleading in the form and context in which it is included; and (ii) where the omission from a prospectus or a statement in lieu of prospectus of any matter is calculated to mislead, the prospectus or statement in lieu of prospectus shall be deemed, in respect of such
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omission, to be a prospectus or a statement in lieu of prospectus in which an untrue statement is included For the purposes of sub-section (6) and clause (a) of sub-section (7), the expression "included" when used with reference to a prospectus or statement in lieu of prospectus, means included in the prospectus or statement in lieu of prospectus itself or contained in any report or memorandum appearing on the face thereof, or by reference incorporated therein.
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46. CONSEQUENCE OF DEFAULT IN COMPLYING WITH CONDITIONS CONSTITUTING A COMPANY A PRIVATE COMPANY:
Where the articles of a company include the provisions which, under clause (28) of sub-section (1) of section 2, are required to be included in the articles of a company in order to constitute it a private company, but default is made in complying with any of those provisions, the companyshall cease to be entitled to the privileges and exemptions conferred on private companies by or under this Ordinance, and this Ordinance shall apply to the company as if it were not a private company: Provided that the Commission, on being satisfied that the failure to comply with the conditions was accidental or due to inadvertence or to some other sufficient cause, or that on other ground it is just and equitable to grant relief, may, on the application of the company or any other person interested and on such terms and conditions as seem to the Commission just and expedient, order that the company be relieved from such consequences as aforesaid.
CARRYING ON BUSINESS WITH LESS THAN THE LEGAL MINIMUM OF MEMBERS 47. LIABILITY FOR CARRYING ON BUSINESS WITH LESS THAN THREE OR, IN THE CASE OF A PRIVATE COMPANY, TWO MEMBERS:
If at any time the number of members of a company is reduced, in the case of a private company other than a single member company, below two, or in the case of any other company, below three, and the company carries on business for more than six months while the number is so reduced, every person who is a member of the company during the time that it so carries on business after those six months and is cognizant of the fact that it is carrying on business with fewer than two members or three members, as the case may be, shall be severally liable for the payment of the whole debts of the company contracted during that time, and may be sued therefor without joinder in the suit of any other member.
SERVICE AND AUTHENTICATION OF DOCUMENTS 48. SERVICE OF DOCUMENTS ON COMPANY:

A document may be served on a company or an officer thereof by sendingit to the company or officer at the registered office of the company by post under a certificate of posting or by registered post, or by leavingit at the registered office of the company.
49. SERVICE OF DOCUMENTS ON REGISTRAR:

A document may be served on the registrar by sending it to him at his office by registered post, or by delivering it to him, or leaving it for him at his office, against an acknowledgment of receipt.
50. SERVICE OF NOTICE ON MEMBERS, ETC:

A notice may be given by a company to any member either personally or by sending it by post to him to his registered address or, if he has no registered address in Pakistan, to the address, if any, within Pakistan supplied by him to the company for the giving of notices to him. 2) Where a notice is sent by post, service of the notice shall be deemed to be effected by properly addressing, prepaying and posting a letter containing the notice and, unless the contrary is proved, to have been effected at the time at which the letter would be delivered in he ordinary course of post. 3) If a member has no registered address in Pakistan, and has not supplied to the company an address within Pakistan for the giving of notices to him, a notice addressed to him or to the shareholders generally andadvertised in a newspaper circulating in the Province or the part of Pakistan not forming part of a Province in which the registered office of the company is situate shall be deemed to be duly given to him on the day on which the advertisement appears: Provided that in the case of a listed company such notice shall in addition to its being published as aforesaid be also published at least in one issue each of a daily newspaper in English language and a daily newspaper in a Urdu language havingcirculation in the Province in which the stock exchange on which the company is listed is situate. 4) A notice may be given by the company to the joint-holders of a share by giving the notice to the joint-holder named first in the register in respect of the share. 5) A notice may be given by the company to the person entitled to a sharein consequence of the death or insolvency of a member by sending it through the post in a prepaid letter addressed to them by name, or by the title or representatives of the deceased, or assignees of the insolvent, or by any like description, at the address, if any, in Pakistan supplied for the purpose by the person claiming to be so entitled, or until such an 1)
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address has been so supplied by giving the notice in any manner in which the same might have been given if the death or insolvency had not occurred. 6) In addition to any other mode provided by this Ordinance for notice of any general meeting, notice of every general meeting shall be given in same manner hereinbefore authorized to (i) every member of the company except those members who, having no registered address within Pakistan, have not supplied to the company an address within Pakistan for the giving of notices to them; (ii) every person entitled to a share in consequence of the death or insolvency of a member who, but for his death or insolvency, would be entitled to receive, notice of the meeting; and (iii) theauditors of the company. 51. AUTHENTICATION OF DOCUMENTS AND PROCEEDINGS : Save as expressly provided in this Ordinance, a document or proceeding requiring authentication by a company may be signed by the chief executive or a director, secretary or other authorized officer of the company, and need not be under its common seal.
THE COMPANIES (GENERAL PROVISIONS AND FORMS) RULES, 1985 Rule 8,9 and 10 8. SERVICE OF DOCUMENTS ON PUBLIC FUNCTIONARIES:
An application or any documentsubmitted to the Commission or the registrar in pursuance to or for the purposes of any of the provisions of the Ordinance shall, unless otherwise proved, be deemed to have been received or delivered to it or him on the day on which it is received by its or his office.
9.MODE OF SUBMISSION OF RETURNS AND APPLICATIONS TO THE COMMISSION:

A document, statement, return, report, communication or application required to be submitted to the Commission or a Stock Exchange, may be sent to the Commission or the Stock Exchange at its headquarters by registered post or by delivery either in person or through an agent, against an acknowledgment of receipt.
10. CIRCULATION OF REPORTS AND NOTICES BY COMPANIES:

Unless otherwise provided by the Ordinance or these rules, any report, notice, statement, circular or other documentrequired under the Ordinance or any rule made there under to be circulated, transmitted or forwarded to the members,debenture-holders or creditors shall, unless it is delivered to the addressee personally against an acknowledgement or is sent by registered post, be sent, transmitted or forwarded by post under certificate of posting or through a courier service.
PART V PROSPECTUS, ALLOTMENT, ISSUE AND TRANSFER OF SHARES AND DEBENTURES, DEPOSITS, ETC.
PROSPECTUS 52. PROSPECTUS TO BE DATED:
A prospectus issued by or on behalf of a company shall be dated, and that date shall, unless the contrary is proved, be taken as the date of publication of the prospectus. 53. MATTERS TO BE STATED AND REPORTS TO BE SET OUT IN PROSPECTUS: 1. Every prospectus issued a) by or on behalf of a company, or b) by or on behalf of any person who has been engaged or interested in the formation of a company, shall state the matters specified in section 1 of Part I of the Second Schedule and set out the reports specified in section 2 of that Part and the said sections 1 and 2 shall have effect subject to the provisions contained in section 3 of that Part. (1A)A sufficient number of copies of the prospectus issued under sub-section(1) shall be made available at the registered office of the company, with the stockexchange at which the company is listed or is proposed to be listed and with the bankersto the issue, and the prospectus in its full text or in such abridged form as may beprescribed, shall be published at least in one Urdu and one English daily newspaper. 2. No prospectus shall be issued or an advertisement of a prospectuspublished in a newspaper less than seven days or more than thirty days before thesubscription list, as specified in the prospectus, is due to open: Provided that the Commission may for special reasons allow a prospectus to beissued or an advertisement of a prospectus to be published more than thirty days beforethe subscription list is due to open. 3. If a prospectus is issued which does not comply with the provisions ofsub-section (1) or sub-section (2), every person who is knowingly responsible for theissue of such prospectus shall be liable to a fine not exceeding ten thousand rupees and inthe case of a continuing default to a further fine not exceeding two hundred rupees forevery day from the day of the issue of the prospectus until a prospectus complying withthe requirements aforesaid is issued and a copy thereof is filed with the registra r.
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A condition requiring or binding an applicant for shares in or debenturesof a company to waive compliance with any of the requirements of this section, orpurporting to affect him with notice of any contract, document or matter not specificallyreferred to in the prospectus, shall be void. 5. No one shall issue any form of application for shares in or debentures ofa company, unless the form is accompanied by a prospectus which complies with therequirements of this section: Provided that this sub-section shall not apply if it is shown that the form ofapplication was issued either i. in connection with a bona fide invitation to a person to enter into anunderwriting agreement with respect to the shares or debentures; or ii. in relation to shares or debentures which were not offered to the public. 6. If any person acts in contravention of the provisions of sub-section (5) heshall be liable to a fine not exceeding two thousand rupees. 7. A director or other person responsible for the prospectus shall not incurany liability by reason of any noncompliance with, or contravention of, any of therequirements of this section, if a. as regards any matter not disclosed, he proves that he had no knowledgethereof; or b. he proves that the non-compliance or contravention arose from an honestmistake of fact on his part; or c. that non-compliance or contravention was in respect of matters which, inthe opinion of the registrar or officer dealing with the case, wereimmaterial, or was otherwise such as ought, in the opinion of thatregistrar or officer, as the case may be, having regard to all thecircumstances of the case, reasonably to be excused: Provided that no director or other person shall incur any liabilityin respect of the failure to include in a prospectus a statement withrespect to the matters specified in clause 18 of Part I of the SecondSchedule, unless it is proved that he had knowledge of the matters notdisclosed. 8. This section shall not apply a. to the issue to existing members or debenture-holders of a company of aprospectus or form of application relating to shares in or debentures ofthe company, whether an applicant for shares or debentures will or willnot have the right to renounce in favor of other persons; or b. to the issue of a prospectus or form of application relating to shares ordebenture which are, or are to be, in all respects uniform with shares ordebentures previously issued and for the time being dealt in or quoted ona stock exchange;but, subject as aforesaid, this section shall apply to a prospectus or aform of application, whether issued on or with reference to the formationof a company or subsequently. 9. Nothing in this section shall limit or diminish any liability which anyperson may incur under the general law or under any other provision of this Ordinance. 4.
SECOND SCHEDULE [See sections 45, 53 and 69] PART I MATTERS TO BE SPECIFIED IN PROSPECTUS AND REPORTS TO BE SETOUT THEREIN SECTION 1 MATTERS TO BE SPECIFIED
(1)Save as provided in clause 31, the contents of the memorandum,with the names, addresses, descriptions and occupations of the signatories to thememorandum and the number of shares subscribed for by them. (2)The number and value of shares, if any, and the nature and extent of theinterest of the holders in the property and profits of the company. 2. Description of business to be undertaken and its prospects. 3. Any provision in the articles as to remuneration of the directors, whetherfor their services to the company as directors or chief executive or otherwise. 4. (1)The names, addresses, descriptions, occupation of a. the directors or proposed directors; b. the chief executive or proposed chief executive, if any; c. the managing agent, or proposed managing agent, if any (wherepermissible); d. the secretary or proposed secretary, if any: Where any such person is already a director, chief executive or other officer ofany other company, the name of such other company and the office held therein. (2)Any provision in the articles or in any contract which has been enteredinto as to the appointment of a chief executive, managing agent, if any, or secretary, theremuneration payable to him or them, and the compensation, if any, payable to him orthem for loss of office. 5. Where shares are offered to the public for subscription, particulars asto a) the minimum amount which, in the opinion of the directors or of thesignatories of the memorandum arrived at after due inquiry, must beraised by the issue of those shares in order to provide the sums, or if anypart thereof is to be defrayed in any other manner, the balance of thesums, required to be 1.
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provided in respect of each of the following headsand distinguishing the amount required under each head: i. the purchase price of any property purchased or to be purchasedwhich is to be defrayed in whole or in part out of the proceeds ofthe issue; ii. any preliminary expenses payable by the company, and anycommission so payable to any person in consideration of hisagreeing to subscribe for, or of his procuring or agreeing toprocure subscriptions for, any shares in the company; iii. the repayment of any moneys borrowed by the company inrespect of any of the foregoing matters; iv. working capital; v. any other expenditure, stating the nature and purpose thereof andthe estimated amount in each case; and b) the amounts to be provided in respect of the matters aforesaid otherwisethan out of the proceeds of the issue and the sources out of which thoseamounts are to be provided. 6. The date and time of the opening and closing of the subscription list. 7. The amount payable on application on each share, and in the case of asecond or subsequent offer of shares, the amount offered for subscription on eachprevious allotment made within the two preceding years, the amount actually allotted,and the amount, if any, paid on the shares so allotted. 8. The substance of any contract or arrangement, or proposed contract orarrangement, whereby any option or preferential right of any kind has been or is proposedto be given to any person to subscribe for any shares in or debentures of, the company,giving the number, description and amount of any such shares or debentu res andincluding the following particulars of the option or right:a. the period during which the option or right is exercisable; b. the price to be paid for shares or debentures subscribed for under theoption or right; c. the consideration, if any, given or to be given for the option or right orfor the right thereto; d. the names, addresses, descriptions and occupations of the persons towhom the option or right or the right thereto has been given or isproposed to be given or, if given to existing shareholders or debentureholders as such, the description and numbers of the relevant shares ordebentures; e. any other material fact or circumstances relevant to the grant of theoption or right. Explanation:-Subscribing for shares or debentures shall, for the purposes ofthis clause, include acquiring them from a person to whom they have been allotted oragreed to be allotted with a view to his offering them for sale. 9. The number, description and amount of shares and debentures whichwithin the two preceding years have been issued, or agreed to be issued, as fully or partlypaid up otherwise than in cash, and in the latter case the extent to which they are so paidup, and in either case the consideration for which those shares or debentures have beenissued or agreed to be issued. 10. The amount paid or payable by way of premium, if any, on each sharewhich has been issued within the two years preceding the date of the prospectus, or is tobe issued, stating the dates or proposed dates of issue and, where some shares have beenor are to be issued at premium and other shares of the same class at a lower premium, orat par or at a discount, the reasons for the differentiation and how any premium receivedhave been or are to be disposed of. 11. Where any issue of shares or debentures is underwritten, the names of theunderwriters, and the opinion of the directors that the resources of the underwriters aresufficient to discharge their obligations. 12. (1) As respects any property to which this clause appliesa. the names, addresses, descriptions and occupation of the vendors; b. the amount paid or payable in cash, shares or debentures to the vendorand, where there is more than one separate vendor, or the company is asub-purchaser, the amount so paid or payable to each vendor, specifyingseparately the amount, if any, paid or payable for goodwill; c. the nature of the title or interest in such property acquired or to beacquired by the company; d. short particulars of every transaction relating to the property completedwithin the two preceding years, in which any vendor of the property tothe company or any person who is, or was at the time of the transaction,promoter or a director or proposed director of the company had anyinterest, direct or indirect, specifying the date of the transaction and thename of such promoter, director or proposed director and stating theamount payable by or to such vendor, promoter, director or proposeddirector in respect of the transaction. (2) The property to which sub-clause (1) applies is property purchased oracquired by the company or proposed to be purchased or acquired, which is to be paid forwholly or partly out of the proceeds of the issue offered for subscription by theprospectus or the purchase or acquisition of which has not been completed at the date ofthe issue of the prospectus, other than property a. the contract for the purchase or acquisition whereof was entered into inthe ordinary course of the company's business, the contract not beingmade in contemplation of the issue nor the issue in
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consequence of thecontract; or b. as respects which the amount of the purchase money is not material. (3) For the purposes of this clause, where any of the vendors is a firm, themembers of the firm shall not be treated as separate vendors. 13. The amount, if any, or the nature and extent of any consideration paidwithin the two preceding years, or payable, as commission to any person (includingcommission so paid or payable to any sub-underwriter, who is a promoter or officer ofthe company) for subscribing or agreeing to subscribe, or procuring or agreeing toprocure subscriptions for any shares in, or debentures of the company; and giving also thefollowing particulars, namely: a. the name, address, description and occupation of each such person; b. particulars of the amounts which each has underwritten or subunderwrittenas aforesaid; c. the rate of the commission payable to each for such underwriting or subunderwriting; d. any other material term or condition of the underwriting or subunderwritingcontract with each such person; and e. when any such person is a company or a firm, the nature of any interest,direct or indirect, in such company or firm of any promoter or officer ofthe company in respect of which the prospectus is issued. 14. (1) Save as provided in clause 31, the amount or estimated amount ofpreliminary expenses and the persons by whom any of the expenses have been paid or arepayable. (2) Save as aforesaid the amount or estimated amount of the expenses of theissue and the persons by whom any of these expenses have been paid or are payable. 15. Any amount or benefit paid or given within the two preceding years, orintended to be paid or given, to any promoter or officer, and the consideration for thepayment or the giving of the benefit. 16. (1) The dates of, parties to, and general nature ofa. every contract appointing or fixing the remuneration of a chief executive,managing agent , if any, or secretary, whenever entered into, that is tosay, whether within, or more than, two years before the date of theprospectus; b. every other material contract, not being a contract entered into in theordinary course of the business carried on by the company or a contractentered into more than two years before the date of the prospectus. (2) A reasonable time and place at which any such contract or a copy thereofmay be inspected. 17. The names and addresses of the auditors and legal advisers, if any, of thecompany. 18. (1) Full particulars of the nature and extent of the interest, if any, of every director or promoter a. in the promotion of the company; or b. in any property acquired by the company within two years of the date ofthe prospectus or proposed to be acquired by it. (2) Where the interest of such a director or promoter consists in being amember of a firm or company, the natureand extent of the interest of the firm orcompany, with a statement of all sums paid or agreed to be paid to him or to the firm orcompany in cash or shares or otherwise by any person either to induce him to become, orto qualify himas, a director, or otherwise for services rendered by him or by the firm or company in connection with the promotion or formation of the company. 19. The right of voting at meetings of the company conferred by, and therights in respect of capital and dividends attached to, shares. 20. Where the articles of the company impose any restrictions upon themembers of the company in respect of right to attend, speak or vote at meetings of thecompany or of the right to transfer shares, or upon the directors of the company in respectof their powers of management, the nature and extent of those restrictions. 21. (1) In case of a company which has been carrying on business, the lengthof time during which the business of the company has been carried on. (2) If the company proposes to acquire a business which has been carried onfor less than three years, the length of time during which the business has been carried on. 22. (1) If any reserves or profits of the company or any of its subsidiarieshave been capitalized, particulars of the capitalization. (2) Particulars of the surplus arising from any revaluation of the assets of thecompany or any of its subsidiaries done before the date of the prospectus and the mannerin which such surplus has been applied, adjusted or treated. 23. A reasonable time and place at which copies of all balance sheets andprofit and loss accounts, if any, on which the report of the auditors under section 2 ofthis Part is based, may be inspected. 24. The principal purposes for which the net proceeds of the issue areintended to be used and approximate amount intended to be used for each such purpose. 25. If any of the shares are to be issued otherwise than for cash, the generalpurpose of the distribution, the basis upon which these shares are to be offered, theamount of compensation and by whom they are to be borne.
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26. A summary in columnar form of the earnings of the company or thecompany and its subsidiaries consolidated or otherwise, as appropriate, for each of thelast three financial years of the company. 27. Pending legal proceedings, other than ordinary routine litigationincidental to the business, to which the company or any of its subsidiary is a party.
SECTION 2 REPORTS TO BE SET OUT

28. (1)A report by the auditors of the company with respect to a. profits and losses and assets and liabilities, in accordance withsub-clause (2) or (3) of this clause, as the case may require; and b. the rates of the dividends, if any, paid by the company, in respectof each class of shares in the company for each of the fivefinancial years immediately preceding the issue of theprospectus, giving particulars of each class of shares on whichsuch dividends have been paid and particulars of the cases inwhich no dividends have been paid in respect of any class ofshares for any of those years;and, if no accounts have been made up in respect of any part of the period of five yearsending on a date three months before the issue of the prospectus, containing a statementof that fact. (2) If the company has no subsidiaries, the report shall a. so far as regards profits and losses, deal with the profits or lossesof the company (distinguishing items of a non-recurring nature)for each of the five financial years immediately preceding theissue of the prospectus; and b. so far as regards assets and liabilities, deal with the assets andliabilities of the comp any at the last date to which the accountsof the company were made up. (3) If the company has subsidiaries, the report shall a. so far as regards profits and losses, deal separately with thecompany's profits or losses as provided by sub-clause (2) and inaddition, deal either i. as a whole with the combined profits or losses of itssubsidiaries, so far as they concern members of thecompany; or ii. individually with the profits or losses of each subsidiary,so far as they concern members of the company;or, instead of dealing separately with the company's profits orlosses, deal as a whole with the profits or losses of the company,and so far as they concern members of the company, with thecombined profits or losses of its subsidiaries; and b. so far as regards assets and liabilities, deal separately with thecompany's assets and liabilities as provided by sub -clause (2)and in addition, deal eitheri. as a whole with the combined assets and liabilities of itssubsidiaries, with or without the company's assets andliabilities; or ii. individually with the assets and liabilities of eachsubsidiary;and shall indicate as respects the assets and liabilities of thesubsidiaries, the allowances to be made for persons other thanmembers of the company. 29. If any shares have been or are to be issued or the proceeds, or any part ofthe proceeds, of the issue of the shares or debentures are or is to be applied directly or indirectly i. in the purchase of any business; or ii. in the purchase of an interest in any business; and by reason of thatpurchase or anything to be done in consequence thereof, or inconnection therewith, the company will become entitled to an interest, asrespects either the capital or profits and losses or both, in such businessexceeding fifty per cent thereof; a report made by auditors (who shall be named in the prospectus) upon a. the profits or losses of the business for each of the five financial yearsimmediately preceding the issue of the prospectus; and b. the assets and liabilities of the business at the last date to which theaccounts of the business were made up, being a date not more than onehundred and twenty days before the date of the issue of the prospectus. 30. (1)If a. the proceeds, or any part of the proceeds, of the issue of the shares ordebentures are or is to be applied directly or indirectly in any mannerresulting in the acquisition by the company of shares in any other bodycorporate; and b. by reason of that acquisition or anything to be done in consequencethereof or in connection therewith, that body corporate will become asubsidiary of the company; a report made by auditors (who shall be named in the prospectus) upon i. the profits or losses of the other body corporate for each of the fivefinancial years immediately preceding the issue of the prospectus; and ii. the assets and liabilities of the other body corporate at the last date towhich its accounts were made
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up. (2) The said report shall a. indicate how the profits or losses of the other body corporate dealt withby the report would, in respect of the shares to be acquired, haveconcerned members of the company and what allowance would havefallen to be made, in relation to assets and liabilities so dealt with, forholders of other shares, if the company had at all material times held theshares to be acquired; and b. where the other body corporate has subsidiaries, deal with the profits orlosses and the assets and liabilities of the body corporate and itssubsidiaries in the manner provided by sub-clause (3) of clause 28 inrelation to the company and its subsidiaries. 30A. The Chief Executive and the Chief Financial Officer of the companyshall certify that the prospectus constitutes a full, true and plaindisclosure of all material facts relating to the securities offered by theprospectus.
SECTION 3 PROVISIONS APPLYING TO SECTIONS 1 AND 2 OF THIS PART

31. Clause 1 (so far as it relates to particulars of the signatories of thememorandum and the shares subscribed for by them) and clause 14 (so far as it relates topreliminary expenses) of this Schedule shall not apply in the case of a prospectus issuedmore than two years after the date at which the company is entitled to commencebusiness. 32. Every person shall, for the purposes of this Part, be deemed to be avendor who has entered into any contract, absolute or conditional, for the sale orpurchase, or for any option of purchase, of any property to be acquired by the company, in any case where a. the purchase money is not fully paid at the date of the issue of theprospectus; b. the purchase money is to be paid or satisfied, wholly or in part, out of theproceeds of the issue offered for subscription by the prospectus; or c. the contract depends for its validity or fulfillment on the result of thatissue. 33. Where any property to be acquired by the company is to be taken onlease, this Part shall have effect as if vendor included the lessor, purchase money included the consideration for the lease, and sub-purchaser included a sub-lessee. 34. If, in the case of a company which has been carrying on business, or of abusiness which has been carried on for less than five financial years, the accounts of thecompany or business have only been made up in respect of four such years, three suchyears, two such years or one such year, Section 2 of this Part shall have effect as ifreference to four financial years, three financial years, two financial years or onefinancial year, as the case may be, were substituted for references to five financial years. 35. Where the five financial years immediately preceding the issue of theprospectus which are referred to in Section 2 of this Part or in this Section cover a periodof less than five years, references to the said five financial years in either Section shallhave effect as if references to a number of financial years the aggregate period coveredby which is not less than five years immediately preceding the issue of the prospectuswere substituted for references to the five financial years aforesaid. 36. Any report required by Section 2 of this Part shall eithera. indicate by way of note any adjustments as respects the figures of anyprofits or losses or assets and liabilities dealt with by the report whichappears to the persons making the report necessary ; or b. make those adjustments and indicate that adjustments have been made. 37. Any report by auditors required by Section 2 of this Part a. shall be made by auditors qualified under the Ordinance for appointmentas auditors of the company; and b. shall not be made by any auditor who is an officer or servant, or a partneror in the employment of an officer or servant, of the company or of thecompany s subsidiary or holding company or of a subsidiary of thecompany s holding company. For the purposes of this clause, officer shall include a proposed director but notan auditor.
PART II FORM OF STATEMENT IN LIEU OF PROSPECTUS TO BE DELIVERED TO REGISTRAR BY A COMPANY WHICH DOES NOT ISSUE A PROSPECTUS OR WHICH DOES NOT GO TO ALLOTMENT ON A PROSPECTUS ISSUED, AND REPORTS TO BE SET OUT THEREIN SECTION 1 FORM OF STATEMENT AND PARTICULARS TO BECONTAINED THEREIN D-9 Company Law Page 21

(Pursuant to section 69 of the Companies Ordinance, 1984)
Name of the company Delivered for registration by The nominal share capital of the company Divided into shares of Description of business to be undertaken and itsprospects Names, addresses, descriptions and occupations of a. directors or proposed directors; b. chief executive or proposed chief executive; c. managing agent, if any, or, proposedmanaging agent, if any; d. secretary or proposed secretary Any provision in the articles of the company or inany contract irrespective of the time when it wasentered into, as to the appointment of andremuneration payable to the persons referred to in(a), (b), (c) and (d) above. The right of voting at meetings of the companyconferred by, and the rights in respect of capital anddividends attached to, the several classes of shares. Number and amount of shares and debenturesagreed to be issued as fully or partly paid-upotherwise than in cash.
Rs...................... Rs .each
The consideration for the intended issue of thoseshares and debentures. Number, description and amount of any shares ordebentures which any person has or is entitled to begiven an option to subscribe for, or to acquire from,a person to whom they have been allotted or agreedto be allotted with a view to his offering them forsale. Period during which the option is exercisable. Price to be paid for shares or debentures subscribedfor or acquired under option. Consideration for the option or the right to option. Persons to whom the option or the right to optionwas given or, if given to existing shareholders ordebenture holders as such the relevant shares ordebentures. Names, occupations and addresses of vendors ofproperty purchased or acquired, or proposed to bepurchased or acquired by the company except wherethe contract for its purchase or acquisition wasentered into in the ordinary course of the businessintended to be carried on by the company or theamount of the purchase money is not material. Amount (in cash, shares or debentures) payable toeach separate vendor. Amount (if any) paid or payable ( in cash, shares, ordebentures) for each such property, specifyingamount (if any ) paid or payable for goodwill.
1. ..Shares of Rs .. fullypaid. 2. ..Shares upon which Rs .per share credited as paid. 3. .Debentures of Rs . 4. Consideration 1. .Shares of Rs . and debentures of Rs . 2. Until 3. Rs.................. 4. Consideration: 5. Names and addresses
Rs. Total purchase price Rs. Cash Rs. Shares Rs. Debentures Rs. Good-will Rs.
Short particulars of every transaction relating toeach such property which was completed within thetwo preceding years and in which any vendor to thecompany or any person who is, or was at the timethereof, a promoter, director or proposed director ofthe company had any interest, direct or indirect. Amount (if any) paid or payable as commission forsubscribing or agreeing to subscribe Amount paid .. or procuringor agreeing to procure subscriptions for anyshares or debentures in the Amount payable .. company; or Rate of the commission Rate per cent The number of shares, if any, which persons haveagreed to subscribe for a commission. Shares If it is proposed to acquire any business, the amount,as certified by the persons by whom the accounts ofthe business have been audited, of the net profits ofthe business in respect of -each of the five yearsimmediately preceding the date of this statement,provided that in the case of a business which hasbeen carried on for less than five years and theaccounts of which have only been made-up inrespect of four years, three years, two years or oneyear, the above requirements shal have effect as l ifreferences to four years, three years, two years orone year, as the case may be, were
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substituted forreference to five years, and in any such case thestatement shall say how long the business to beacquired has been carried on. Where the financial year with respect to which theaccounts of the business have been made-up isgreater or less than a year, reference to five years,four years, three years, two years and one year inthis paragraph shall have effect as if references tosuch number of financial years as in the aggregate,cover a period of not less than five years, four years,three years, two years or one year, as the case maybe, were substituted for reference to three years, twoyears and one year respectively. Estimated amount of preliminary expenses By whom those expenses have been paid or arepayable. Amount paid or intended to be paid to any promoter. Consideration for the payment Any other benefit given or intended to be given toany promoter.
Consideration for the benefit Dates of, parties to, and general nature of (a) Contract appointing or fixing the remunerationof directors, chief executive, managing agent, ifany, or secretary; and (b) every other material contract (other than (i)contracts entered into in the ordinary course ofthe business intended to be carried on by thecompany or (ii) entered into more than twoyear before the delivery of this statement). Time and place at which-(1) the contracts or copiesthereof or (2) (i) in the case of a contract not reducedinto writing, a memorandum giving full particularsthereof, and (ii) in the case of a contract wholly orpartly in a language other than English or Urdu, acopy of a translation thereof in English or Urdu, orembodying a translation in English or Urdu of theparts in the other language, as the case may be,being a translation certified in the prescribed mannerto be a correct translation, may be inspected.Names and addresses of the auditors and legaladvisers of the company (if any). Full particulars of the nature and extent of theinterest of every director, chief executive, managingagent, if any, or secretary in the promotion of or inthe property proposed to be acquired, by thecompany, or where the interest of such a directorconsists in being a partner in a firm, the nature andextent of the interest of the firm, with a statement ofall sums paid or agreed to be paid to him or to thefirm in cash or shares, or otherwise, by any personeither to induce him to become, or otherwise forservices rendered by him or by the firm inconnection with the promotion or formation of thecompany. Amount of minimum subscription and otherinformation as required under sub-clauses (a) and(b) of clause 5 of Part I. (Signatures of the persons above named as directors or proposed directors or of their agents authorized in writing). Date :
Rs......................... Name of promoter. Amount Rs Consideration: Name of promoter Nature and value of benefit. Consideration:
______________________ ______________________
SECTION 2
REPORTS TO BE SET OUT 1. Where it is proposed to acquire a business, a report made by auditors(who shall be named in the statement) upon a. the profits or losses of the business in respect of each of the five financialyears immediately preceding the delivery of the statement to theregistrar; and b. the assets and liabilities of the business as at the last date to which theaccounts of the business were made up. 2. (1) Where it is proposed to acquire shares in a body corporate which byreason of the acquisition or anything to
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be done in consequence thereof or in connectiontherewith will become a subsidiary of the company, a report made by auditors (who shallbe named in the statement) with respect to the profits and losses and assets and liabilitiesof the other body corporate in accordance with sub-clause (2) or (3) of this clause, as thecase may require, indicating how the profits or losses of the other body corporate dealtwith by the report would, in respect of the shares to be acquired, have concernedmembers of the company, and what allowance would have fallen to be made, in relationto assets and liabilities so dealt with, for holders of other shares, if the company had at allmaterial times held the shares to be acquired. (2) If the other body corporate has no subsidiaries, the report referred to insub-clause (1) shalla. so far as regards profits and losses, deal with the profits or losses of thebody corporate in respect of each of the five financial years immediatelypreceding the delivery of the statement to the registrar; and b. so far as regards assets and liabilities, deal with the assets and liabilitiesof the body corporate as at the last date to which the accounts of the bodycorporate were made up. (3) If the other body corporate has subsidiaries the report referred to in subclause (1) shall a. so far as regards profits and losses, deal separately with other bodycorporate's profits or losses as provided by sub-clause (2) , and in addition either i. as a whole with the combined profits or losses of its subsidiariesso far as they concern members of the other body corporate ; or ii. individually with the profits or losses of each subsidiary, so faras they concern members of the other body corporate; or insteadof dealing separately with the other body corporate's profits orlosses, deal as a whole with the profits or losses of the otherbody corporate and, so far as they concern members of the otherbody corporate, with the combined profits or losses of itssubsidiaries; and b. so far as regards assets and liabilities deal separately with the other bodycorporate's assets and liabilities as provided by sub-clause (2) and, inaddition, deal eitheri. as a whole with the combined assets and liabilities of itssubsidiaries, with or without the other body corporate's assetsand liabilities; or ii. individually with the assets and liabilities of each subsidiary; andshall indicate, as respects the assets and liabilities of thesubsidiaries, the allowance to be made for persons other thanmembers of the company.

3. (1) In this Part, the expression vendor includes a vendor as defined inSection 3 of Part I. (2) Clause 35 of Part I shall apply to the interpretation of Section 2 of thisPart as it a pplies to the interpretation of Section 2 of Part I. 4. If in the case of a business which has been carried on, or of a bodycorporate which has been carrying on business, for less than five financial years, theaccounts of the business or body corporate have only been made up in respect of foursuch years, three such years, two such years or one such year, Section 2 of this Part shallhave effect as if reference to four financial years, three financial years, two financialyears or one financial year, as the case may be, were substituted for references to fivefinancial years. 5. Any report required by Section 2 of this Part shall either a. indicate by way of note any adjustments as respects the figuresof any profits or losses or assets and liabilities dealt with by thereport which appears to the person making the report necessary;or b. make those adjustments and indicate that adjustments have beenmade. 6. Any report by auditors required by Section 2 of this Part a. shall be made by auditors qualified under the Ordinance forappointment as auditors of a company; and b. shall not be made by any auditor who is an officer or servant, ora partner or in the employment of an officer or servant, of thecompany or of the company's subsidiary or holding company orof a subsidiary of the company's holding company. For the purposes of this clause, officer shall include aproposed director but not an auditor.
PART III FORM OF STATEMENT IN LIEU OF PROSPECTUS TO BEDELIVERED TO REGISTRAR BY A PRIVATE COMPANY ON BECOMING APUBLIC COMPANY AND REPORTS TO BE SET OUT THEREIN. THE COMPANIES ORDINANCE, 1984 SECTION 1 FORM OF STATEMENT AND THE PARTICULARS TO BE CONTAINEDTHEREIN (Pursuant to section 45 of the Companies Ordinance, 1984)
Name of the company
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Delivered for registration by The nominal share capital of the company Rs..................divided into .....shares of Rs ..........each
Names, addresses, descriptions and occupations ofa. directors or proposed directors; b. chief executive or proposed chief executive; c. managing agent, or proposed managing agent,if any; d. secretary or proposed secretary Any provision in the articles of the company, or in anycontract irrespective of the time when it wasentered into, as to the appointment of andremuneration payable to the persons referred toin (a), (b),(c) and (d) above. Number and amount of shares issued. Amount of commission paid or payable in connectiontherewith. Amount of discount, if any, allowed on the issue of anyshares, or so much thereof as has not beenwritten off at the date of the statement. Unless more than two years have elapsed since the dateon which the company was entitled tocommence business Amount of preliminary expenses By whom those expenses have been paid or arepayable. Amount paid or intended to be paid to any promoter Consideration for the payment . Any other benefit given or intended to be given to anypromoter. Consideration for the benefit The right of voting at meetings of the companyconferred by, and the rights in respect of capital and dividends attached to, the severalclasses of shares respectively. Number and amount of shares and debentures issuedwithin the two years preceding the date of thisstatement as fully or partly paid up otherwisethan for cash or agreed to be so issued at thedate of this statement.
.. ..shares Rs Rs. Rs.
..
Rs. Name of promoter Rs. Consideration: Name of promoter: Nature and value ofbenefit: Consideration:
Consideration for the issue of those shares ordebentures. Number, description and amount of any shares ordebentures which any person has or is entitledto be given an option to subscribe for, or toacquire from, a person to whom they have beenallotted or agreed to be allotted with a view tohis offering them for sale. Period during which the option is exercisable. Price to be paid for shares or debentures subscribed foror acquired under the option. Consideration for the option or right to option. Persons to whom the option or the right to option wasgiven or, if given to existing shareholders ordebentures holders as such, the relevant sharesor debentures. Names, addresses, descriptions and occupations ofvendors of property (1) purchased or acquiredby the company within the two years precedingthe date of this statement or (2) agreed orproposed to be purchased or acquired by thecompany, except where the contract for itspurchase or acquisition was entered into in theordinary course of business and there is noconnection between the transaction and thecompany ceasing to be a private company orwhere the amount of the purchase money is notmaterial. Amount (in cash, shares or debentures) paid or payableto each separate vendor. Amount paid or payable in cash, shares or debenturesfor each such property, specifying the amountpaid or payable for goodwill.
1 ........ Shares of Rs .......... fully paid. 2 ....... Shares upon which Rs ....per share creditedas paid. 3 ......... Debentures for Rs ...........each. 4. Consideration: 1 ..... Shares of Rs ... and debentures of Rs .
2. Until. 3. Rs. 4. Consideration: 5. Names and addresses:
Rs. Total purchase price Rs..... Cash Rs...... Shares Rs...... Debentures Rs...... Goodwill Rs......
Short particulars of every transaction relating to eachsuch property which was completed within thetwo preceding years and in which any vendorto the company or
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any person who is, or was atthe time thereof, a promoter, director orproposed director of the company had anyinterest direct or indirect. Amount (if any) paid or payable as commission forsubscribing or agreeing to subscribe or procuring or agreeing to procure subscriptionsfor any shares or debentures in the company; orrate of the commission. The number of shares, if any, which persons haveagreed to subscribe for a commission. If it is proposed to acquire any business, the amount, ascertified by the persons by whom the accountsof the business have been audited, of the netprofits of the business in respect of each of thefive years immediately preceding the date ofthis statement, provided that, in the case of abusiness which has been carried on for lessthan five years, and the accounts of which haveonly been made up in respect of four years,three years, two years, or one year, the aboverequirements shall have effect as if referencesto four years; three years, two years or oneyear, as the case may be, were substituted forreference to five years and in any such case,the statement shall say how long the businessto be acquired has been carried on. Where the financial year with respect to which theaccounts of the business have been made up isgreater or less than a year, references to fiveyears, four years, three years, two years andone year in this paragraph shall have effect asif references to such number of financial years,as, in the aggregate, cover a period of not lessthan five years, four years, three years, twoyears or one year, as the case may be, weresubstituted for references to three years, twoyears and one year respectively. Dates of, parties to, and general nature of (a) contract appointing or fixing the remunerationof directors, chief executive, managing agentor secretary; and (b) every other material contract (other than (i)contracts entered into in the ordinary course ofthe business intended to be carried on by thecompany or (ii) entered into more than twoyears before the delivery of this statement. ) Time and place at which (1) the, contracts or copiesthereof; (2) (i) in the case of a contract notreduced into writing a memorandum giving fullparticulars thereof, and (ii) in the case of acontract wholly or partly in a language otherthan English or Urdu a copy of translation thereof in English or Urdu or embodying atranslation in English or Urdu of the parts inthe other language, as the case may be, being atranslation certified in the prescribed manner tobe a correct translation, may be inspected. Names and addresses of the auditors and legal advisersof the company. Full particulars of the nature and extent of the interestof every director, chief executive, managingagent or secretary, in any property purchasedor acquired by the company within the twoyears preceding the date of this statement orproposed to be purchased or acquired by thecompany or, where the interest of such adirector consists in being a partner in a firm,the nature and extent of the interest of the firm,with a statement of all sums paid or agreed tobe paid to him or to the firm in cash or shares,or otherwise, by any person either to inducehim to become, or to qualify him as, a director,or otherwise for services rendered or to berendered to the company by him or by the firm. Rate of the dividends (if any) paid by the company inrespect of each class of shares in the companyin each of the five financial years immediately,preceding the date of this statement or since theincorporation of the company, whicheverperiod is shorter. Particulars of the cases in which no dividends havebeen paid in respect of any class of shares inany of these years. (Signatures of the persons above named as directors orproposed directors or of their agents authorized inwriting). Date:
Amount paid Amount payable . Rate per cent . .........shares
_______________________ _______________________
SECTION 2 REPORTS TO BE SET OUT

1. If unissued shares or debentures of the company are to be applied in thepurchase of a business, a report made by auditors (who shall be named in the statement) upon a. the profits or losses of the business in respect of each of the fivefinancial years immediately preceding
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the delivery of the statement to theregistrar; and the assets and liabilities of the business as at the last date to which theaccounts of the business were made up. 2. (1) If unissued shares or debentures of the company are to be applieddirectly or indirectly in any manner resulting in the acquisition of shares in a bodycorporate which by reason of the acquisition or anything to be done in consequencethereof or in connection therewith will become a subsidiary of the company, a reportmade by auditors (who shall be named in the statement) with respect to the profits andlosses and assets and liabilities of the other body corporate in accordance with sub-clause(2) or (3) of this clause, as the case may require, indicating how the profits or losses ofthe other body corporate dealt with by the report would, in respect of the shares to beacquired, have concerned members of company, and what allowance would have fallento be made, in relation to assets and liabilities so dealt with, for holders of other shares, ifthe company had at all material times held the shares to be required. (2) If the other body corporate has no subsidiaries, the report referred to in sub-clause (1) shall a. so far as regards profits and losses, deal with the profits or losses of thebody corporate in respect of each of the five financial years immediatelypreceding the delivery of the statement to the registrar; and b. so far as regards assets and liabilities, deal with the assets and liabilitiesof the body corporate as at the last date to which the accounts of the bodycorporate were made up. (3) If the other body corporate has subsidiaries, the report referred to in subclause (1) shall a. so far as regards profits and losses, deal separately with the other bodycorporate's profits or losses as provided by sub-clause (2), and in addition deal either i. as a whole with the combined profits or losses of its subsidiaries, so far as they concern members of the other body corporate; or ii. individually with the profits or losses of each subsidiary, so faras they concern members of the other body corporate;or, instead of dealing separately with the other body corporate's profits orlosses, deal as a whole with the profits or losses of the other bodycorporate, and, so far as they concern members of the other bodycorporate, with the combined profits or losses of its subsidiaries; and b. so far as regards assets and liabilities, deal separately with the other bodycorporate's assets and liabilities as provided by sub-clause (2) and in addition, deal either i. as a whole with the combined assets and liabilities of itssubsidiaries, with or without the other body corporate's assetsand liabilities; or ii. individually with the assets and liabilities of each subsidiary; andshall indicate, as respects the assets and liabilities of thesubsidiaries, the allowance to be made for persons other thanmembers of the company. b.

3. (1) In this Part, the expression vendor includes a vendor as defined inSection 3 of Part I. (2) Clause 35 of Part I shall apply to the interpretation of Sections 1 and 2 ofthis Part as it applies to the interpretationof Part I. 4. If in the case of a business which has been carried on, or of a bodycorporate which has been carrying on business, for less than five financial years, theaccounts of the business or body corporate have only been made up in respect of foursuch years, three such years, two such years or one such year, Sections 1 and 2 of thisPart shall have effect as if references to four financial years, three financial years, twofinancial years or one financial year, as the case may be, were substituted for referencesto five financial years. 5. Any report required by Section 2 of this Part shall either a. indicate by way of note any adjustments as respects the figuresof any profits or losses or assets and liabilities dealt with by thereport which appear to the persons making the report necessary; b. make those adjustments and indicate that adjustments have beenmade. 6. Any report by auditors required by Section 2 of this Part shall a. be made by auditors qualified under the Ordinance forappointment as auditors of a company ; and b. shall not be made by any auditor who is an officer or servant or apartner or in the employment of an officer or servant, of thecompany, or of the company's subsidiary or holding company orof a subsidiary of the company's holding company.For the purposes of this clause, officer shall include a proposeddirector but not an auditor.
54. EXPERT TO BE UNCONNECTED WITH FORMATION OR MANAGEMENT OF COMPANY :

A prospectus inviting persons to subscribe for shares in or debentures of acompany shall not include a statement purporting to be made by an expert, unless theexpert is a person who is not, and has not been, engaged or interested in the formation orpromotion, or in the management, of the company. 55. EXPERT'S CONSENT TO ISSUE OF PROSPECTUS CONTAINING STATEMENT BY HIM:
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A prospectus inviting persons to subscribe for shares in or debentures of a company andincluding a statement purporting to be made by an expert shall not be issued, unless a. he has given his written consent to the issue thereof with the statementincluded in the form and context in which it is included, and has notwithdrawn such consent before the delivery of a copy of the prospectusfor registration; and b. a statement that he has given and has not withdrawn his consent asaforesaid appears in the prospectus. 56. PENALTY AND INTERPRETATION: 1. If any prospectus is issued incontravention of section 54 or 55, the company, and every person who is knowingly aparty to the issue thereof, shall be punishable with fine not exceeding five thousandrupees. 2. In sections 54 and 55, the expression "expert" includes an engineer, avaluer, an accountant and every other person whose profession gives authority to astatement made by him. 57. APPROVAL, ISSUE AND REGISTRATION OF PROSPECTUS: 1. No listedcompany, and no company which proposes to make an application to a stock exchangefor listing of its securities and no other person, shall issue, circulate or publish anyprospectus or other document offering for subscription or publicly offering for sale anysecurity unless approval of the Commission to its issue, circulation or publication hasbeen obtained within the period of sixty days preceding the date of its issue. 2. The Commission may, while according approval under sub-section (1),impose such condition as it may deem necessary. 3. No prospectus shall be issued by or on behalf of a company unless, on orbefore the date of its publication, there has been delivered to the registrar a copy thereofsigned by every person who is named therein as a director or proposed director of thecompany or by his agent authorized in writing, and having endorsed thereon or attached thereto a. any consent to the issue of the prospectus required by section 55 fromany person as an expert; and b. in the case of a prospectus issued generally, also i. a copy of every contract required by clause 16 of Part I of theSecond Schedule to be specified in the prospectus, or, in the caseof a contract not reduced into writing, a memorandum giving fullparticulars thereof; and ii. where the persons making any report required by Part II of thatSchedule have made therein, or have without giving the reasons,indicated therein, any such adjustments as are mentioned inclause 36 of Part I of that Schedule, a written statement signedby those persons setting out the adjustments and giving thereasons therefor. 4. Every prospectus to which this section applies shall, on the face of it, a) state that a copy has been delivered to the registrar as required by subsection(3); b) specify any documents required by this section to be endorsed on orattached to the copy so delivered, or refer to statements included in theprospectus which specify those documents; and c) where application has been made, or is proposed to be made, to a stockexchange for the listing of the security, state that such an application hasbeen made or is proposed to be made. 5. The registrar shall not register a prospectus unless the requirements ofsections 52, 53, 54 and 55 and this section have been complied with and the prospectus isaccompanied by the consent in writing of the person, if any, named therein as the auditor,legal adviser, attorney, solicitor, banker or broker, being a member of a stock exchange,of the company, to act in that capacity. 6. If a prospectus is issued, published or circulated without complying with,or in contravention of any provision of this section, the company, and every person whois knowingly a party to the issue, publication or circulation of the prospectus, shall beliable to a fine not exceeding ten thousand rupees and in the case of a continuing defaultto a further fine not exceeding two hundred rupees for every day from the date of issue,publication or circulation, as the case may be, of the prospectus, until a copy thereofcomplying with all the requirements of this section has been delivered to the registrar. THE COMPANIES (GENERAL PROVISIONS AND FORMS) RULES, 1985 RULE 11 SUBMISSION OF PROSPECTUS FOR APPROVAL OF THE COMMISSION UNDER SECTION 57 An application for approval of a prospectus of a listed company or of a company which proposes to make an application to a stock exchange for the listing of its securities, s ubmitted to the Commission under sub-section (1) of section 57, shall be accompanied by three copies of the prospectus along with such certificates or other documents as are required to be appended thereto, and an affidavit affirming, among other things, that all the information in the prospectus and all other documents filed in connection with it is true and correct.
58. TERMS OF CONTRACT MENTIONED IN PROSPECTUS OR STATEMENT IN LIEU OF PROSPECTUS NOT TO BE

VARIED:
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A company shall not, at any time, vary the terms ofcontract referred to in the prospectus or a statement in lieu of prospectus except subject tothe approval of, or except on authority given by, the company in general meeting. 59. CIVIL LIABILITY FOR MIS-STATEMENTS IN PROSPECTUS: 1) Subject to theprovisions of this section, where a prospectus invites persons to subscribe for shares in ordebentures of a company, the following persons shall be liable to pay compensation toevery person who subscribes for or purchases any share or debentures on the faith of theprospectus for any loss or damage he may have sustained by reason of any untruestatement included therein, namely, a. every person who is a director of the company at the time of the issue ofthe prospectus; b. every person who has authorized himself to be named and is named inthe prospectus either as a director, or as having agreed to become adirector, either immediately or after an interval of time; c. every person who is a promoter of the company; and d. every person who has given consent to the issue of the prospectus undersection 55 or sub-section (5) of section 57: Provided that where, under section 55, the consent of a person isrequired to the issue of a prospectus and he has given that consent, orwhere, under sub-section (5) of section 57, the consent of a personnamed in a prospectus is required and he has given that consent, he shallnot, by reason of having given such consent, be liable under this subsectionas a person who has authorized the issue of the prospectus exceptin respect of an untrue statement, if any, purporting to be made by him asan expert. 2) No person shall be liable under sub-section (1), if he proves a. that, having consented to become a director of the company, he withdrewhis consent before the issue of the prospectus, and that it was issuedwithout his authority or consent; b. that the prospectus was issued without his knowledge or consent, andthat on becoming aware of its issue, he forthwith gave reasonable publicnotice that it was issued without his knowledge or consent; c. that, after the issue of the prospectus and before allotment thereunder, he,on becoming aware of any untrue statement therein, withdrew hisconsent to the prospectus and gave reasonable public notice of thewithdrawal and of the reason therefor; or d. that i. as regards every untrue statement not purporting to be made onthe authority of an expert or of a public official document orstatement, he had reasonable ground to believe, and did up to thetime of the allotment of the shares or debentures, as the case maybe, believe, that the statement was true; and ii. as regards every untrue statement purporting to be a statement byan expert or contained in what purports to be a copy of or anextract from a report or valuation of an expert, it was a correctand fair representation of the statement, or a correct copy of, or acorrect and fair extract from, the report or valuation; and he hadreasonable ground to believe, and did up to the time of the issueof the prospectus believe, that the person making the statementwas competent to make it and that that person had given theconsent required by section 55 to the issue of the prospectus andhad not withdrawn that consent before delivery of a copy of theprospectus for registration or, to the defendant's knowledge,before allotment thereunder; and iii. as regard every untrue statement purporting to be a statementmade by an official person or contained in what purports to be acopy of or extract from a public official document, it was acorrect and fair representation of the statement, or a correct copyof, or a correct and fair extract from, the document: Provided that this sub-section shall not apply in the caseof a person liable, by reason of his having given a consentrequired of him by section 55, as a person who has authorizedthe issue of the prospectus in respect of an untrue statementpurporting to be made by him as an expert. 3) A person who, apart from this sub-section would, under sub-section (1)be liable by reason of his having given a consent required of him by section 55, as aperson who has authorized the issue of the prospectus in respect of an untrue statementpurporting to be made by him as an expert, shall not be so liable, if he proves a) that, having given his consent under section 55 to the issue of theprospectus, he withdrew it in writing before delivery of a copy of theprospectus for registration; b) that, after delivery of a copy of the prospectus for registration and beforeallotment thereunder, he, on becoming aware of the untrue statement,withdrew his consent in writing and gave reasonable public notice of thewithdrawal and of the reason therefor; or c) that he was competent to make the statement and that he had reasonableground to believe, and did up to the time of the allotment of shares ordebentures believe, that the statement was true. 4) Where
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the prospectus specifies the name of a person as a director of thecompany, or as having agreed to become a director thereof, and he hasnot consented to become a director, or has withdrawn his consent beforethe issue of the prospectus, and has not authorized or consented to theissue thereof; or b) the consent of a person is required under section 55 to the issue of theprospectus and he either has not given that consent or has withdrawn itbefore the issue of the prospectus;the directors of the company, excluding those without whose knowledge or consent theprospectus was issued, and every other person who authorized the issue thereof, shall beliable to indemnify the person referred to in clause (a) or clause (b), as the case may be,against all damages, costs and expenses to which he may be made liable by reason of hisname having been inserted in the prospectus or of the inclusion therein of a statementpurporting to be made by him as an expert, as the case may be, or in defending himselfagainst any suit or legal proceeding brought against him in respect thereof: Provided that a person shall not be deemed for the purposes of this sub-section tohave authorized the issue of a prospectus by reason only of his having given the consentrequired by section 55 to the inclusion therein of a statement purporting to be made byhim as an expert. 5) Every person who becomes liable to make any payment by virtue of thissection may recover contribution, as in cases of contract, from any other person who, ifsued separately, would have been liable to make the same payment, unless the formerperson was, and the latter person was not, guilty of fraudulent misrepresentation. 6) For the purposes of this section a) the expression "promoter" means a promoter who was a party to thepreparation of prospectus or a portion thereof containing the untruestatement, but does not include any person by reason of his acting in aprofessional capacity for persons engaged in procuring the formation ofthe company; and b) the expression "expert" has the same meaning as in section 55. 60. CRIMINAL LIABILITY FOR MIS-STATEMENTS IN PROSPECTUS: 1) Where aprospectus includes any untrue statement, every person who signed or authorized theissue of the prospectus shall be punishable with imprisonment for a term which mayextend to two years, or with fine which may extend to ten thousand rupees, or with both,unless he proves either that the statement was immaterial or that he had reasonableground to believe, and did up to the time of the issue of the prospectus believe, that thestatement was true. 2) A person shall not be deemed for the purposes of this section to haveauthorized the issue of a prospectus by reason only of his having given a. the consent required by section 55 to the inclusion therein of a statementpurporting to be made by him as an expert, or b. the consent required by sub-section (5) of section 57. 61. DOCUMENT CONTAINING OFFER OF SHARES OR DEBENTURES FOR SALE TO BE DEEMED PROSPECTUS 1) Where a company allots or agrees to allot any shares in ordebentures of the company with a view to all or any of those shares or debentures beingoffered for sale to the public, any document by which the offer for sale to the public ismade shall, for all purposes, be deemed to be a prospectus issued by the company; and allenactments and rules of law as to the contents, filing and registration of a prospectus andas to liability in respect of statements in and omissions from a prospectus, or otherwiserelating to a prospectus, shall apply with the modifications, specified in sub-sections (3),(4) and (5), and have effect accordingly, as if the shares or debentures had been offered tothe public for subscription and as if persons accepting the offer in respect of any shares ordebentures, were subscribers for those shares or debentures, but without prejudice to theliability, if any, of the person by whom the offer is made in respect of mis-statementcontained in the document or otherwise in respect thereof. 2) For the purposes of this Ordinance, it shall, unless the contrary is proved,be evidence that an allotment of, or an agreement to allot, shares or debentures was madewith a view to the shares or debentures being offered for sale to the public if it is shown a) that an offer of the shares or debentures or of any of them for sale to thepublic was made within one year after the allotment or agreement toallot; b) that at the date when the offer was made; the whole of the considerationto be received by the company in respect of the shares or debentures hadnot been received by it; or c) that an offer of the shares or debentures or of any of them for sale to thepublic was made in pursuance of an understanding to which the companywas directly or indirectly a party or a condition imposed by any authorityin relation to the position, business or privileges of the company. 3) For the purposes of this section, section 53 shall have effect as if itrequired a prospectus to state, in addition to the matters required by that section to bestated in a prospectus, a) the net amount of the consideration received or to be received by thecompany in respect of the shares or debentures to which the offer relates;and a)
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the place and time at which the contract under which the said shares ordebentures have been or are to be allotted may be inspected. 4) For the purposes of this section, section 57 shall have effect as if thepersons making the offer were persons named in a prospectus as directors of a company. 5) Where a person making an offer to which this section relates is acompany or a firm, it shall be sufficient if the document referred to in sub-section (1) issigned on behalf of the company or firm by two directors of the company or by not lessthan one-half of the partners in the firm, as the case may be; and any such director orpartner may sign by his agent authorized in writing. 62. OFFER OF SHARES OR DEBENTURES FOR SALE BY CERTAIN PERSONS: 1) Noperson who holds more than ten per cent of the shares or debentures of a company shalloffer for sale to the public any share or debenture of the company held by him exceptwith the approval of the Commission. 2) Any document by which an offer for sale to the public is made by anysuch person as is referred to in subsection (1) shall, for all purposes, be deemed to be aprospectus issued by a company, and all enactments and rules of law as to the contents,filing and registration of a prospectus and as to the liability in respect of statements in andomissions from a prospectus, or otherwise relating to a prospectus, shall apply with themodifications specified in sub-sections (3) and (4), and have effect accordingly, butwithout prejudice to the liability, if any, o f the persons by whom the offer is made inrespect of mis-statements contained in the document or otherwise in respect thereof. 3) For the purposes of this section, section 57 shall have effect as if theperson making the offer were a person named in a prospectus as director of a company. 4) Where a person making an offer to which this section relates is acompany or a firm, it shall be sufficient if the document referred to in sub-section (2) issigned on behalf of the company or firm by two directors of the company or not less thanone-half of the partners in the firm, as the case may be; and any such director or partnermay sign by his agent authorized in writing. 5) A notice, circular, advertisement or other document soliciting bids,offers, proposals or tenders for sale of shares or other securities acquired in the course ofnormal business or for negotiating sale thereof or expressing an intention to disinvestsuch shares or other securities issued by a scheduled bank or a financial institution shallnot be deemed to be a prospectus or an offer for sale to the public for the purposes of sections 61 and 62. 62A. ISSUE OF SECURITIES OUTSIDE PAKISTAN: No company shall, except withthe prior approval of the Commission, issue any security outside Pakistan. 63. INTERPRETATION OF PROVISIONS RELATING TO PROSPECTUS: 1) For thepurposes of the foregoing provisions relating to a prospectus, a. a statement included in a prospectus shall be deemed to be untrue, if thestatement is misleading in the form and context in which it is included;and b. where the omission from a prospectus of any matter is calculated tomislead, the prospectus shall be deemed, in respect of such omission, tobe a prospectus in which an untrue statement is included. 2) For the purposes of sections 59 and 60 and clause (a) of sub-section (1)of this section, the expression "included", when used in reference to a prospectus, meansincluded in the prospectus itself or contained in any report or memorandum appearing onthe face thereof or by reference incorporated therein or issued herewith. 64. NEWSPAPER ADVERTISEMENT OF PROSPECTUS: Where any prospectus ispublished as a newspaper advertisement, it shall not be necessary in the advertisement tocomply with the requirements of sub-clause (1) of clause 1 of section 1 of Part I of theSecond Schedule in so far as the said provisions require the contents of the memorandumor the signatories thereto, or the number of shares subscribed for by them, to be specified. 65. CONSTRUCTION OF REFERENCES TO OFFERING SHARES OR DEBENTURES TO THE PUBLIC, ETC: 1) Any reference in this Ordinance or in the articles of a company tooffering of shares or debentures to the public, or to invitation to the public to subscribefor shares or debentures, shall, unless otherwise expressly provided in this Ordinance,include a reference to offering of shares or debentures to any section of the public or toinvitation to any section of public to subscribe for shares or debentures, as the case maybe. Explanation: The term "section of the public" includes existing members ordebenture-holders of the company or clients of the persons issuing the prospectus. 2) No offer or invitation shall be treated as made to the public by virtue ofsub-section (1) if the offer or invitation can properly be regarded, in all the circumstances a. as not being calculated to result, directly or indirectly, in the shares ordebentures becoming available for subscription or purchase by personsother than those receiving the offer or invitation; or b. otherwise as being a domestic concern of the persons making andreceiving the offer or invitation. 3) Without prejudice to the generality of sub-section (2), a provision in acompany's articles prohibiting invitations to the public to subscribe for shares ordebentures shall not be taken as prohibiting the making to members or debenture-holdersof an invitation which can properly be regarded in the manner set forth in that subsection. b)
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4) The provisions of this Ordinance relating to private companies shall beconstrued in accordance with the provisions contained in sub-sections (1) to (3). 66. PENALTY FOR FRAUDULENTLY INDUCING PERSONS TO INVEST MONEY: Anyperson who, either by knowingly or recklessly making any statement, promise or forecastwhich is false, deceptive or misleading, or by any dishonest concealment of materialfacts, induces or attempts to induce another person to enter into, or to offer to enter into, a) any agreement for, or with a view to, acquiring, disposing of, subscribingfor, or underwriting shares or debentures; or b) any agreement the purpose or pretended purpose of which is to secure aprofit to any of the parties from the yield of shares or debentures, or byreference to fluctuations in the value of shares or debentures;shall be punishable with imprisonment of either description for a term which may extendto three years, or with fine which may extend to twenty thousand rupees, or with both.
ALLOTMENT 67. APPLICATION FOR, AND ALLOTMENT OF, SHARES AND DEBENTURES:
Noapplication for allotment of shares in and debentures of a company in pursuance of aprospectus shall be made for shares or debentures of less than such nominal amount asthe Commission may, form time to time, specify, either generally or in a particular case. 2) The Commission may specify the form of an application for subscriptionto shares in or debentures of a company which may, among other matters, contain suchdeclarations or verifications as it may, in the public interest, deem necessary; and suchform then shall form part of the prospectus. 3) All certificates, statements and declarations made by the applicant shallbe binding on him. 4) An application for shares in or debentures of a company which is madein pursuance of a prospectus shall be irrevocable. 5) Whoever contravenes the provisions of sub-section (1) or sub-section (2),or makes an incorrect statement, declaration or verification in the application forallotment of shares, shall be liable to a fine which may extend to ten thousand rupees. 68. RESTRICTION AS TO ALLOTMENT: 1) No allotment shall be made of anyshare capital of a company offered to the public for subscription unless the amount statedin the prospectus as the minimum amount which in the opinion of the directors must beraised by the issue of share capital in order to provide for the matters specified in clause 5of section 1 of Part I of the Second Schedule has been subscribed, and the full amountthereof has been paid to and received in cash by the company. 2) The amount referred to in sub-section (1) as the amount stated in theprospectus shall be reckoned exclusively of any amount payable otherwise than in cashand is in this Ordinance referred to as the minimum subscription. 3) All moneys received from applicants for shares shall be deposited andkept in a separate bank account in a scheduled bank until returned in accordance with theprovisions of sub-section (5) or until the certificate to commence business is obtainedunder section 146. 4) The amount payable on application on each share shall be the fullnominal amount of the share. 5) If the conditions aforesaid have not been complied with on the expirationof forty days after the first issue of the prospectus, all money received from applicants forshares shall be forthwith repaid to them without surcharge, and, if any such money is notso repaid within fifty days after the issue of the prospectus, the directors of the companyshall be jointly and severally liable to repay that money with surcharge at the rate of oneand a half per cent for every month or part thereof from the expiration of the fiftieth day: Provided that a director shall not be liable if he proves that the default inrepayment of the money was not due to any misconduct or negligence on his part. 6) Any condition purporting to require or bind any applicant for shares towaive compliance with any requirement of this section shall be void. 7) This section, except sub-section (4) thereof, shall not apply to anyallotment of shares subsequent to the first allotment of shares offered to the public forsubscription. 8) In the case of the first allotment of shares capital payable in cash of acompany which does not issue any invitation to the public to subscribe for its shares, noallotment shall be made unless the minimum subscription, that is to say, a) the amount, if any, fixed by the memorandum or articles and specified inthe statement in lieu of prospectus as the minimum subscription referredto in sub-section (1) upon which the directors may proceed to allotment;or b) if no amount is so fixed and specified, the whole amount of the sharecapital other than that issued or agreed to be issued as paid up otherwisethan in cash;has been subscribed and the full nominal amount of each share payable in cash has beenpaid to and received by the company. 1)
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9) Sub-section (8) shall not apply to a private company. 10) In the event of any contravention of any provisions of this section, everypromoter, director or other person knowingly responsible for such contravention shall beliable to a fine not exceeding ten thousand rupees and in the case of a continuingcontravention to a further fine not exceeding two hundred rupees for every day after thefirst during which the contravention continues. 11) For the purpose of this section, the expression "promoter" has the samemeaning as in section 59. 69. STATEMENT IN LIEU OF PROSPECTUS: 1) A company having a share capital,which does not issue a prospectus on or with reference to its formation, or which hasissued such a prospectus but has not proceeded to allot any of the shares offered to thepublic for subscription, shall not allot any of its shares or debentures unless, at least threedays before the first allotment of either share or debenture, there has been delivered to theregistrar for registration a statement in lieu of prospectus signed by every person who isnamed therein as a director or proposed director of the company or by his agentauthorized in writing, in the form and containing the particulars s et out in section 1 ofPart II of the Second Schedule and, in the cases mentioned in section 2 of that Part,setting out the reports specified therein, and the said sections 1 and 2 shall have effectsubject to the provisions contained in section 3 of that Part. 2) Every statement in lieu of prospectus delivered under sub-section (1),where the persons making any such report as aforesaid have made therein, or havewithout giving the reasons indicated therein, made any such adjustments as arementioned in clause 5 of Part II of the Second Schedule, shall have endorsed thereon orattached thereto a written statement signed by those persons, setting out the adjustmentsand giving the reasons thereof. 3) This section shall not apply to a private company. 4) If a company acts in contravention of sub-section (1) or sub-section (2),the company, and every officer of the company who willfully authorizes or permits thecontravention, shall be liable to a fine not exceeding five thousand rupees and in the caseof a continuing contravention with a further fine not exceeding one hundred rupees forevery day after the first during which the contravention continues. 5) Where a statement in lieu of prospectus delivered to the registrar undersub-section (1) includes any untrue statement, any person who signed or authorized thedelivery of the statement in lieu of prospectus for registration shall be punishable withimprisonment for a term which may extend to two years, or with fine which may extendto ten thousand rupees, or with both, unless he proves either that the statement wasimmaterial or that he had reasonable ground to believe, and did up to the time of deliveryfor registration of the statement in lieu of prospectus believe, that the statement was true. 6) For the purposes of this section, a) a statement included in a statement in lieu of prospectus shall be deemedto be untrue if it is misleading in the form and context in which it isincluded; and b) where the omission from a statement in lieu of prospectus of any matteris calculated to mislead, the statement in lieu of prospectus shall bedeemed, in respect of such omission, to be a statement in lieu ofprospectus in which an untrue statement is included. 7) For the purposes of sub-section (5) and clause (a) of sub-section (6), theexpression "included", when used with reference to a statement in lieu of prospectus,means included in the statement in lieu of prospectus itself or contained in any report ormemorandum appearing on the face thereof, or by reference incorporated therein, orissued therewith. 70. EFFECT OF IRREGULAR ALLOTMENT: 1) An allotment made by a company toan applicant in contravention of the provisions of section 68 or 69 shall be voidable at theinstance of the applicant within thirty days after the holding of the statutory meeting ofthe company and not later, or in any case where the company is not required to hold astatutory meeting or where the allotment is made after the holding of the statutorymeeting, within thirty days after the date of the allotment, and not later, and shall be sovoidable notwithstanding that the company is in course of being wound up. 2) If any officer of a company knowingly contravenes or permits orauthorizes the contravention of any of the provisions of section 68 or 69 with respect toallotment, he shall, without prejudice to any other liability, be liable to compensate thecompany and the allottee respectively for any loss, damages or costs which the companyor the allottee may have sustained or incurred thereby: Provided that proceedings to recover any such loss, damages or costs shall not becommenced after the expiration of two years from the date of the allotment. 71. REPAYMENT OF MONEY RECEIVED FOR SHARES NOT ALLOTTED: 1) Where acompany issues any invitation to the public to subscribe for its shares or other securities,the company shall take a decision within ten days of the closure of the subscription listsas to what applications have been accepted or are successful and refund the money in thecase of the unaccepted or unsuccessful applications within ten days of the date of suchdecision.
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If the refund required by sub-section (1) is not made within the timespecified therein, the directors of the company shall be jointly and severally liable torepay that money with surcharge at the rate of one and a half per cent for every month orpart thereof from the expiration of the fifteenth day and, in addition, to a fine notexceeding five thousand rupees and in the case of a continuing offence to a further finenot exceeding one hundred rupees for every day after the said fifteenth day on which thedefault continues: Provided that a director shall not be liable if he proves that the default in makingthe refund was not due to any misconduct or negligence on his part. 3) Any condition purporting to require or bind any applicant for shares orother securities to waive any requirement of this section shall be void. 72. ALLOTMENT OF SHARES AND DEBENTURES TO BE DEALT IN ON STOCK EXCHANGE: 1) Where a prospectus, whether issued generally or not, states thatapplication has been or will be made for permission for the shares or debentures offeredthereby to be dealt in on any stock exchange, any allotment made on an application inpursuance of the prospectus shall, whenever made, be void if the permission has not beenapplied for before the seventh day after the first issue of the prospectus or if thepermission has not been granted before the expiration of twenty-one days from the dateof the closing of the subscription lists or such longer period not exceeding forty-two daysas may, within the said twenty-one days, be notified to the applicant for permission by oron behalf of the stock exchange. 2) Where the permission has not been applied for as aforesaid, or has notbeen granted as aforesaid, the company shall forthwith repay without surcharge allmoney received from applicants in pursuance of the prospectus, and, if any such money isnot repaid within eight days after the company becomes liable to repay it, the directors ofthe company shall be jointly and severally liable to repay that money from the expirationof the eighth day together with surcharge at the rate of one and a half per cent for everymonth or part thereof from the expiration of the eighth day and, in addition, to a fine notexceeding five thousand rupees and in the case of a continuing offence to a further fine ofone hundred rupees for every day after the said eighth day on which the defaultcontinues: Provided that a director shall not be liable if he proves that the default in therepayment of the money was not due to any misconduct or negligence on his part. 3) All moneys received as aforesaid shall be deposited and kept in aseparate bank account in a scheduled bank so long as the company may become liable torepay it under sub-section (2); and, if default is made in complying with this sub-section,the company and every officer of the company who knowingly and willfully authorizes orpermits the default shall be liable to a fine not exceeding five thousand rupees. 4) Any condition purporting to require or bind any applicant for shares ordebentures to waive compliance with any requirement of this section shall be void. 5) For the purposes of this section, permission shall not be deemed to berefused if it is intimated that the application for it, though not at present granted, will begiven further consideration. 6) This section shall have effect a) in relation to any shares or debentures agreed to be taken by a personunderwriting an offer thereof by a prospectus as if he had appliedtherefor in pursuance of the prospectus; and b) in relation to a prospectus offering shares for sale with the followingmo difications, that is to say, i. reference to sale shall be substituted for reference to allotment; ii. the person by whom the offer is made and not the company, shallbe liable under sub-section (2) to repay the money receivedfrom applicant and reference to the company's liability under thatsub-section shall be construed accordingly; and iii. for the reference in sub-section (3) to the company and everyofficer of the company there shall be substituted a reference toany person by or through whom the offer is made and whoknowingly and willfully authorizes or permits the default. 2)
73. RETURN AS TO ALLOTMENTS:

1) Whenever a company having a sharecapital makes any allotment of its shares, the company shall, within thirty days thereafter, a) file with the registrar a return of the allotment, stating the number andnominal amount of the shares comprised in the allotment and suchparticulars as may be prescribed of each allottee, and the amount paidon each share; and b) in the case of shares allotted as paid up otherwise than in cash, producefor the inspection and examination of the registrar a contract in writingconstituting the title of the allottee to the allotment together with anycontract of sale, or for services or other consideration in respect of whichthat allotment was made, such contracts being duly stamped, and filewith the registrar copies verified in the prescribed manner of all suchcontracts and a return stating the number and nominal amount of
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sharesso allotted, the amount to be treated as paid-up, and the consideration forwhich they have been allotted; and c) file with the registrar i. in the case of bonus shares, a return stating the number andnominal amount of such shares comprised in the allotment andsuch particulars as may be prescribed of each allottee togetherwith a copy of the resolution authorizing the issue of such shares; ii. in the case of issue of shares at a discount, a copy of theresolution passed by the company authorizing such issue togetherwith a copy of the order of the Commission sanctioning theissue, and where the maximum rate of discount exceeds ten percent, a copy of the order of the Commission permitting the issueat the higher percentage. Explanation:Shares shall not be deemed to have been paid for in cash exceptto the extent that the company shall actually have received cash therefor at the time of, orsubsequent to, the agreement to issue the shares, and where shares are issued to a personwho has sold or agreed to sell property or rendered or agreed to render services to thecompany, or to persons nominated by him, the amount of any payment made for theproperty or services shall be deducted from the amount of any cash payment made for theshares and only the balance if any, shall be treated as having been paid in cash for suchshares, notwithstanding any bill of exchange or cheques or other securities for money. Where such a contract as is mentioned in clause (b) of sub-section (1) isnot reduced to writing, the company shall, within thirty days after the allotment, file withthe registrar the prescribed p articulars of the contract stamped with the same stamp dutyas would have been payable if the contract had been reduced to writing, and theseparticulars shall be deemed to be an instrument within the meaning of the Stamp Act, 1899, and the registrar may, as a condition of filing the particulars, requirethat the duty payable thereon be adjudicated under section 31 of that Act. If the registrar is satisfied that in the circumstances of any particular casethe period of thirty days specified in sub-sections (1) and (2) for compliance with therequirements of this section is inadequate, he may extend that period as he thinks fit, and,if he does so, the provisions of sub-sections (1) and (2) shall have effect in that particularcase as if for the said period of thirty days the extended period allowed by the registrarwere substituted. If default is made in complying with any requirement of this section, thecompany and every officer of the company who is knowingly a party to the default shallbe liable to a fine not exceeding five hundred rupees for every day during which thedefault continues. This section shall apply mutatis mutandis, to shares which are allotted orissued or deemed to have been issued to a scheduled bank or a financial institution inpursuance of any obligation of a company to issue shares to such scheduled bank orfinancial institution: Provided that where default is made by a company in filing a return of allotmentin respect of the shares referred to in this sub-section, the scheduled bank or the financialinstitution to whom shares have been allotted or issued or deemed to have been issuedmay file a return of allotment in respect of such shares with the registrar together withsuch documents as may be specified by the Commission in this behalf, and such return ofallotment shall be deemed to have been filed by the company itself and the scheduledbank or the financial institution shall be entitled to recover from the company the amountof any fee properly paid by it to the registrar in respect of the return.
2)
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THE COMPANIES (GENERAL PROVISIONS AND FORMS) RULES, 1985 RULE 12 VERIFICATION OF COPIES OF CONTRACTS FOR PURPOSES OF SECTION 73 Copies of contracts required to be filed with the registrar under sub-section (1) of section 73 shall be verified i. by an affidavit of a responsible officer that these are true copies; or ii. by a certification of the public officer having custody of the original document.
CERTIFICATE OF SHARES AND DEBENTURES 74. LIMITATION OF TIME FOR ISSUE OF CERTIFICATES:
1) Every company shall,within ninety days after the allotment of any of its shares, debentures or debenture stock,and within forty-five days after the application for the registration of the transfer of anysuch shares, debentures or debenture stock, complete and have ready for delivery thecertificates of all shares, the debentures, and the certificates of all debenture stock allottedor transferred, and unless sent by post or delivered to the person entitled thereto, withinthat period, shall give notice of this fact to the shareholders or debenture holders, as thecase may be, immediately thereafter in the manner prescribed, unless the conditions ofissue of the shares, debentures or debenture stock otherwise provide:
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Provided that, the company shall, within five days after an application is madefor the registration of the transfer of any; shares, debentures or debenture stock to acentral depository, register such transfer in the name of the central depository. Explanation:The expression "transfer", for the purposes of this sub-section,means a transfer duly stamped and otherwise valid, and does not include such a transferas the company is for any reason entitled to refuse to register and does not register. 2) If default is made in complying with the requirements of sub-section (1) thecompany, and every officer of the company who is knowingly a party to the default, shallbe liable to a fine not exceeding one hundred rupees for every day during which thedefault continues. 75. ISSUE OF DUPLICATE CERTIFICATES: 1) A duplicate of a certificate of shares,debentures or debenture stock issued under section 74 shall be issued by the companywithin forty-five days from the date of application if the original a. is proved to have been lost or destroyed, or b. having been defaced or mutilated or torn is surrendered to the company. 2) The company, after making such inquiry as to the loss, destruction,defacement or mutilation of the original, as it may deem fit to make, shall, subject to suchterms and conditions, if any, as it may consider necessary, issue the duplicate: Provided that the company shall not charge fee exceeding the sum prescribed andthe actual expenses incurred on such inquiry. 3) If the company for any reasonable cause is unable to issue duplicatecertificate, it shall notify this fact, alongwith the reasons within thirty days from the dateof the application, to the applicant. 4) If default is made in complying with the requirements of this section, thecompany and every officer of the company who is knowingly a party to the default shallbe liable to a fine not exceeding five hundred rupees. 5) If a company with intent to defraud, renews a certificate or issues aduplicate thereof, the company shall be punishable with fine which may extend to twentythousand rupees and every officer of the company who is in default shall be punishablewith imprisonment for a term which may extend to six months, or with fine which mayextend to ten thousand rupees, or with both.
TRANSFER OF SHARES AND DEBENTURES 76. TRANSFER OF SHARES AND DEBENTURES:

An application for registrationof the transfer of shares and debentures in a company may be made either by thetransferor or the transferee, and subject to the provisions of this section, the companyshall enter in its register of members the name of the transferee in the same manner andsubject to the same conditions as if the application was made by the transferee: Provided that the company shall not register a transfer of shares or debenturesunless proper instrument of transfer duly stamped and executed by the transferor and thetransferee has been delivered to the company alongwith the scrip. 2) Where a transfer deed is lost, destroyed or mutilated before its lodgment,the company may on an application made by the transferee and bearing the stamprequired by an instrument of transfer, register the transfer of shares or debentures if thetransferee proves to the satisfaction of the directors of the company that the transfer deedduly executed has been lost, destroyed or mutilated: Provided that before registering the transfer of shares or debentures the companymay demand such indemnity as it may think fit. 3) All references to the shares or debentures in this section, shall in case ofa company not having share capital, be deemed to be references to interest of themembers in the company. 4) Every company shall maintain at its registered office a register oftransfers of shares and debentures made from time to time and such register shall be opento inspection by the members and supply of copy thereof in the manner stated in section150. 5) Nothing in sub-section (1) shall prevent a company from registering asshareholder or debenture-holder a person to whom the right to any share or debenture ofthe company has been transmitted by operation of law. 6) In the case of a public company, a financial institution duly approved bythe Commission may be appointed as the transfer agent on behalf of the company. 7) If a company makes default in complying with any of the provisions ofsub-sections (1) to (4), it shall be liable to a fine not exceeding five thousand rupees andevery officer of the company who is knowingly or willfully a party to such default shallbe liable to a like penalty. 77. DIRECTORS NOT TO REFUSE TRANSFER OF SHARES: The directors of a companyshall not refuse to transfer any fully paid shares or debentures unless the transfer deed is,for any reason, defective or invalid: 1)
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Provided that the company shall within thirty days or, where the transferee is acentral depository, within five days from the date on which the instrument of transferwas lodged with it notify the defect or invalidity to the transferee who shall, after theremoval of such defect or invalidity, be entitled to relodge the transfer deed with thecompany: Provided further that the provisions of this section shall, in relation to a private company, be subject to such limitations and restrictions as may have been imposed by thearticles of such company. 78. NOTICE OF REFUSAL TO TRANSFER: 1) If a company refuses to register atransfer of any shares or debentures, the company shall, within thirty days after the dateon which the instrument of transfer was lodged with the company, send to the transfereenotice of the refusal indicating reasons for such refusal. 2) If default is made in complying with section 77 or this section, thecompany and every officer of the company who is a party to the default shall be liable toa fine not exceeding 2[twenty] thousand rupees and to a further fine not exceeding one thousand rupees for every day after the first during which the default continues. 78A. APPEAL AGAINST REFUSAL FOR REGISTRATION OF TRANSFER: 1) The transferoror transferee, or the person who gave intimation of the transmission by operation of law,as the case may be, may appeal to the Commission against any refusal of the company toregister the transfer or transmission, or against any failure on its part, within the periodreferred to in sub-section (1) of section 78 either to register the transfer or transmission orto send notice of its refusal to register the same. 2) An appeal to the Commission under sub-section (1) may be preferred a) in case the appeal is against the refusal to register a transfer ortransmission, within two months of the receipt by him of the notice ofrefusal; and b) in case the appeal is against the failure referred to in sub-section (1)within two months from the expiry of the period referred to in subsection(1) of section 78. 3) The Commission shall, after causing reasonable notice to be given to thecompany and also to, the transferor and the transferee or, as the case may require, to theperson giving intimation of the transmission by operation of law and the previous owner,if any, and giving them a reasonable opportunity to make their representation, may, by anorder in writing, direct either that the transfer or transmission shall be registered by thecompany or that it need not be registered by it and in the former case, the company shallgive effect to the decision within fifteen days of the receipt of the order. 4) Before making an order under sub-section (3) on an appeal against anyrefusal of the company to register any transfer or transmission the Commission mayrequire the company to disclose to it the reasons for such refusal. 5) The Commission may, in its aforesaid order, give such incidental andconsequential directions as to the payment of costs or otherwise as it deems fit. 6) If default is made in giving effect to the order of the Commission withinthe period specified in sub-section (3), every director and officer of the company who isin default, shall be punishable with fine which may extend to five hundred rupees forevery day after the first during which the default continues. 79. TRANSFER TO SUCCESSOR-IN-INTEREST: The transfer of shares or debenturesfrom a deceased member or holder to his lawful nominee successor-ininterest shall bemade on application by such nominee successor duly supported by a documentevidencing nomination or lawful award of the relevant property to such nominee orsuccessor and thereupon the nominee or successor shall be entered as a member: Provided that the company may, on furnishing of a suitable indemnity by suchnominee or successor, proceed to transfer the security in his name and enter him in theregister of members. 80. TRANSFER TO NOMINEE OF A DECEASED MEMBER: 1) Notwithstandinganything contained in any other law for the time being in force or in any disposition by amember of a company of his interest represented by the shares held by him as a memberof the company, a person may on acquiring interest in a company as member, representedby shares, at any time after acquisition of such interest deposit with the company anomination conferring on one or more persons the right to acquire the interest in theshares therein specified in the event of his death: Provided that, where a member nominates more than one person, he shall specifyin the nomination the extent of right conferred upon each of the nominees, so howeverthat the number of shares therein specified are possible of ascertainment in wholenumbers. 2) Where any nomination, duly made and deposited with the company asaforesaid, purports to confer upon any person the right to receive the whole or anydivisible part of the interest therein mentioned, the said person shall, on the death of themember, become entitled, to the exclusion of all other persons, to become the holder ofthe shares or the part thereof, as the case may be, and on receipt of proof of the death ofthe member alongwith the relative scrips, the transmission of the said shares shall beregistered in favour of the nominee to the extent of his interests unless
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such nomination is at any time varied by another nomination made anddeposited before the death of the member in like manner or expresslycancelled by notice in writing to the company; or b. such nomination at any time becomes invalid by reason of the happeningof some contingency specified therein;and if the said person predeceases the member, the nomination shall, so far as it relatesto the right conferred upon the said person, become void and of no effect: Provided that where provision has been duly made in the nomination conferringupon some other person such right in the stead of the person deceased, such right shall,upon the decease as aforesaid of the said person, pass to such other person. 3) The person to be nominated as aforesaid shall not be a person other thanthe following relatives of the member, namely, a spouse, father, mother, brother, sisterand son or daughter, including a step or adopted child. 4) The nomination as aforesaid shall in no way prejudice the right of themember making the nomination to transfer, dispose of or otherwise deal in the sharesowned by him during his lifetime and shall have effect in respect of the shares owned bythe said member on the day of his death. 81. TRANSFER BY NOMINEE OR LEGAL REPRESENTATIVE: A transfer of the shares ordebentures or other interest of a deceased member of a company made by his nominee orlegal representative shall, although the nominee or legal representative is not himself amember, be as valid if he had been a member at the time of execution of the instrumentof transfer. a.
COMMISSION, DISCOUNT, PREMIUM AND REDEEMABLE PREFERENCESHARES 82. POWER TO PAY CERTAIN COMMISSIONS, AND PROHIBITION OF PAYMENT OF OTHER COMMISSIONS,
DISCOUNTS, ETC: 1) It shall be lawful for a company to pay a commissionto any person in consideration of his subscribing or agreeing to subscribe, whetherabsolutely or conditionally, for any shares in or debentures of the company, or procuringor agreeing to procure subscriptions, whether absolute or conditional, for any shares in or debentures of the company if a. the payment of the commission is authorized by the articles; b. the commission paid or agreed to be paid does not exceed such rate percent of amount as may generally or in a particular case be fixed by theCommission; and c. the amount or rate per cent of the commission paid or agreed to be paid is i. in the case of shares or debentures offered to the public forsubscription, disclosed in the prospectus; or ii. in the case of shares or debentures not offered to the public forsubscription, disclosed in the statement in lieu of prospectus, orin a statement in the prescribed form signed in like manner as astatement in lieu of prospectus and delivered before the paymentof the commission to the registrar for registration and, where acircular or notice, not being a prospectus, inviting subscriptionfor the shares or debentures, is issued, also disclosed in thatcircular or notice; and d. the number of shares or debentures which persons have agreed for a commission to subscribe absolutely is disclosed in the manner aforesaid. 2) Save as aforesaid and save as provided in section 84, no company shallallot any of its shares or debentures, or apply any of its moneys, either directly orindirectly, in payment of any commission, discount or allowance, to any person inconsideration of his subscribing or agreeing to subscribe, whether absolutely orconditionally, for any shares in or debentures of the company, or procuring or agreeing toprocure subscriptions, whether absolute or conditional, for any shares in or debentures ofthe company, whether the shares, debentures or money be so allotted or applied by beingadded to the purchase money of any property acquired by the company or to the contractprice of any work to be executed for the company, or the money be paid out of thenominal purchase money or contract price, or otherwise. 3) Nothing in this section shall affect the power of any company to paysuch brokerage as it has heretofore been lawful for a company to pay, but brokerage shallnot in any case exceed one per cent of the price at which shares or debentures issued havebeen actually and not merely sold through the broker or shall be paid at not more thansuch other rate per cent as may from time to time be specified by the Commission,generally or in a particular case. 4) A vendor, promoter, or other person who receives payment in shares,debentures or money from a company shall have and shall be deemed always to have hadpower to apply any part of the shares, debentures or money so received in payment of anycommission the payment of which, if made directly by the company, would have beenlegal under this section. 5) If default is made in complying with the provisions of this section, thecompany and every officer of the company who knowingly and willfully is in defaults hall a. for non-compliance with the provisions of clause (b) of sub-section (1),be liable to a fine not exceeding two thousand rupees;
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for non-compliance with the provisions of clause (c) or clause (d) of thatsub-section, be liable to a fine not exceeding one thousand rupees; and c. for non-compliance with any other provision of this section, be liable to afine not exceeding five hundred rupees. 83. APPLICATION OF PREMIUM RECEIVED ON ISSUE OF SHARES: 1) Where acompany issues shares at a premium, whether in cash or otherwise, a sum equal to theaggregate amount or the value of the premiums on those shares shall be transferred to anaccount, to be called "the share premium account"; and the provisions of this Ordinancerelating to the reduction of the share capital of a company shall, except as provided in thissection, apply as if the share premium account were paid-up capital of the company. 2) The share premium account may, notwithstanding anything contained insub-section (1), be applied by the company a. in writing off the preliminary expenses of the company; b. in writing off the expenses of, or the commission paid or discount allowedon, any issue of shares or debentures of the company; c. in providing for the premium payable on the redemption of anyredeemable preference shares or debentures of the company; or d. in paying up un-issued shares of the company to be issued to members ofthe company as fully paid bonus shares. 3) Where a company has, before the commencement of this Ordinance,issued any shares at a premium, this section shall apply as if the shares had been issuedafter such commencement: Provided that any part of the premium which has been so applied that it does notat the commencement of this Ordinance form an identifiable part of the company'sreserves within the meaning of the Fourth Schedule or the Fifth Schedule shall bedisregarded in determining the sum to be included in the share premium account. 84. POWER TO ISSUE SHARES AT A DISCOUNT: 1) Subject to the provisions ofthis section, it shall be lawful for a company to issue shares in the company at adiscount: Provided that a. the issue of the shares at a discount must be authorised by resolutionpassed in general meeting of the company and must be sanctioned bythe Commission; b. the resolution must specify the maximum rate of discount at whichshares are to be issued; c. not less than one year must at the date of issue have elapsed since thedate on which the company was entitled to commence business; and d. the shares to be issued at a discount must be issued within sixty daysafter the date on which the issue is sanctioned by the Commission orwithin such extended time as the Commission may allow. 2) Where a company has passed a resolution authorizing the issue of sharesat a discount, it may apply to the Commission for an order sanctioning the issue; and onsuch application the Commission may, if, having regard to all the circumstances of thecase, it thinks proper so to do, make an order sanctioning the issue on such terms andconditions as it thinks fit. 3) Issue of shares at a discount shall not be deemed to be reduction ofcapital. 4) Every prospectus relating to the issue of shares, and every balance-sheetissued by the company subsequent to the issue of shares, shall contain particulars of thediscount allowed on the issue of the shares or of so much of that discount as has notbeen written off at the date of the issue of the prospectus or balancesheet. 5) If default is made in complying with sub-section (4), the company andevery officer of the company who is in default shall be liable to a fine not exceeding twothousand rupees. b.
85. REDEMPTION OF PREFERENCE SHARES:

1) Subject to the provisions of thissection, a company limited by shares may redeem the preference shares issued by it: Provided that a. no such shares shall be redeemed except out of profits of the companywhich would otherwise be available for dividend or from out of a sinkingfund created for this purpose or out of the proceeds of a fresh issue ofshares made for the purposes of the redemption or out of sale proceeds ofany property of the company; b. no such shares shall be redeemed unless they are fully paid;
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where any such shares are redeemed otherwise than out of the proceedsof a fresh issue, there shall out of profits which would otherwise havebeen available for dividend be transferred to a reserve fund, to be called the capital redemption reserve fund , a sum equal to the amount appliedin redeeming the shares, and the provisions of this Ordinance relating tothe reduction of the share capital of a company shall, except as providedin this section, apply as if the capital redemption reserve fund were paidupshare capital of the company; d. where any such shares are redeemed out of the proceeds of a fresh issue,the premium, if any, payable on redemption must have been provided forout of the profits of the company before the shares are redeemed or outof the share premium account. If a company fails to comply with the provisions of sub-section (1), thecompany and every officer of the company who knowingly and willfully is in defaultshall be liable to a fine not exceeding five thousand rupees. The redemption of preference shares under this section by a companyshall not be taken as reducing the amount of its authorised share capital. Subject to the provisions of this section, the redemption of preferenceshares thereunder may be effected on such terms and in such manner as may be providedby the articles of the company. c.
2)
3) 4)
FURTHER ISSUE OF CAPITAL 86. FURTHER ISSUE OF CAPITAL:

Where the directors decide to increase thecapital of the company by the issue of further shares, such shares shall be offered to themembers in proportion to the existing shares held by each member, irrespective of class,and such offer shall be made by notice specifying the number of shares to which themember is entitled, and limiting a time within which the offer , if not accepted, will bedeemed to be declined: Provided that the Federal Government may, on an application made by anypublic company on the basis of a special resolution passed by it, allow such company toraise its further capital without issue of right shares: Provided further that a public company may reserve a certain percentage offurther issue for its employees under Employees Stock Option Scheme to be approvedby the Commission in accordance with the rules made under this Ordinance. 2) The offer of new shares shall be strictly in proportion to the number ofexisting shares held: Provided that fractional shares shall not be offered and all fractions less than ashare shall be consolidated and disposed of by the company and the proceeds from suchdisposition shall be paid to such of the entitled shareholders as may have accepted suchoffer. 3) The offer of new shares shall be accompanied by a circular duly signedby the directors or an officer of the company authorised by them in this behalf in the formprescribed by the Commission containing material information about the affairs of thecompany, latest statement of the accounts and setting forth the necessity for issue offurther capital. 4) A copy of the circular referred to in sub-section (3) duly signed by thedirectors or an officer authorised as aforesaid shall be filed with the registrar before thecircular is sent to the shareholders. 5) The circular referred to in sub-section (3) shall specify a date by whichthe offer, if not accepted, will be deemed to be declined. 6) Omitted 7) If the whole or any part of the shares offered under sub-section (1) isdeclined or is not subscribed, the directors may allot and issue such shares in such manner as they may deem fit. 87. ISSUE OF SHARES IN LIEU OF OUTSTANDING BALANCE OF ANY LOANS, ETC: Notwithstanding anything contained in section 86 or the memorandum and articles, acompany may issue ordinary shares or grant option to convert into ordinary shares theoutstanding balance of any loans, advances or credit, as defined in the BankingCompanies Ordinance, 1962, or other non-interest bearing securities andobligations outstanding or having a term of not less than three years in the mannerprovided in any contract with any scheduled bank or a financial institution to the extentof twenty per cent of such balance: Provided that such shares shall not be issued or option to convert the outstandingbalance exercised unless in any two of the preceding three years after expiry of two yearsfrom the date of commencement of commercial production, the return on such noninterestbearing securities, obligations, loans, advances or credit has fallen below theminimum rate of return laid down by the State Bank of Pakistan for the said years. 1)
REGULATION OF DEPOSITS 88. DEPOSITS NOT TO BE INVITED WITHOUT ISSUING AN ADVE RTISEMENT:
1) 2) TheFederal Government may prescribe the limits up to which, the manner in which and theconditions subject to which deposits may be invited, accepted or retained by a company. No company shall invite, or allow any other person to invite or cause tobe invited on its behalf, any deposit unless
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such deposit is invited or is caused to be invited in accordance with therules made under sub-section (1); and b. an advertisement, including therein a statement showing the financialposition of the company, has been issued by the company in such formand in such manner as may be prescribed. 3) The provisions of this Ordinance relating to a prospectus shall, so far asmay be, apply to an advertisement referred to in sub-section (2). 4) Where a company accepts or invites, or allows or causes any otherperson to accept or invite on its behalf, any deposit in excess of the limits prescribedunder sub-section (1) or in contravention of the manner or conditions prescribed underthat sub-section or in contravention of the provisions of sub-section (2), as the case may be, a. the company shall be punishable, i. where such contravention relates to the acceptance of anydeposit, with fine which shall not be less than the amount of thedeposit so accepted; and ii. where such contravention relates to the invitation for anydeposit, with fine which may extend to twenty thousand rupees;and b. every officer of the company which is in default shall be punishable withimprisonment for a term which may extend to two years and shall also beliable to fine. Explanation:For the purposes of this section, deposit means any deposit ofmoney with, and includes any amount borrowed by, a company, but shall not include aloan raised by issue of debentures or a loan obtained from a banking company orfinancial institution. 5) Nothing contained in this section shall apply to i. a banking company, or ii. such other class of companies as the Commission may specify inthis behalf. a.
THE COMPANIES (INVITATION AND ACCEPTANCE OF DEPOSITS) RULES, 1987

S.R.O. 778 (1)/87-Islamabad, the 26th September, 1987 1. SHORT TITLE AND COMMENCEMENT: 1) These rules may be called theCompanies (Invitation and Acceptance of deposits) Rules, 1987. 2) They shall come into force on the first day of January,1988. 3) They shall apply to all companies, except the banking companies. 2. DEFINITIONS: 1) In these rules, unless there is anything repugnant in the subject or context, a. "banking company" means a banking company as defined in theBanking Tribunals ordinance, 1984; (aa) Commission means the Securities and Exchange Commission ofPakistan established under the Securities and ExchangeCommission of Pakistan Act, 1997; b. "deposit" means any deposit of money with, and includes anyamount borrowed by, a company, but shall not include a loanraised by issue of debentures or a loan obtained from a bankingcompany or a financial institution; c. "depositor" includes any person, other than a banking company ora financial institution, who has given a loan or provided finance other than i. finance by way of contribution towards share capital; or ii. finance by way of redeemable capital on contribution todebentures issued by the company to a company. d. "form" means a form annexed to these rules; e. "free reserves" includes any amount which, having been set asideout of revenue of other surpluses, excluding surplus on revaluationof assets is free in that it is not retained to meet any diminution invalue of assets, specific liability, contingency or commitmentknown to exist at the date of the balance sheet; f. "Ordinance" means the Companies Ordinance, 1984; g. "Schedule" means a schedule to the Ordinance; and h. "section" means a section of the Ordinance. 2) All other terms and expressions used but not defined in these rules shallhave the same meaning as in the Ordinance. 3. ACCEPTANCE OF DEPOSITS BY COMPANIES: 1) No company shall accept any deposit a. for purposes other than the financing of its own business asreferred to in Explanation to clause (c) of Section 5 of the BankingCompanies Ordinance, 1962; b. from another company, except a company which is its holdingcompany; c. which is repayable on demand or on notice or repayable earlierthan the expiry of six months or later than the expiry of thirty-sixmonths from the date of acceptance of renewal of such deposit, orrenew any such deposit accepted by it, whether before or after thecommencement of these rules: Provided that a company may, for the purpose of meeting any of its shorttermrequirements of funds,
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acceptor retain or renew deposits for repayment earlier thansix months from the date of deposit or renewal, as the case may be, subject to theconditions that such depositsi. shall not exceed ten per cent of the aggregate of the paid-up sharecapital and free reserves of the company; and ii. shall be repayable not earlier than three months from the date ofsuch deposit or renewal, as the case may be: Provided further that, where a company has, before the coming into forceof these rules, accepted any deposit repayable after a period of more than thirty-sixmonths, such deposits shall, unless renewed after the coming into force of these rules, berepaid in accordance with the terms of such deposits. 2) No company shall accept or renew or retain any deposits, if the amount ofsuch deposit, together with the amount of such other deposits, referred to in this rule andoutstanding on the date of acceptance or renewal of such deposits, including any depositaccepted under proviso to sub-rule (1), exceeds twenty- five percent of the aggregate ofthe paid-up share capital and free reserves of the company. 3) If, immediately before the commencement of these rules, any deposit,accepted by a company before such commencement, exceeds the limit specified in subrule(2), the company shall, within five years from the date of coming into force of theserules, bring down the deposits to the limit aforesaid and for this purpose the companyshall not renew of retain such deposits of expiry of their pre-existing term nor accept anyfurther deposits besides repaying the same and adopting other measures to bring downthe aggregate deposits within the limits permissible under this rule during the said periodof five years. 4) Nothing contained in this rule shall apply to the following types ofdeposits, namely: a. any about received from or guaranteed by the federal Governmentor the Government of a province or a corporation owned orcontrolled by any such Government; b. loans or finance raised by issuer of debentures redeemable capital; c. finance as defined in the Banking Tribunals Ordinance, 1984obtained from a banking company or a financialinstitution; d. advance or application money or subscription for shares in thecompany; e. security deposits with utility companies; f. security deposits in connection with the execution of contracts; g. earnest-moneys received from tender; h. deposits to undertake deposit works; i. rent received in advance from a lessee; j. amount received by way of security or an advance from anypurchasing agent, selling agent or other agent in the ordinarycourse of business of the company or an advance received againstorders for the supply of goods or properties for rendering servicesnot being the amount collected through a scheme advertised inthe media or by any other means by real estate companies,automobile or other companies as an advance against the promiseto supply the property or commodity, as the case may be, at somefuture date: Provided that this clause shall not apply to such companyas is notified by the Commission to be exempt in consultation withthe concerned trade organization duly licensed and registeredunder the Trade Organizations Ordinance, 1961. Explanation:For the purposes of this sub-rule, anymarketing campaign launched by a company itself, or by someoneelse on its behalf, through the print or electronic media or by anyother means inviting or soliciting thegeneral public or any sectionthereof through a notice, circular, advertisement or other communication to apply for the purchase of a property orcommodity or any other product against payment in full or in part,whether or not described as a deposit, shall be treat ed as a schemeas aforesaid if a. the property or commodity is not in possession of thecompany at the time when the notice, circular,advertisement or communication is issued; or b. it offers for sale a product for which the company does nothave adequate production facility; or c. it contains a promise for a gift or reward or some unusualincentive so as to prompt an early booking; k. amount received from an employee by way of security deposit orcontribution towards provident fund; l. amounts received from employees for payment of annuities orsuperannuation benefits ; and m. amount received from a person who at the time of the receipt of theamount by the company was a director of the company or anyamount received by a private company from its shareholders,provided such about has not been raised from any other person orperson except his spouse and children. Explanation:For the purpose of this rule, in arriving at the aggregate ofthe paid-up share capital and free reserves there shall be deducted from the aggregate ofthe paid- up share capital and free reserves as appearingin the latest audited balance sheetof the company, the amount of accumulated balance of loss and balance of deferredrevenue expenditure, if any, as disclosed in the said balance sheet. 4. PURPOSE FOR WHICH DEPOSITS CANNOT BE UTILIZED: No company shall utilizethe deposits received by it for providing financial assistance to any other person.
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MAINTENANCE OF LIQUID ASSETS: st 1) Every company shall before the 31 day of December of each calendar year deposit or invest, as the case may be, a sumwhich shall not be less than ten percent of the about of its deposits maturing during theyear ending on the 31st day of December next following, in any one or more of thefollowing modes, namely:a. in a National Savings Scheme; b. in a special account to be opened by the company for the purposein a scheduled bank, free from change or lien; c. in Government securities; or d. in such other securities as are notified by the Commission for thepurpose. 2) The amount deposited or invested, as the case may be, under sub-rule (i),shall not be utilized for any purpose other than for the repayment of deposits maturingduring the year referred to in that sub-rule, provided that the about remaining depositedor invested, as the case may be, shall not at any time fall below ten per cent of the amountof deposits maturing until the 31st day of December of the year. 6. OBLIGATION OF PUBLIC COMPANIES TO ISSUE ADVERTISEMENT AND PROVISIONS RELATION THERETO: 1) Subject to rule 7, every company intending to invite or allow orcause any other person to invite deposits shall issue an advertisement for the purpose inone daily newspaper in English language and in one daily newspaper in Urdu languagecirculating in the province in which the registered and other offices of the company aresituated. 2) No company shall issue or allow any other person to issue or cause to be issued on its behalf; any advertisement, inviting deposits unless such advertisement isissued on the authority and in the name of the Board of Directors of the company andcontains a reference to the conditions subject to which deposits shall be accepted by thecompany, the date on which the said Board of Directors has approved the test of theadvertisements, and the matters specified in Form No. 1. 3) An advertisement issued in accordance with this rule shall be valid untilthe expiry of six months form the date of closure of the financial year in which it is issuedor until the date on which the balance sheet is laid before the company in generalmeeting, or where the annual general meeting for any year has not been held, the latestday on which that meeting should have been held in accordance with the provisions ofthe Ordinance, whichever is earlier, and a fresh advertisement shall be made in eachsucceeding financial year for inviting deposits during that financial year, within afortnight of expiry of the said period. 4) The advertisement referred to in this rule shall not be issued by or onbehalf of a company unless before that date of it issue, approval of the Commission to itsto its issue, circulation or publication has been obtained within sixty days preceding thedate of its issue and there has been delivered to the registrar concerned for registration acopy thereof authenticated by the chief executive of the company and a majority of theother directors on the Board of Directors of the company as constituted at the time theBoard approved the advertisement. Explanation: For the purposes of this rule, the date of the newspaper in which theadvertisement first appears shall be taken as the date of issue of the advertisement. 7. CERTAIN PROVISIONS TO APPLY TO PRIVATE COMPANIES AND PUBLICCOMPANIES NOT ISSUING ADVERTISEMENT: The following provisions shall apply to publiccompanies not issuing advertisement and the private companies in addition to the otherprovisions or conditions laid down in these rules, namely:5. No private company shall invite or allow or cause any other personto invite deposits from the public whether by issue of andadvertisement, public notice or otherwise; b. A private company may accept deposits from person other than itsdirectors or shareholders or their spouses or minor children,provided that the number of such persons shall not exceed twentyat any time; c. Where a public company intends to accept deposits without issuingan advertisement or a private company intends to accept depositsin the manner permissible under these rules, it shall beforeaccepting deposits obtain the approval of the Commission anddeliver to the registrar concerned for registration a statement in lieuof advertisement containing all the particulars required to beincluded in the advertisement by virtue of sub-rule (2) of rule 6authenticated duly in the manner provided in sub-rule (4) of thatrule. d. A statement delivered under sub-rule (3) of rule 6 shall be validuntil the expiry of six months from the date of closure of thefinancial year in which it is so delivered or until the date on whichthe balance sheet is laid before the company in general meeting, orwhere annual general meeting for any year has not been held, thelatest day on which that meeting should have been held inaccordance with the provisions of the Ordinance, whichever isearlier, and a fresh statement in lieu of the advertisement shall bedelivered to the registrar concerned within a fortnight of expiry ofthe period. FORM OF APPLICATION FOR DEPOSITS: a.
8.
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No company shall accept or renewany deposit referred to in 2 unless an application is made by the intending depositor forthe acceptance of such deposit and such application contains a declaration by such personto the effect that the amount is not being deposited out of the funds acquired by him byborrowing or accepting deposits from any other person except his spouse or minorchildren. 2) The application referred to in sub-rule (1) shall be made in the formsupplied by the company and such form shall be accompanied by a statement by thecompany containing all the particulars specified in sub-rule (2) of rule 6 andincorporating therein all changes in relation to such particulars up to the date on whichthe form is issued by the company. FURNISHING OF RECEIPTS TO DEPOSITORS: 1) Every company shall on theacceptance or renewal of a deposit, furnish to the depositor or his agent, receipt for theabout received by the company. 2) The deposit receipt referred to in sub-rule(1) shall be signed by an officerof the company duly authorized by the company in this behalf, and shall state the date ofdeposit, the name and address of depositor, the amount received by the company asdeposit with nature thereof, the rate of return payable thereon and the date on which thedeposit is repayable. REGISTER OF DEPOSITS: 1) Every company accepting deposits shall keep atits registered office on or more registers in which there shall be entered separately in thecase of each depositor, the following particulars namely:a. name and the address of the depositor; b. date and amount of each deposit with nature thereof; c. duration of the deposit and the date on which each deposit isrepayable; d. rate of return; e. date or dates on which payment of return will be mace; f. date or dates on which firm actual paid and the amount paid oneach; g. date on which the deposit is actually repaid and the amount repaid; h. date of renewal, if renewed; and i. any other particulars relating to the deposit. 2) The register or registers referred to in sub-rake (1) shall be preserved ingood order for a person of not less than ten calendar years from the financial year inwhich the last entry is made in the register and shall be open to inspection by anyshareholder or depositor of the company without charge. CIRCULATION OF INFORMATION TO THE DEPOSITORS: 1) Every company whichhas accepted or invited deposits under rule 3 shall within six months of the close of theaccounting year of the company send to every depositor the particulars and informationrequired to be included in the case of a public company in an advertisement invitingdeposits and in the case of any other company the statement in lieu of advertisement. 2) Every depositor shall be supplied within seven days of his request a copyof the latest audited balance sheet and profit and loss account of the company free of cost. PROHIBITION ON EMPLOYING AGENTS FOR SOLICITING DEPOSITS AND PAYMENT OF COMMISSION, ETC.: No company shall employ an agent for soliciting, collecting andreceiving deposits or pay any commission of brokerage to any on deposits received by it. GENERAL PROVISIONS REGARDING REPAYMENT OF DEPOSITS: 1) Where acompany makes repayment of a deposit after the expiry of a period of six months fromthe date of such deposit but before the expiry of the period for which such deposit wasaccepted by the company the return payable by the company on such deposit calculatedon daily product basis, shall be reduced by onefourth from the return due on the depositand the company shall not pay return higher than the profit as so reduced. 2) Where any repayment of the deposit of payment of any return thereon isnot made within seven days of the date on which it becomes payable, the company shallpay to the depositor an additional return at the rate of two per cent per month calculatedon daily product basis, or such higher rate as may be specified by the Commission in thecase of any particular company or depositor or class of companies or depositors. 3) A deposit accepted or received by a company, whether before of aftercommencement of these rules, and any return due thereon shall be repaid or paid, as thecase may be, on a date not later than seven days from the date becoming due or payableand if default is made in repayment of any deposit or payment of return thereon asaforesaid without approval of the Commission, the company shall forthwith discontinueacceptance of new deposits and renewal of deposits already received by it until permittedby the Commission and subject to conditions as may be imposed by it. POWER OF COMMISSION TO DECIDE CERTAIN QUESTIONS: If any question arisesas to whether these rules are or are not applicable to particular company or deposit, suchquestion shall be decided by the Commission. RETURN OF DEPOSITS TO BE FILED WITH THE REGISTRAR: 1)
9.
10.
11.
12.
13.
14.
15.
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Every company towhich these rules apply, shall on or before the 31st date of March of every year, filewith the Registrar, a return in Form-II and furnish the information contained therein as onthe 31st day of December of the previous year certified by the auditor of the company. 2) A copy of the return shall also be simultaneously furnished to theCommission. 16. PENALTY: If a company or any other person contravenes any provision of theserules for which no punishment is provided in the Ordinance, the company and everyofficer of the company or such other person, who is in default, shall be punishable withfine which may extend to two thousand rupees and where the contravention is acontinuing one, with a further fine which may extend to one hundred rupees for every dayafter the first during which the contravention continues. 1)
PART VI SHARE CAPITAL AND DEBENTURES NATURE, NUMBERING AND CERTIFICATE OF SHARES 89. NATURE OF SHARES AND CERTIFICATE OF SHARES:
1) 2) 3) The shares or otherinterest of any member in a company shall be moveable property, transferable in themanner provided by the articles of the company. Each share in a company shall have a distinctive number. A certificate under the common seal of the company specifying anyshares held by any member shall be prima facie evidence of the title of the member to theshares therein specified.
CLASSES AND KINDS OF SHARES 90. CLASSES AND KINDS OF SHARE CAPITAL:
A company limited by shares mayhave different kinds of share capital and classes therein as provided by its memorandumand articles: Provided that different rights and privileges in relation to the different classes ofshares may only be conferred in such manner as may be prescribed.
COMPANIES (ISSUE OF CAPITAL) RULES, 1996

S. R. O. 110(I)96 1. SHORT TITLE, COMMENCEMENT AND APPLICATION: 1) These rules may becalled the Companies (Issue of Capital) Rules, 1996. 2) They shall come into force at once. 3) They shall apply to i. the companies proposing to offer share capital to the public; ii. listed companies proposing to increase share capital through rightissue or bonus issue; iii. all companies proposing to issue shares for consideration otherwisethan in cash; and iv. certain persons offering shares for sale to the public. 2. INTERPRETATION: In these rules the words and expressions used shall havethe same meaning to them in the Companies Ordinance, 1984. 3. POLICY FOR ISSUE OF CAPITAL: A company which owns a loan-based projector an equity-based project and proposes to raise capital through public offer for the firsttime shall comply with the following conditions, namely; :I. Loan-based projects: i. The size of capital to be issue shall be in accordance with financialplan approved by an institution financing the project. ii. The company s auditors shall certify that sponsors subscriptionhas been received in full and al least eight per cent thereof hasbeen utilized in the project. iii. The stock exchange concerned shall verify that at least thirtypercent of the plant and machinery has been installed and lastconsignment of plant and machinery, where required has beenshipped to the company; iv. The sponsors shall, al all times retain at least twenty -five percentof the capital of the company. II. Equity-based projects: i. The fixed capital expenditure shall be entirely financed by equity. ii. The project shall be appraised by a financial institution or acommercial bank or an investment bank. iii. The appraisal report shall be accompanied by a certificate from thecompany s auditors confirming that a. the capital allocated to sponsors, foreign and localinvestors, if any, has been fully paid: and b. the land for the project has been required, letters of credithave been established and shipment
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schedule of plant andmachinery has been finalized by the suppliers. The issue shall be fully underwritten and the underwriters, notbeing the associated companies, shall include at least two financialinstitutions, including commercial banks and investments banksand the underwriters shall evaluate the project in their independentdue diligence report. v. The sponsors shall retain at least twenty-five per cent of the capitalof the company for a period of five years from the date of publicsubscription. 4. ISSUE OF SHARES ON PREMIUM: A company may issue shares to the publicon premium subject to the following conditions, namely:i. It shall have profitable operational record of at least one year; ii. the premium on public offering shall not exceed the amount ofpremium charged on placements with foreign or local institutionsand the names and addresses of such institutions shall be disclosedin the prospectus; iii. the issue shall be fully underwritten and the underwriters not beingthe associated companies, shall include at least two financialinstitutions, including commercial banks and investments banksand the underwriters shall give full justification of the amount ofpremium in their independent due diligence report; iv. the due diligence report of the underwriters shall form part of thematerial contracts; v. full justification for premium shall be disclosed in the prospectus; vi. the employees of the company getting preferential allocation, ifany, shall be charged premium at the same rate as the public; and vii. the shares allotted to any person on account of preferentialallocation at par, shall not be salable for a period of two years fromthe date of public subscription, These person shall be issued jumbocertificates with markings not salable for two years . Theparticulars of each jumbo certificates will be furnished to therespective stock exchange. Companies while splitting jumbocertificates into marketable lots. after the prescribed period, shallinform the respective stock exchange. 5. ISSUE OF RIGHT SHARES OF A LISTED COMPANY: A listed company may issueright shares subject to following conditions, namely:i. The company shall not make a right issue within one year of the first issueof capital to the public or further issue of capital through right issue; ii. the company while announcing right issue, shall clearly state the purposeof the right issue, benefits to the company, use of funds and financialprojections for three years. The financial plan and projections shall besigned by all the directors who were present in the meeting in which theright issue was approved. iii. the decision of the company to issue right shares shall be communicated tothe Authority and the respective stock exchange on the day of thedecision; iv. the company may charge premium on right shares up to the free reservesper shares as certified by the company s auditors and the certificates of theauditors shall be furnished to the Authority and the respective stockexchange alongwith intimation of the proposed right issue: Provided that where a company proposes to charge premium on right issueabove the free reserves per share it shall be required to fulfill the following requirements,namely:a. At least forty per cent of all the shareholders undertake tosubscribe their portion of right issue; and b. the remaining right issue shall be fully underwritten and theunderwrites, not being associated companies, shall include at leasttwo financial institutions including commercial banks andinvestment banks and the underwriters shall give full justificationof the amount of premium in their independent due diligencereports; v. right issue of a loss making company or a company whose market shareprice during the preceding six months has remained below per value shallbe fully and firmly underwritten; vi. book closure shall be made within forty-five days of the announcement ofthe right issue and the payment and renunciation date once announced forthe letter of right shall not be extended except with the permission of therespective stock exchange under special circumstances; and vii. if the announcement of bonus and right issue is made simultaneously,resolution of the board of directors shall specify whether the bonus sharescovered by the announcement quality for right entitlement. Explanation: free reserves includes any amount which, having been setaside out of revenue or other surpluses after adjustment of all intangible or fictitiousassets, is free in that it is not retained to meet any diminution in value of assets, specificliability, contin gency or commitment known to exist at the date of the balance sheet, but does not include i. reserves created as a result of re-valuation of fixed assets; ii. goodwill reserve; iii. depreciation reserve to the extent of ordinary depreciation includingallowance for extra shifts iv.
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admissible under the Income Tax Ordinance, 1979; iv. development allowance reserve created under the provisions of the IncomeTax Ordinance, 1979; v. workers welfare fund; vi. provisions for taxation to the extent of the deferred or current liability ofthe company; and vii. capital redemption reserve. ISSUE OF BONUS SHARES BY LISTED COMPANIES: A listed company mayissue bonus shares subject to the following conditions, namely:-i. The decision of the directors to issue bonus shares shall be communicatedto the Authority and the respective stock exchange on the day of thedecision and the intimation letter shall be accompanied by the auditor scertificate as specified in clause (iii); ii. the free reserves of the company calculated in the manner as specified inrule 5 shall be sufficient to issue the bonus shares after retaining in thereserves twenty-five per cent of the capital as it will be increased by theproposed bonus shares; a certificate from the auditors shall be obtained to the effect that the freereserves and surpluses retained after the issue of the bonus shares will notbe less than twenty-five per cent of the increased capital; and iv. all contingent liabilities disclosed in the audited accounts and any suchliability which may have been created subsequent to the audited accountsshall be deducted while calculating minimum residual reserves of twentyfiveper cent. OFFER FOR SALE OF SHARES BY PRIVATIZED COMPANIES: Where a company has been privatized by the Federal Government or a Provincial Government, the newmanagement shall not offer shares to the public for a period of three years from the dateof privatization at a price higher than the purchase price per share adjusted by right orbonus issue or any other distribution made out of the pre-acquisition reserves. ISSUE OF SHARES FOR CONSIDERATION OTHERWISE THAN IN CASH: Acompany may issue shares for consideration otherwise than in cash subject to thefollowing conditions, namely;-i. The value of assets shall be determined by a consulting engineer registeredwith Pakistan Engineering Council and borne on the panel of at least twofinancial institutions as a valuer; ii. the value of assets taken over shall be reduced by depreciation charged onconsistent basis; iii. the goodwill and other intangible assets shall be excluded from theconsideration; and iv. certificate from a practising Chartered Accountant shall be obtained to theeffect that the above mentioned conditions have been complied with OFFER FOR SALE OF SHARES BY CERTAIN PERSONS: A person who holds morethan ten percent of the shares of a company may offer such shares for sale to the publicsubject to the following conditions; namely;-i. The size of the capital to be offered to public through offer for sale shallnot be less than one hundred million rupees or twenty-five per cent of the capital, whichever is less; ii. no premium shall be charged unless the company has profitableoperational record for at least one year; iii. in case a premium is to be charged on the sale of shares, the offer shall befully underwritten and the underwriters, not being the associatedcompanies, shall include at least two financial institutions includingcommercial banks and investment banks and the underwriters shall givefull justification of the amount of premium in their independent duediligence reports. iv. due diligence reports of the underwriters shall form part of the materialcontracts: and v. full justification for the premium shall be disclosed in the offer for sale. iii.
6.
7.
8.
9.
10. RELAXATION OF RULES: Where the Authority is satisfied that it is notpracticable to comply with any requirement of these rules in a particular case or class ofcases, the Authority may, for reasons to be recorded, relax such requirement subject tosuch conditions as it may deem fit. 11. PENALTY: Whoever fails or refuses to comply with, or contravenes anyprovision of these rules, or knowingly and willfullyauthorizes or permits such failure,refusal or contravention, shall, in addition to any other liability under the Ordinance, bealso punishable with fine not exceeding two thousand rupees, and in case of continuingfailure, refusal or contravention, to a further fine not exceeding one hundred rupees forevery day after the first during which such contravention continues.
GENERAL PROVISIONS AS TO SHARE CAPITAL
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91. ONLY FULLY PAID SHARES TO BE ISSUED:
No company shall issue partlypaid shares: Provided that where a company has partly paid shares on the commencement ofthis Ordinance, iti. shall not issue any further share capital until all the shares previouslyissued have become fully paid up; and ii. shall pay dividend only in proportion to the amount paid up on eachshare. 92. POWER OF COMPANY LIMITED BY SHARES TO ALTER ITS SHARE CAPITAL: 1) Acompany limited by shares, if so authorised by its articles, may alter the conditions of its memorandum so as to a. increase its share capital by such amount as it thinks expedient; b. consolidate and divide the whole or any part of its share capital intoshares of larger amount than its existing shares; c. sub-divide its shares, or any of them, into shares of smaller amount thanis fixed by the memorandum; or d. cancel shares which, at the date of the passing of the resolution in thatbehalf, have not been taken or agreed to be taken by any person, anddiminish the amount of its share capital by the amount of the shares socancelled: Provided that, in the event of consolidation or sub-division of shares, the rightsattaching to the new shares shall be strictly proportional to the rights attaching to theprevious shares so consolidated or sub-divided: Provided further that, where any shares issued are of a class which is the same asthat of shares previously issued, the rights attaching to the new shares shall be the sameas those attaching to the shares previously held. 2) The new shares issued by a company shall rank paripassuwith theexisting shares of the class to which the new shares belong in all matters, including theright to such bonus or right issue and dividend as may be declared by the companysubsequent to the date of issue of such new shares. 3) The powers conferred by sub-section (1) shall be exercisable by thecompany only in a general meeting. 3A) Notwithstanding anything contained in this Ordinance or any other lawfor the time being in force or the memorandum and articles, where the authorised capitalof a company is fully subscribed, or the unsubscribed capital is insufficient, the sameshall be deemed to have been increased to the extent necessary for issue of shares to ascheduled bank or financial institution in pursuance of any obligation of the company toissue shares to such scheduled bank or financial institution. 4) A cancellation of shares in pursuance of sub-section (1) shall not bedeemed to be a reduction of share capital within the meaning of this Ordinance. 5) The company shall file with the registrar notice of the exercise of anypower referred to in sub-section (1) within fifteen days from the exercise thereof. 93. NOTICE TO REGISTRAR OF CONSOLIDATION OF SHARE CAPITAL, ETC : 1) Where acompany having a share capital has consolidated and divided its share capital into sharesof larger amount than its existing shares, it shall, within fifteen days of the consolidationand division, file notice with the registrar of the same, specifying the shares consolidatedand divided. 2) If a company makes default in complying with the requirements of subsection(5) of section 92 or subsection (1) of this section, it shall be liable to a fine whichmay extend to one hundred rupees for every day during which the default continues, andevery officer of the company who knowingly and willfully authorizes or permits thedefault shall be liable to the like penalty. 94. NOTICE OF INCREASE OF SHARE CAPITAL OR OF MEMBERS: 1) Where acompany having a share capital has resolved to increase its share capital beyond theauthorised capital or such capital is increased under sub-section (3A) of section 92, andwhere a company not having a share capital has resolved to increase the number of itsmembers beyond the number previously registered, it shall file with the registrar, withinfifteen days after the passing of the resolution, a notice of the increase of capital ormembers, as the case may be, and the registrar shall record the increase: Provided that where default is made by a company in filing a notice of increasein the authorised capital under sub-section (3A) of section 92, the scheduled bank or thefinancial institution to whom shares have been issued may file notice of such increasewith the registrar and such notice shall be deemed to have been filed by the companyitself and the scheduled bank or financial institution shall be entitled to recover from thecompany the amount of any fee properly paid by it to the registrar in respect of such increase. 2) The notice to be given under sub-section (1) shall include particulars ofthe shares to be affected and the conditions, if any, subject to which the new shares are tobe issued. 3) If a company makes default in complying with the requirements of subsection(1), it shall be liable to a fine which may extend to one hundred rupees for everyday during which the default continues, and every officer of the company who knowinglyand willfully authorizes or permits the default shall be liable to the like penalty.
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No resolution referred to in sub-section (1) shall take effect unless thenotice required by that sub-section to be filed with the registrar is duly sent to him. 95. PROHIBITION OF PURCHASE OR GRANT OF FINANCIAL ASSISTANCE BY A COMPANY FOR PURCHASE OF ITS OWN OR ITS HOLDING COMPANY S SHARES: 1) No companyshall have power to buy its own shares or the shares of its holding company: Provided that a subsidiary shall not be barred a. from acting as a trustee unless its holding company is beneficiallyinterested under the trust; and b. from dealing in shares of its holding company in the ordinary courseof its business, where such subsidiary carries on a bona fide businessof brokerage: Provided further that a subsidiary dealing in shares of its holding company in theordinary course of its brokerage business, shall not exercise the voting rights attached to such shares. 2) No company limited by shares, other than a private company, not being asubsidiary of a public company, shall give, whether directly or indirectly, and whether bymeans of a loan, guarantee, the provision of security or otherwise, any financialassistance for the purpose of or in connection with purchase made or to be made by anyperson of any shares in the company or, where the company is a subsidiary, in its holdingcompany: Provided that nothing in this sub-section shall prevent the company fromadvancing or securing an advance to any of its salaried employees, including a chiefexecutive who, before his appointment as such, was not a director of the company, butexcluding all directors of the company, for purchase of shares of the company or of itssubsidiary or holding company, if making or securing of such advance is a part of thecontract of service of such employee. 3) If a company acts in contravention of sub-section (1) or sub-section (2),the company and every officer of the company who is knowingly and willfully in defaultshall be liable to a fine which may extend to ten tho usand rupees if the default relates to alisted company and to two thousand rupees if the default relates to any other company. 4) Nothing in this section shall preventa. a company from redeeming any shares or any other redeemable securityissued in accordance with the provisions of this Ordinance; and b. a listed company from purchasing its own shares in accordance with the provisions of this Ordinance. 95A. POWER OF A COMPANY TO PURCHASE ITS OWN SHARES: 1) Notwithstanding anything contained in this Ordinance or any other law for the timebeing in force or the memorandum and articles, a listed company may, subject to theprovisions of this section and the regulations prescribed by the Commission in thisbehalf, purchase its own shares (hereinafter in this section referred to as purchase ). 2) The shares purchased by the company may, in accordance with theprovisions of this section and the regulations, either be cancelled or held as treasuryshares. 3) The shares held by the company as treasury shares shall, as long asthey are so held, in addition to any other conditions as may be prescribed, be subjectto the following conditions, namely:a. the voting rights of these shares shall remain suspended;and b. no cash dividend shall be paid and no other distribution,whether in cash or otherwise of the company's assets,including any distribution of assets to members on awinding up shall be made to the company in respect ofthese shares: Provided that nothing in this sub-section shall prevent, i. an allotment of shares as fully paid bonus shares inrespect of the treasury shares; and ii. the payment of any amount payable on theredemption of the treasury shares, if they areredeemable. 4) The board of directors shall recommend the purchase to themembers. The decision of the board of directors shall clearly specify the number ofshares proposed to be purchased, purpose of purchase i.e. cancellation or holdingthe shares as treasury shares, the purchase price, period within which purchase shallbe made, source of funds, justification for the purchase and effect on the financialposition of the company. 5) The purchase shall be made only under the authority of a specialresolution. 6) The purchase shall be made within a period as specified in theregulations. 7) The proposal of the board of directors to purchase shares shall becommunicated to the Commission and to the stock exchange on which shares of thecompany are listed on conclusion of the board meeting. 8) The purchase shall always be made in cash and shall be out of thedistributable profits or reserves specifically maintained for the purpose. 9) The purchase shall be made either through a tender offer or throughstock exchange as prescribed by the regulations. 10) The company may dispose of the treasury shares as prescribed bythe regulations. 4)
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11) Where a purchase has been made under this section, the companyshall maintain a register of shares so purchased and enter therein the followingparticulars, namely:a. number of shares purchased; b. consideration paid for the shares purchased; c. mode of purchase; d. the date of cancellation or re-issuance of such shares; e. number of bonus shares issued in respect of treasury shares;and f. number and amount of treasury shares redeemed, ifredeemable. 12) Whosoever contravenes any provision of this section or any regulationsframed hereunder shall be punishable with a fine which may extend to thirty millionrupees and shall also be individually and severally liable for any and all losses ordamages arising out of such contravention.
THE COMPANIES (BUY-BACK OF SHARES) RULES, 1999

S.R.O. 1337 (I)/99 1. SHORT TITLE COMMENCEMENT AND APPLICATION: 1) These rules may becalled the Companies (Buy-back of Shares) Rules, 1999. 2) They shall come into force at once. 3) They shall apply to listed companies. 2. DEFINITIONS: 1) In these rules, unless there is anything repugnant inthe subject or context,a. "Commission" means the Securities and ExchangeCommission of Pakistan; b. "Ordinance" means the Companies Ordinance, 1984; and c. "Purchase" means purchase by the companies of their ownshares. 2) All other terms and expressions used but not defined in theserules shall have the same meaning as assigned to them in the Ordinance. 3. FINANCIAL RATIOS: 1) Subject to and in addition to other restrictions andconditions provided in section 95A of the Ordinance, the company intending topurchase, shall have debt-equity and current ratios as under: i. Debt-equity ratio 60 :40 ii. Current ratio 1:1 2) The financial ratios specified in sub-rule (1) shall be certified bythe auditors of the company on a date not earlier than thirty days immediatelypreceding the date of passing the special resolution for the purchase. 3) Debt-equity and current ratios as certified by the auditors shall beindicated in the explanatory statement to be circulated to the membersalongwith the notice of the meeting in which the proposed purchase is to beconsidered. 4. AVAILABILITY OF SUFFICIENT CASH: 1) The company shall have sufficientcash available with it for the purchase. 2) A certificate from the auditors that sufficient cash is available,shall be obtained by the company on a date not earlier than thirty daysimmediately preceding the date of passing the special resolution for purchaseand the position shall be indicated in the explanatory statement to becirculated along with the notice of the meeting. 5. PURCHASE PROCEDURE: 1) The directors shall take a decision in ameeting for the purchase of a specified number of shares at a determined priceand shall fix a date for the company's meeting for seeking the approval ofshareholders. 2) The decision of the directors for the purchase shall becommunicated to the Commission and the respective stock exchange on theday of the decision. 3) Subject to the approval of the shareholders, made in a meetingthrough special resolution, the tender notice for the purchase shall contain i. the maximum number of shares to be purchased by thecompany; ii. the manner in which the offer shall be communicated; iii. the last date by which the offer to sell the shares shall bemade; and iv. the name and the address of the designated branches ofthe authorized bank. 4) A shareholder, interested to sell his shares to the company inresponse to the tender notice, shall make the offer in writing through thedesignated branches of an authorized bank, providing the following informationin the offer, namely: i. Name of the shareholder; ii. his father's name and in the case of a married woman or awidow, her husband's name; iii. National Identity Card No.; iv. address of the shareholder registered with the company; v. number of shares offered for repurchase by the company; vi. distinctive numbers of share certificates (if not in theCentral Depository);
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vii. folio No. (if not in the Central Depository); and viii. sub-account number with the Central Depository, if any. 5) The company shall take a decision on the offers received withinten days of the closing date of the receipt of offers. 6) In case, offers received in response to tender notice exceed therequisite purchase, the acceptance thereof shall be on pro-rata basis in lots offive hundred shares. 7) The acceptance of the offer shall be communicated within sevendays of the decision. 8) The shareholder, whose offer has been accepted, shall submit the share certificates alongwith the transfer deed duly signed, verified andwitnessed to the company through designated branches of the bank withinseven days of the receipt of acceptance from the company. 9) Where the shares are on the Central Depository System aconfirmation from the Central Depository, about the availability of the shares alongwith authorization to transfer, shall be sent to the designated branches ofthe bank within seven days of the receipt of acceptance of the offer. 10) In the case of non-compliance with sub-rules (8) and (9), theacceptance of the offer shall be deemed to have been revoked. 11) The company shall pay the price of the purchase through 'bankdraft'/'pay order' immediately on receipt of the share certificates and transferdeed or the authority to transfer the shares from the Central Depository, as thecase may be but not later than seven days. 6. DISCLOSURE OF PURCHASE: The purchase shall be disclosed in thebalance sheet as reduction of share capital and other necessary details including the mode and purchase price shall be provided in the explanatorynotes of the accounts. 7. FILING OF RETURN: The company shall submit to the Commission andthe registrar concerned a return and a declaration of solvency within thirtydays of the purchase in the manner set out in the Schedule to these rules. 8. PENALTY: Whoever fails or refuses to comply with or contravenes anyprovision of these rules, or knowingly and willfully authorizes or permits suchfailure, refusal or contravention shall, in addition to any other liability underthe Ordinance, be also punishable with fine not exceeding two thousandrupees, and, in case of continuing failure, refusal or contravention, to a furtherfine not exceeding one hundred rupees for every day after the first duringwhich such contravention continues.
REDUCTION OF SHARE CAPITAL 96. REDUCTION OF SHARE CAPITAL:

Subject to confirmation by the Court, acompany limited by shares, if so authorised by its articles, may by special resolutionreduce its share capital in any way, and in particular and without prejudice to thegenerality of the foregoing powers may i. extinguish or reduce the liability on any of its shares in respect of sharecapital not paid up; or ii. either with or without extinguishing or reducing liability on any of itsshares, cancel any paid-up share capital which is lost or unrepresented byavailable assets; or iii. either with or without extinguishing or reducing liability on any of itsshares, pay off any paid -up share capital which is in excess of the needsof the company;and may, if and so far as is necessary, alter its memorandum by reducing the amount ofits share capital and of its shares accordingly. 2) A special resolution under sub-section (1) is in this Ordinance referred toas a resolution for reducing share capital. 97. APPLICATION TO COURT FOR CONFIRMING ORDER: Where a company haspassed a resolution for reducing share capital, it may apply by a petition to the Court foran order confirming the reduction. 98. ADDITION TO NAME OF COMPANY OF AND REDUCED : On and from thepassing by a company of a resolution for reducing share capital, or where the reductiondoes not involve either the diminution of any liability in respect of unpaid share capital orthe payment to any shareholder of any paid-up share capital, then on and from the makingof the order confirming the reduction, the company shall, unless otherwise directed by theCourt for any special reasons, add to its name until such date as the Court may fix, thewords and reduced as the last words thereof, and those words shall, until that date, bedeemed to be part of the name of the company: Provided that, where the reduction does not involve either the diminution of anyliability in respect of unpaid share capital, or payment to any shareholder of any paid-upshare capital, the Court may, if it thinks expedient, dispense with the addition of thewords and reduced . 99. OBJECTION BY CREDITORS AND SETTLEMENT OF LIST OF OBJECTING CREDITORS: 1)
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Where the proposed reduction of share capital involves either diminution of liabilityin respect of unpaid share capital or the payment to any shareholder of any paid-up sharecapital, and in any other case if the Court so directs, every creditor of the company who,on the date fixed by the Court, is entitled to any debt or claim which, if that date were thedate of commencement of the winding up of the company, would be admissible in proofagainst the company, shall be entitled to object to the reduction. 2) The Court shall settle a list of creditors so entitled to object, and for thatpurpose shall ascertain, as far as possible without requiring an application from anycreditor, the names of those creditors and the nature and amount of their debts or claims,and may publish notices fixing a day or days within which creditors not entered on thelist are to claim to be so entered or are to be excluded from the right of objecting to thereduction. 100. POWER TO DISPENSE WITH CONSENT OF CREDITOR ON SECURITY BEING GIVEN FOR HIS DEBT: 1) Where a creditor entered on the list of creditors whose debt or claim is notdischarged or determined does not consent to the reduction, the Court may, if it thinks fit,dispense with the consent of that creditor, on the company securing payment of his debtor claim by appropriating, as the Court may direct, the following amount, that is to say, i. if the company admits the full amount of his debt or claim, or, though notadmitting it, is willing to provide for it, then the full amount of the debtor claim; and ii. if the company does not admit or is not willing to provide for the fullamount of the debt or claim, or if the amount is contingent or notascertained, then an amount fixed by the Court after the like inquiry, andadjudication as if the company were being wound up by the Court. 101. ORDER CONFIRMING REDUCTION: If the Court is satisfied with respect toevery creditor of the company who under this Ordinance is entitled to object to thereduction that either his consent to the reduction has been obtained or his debt or claimhas been discharged or has been determined or has been secured, the Court may make anorder confirming the reduction on such terms and conditions as it thinks fit. 102. REGISTRATION OF ORDER AND MINUTE OF REDUCTION: 1) The registrar onproduction to him of an order of the Court confirming the reduction of the share capital ofa company, and on the filing with him of a certified copy of the order and of a minuteapproved by the Court and showing, with respect to the share capital of the company asaltered by the order, the amount of the share capital, the number of shares into which it isto be divided and the amount of each share, and the amount, if any, at the date of theregistration deemed to be paid-up on each share, shall register the order and minute. 2) A resolution for reducing share capital as confirmed by an order of theCourt registered under sub-section (1) shall take effect on such registration and notbefore. 3) Notice of the registration shall be published in such manner as the Courtmay direct. 4) The registrar shall certify under his hand the registration of the order andminute, and his certificate shall be conclusive evidence that all the requirements of thisOrdinance with respect to reduction of share capital have been complied with, and thatthe share capital of the company is such as is stated in the minute. 103. MINUTE TO FORM PART OF MEMORANDUM: 1) The minute whenregistered shall be deemed to be substituted for the corresponding part of thememorandum of the company, and shall be valid and alterable as if it had been originallyincorporated therein, and shall be embodied in every copy of the memorandum issuedafter its registration. 2) If a company makes default in complying with the requirements of subsection(1), it shall be liable to a fine which may extend to fifty rupees for each copy inrespect of which default is made, and every officer of the company who knowingly andwillfully authorizes or permits the default shall be liable to the like penalty. 104. LIABILITY OF MEMBERS IN RESPECT OF REDUCED SHARES: 1) A member ofthe company, past or present, shall not be liable in respect of any share to any call orcontribution exceeding in amount the difference, if any, between the amount paid, or, asthe case may be, the reduced amount, if any, which is to be deemed to have been paid, onthe share and the amount of the share as fixed by the minute: Provided that, if any creditor, entitled in respect of any debt or claim to object tothe reduction of share capital, is, by reason of his ignorance of the proceedings forreduction, or of their nature and effect with respect to his claim not entered on the list ofcreditors, and, after the reduction, the company is unable, within the meaning of theprovisions of this Ordinance with respect to winding up by the Court, to pay the amountof his debt or claim, theni. every person who was a member of the company at the date of theregistration of the order for reduction and minute shall be liable tocontribute for the payment of that debt, or claim an amount notexceeding the amount which he would have been liable to contribute ifthe company had commenced to be wound up on the day before thatregistration; and 1)
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ii. if the company is wound up, the Court, on the application of any suchcreditor and proof of his ignorance as aforesaid, may, if it thinks fit,settle accordingly a list of persons so liable to contribute, and make andenforce calls and orders on the contributories settled on the list as if theywere ordinary contributories in a winding up. 2) Noting in this section shall effect the rights of the contributories among themselves. 105. PENALTY ON CONCEALMENT OF NAME OF CREDITOR: If any officer of thecompany willfully conceals the name of any creditor entitled to object to the reduction, orwillfully misrepresents the nature or amount of the debt or claim of any creditor, or if anyofficer of the company abets any such concealment or misrepresentation as aforesaid,every such officer shall be punishable with imprisonment for a term which may extend toone year, or with fine, or with both. 106. PUBLICATION OF REASONS FOR REDUCTION: In the case of reduction of sharecapital, the Court may require the company to publish in the manner specified by theCourt the reasons for reduction, or such other information in regard thereto as the Courtmay think expedient with a view to giving proper information to the public, and, if theCourt thinks fit, the causes which led to the reduction. 107. INCREASE AND REDUCTION OF SHARE CAPITAL IN CASE OF A COMPANY LIMITED BY GUARANTEE HAVING A SHARE CAPITAL: A company limited by guarantee may, if it has ashare capital and is so authorised by its articles, increase or reduce its share capital in thesame manner and subject to the same conditions in and subject to which a companylimited by shares may increase or reduce its share capital under the provisions of thisOrdinance.
VARIATION OF SHAREHOLDER S RIGHTS 108.

1) 2) VARIATION OF SHAREHOLDER S RIGHTS: The variation of the rights ofshareholders of any class shall be effected only in the manner laid down in sec. 28. Not less than ten per cent of the class of shareholders who are aggrievedby the variation of their rights under sub-section (1) may, within thirty days of the date ofthe resolution varying their rights, apply to the Court for an order cancelling theresolution: Provided that the Court shall not pass such an order unless it is shown to itssatisfaction that some facts which would have had a bearing on the decision of theshareholders were withheld by the company in getting the aforesaid resolution passed or,having regard to all the circumstances of the case, that the variation would unfairlyprejudice the shareholders of the class represented by the applicant. An application under sub-section (2) may be made on behalf of theshareholders entitled to make it by such one or more of their number as they mayauthorize in writing in this behalf. The decision of the Court on any such application shall be final. The company shall, within fifteen days after the service on the companyof any order made on any such application, forward a copy of the order to the registrarand, if default is made in complying with this provision, the company and every officerof the company who is knowingly and willfully in default shall be liable to a fine whichmay extend to two hundred rupees for each day during which the default continues. The expression variation includes abrogation, revocation orenhancement. Section 5 of the Limitation Act, 1908, shall apply to anapplication made under sub-section (2).
3) 4) 5)
6) 7)
THE COMPANIES' SHARE CAPITAL (VARIATIONIN RIGHTS AND PRIVILEGES) RULES, 2000
S.R.O.599 (I)/2000. 1. SHORT TITLE AND COMMENCEMENT: 1) These rules may be calledthe Companies' Share Capital (Variation in Rights and Privileges) Rules,2000. 2) They shall come into force at once. 2. DEFINITIONS: 1) In these rules, unless there is anythingrepugnant in the subject or context,a. "Commission" means the Securities and ExchangeCommission of Pakistan; and b. "Ordinance" means the Companies Ordinance, 1984. 2) All other terms and expressions used but not defined in these rulesshall have the same meaning as assigned to them in the Ordinance. 3. KINDS AND CLASSES OF SHARE CAPITAL: 1) A company limited byshares may have more than one kind of share capital and may havedifferent classes of shares under each kind. 2) Where a company intends to have different kinds of sharecapital and classes of shares therein, it shall specifically so provide in itsmemorandum and articles. 4. NATURE OF RIGHTS AND PRIVILEGES: Each kind of share capital of acompany and class or classes of its shares, if any, as specified in thememorandum
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and articles may have different rights and privileges,which shall be provided in the articles. The variation in the rights andprivileges of the shareholders in a kind of share capital or class orclasses therein may be of the nature, including the following, namely:a. different voting rights; voting rights disproportionate tothe paid up value of shares held; voting rights forspecific purposes only; or no voting rights at all; b. different rights for entitlement of dividend, right sharesor bonus shares or entitlement to receive the noticesand to attend the general meetings; and c. rights and privileges for indefinite period, for a limitedspecified period or fo r such periods as may from timeto time be determined by the members through specialresolution. CONDITIONS: 1) No company shall issue further share capital ofany kind or class carrying different rights and privileges except with priorapproval of the Commission to be obtained on the basis of a specialresolution. 2) Subject to the provisions of section 86 of the Ordinance, offerof further share capital of any kind or class carrying different rights andprivileges shall be made to each existing shareholder proportionatelywithout any discrimination. 3) If any of the existing shareholders declines to accept the offermade under sub-rule (2), the shares so declined shall be disposed of bythe directors in such manner as may be provided in the articles or inaccordance with the special resolution passed by shareholders. 4) In case share capital of a company has different classeshaving different rights and privileges and the same is to be offered to thegeneral public, the fact shall be distinctly mentioned in the offeringdocument and the difference in the rights and privileges of any class ofshare capital shall be conspicuously mentioned in the offering documentor prospectus, etc.
5.
REGISTRATION OF UNLIMITED COMPANY AS LIMITED 109.

REGISTRATION OF UNLIMITED COMPANY AS LIMITED: Subject to theprovisions of this section, any company registered as unlimited may register under thisOrdinance as limited or any company already registered as a limited company may reregisterunder this Ordinance, but the registration of an unlimited company as a limitedcompany shall not affect the rights, debts, liabilities, obligations or contracts acquired,incurred or entered into by, to, with or on behalf of, the company before the registration. 2) On registration in pursuance of sub-section (1), the registrar shall closethe former registration of the company, and may dispense with the delivery to him ofcopies of any documents with copies of which he was furnished on the occasion of theoriginal registration of the Company; but, save as aforesaid, the registration shall takeplace in the same manner and shall have effect as if it were the first registration of thecompany under this Ordinance. 110. POWER OF UNLIMITED COMPANY TO PROVIDE FOR RESERVE SHARE CAPITAL ON RE-REGISTRATION: An unlimited company having a share capital may, by its resolution forregistration as a limited company in pursuance of this Ordinance, increase the nominalamount of its share capital by increasing the nominal amount of each of its shares, butsubject to the condition that no part of the amount by w hich its capital is so increasedshall be capable of being called up except in the event and for the purpose of thecompany being wound up. 1)
UNLIMITED LIABILITY OF DIRECTORS 111.

1) 2) LIMITED COMPANY MAY HAVE DIRECTORS WITH UNLIMITED LIABILITY: Ina limited company, the liability of the directors or of any director may, if so provided bythe memorandum, be unlimited. In a limited company in which the liability of any director is unlimited,the directors of the company, if any, and the member who proposes a person for electionor appointment to the office of director, shall add to that proposal a statement that theliability of the person holding that office will be unlimited and the promoters and officersof the company, or one of them shall, before that person accepts the office or acts therein,give him notice in writing that his liability will be unlimited. If any director or proposer makes default in adding such a statement, or ifany promoter or officer of the company makes default in giving such a notice, he shall beliable to a fine which may extend to two thousand rupees and shall also be liable for anydamage which the person so elected or appointed may sustain from the default, but theliability of the person elected or appointed shall not be affected by the default. SPECIAL RESOLUTION OF LIMITED COMPANY MAKING LIABILITY OF DIRECTORS UNLIMITED: A limited company, if so authorised by its articles, may, by specialresolution, alter its memorandum so as to render unlimited the liability of its directors orof any director.
3)
112.
1)
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2) Upon the passing of any such special resolution, the provisions thereofshall be as valid as if they had been originally contained in the memorandum: Provided that an alteration of the memorandum making the liability of any of thedirectors unlimited shall not apply, without his consent, to a director who was holding theoffice from before the date of the alteration, until the expiry of the term for which he washolding office on that date.
SPECIAL PROVISIONS AS TO DEBENTURES 113.

RIGHT OF DEBENTURE-HOLDER AND SHAREHO LDER TO HAVE COPIES OF TRUST DEED: 1) A copy of any trust-deed for securing any issue of debentures shall beforwarded to every holder of any such debentures or holder of shares in the company, athis request on payment of such fee as the company may fix not exceeding the amountprescribed. 2) If a copy is refused or not forwarded as required under sub-section (1),the company shall be liable to a fine not exceeding five hundred rupees, and to a furtherfine not exceeding fifty rupees for every day after the first during which the refusalcontinues, and every officer of the company who knowingly authorizes or permits therefusal shall be liable to the like penalty, and the registrar may by order compelimmediate supply of a copy. 114. DEBENTURES NOT TO CARRY VOTING RIGHTS: 1) Except as otherwiseprovided in this Ordinance, no company shall, after the commencement of thisOrdinance, issue any debentures carrying voting rights at any meeting of the company: Provided that debentures convertible into ordinary shares may, at the option ofthe company, carry voting rights: Provided further that such voting rights shall not be in excess of the voting rightsattaching to ordinary shares of equal paid-up value. Explanation:Debentures convertible into ordinary shares include debentureswith subscription warrants. 2) Notwithstanding any-thing contained in this Ordinance, or in thememorandum or articles of any company, no debenture-holder having immediatelybefore the commencement of this Ordinance voting rights shall, after suchcommencement, exercise any such rights at any meeting of the company, except ameeting of debenture-holders themselves. 115. PERPETUAL DEBENTURES: A condition contained in any debenture or anydeed for securing any debentures, whether issued or executed before or after thepromulgation of this Ordinance, shall not be invalid by reason only that thereby thedebentures are made irredeemable or redeemable only on the happening of acontingency, however remote, or on the expiration of a period however long. 116. POWER TO RE-ISSUE REDEEMED DEBENTURES IN CERTAIN CASES: 1) Whereeither before or after the commencement of this Ordinance a company has redeemed anydebentures previously issued, the company, unless the articles or the conditions of issueexpressly otherwise provide, or unless the debentures have been redeemed in pursuanceof any obligation on the company so to do, not being an obligation enforceable only bythe person to whom the redeemed debentures were issued or his assigns, shall havepower, and shall be deemed always to have had power, to keep the debentures alive forthe purposes of reissue, and where a company has purported to exercise such a power thecompany shall have power, and shall be deemed always to have had power, to reissue thedebentures either by reissuing the same debentures or by issuing other debentures in theirplace, and upon such reissue the person entitled to the debentures shall have, and shall bedeemed always to have had, the same rights and priorities as if the debentures had notpreviously been issued. 2) Where with the object of keeping debentures alive for the purpose ofreissue they have, either before or after the commencement of this Ordinance, beentransferred to a nominee of the company, a transfer from that nominee shall be deemed tobe a reissue for the purposes of this section. 3) Where a company has, either before or after the commencement of thisOrdinance, deposited any of its debentures to secure advances from time to time oncurrent account or otherwise, the debentures shall not be deemed to have been redeemedby reason only of the account of the company having ceased to be in debit while thedebentures remained so deposited. 4) The re-issue of a debenture or the issue of another debenture in its placeunder the power by this section given to, or deemed to have been possessed by, acompany, whether the re-issue or issue was made before or after the commencement ofthis Ordinance, shall be treated as the issue of a new debenture for the purposes of stampdutyand registration, but it shall not be so treated for the purposes of any provisionlimiting the amount or number of debentures to be issued: Provided that any person lending money on the security of a debenture re-issuedunder this section which appears to be duly stamped may give the debenture in evidencein any proceedings for enforcing his security without payment of the stamp-duty or anypenalty in respect thereof, unless he had notice or, but for his
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negligence, might havediscovered, that the debenture was not duly stamped, but in any such case the companyshall be liable to pay the proper stamp-duty and penalty. 5) Nothing in this section shall prejudice any power to issue debentures inthe place of any debentures paid off or otherwise satisfied or extinguished, reserved to acompany by its debentures or the securities for the same. 117. SPECIFIC PERFORMANCE OF CONTRACT TO SUBSCRIBE FOR DEBENTURES: Acontract with a company to take up and pay for any debentures of the company may beenforced by a decree for specific performance. 118. PAYMENT OF CERTAIN DEBTS OUT OF ASSETS SUBJECT TO FLOATING CHARGE IN PRIORITY TO CLAIMS UNDER THE CHARGE: 1) Where either a receiver is appointed onbehalf of the holders of any debentures of a company secured by a floating charge, orpossession is taken by or on behalf of these debenture holders of any property comprisedin or subject to the charge, then, if the company is not at the time in course of beingwound up, the debts which in every winding up are under the provisions of Part XIrelating to preferential payments to be paid in priority to all other debts, shall be paidforthwith out of any assets coming to the hands of the receiver or other person takingpossession as aforesaid in priority to any claim for principal or interest in respect of thedebentures. 2) The periods of time mentioned in the said provisions of Part XI shall bereckoned from the date of the appointment of the receiver or of possession being taken asaforesaid, as the case may be. 3) Any payments made under sub-section (1) shall be recouped, as far asmay be, out of the assets of the company available for payment of general creditors. 119. POWERS AND LIABILITIES OF TRUSTEE: 1) The trustee nominated orappointed under the trust-deed for securing an issue of debentures shall, if so empoweredby such deed, have the right to sue for all redemption monies and interest in the followingcases, namely: a. where the issuer of the debentures as mortgagor binds himself to repaythe debenture loan or pay the accrued interest thereon, or both to repaythe loan and pay the interest thereon, in the manner provided on the duedate; b. where by any cause other than the wrongful act or default of the issuerthe mortgaged property is wholly or partially destroyed or the security isrendered insufficient within the meaning of section 66 of the Transfer ofProperty Act, 1882, and the trustee has given the issuera reasonable opportunity of providing further security adequate to renderthe whole security sufficient and the issuer has failed to do so; c. where the trustee is deprived of the whole or part of the security by or inconsequence of any wrongful act or default on the part of the issuer; and d. where the trustee is entitled to take possession of the mortgaged propertyand the issuer fails to deliver the same to him or to secure the possessionthereof without disturbance by the issuer or any person claiming under atitle superior to that of the issuer. 2) Where a suit is brought under clause (a) or clause (b) of sub-section (1)the Court may at its discretion stay the suit and all proceedings therein notwithstandingany contract to the contrary, until the trustee has exhausted all his available remediesagainst the mortgaged property or what remains of it unless the trustee abandons hissecurity and, if necessary, retransfers the mortgaged property. 3) Notwithstanding anything contained in sub-sections (1) and (2) or anyother, law for the time being in force, the trustee or any person acting on his behalf shall,if so authorised by the trust-deed, sell or concur in selling, without intervention of theCourt, the mortgaged property or any part thereof in default of payment according to repayment schedule of any redemption amount or in the payment of any accrued interest onthe due date by the issuer. Explanation:"Issuer", in sub-sections (1), (2) and (3), shall mean the companyissuing debentures and securing the same by mortgage of its properties or assets, or bothits properties and assets, and appointing a trustee under a trust-deed. 4) Subject to the provisions of this section, any provision contained in atrust-deed for securing an issue of debentures, or in any contract with the holders ofdebentures secured by a trust-deed, shall be void in so far as it would have the effect ofexempting a trustee thereof from, or indemnifying him against, liability for breach oftrust, where he fails to show the degree of care and diligence required of him as trustee,having regard to the provisions of the trust-deed conferring on him any power, authorityor discretion. 5) Sub-section (4) shall not invalidatea. any release otherwise validly given in respect of anything done oromitted to be done by a trustee before the giving of the release; or b. any provision enabling such a release to be given
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i. on the agreement thereto of a majority of not less than threefourthsin value of the debentureholders present and voting inperson or, where proxies are permitted, by proxy, at a meetingsummoned for the purpose; and ii. either with respect to specific acts or omissions or on the trusteedying or ceasing to act. Sub-section (4) shall not operate a. to invalidate any provision in force immediately before thecommencement of this Ordinance, so long as any person then entitled tothe benefit of that provision or afterwards given the benefit thereof undersub-section (7) remains as trustee of the deed in question ; or b. to deprive any person of any exemption or right to be indemnified inrespect of anything done or omitted to be done by him while any suchprovision was in force. While any trustee of a trust-deed remains entitled to the benefit orprovision saved by sub-section (6), the benefits of that provision may be given either a. to all trustees of the deed, present and future; or b. to any named trustees or proposed trustees thereof; by a resolution passed by a majority of not less than three-fourths in value of thedebenture-holders present in person or, where proxies are permitted, by proxy, at ameeting called for the purpose in accordance with the provisions of the deed or, if thedeed makes no provisions for calling meetings, at a meeting called for the purpose in anymanner approved by the Court. ISSUE OF SECURITIES AND REDEEMABLE CAPITAL NOT BASED ON INTEREST: A company may by public offer or, upon terms and conditions contained in anagreement in writing, issue to one or more scheduled banks, financial institutions or suchother persons as are specified for the purpose by the Federal Government by notificationin the official Gazette, either severally, jointly or through their syndicate, any instrumentin the nature of redeemable capital in any or several forms in consideration of any funds,moneys or accommodations received or to be received by the company, whether in cashor in specie or against any promise, guarantee, undertaking or indemnity issued to or infavour of or for the benefit of the company. In particular and without prejudice to the generality of the forgoingprovisions, the agreement referred to in sub-section (1) for redeemable capital mayprovide for, adopt or include, in addition to others, all or any of the following matters,namely:-1 a. mode and basis of repayment by the company of the amount invested inredeemable capital within a certain period of time; b. arrangement for sharing of profit and loss; c. creation of a special reserve called the "participation reserve by thecompany in the manner provided in the agreement for the issue ofparticipatory redeemable capital in which all providers of such capitalshall participate for interim and final adjustment on the maturity date inaccordance with the terms and conditions of such agreements ; and d. in case of net loss on participatory redeemable capital on the date ofmaturity, the right of holders to convert the outstanding, balance of suchcapital or part thereof as provided in the agreement into ordinary sharesof the company at the break-up price calculated in the prescribed manner. The terms and conditions for the issue of instruments or certificates ofredeemable capital and the rights of their holders shall not be challenged or questioned bythe company or any of its shareholders as repugnant to any provision of this Ordinance orany other law or the memorandum or articles or any resolution of the general meeting ordirectors of the company or any other document. The provisions of this Ordinance relating to the creation, issue,increase or decrease of the capital shall not apply to the redeemable capital.
6)
7)
120.
1)
2)
3)
4)
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PART VII REGISTRATION OF MORTGAGES, CHARGES, ETC
CERTAIN MORTGAGES AND CHARGES TO BE VOID IF NOT REGISTERED: Everymortgage, charge or other interest created after the commencement of this Ordinance by a company and being either a. a mortgage or charge for the purpose of securing any issue of debentures;or b. a mortgage or charge on uncalled share capital of the company; or c. a mortgage or charge on any immovable property wherever situate, orany interest therein; or d. a mortgage or charge on any book debts of the company; or e. a mortgage or charge, not being a pledge, on any movable property of thecompany; or f. a floating charge on the undertaking or property of the company,including stock-in-trade; or g. a mortgage or charge on a ship or any share in a ship; or h. a mortgage or charge on goodwill, on a patent or licence under a patent,on a trade mark, or on a copyright or a licence under a copyright; or i. a mortgage or charge or other interest based on agreement for the issueof any instrument in the nature of redeemable capital; or j. a mortgage or charge or other interest based on a musharika agreement;or k. a mortgage or charge or other interest based on a hire-purchase or leasingagreement for acquisition of fixed assets; shall, so far as any security on the company's property or undertaking is therebyconferred, be void against the liquidator and any creditor of the company, unless theprescribed particulars of the mortgage or charge, together with a copy of the instrument,if any, verified in the prescribed manner, by which the mortgage or charge is created orevidenced are filed with the registrar for registration in the manner required by thisOrdinance within twenty-one days after the date of its creation, but without prejudice toany contract or obligation for repayment of the money thereby secured, and when amortgage or charge becomes void under this section the money secured thereby shallimmediately become payable: Provided that: i. in the case of a mortgage or charge created out of Pakistan comprisingsolely property situate outside Pakistan, twenty-one days after the dateon which the instrument or copy could, in due course of post, and ifdispatched with due diligence, have been received in Pakistan shall besubstituted for twenty-one days after the date of the creation of themortgage or charge as the time within which the particulars andinstrument or copy are to be filed with the registrar; and ii. where the mortgage or charge is created in Pakistan but comprisesproperty outside Pakistan, the instrument creating or purporting to createthe mortgage or charge and a copy thereof verified in the prescribedmanner may be filed for registration notwithstanding that furtherproceedings may be necessary to make the mortgage or charge valid oreffectual according to the law of the country in which the property issituate ; and iii. where a negotiable instrument has been given to secure the payment ofany book debts of a company, the deposit of the instrument for thepurpose of securing an advance to the company shall not for the purposeof this sub-section be treated as a mortgage or charge on those bookdebts; and iv. the holding of debentures entitling the holder to a charge on immovableproperty shall not be deemed to be an interest in immovable property. 2) Where any mortgage or charge on any property of a company required tobe registered under sub-section (1) has been so registered, any person acquiring suchproperty or any part thereof, or any share or interest therein, shall be deemed to havenotice of the said mortgage or charge as from the date of such registration. THE COMPANIES (GENERAL PROVISIONS AND FORMS) RULES, 1985 RULE 13 VERIFICATION OF COPIES FOR PURPOSES OF SECTIONS 121, 122, 123 AND 129: A copy of every instrument or deed creating or evidencing any charge and required to be filed with the registrar in pursuance of section 121, 122, 123 or 129 shall be verified as follows, namely: i. Where the instrument or deed relates, whether wholly or partly, to property situate in Pakistan, the copy shall be verified in the manner provided in rule 12; and ii. Where the instrument or deed relates solely to property situate outside Pakistan, the copy shall be verified by an affidavit of a responsible officer of the company, or of a person interested in the mortgage or charge on behalf of any person other than the company, stating that it is a true copy. 1)
121.
122.
REGISTRATION OF CHARGES ON PROPERTIES ACQUIRED SUBJECT TO CHARGE:
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Where a company registered in Pakistan acquires any property which is subject to acharge of any such kind as would, if it had been created by the company after theacquisition of the property, have been required to be registered under this Part, thecompany shall cause the prescribed particulars of the charge, together with a copy,certified in the prescribed manner to be a correct copy of the instrument, if any, by whichthe charge was created or is evidenced, to be delivered to the registrar for registration inthe manner required by this Ordinance within twenty-one days after the date on which theacquisition is completed: Provided that, if the property is situate and the charge was created outsidePakistan, twenty-one days after the date on which the copy of the instrument could in duecourse of post, and if dispatched with due diligence, have been received in Pakistan shallbe substituted for twenty-one days after the completion of the acquisition as the timewithin which the particulars and th e copy of the instrument are to be delivered to theregistrar. 2) If default is made in complying with this section, the company and everyofficer of the company who is knowingly and willfully in default shall be liable to a fineof two thousand rupees. 123. PARTICULARS IN CASE OF SERIES OF DEBENTURES ENTITLING HOLDERS PARI PASSU: Where a series of debentures containing, or giving by reference to any otherinstrument, any charge to the benefit of which the debenture-holders of that series areentitled paripassuis created by a company, it shall be sufficient for the purposes ofsection 121 if there are filed with the registrar within twenty-one days after the executionof the deed containing the charge or, if there is no such deed, after the execution of anydebentures of the series, the following particulars, namely:a. the total amount secured by the whole series; b. the dates of the resolutions authorizing the issue of the series and the dateof the covering deed, if any, by which the security is created or defined; c. a general description of the property charged; and d. the names of the trustees, if any, for the debenture-holders;together with a copy of the deed verified in the prescribed manner containing the charge,or if there is no such deed, one of the debentures of the series, and the registrar shall, onpayment of the prescribed fee, enter those particulars in the register: Provided that, where more than one issue is made of debentures in the series,there shall be filed with the registrar for entry in the register particulars of the date andamount of each issue, but an omission to do this shall not affect the validity of thedebentures issued. 124. PARTICULARS IN CASE OF COMMISSION, ETC. ON DEBENTURES: Where anycommission, allowance or discount has been paid or made either directly or indirectly bythe company to any person in consideration of his subscribing or agreeing to subscribe,whether absolutely or conditionally, for any debentures of the company, or procuring oragreeing to procure subscriptions, whether absolute or conditional, for any suchdebentures, the particulars required to be filed for registration under sections 121 and 123shall include particulars as to the amount or rate per cent of the commission, discount orallowance so paid or made, but an omission to do this shall not affect the validity of thedebentures issued: Provided that the deposit of any debentures as security for any debt of thecompany shall not for the purposes of this section be treated as issue of the debentures ata discount. 125. REGISTER OF MORTGAGES AND CHARGES: 1) The registrar shall keep, withrespect to each company, a register in the prescribed form of all mortgages and chargescreated by the company and requiring registration under section 121 or section 122 andshall, on payment of the prescribed fee, enter in the register, with respect to every suchmortgage, or charge, the date of creation, the amount secured by it, short particulars ofthe property mortgaged or charged, and the names of the mortgagees or persons entitledto the charge. 2) A register kept in pursuance of sub-section (1) shall be open toinspection by any person on payment of the prescribed fee. 126. INDEX TO REGISTER OF MORTGAGES AND CHARGES: The registrar shall keepa chronological index, in the prescribed form and with the prescribed particulars, of themortgages or charges registered with him under this Ordinance. 127. CERTIFICATE OF REGISTRATION: The registrar shall give a certificate underhis hand of the registration of any mortgage or charge registered in pursuance of section121, stating the amount thereby secured, and the certificate shall be conclusive evidencethat the requirements of sections 121 to 125 as to registration have been complied with. 128. ENDORSEMENT OF CERTIFICATE OF REGISTRATION ON DEBENTURE OR CERTIFICATE OF DEBENTURE STOCK: The company shall cause a copy of every certificate of registrationgiven under section 127 to be endorsed on every debenture or certificate of debenturestock which is issued by the company and the payment of which is secured by themortgage or charge so registered: 1)
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Provided that nothing in this section shall be construed as requiring a company tocause a certificate of registration of any mortgage or charge so given to be endorsed onany debenture or certificate of debenture stock which has been issued by the companybefore the mortgage or charge was created. 129. DUTY OF COMPANY AND RIGHT OF INTERESTED PARTY AS REGARDS REGISTRATION: 1) It shall be the duty of a company to file with the registrar forregistration the prescribed particulars of every mortgage or charge created by thecompany and of the issue of debentures of a series, requiring registration under section121, but registration of any such mortgage or charge may be effected on the applicationof any person interested therein. 2) Where the registration is effected on the application of some person otherthan the company, that person shall be entitled to recover from the company the amountof any fees properly paid by him to the registrar on the registration. 3) Whenever the terms or conditions or extent or operation of any mortgageor charge registered under subsection (1) are modified, it shall be the duty of thecompany to send to the registrar the particulars of such modification together with a copyof the instrument evidencing such modification verified in the prescribed manner, and theprovisions of sub-section (1) as to registration of mortgage or charge shall apply to suchmodification of the mortgage or charge as aforesaid. 130. COPY OF INSTRUMENT CREATING MORTGAGE OR CHARGE TO BE KEPT AT REGISTERED OFFICE: Every company shall cause a copy of every instrument creating anymortgage or charge requiring registration under section 121 and of every instrumentevidencing modification of the terms or conditions thereof, to be kept at the registeredoffice of the company: Provided that, in the case of a series of uniform debentures, a copy of one suchdebenture shall be sufficient. 131. RECTIFICATION OF REGISTER OF MORTGAGES: 1) The Commission, onbeing satisfied that the omission to register a mortgage or charge within the time requiredby section 121, or that the omission or miss-statement of any particular with respect to anysuch mortgage or charge, or the omission to give intimation to the registrar of thepayment or satisfaction of a debt for which a charge or mortgage was created, wasaccidental or due to inadvertence or to some other sufficient cause, or is not of a nature toprejudice the position of creditors or shareholders of the company, or that on othergrounds it is just and equitable to grant relief, may, on the application of the company orany person interested and, on such terms and conditions as seem to the Commission just and expedient, order that the time for registration be extended, or, as the case may be,that the omission or miss-statement be rectified, and may make such order as to the costsof the application as it thinks fit. 2) A certified copy of the order of the Commission passed under subsection(1) shall be filed with the registrar within twenty-one days of the date of suchorder by the company or the person on whose application it is passed. 3) Where the Commission extends the time for the registration of amortgage or charge, the order shall not prejudice any rights acquired in respect of theproperty concerned prior to the time when the mortgage or charge is actually registered. 132. REGISTRATION OF PAYMENT OR SATISFACTION OF MORTGAGES AND CHARGES: 1) It shall be the duty of a company to give intimation to the registrar of the payment orsatisfaction, in full, of any charge or mortgage created by the company and requiringregistration under sections 121 and 122 within twenty-one days from the date of thepayment or satisfaction, in full, thereof. 2) The registrar shall on receipt of such intimation cause a notice to be sentto the holder of the charge or mortgage calling upon him to show-cause, within a time,not exceeding fourteen days, to be fixed by such notice, why the payment or satisfactionof the charge or mortgage should not be recorded. 3) The registrar shall, if no cause is shown, order that a memorandum ofsatisfaction be entered in the register and shall if required furnish the company with acopy thereof. 4) Where cause is shown, the registrar shall record a note to that effect inthe register, and shall inform the company that he has done so. 5) Nothing in this section shall be deemed to affect the powers of theregistrar to make an entry in the register of charges under section 133 otherwise than onreceipt of intimation from the company. 133. POWER OF REGISTRAR TO MAKE ENTRIES OF SATISFACTION AND RELEASE IN ABSENCE OF INTIMATION FROM COMPANY: The registrar may, on evidence being given tohis satisfaction with respect to any registered charge a. that the debt for which the charge was given has been paid or satisfied inwhole or in part, or b. that part of the property or undertaking charged has been released fromthe charge or has ceased to form part of the company's property orundertaking,enter in the register of mortgages and charges a memorandum of satisfaction in whole orin part, or of the fact that part of the property or undertaking has been released from thecharge or has ceased to form part of the company's property or undertaking, as the casemay be, notwithstanding the fact that no intimation has been received by him from thecompany.
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PENALTIES: If any company makes default in filing with the registrar for registration the particulars a. of any mortgage or charge created by the company or any modificationthereof; or b. of the payment or satisfaction of a debt in respect of which a mortgage orcharge has been registered under section 121 or section 122; or c. of the issues of debentures of a series,requiring registration with the registrar under the foregoing provisions of this Ordinance,then, unless the registration has been effected within the prescribed period on theapplication of some other person, the company, and every officer of the company or otherperson who is knowingly a party to the default, shall i. be liable to a fine not exceeding one hundred rupees for every day duringwhich the default in filing of the particulars of satisfaction of a mortgageor charge contin ues; and ii. be liable to a fine not exceeding five hundred rupees for every day duringwhich the default in filing of the particulars of a mortgage or charge or ofdebentures continues. 2) Subject as aforesaid, if any company makes default in complying withany of the requirements of this Ordinance as to the registration with the registrar of anymortgage or charge created by the company, or any modification thereof, the company,and every officer of the company who knowingly and willfully authorizes or permits thedefault, shall, without prejudice to any other liability, be liable to a fine not exceedingfive thousand rupees and to a further fine not exceeding one hundred rupees for every dayafter the first during which the default continues. 3) If any person knowingly and willfully authorizes or permits the deliveryof any debenture or certificate of debenture stock requiring registration with the registrarunder the foregoing provisions of this Ordinance without a copy of the certificate ofregistration being endorsed upon it, he shall, without prejudice to any other liability, beliable to a fine not exceeding two thousand rupees. 135. COMPANY'S REGISTER OF MORTGAGES: 1) Every company shall keep aregister of mortgages and enter therein all mortgages and charges specifically affectingproperty of the company and all floating charges on the undertaking or on any property ofthe company, giving in each case a short description of the property mortgaged orcharged, the amount of the mortgage or charge and, except in the case of securities tobearer, the names of the mortgagees or persons entitled thereto. 2) If any officer of the company knowingly and willfully authorizes orpermits the omission of any entry required to be made in pursuance of sub-section (1), heshall be liable to a fine not exceeding two thousand rupees. 136. RIGHT TO INSPECT COPIES OF INSTRUMENTS CREATING MORTGAGES AND CHARGES AND COMPANY'S REGISTER OF MORTGAGES: 1) The copies kept at the registeredoffice of the company in pursuance of section 130 of instruments creating any mortgageor charge or modification of the terms and conditions thereof requiring registration underthis Ordinance with the registrar, and the register of mortgages and charges kept inpursuance of section 135 shall be open at all reasonable times to the inspection of anycreditor or member of the company without fee, and the register of mortgages shall alsobe open to the inspection of any other person on payment of such fee, not exceeding theamount prescribed for each inspection, as the company may fix. 2) If inspection of the said copies or register is refused, the company shallbe liable to a fine not exceeding five hundred rupees and a further fine not exceeding fiftyrupees for every day after the first during which the refusal continues, and every officerof the company who knowingly authorizes or permits the refusal shall incur the likepenalty, and in addition to the above penalty, the registrar may by order compel animmediate inspection of the copies or register. THE COMPANIES (GENERAL PROVISIONS AND FORMS) RULES, 1985 RULE 24 Maximum fees to be charged by companies: The fee to be charged by a company under sections 136, 150, 471 or any other provision of the Ordinance for inspection of any document or register or for the supply of any copy thereof to a person, other than a creditor or member of the company, shall not exceed the fee specified in the Sixth Schedule for the inspection of a document or register or for the supply of a certified copy of an extract of any document or register kept by the registrar. 1)
134.
RECEIVERS AND MANAGERS 137.

1) REGISTRATION OF APPOINTMENT OF RECEIVER OR MANAGER: If anyperson obtains an order for the appointment of a receiver of, or a person to manage, theproperty of a company, or appoints such a receiver or person under any powers containedin any instrument, he shall, within fifteen days from the date of the order or of theappointment under the powers contained in the
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instrument, file notice of the fact with theregistrar, and the registrar shall, on payment of the prescribed fee, enter the fact in theregister of mortgages and charges. 2) If any person makes default in complying with the requirements of subsection(1), he shall be liable to a fine not exceeding two hundred rupees for every dayduring which the default continues. 138. FILING OF ACCOUNTS OF RECEIVER OR MANAGER: 1) Every receiver of theproperty of a company who has been appointed under the powers contained in anyinstrument, and who has taken possession, shall within thirty days of expiry of every sixmonths while he remains in possession, and also within thirty days on ceasing to act asreceiver, file with the registrar an abstract in the prescribed form of his receipts andpayments during the period to which the abstract relates, and shall also, within fifteendays of ceasing to act as receiver, file with the registrar notice to that effect, and theregistrar shall enter the notice in the register of mortgages and charges. 2) Where a receiver of the property of a company has been appointed, everyinvoice, order for goods, or business letter issued by or on behalf of the company or thereceiver of the company, being a document on or in which the name of the companyappears, shall contain a statement that a receiver has been appointed. 3) If default is made in complying with the requirements of sub-section (1)or sub-section (2), the company and every director or other officer of the company andevery receiver who knowingly and willfully authorizes or permits the default, shall beliable to a fine not exceeding two thousand rupees and, in the case of a continuingdefault, to a further fine not exceeding one hundred rupees for every day after the firstduring which the default continues. 4) The provisions of sub-sections (1), (2) and (3) shall apply to any personappointed to manage the property of a company under any powers contained in aninstrument in the same manner as they apply to a receiver so appointed. 139. DISQUALIFICATION FOR APPOINTMENT AS RECEIVER OR MANAGER: Thefollowing shall not be appointed under any powers contained in an instrument as areceiver or manager of the property of a company, namely:a. a minor; b. a person who is of unsound mind and stands so declared by a competentcourt; c. a body corporate; d. a director of the company; e. an undischarged insolvent unless he is granted leave by the court bywhich he has been adjudged an insolvent; or f. a person disqualified by a court from being concerned with or taking partin the management of a company in any other way, unless he is grantedleave by the Court. 140. APPLICATION TO COURT: 1) A receiver or manager of the property of acompany appointed under the powers contained in any instrument may apply to the Courtfor directions in relation to any particular matter arising in connection with theperformance of his functions, and on any such application the Court may give suchdirection, or may make such order declaring the rights of persons before the Court, orotherwise, as the Court thinks just. 2) A receiver or manager of the property of a company appointed asaforesaid shall, to the same extent as if he had been appointed by order of a court, bepersonally liable on any contract entered into by him in the performance of his functions,except in so far as the contract otherwise provides, and entitled in respect of that liabilityto indemnity out of the assets; but nothing in this sub-section shall be deemed to limit anyright to indemnity which he would have apart from this sub-section, or to limit hisliability on contracts entered into without authority or to confer any right to indemnity inrespect of that liability. 141. POWER OF COURT TO FIX REMUNERATION, ETC., OF RECEIVER OR MANAGER: 1) The Court may, on an application made to it by the receiver or manager of the property,by order fix the amount to be paid by way of remuneration to any person who, under thepower contained in an instrument, has been appointed as receiver or manager of theproperty of the company: Provided that the amount of remuneration shall not exceed such limits as may beprescribed. 2) The power of the Court under sub-section (1) shall, where no previousorder has been made with respect thereto,a. extend to fixing the remuneration for any period before the making of theorder or the application therefor; b. be exercisable notwithstanding that the receiver or manager had died orceased to act before the making of the order or the application therefor ;and c. where the receiver or manager has been paid or has retained for hisremuneration for any period before the making of the order any amountin excess of that so fixed for that period, extend to requiring him or hisrepresentative to account for the excess or such part thereof as may bespecified in the order:
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Provided that the power conferred by clause (c) shall not be exercised as respectsany period before the making of the application or the order unless in the opinion of theCourt there are special circumstances making it proper for the power to be so exercised. The Court may from time to time, on an application made either by theliquidator or by the receiver or manager or by the registrar, vary or amend an order madeunder sub-section (1) and issue directions to the receiver respecting his duties andfunctions or any other matter as it may deem expedient: Provided that an order made under sub-section (1) shall not be varied so as toincrease the amount of remuneration payable to any person.
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PART VIII MANAGEMENT AND ADMINISTRATION REGISTERED OFFICE, PUBLICATION OF NAME, ETC. 142.
REGISTERED OFFICE OF COMPANY: A company shall as from the dayon which it begins to carry on business, or as from the twenty-eighth day after the date ofits incorporation, whichever is the earlier, have a registered office to which allcommunications and notices may be addressed. 2) Notice of the situation of the registered office and of any change thereinshall be given within twenty-eight days after the date of the incorporation of the companyor of the change as the case may be, to the registrar who shall record the same. 3) The inclusion in the annual return or any other document of a companyof the statement as to the address of its registered office shall not be taken to meet therequirements of sub-section (2). 4) If a company fails to comply with the requirements of sub-section (1) or(2), it shall be liable to a fine which may extend to two hundred rupees for every dayduring which such non-compliance continues, and every officer of the company whoknowingly and willfully authorizes or permits the default shall be liable to the likepenalty. 143. PUBLICATION OF NAME BY A LIMITED COMPANY: Every limited company a. shall paint or affix, and keep painted or affixed, its name on the outsideof every office or place in which its business is carried on, in aconspicuous position, in letters easily legible and in English or Urducharacters, and also, if the registered office is situate in a place beyondthe local limits of the ordinary original civil jurisdiction of a High Court,in the characters of one of the vernacular languages used in that place; b. shall have its name engraved in legible English or Urdu characters on itsseal; c. shall have its name mentioned in legible English or Urdu characters, inall bill-heads and letter papers and in all documents, notices and otherofficial publications of the company, and in all bills of exchange, hundis,promissory notes, endorsements, cheques and orders for money or goodsp urporting to be signed by or on behalf of the company, and in all bills ofparcels, invoices, receipts and letters of credit of the company. 144. PENALTIES FOR NON-PUBLICATION OF NAME: 1) If a limited company doesnot paint or affix, and keep painted or affixed, its name in manner directed by thisOrdinance, it shall be liable to a fine which may extend to two hundred rupees for everyday during which its name is not so kept painted or affixed, and every officer of thecompany who knowingly and willfully authorizes or permits the default shall be liable tothe like penalty. 2) If any officer of a limited company, or any person on its behalf, uses orauthorizes the use of any seal purporting to be a seal of the company wherein its name isnot so engraved as aforesaid, or issues or authorizes the issue of any bill-head, letterpaper, document, notice or other official publication of the company, or signs orauthorizes to be signed on behalf of the company any bill of exchange, hundi, promissorynote, endorsement, cheque or order for money or goods, or issues or authorizes to beissued any bill of parcels, invoice, receipt or letter of credit of the company, wherein itsname is not mentioned in manner aforesaid, he shall be liable to a fine which may extendto two thousand rupees, and shall further be personally liable to the holder of any suchbill of exchange, hundi, promissory note, cheque or order for money or goods, for theamount thereof, unless the same is duly paid by the company. 145. PUBLICATION OF AUTHORISED AS WELL AS PAID -UP CAPITAL: 1) Where anynotice, advertisement or other official publication of a company contains a statement ofthe amount of the authorised capital of the company, such notice, advertisement or otherofficial publication shall also contain a statement in an equally prominent position and inequally conspicuous characters of the amount of the capital which has been subscribedand the amount paid up. 2) Any company which makes default in complying with the requirementsof sub-section (1) and every officer of the company who is knowingly a party to thedefault shall be liable to a fine which may extend to five thousand rupees. 1)
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COMMENCEMENT OF BUSINESS BY A PUBLIC COMPANY 146.
1) RESTRICTIONS ON COMMENCEMENT OF BUSINESS: A company shall notcommence any business or exercise any borrowing powers unlessa. shares held subject to the payment of the whole amount thereof in cashhave been allotted to an amount not less in the whole than the minimumsubscription; b. every director of the company has paid to the company full amount oneach of the shares taken or contracted to be taken by him and for whichhe is liable to pay in cash; c. no money is or may become liable to be repaid to applicants for anyshares or debentures which have been offered for public subscription byreason of any failure to apply for or to obtain permission for the shares ordebentures to be dealt in on any stock exchange; d. there has been filed with the registrar a duly verified declaration by thechief executive or one of the directors and the secretary in the prescribedform that the aforesaid conditions have been complied with and theregistrar has issued a certificate referred to in subsection (2); and e. in the case of a company which has not issued a prospectus inviting thepublic to subscribe for its shares, there has been filed with the registrar astatement in lieu of prospectus. The registrar shall, on the filing of a duly verified declaration in accordance with the provisions of sub-section (l) and after making such enquiries as hemay deem fit to satisfy himself that all the requirements of this Ordinance have beencomplied with in respect of the commencement of business and matters precedent andincidental thereto, certify that the company is entitled to commence business, and thatcertificate shall be conclusive evidence that the company is so entitled: Provided that, in the case of a company which has not issued a prospectusinviting the public to subscribe for its shares, the registrar shall not give such a certificateunless a statement in lieu of prospectus has been filed with him. Any contract made by a company before the date at which it is entitled tocommence business shall be provisional only, and shall not be binding on the companyuntil that date, and on that date it shall become binding. Nothing in this section shall prevent the simultaneous offer forsubscription or allotment of any shares and debentures or the receipt of any moneypayable on application for debentures. If any company commences business or exercises borrowing powers incontravention of this section, every officer and other person who is responsible for thecontravention shall, without prejudice to any other liability, be liable to a fine notexceeding one thousand rupees for every day during which the contravention continues. Nothing in this section shall apply to a private company, or to a companylimited by guarantee and not having a share capital.
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REGISTER OF MEMBERS AND DEBENTURE-HOLDERS 147.

1) REGISTER OF MEMBERS AND INDEX: Every company shall keep in oneor more books a register of its members and enter therein the following particulars,namely:i. the name in full, father's name (in the case of a married woman orwidow, the name of her husband or deceased husband), nationality,address, and the occupation, if any, of each member, and, in the case of acompany having a share capital, a statement of the shares held by eachmember, distinguishing each share by its number, and of the amount paidor agreed to be considered as paid on the shares of each member; ii. the date at which each person was entered in the register as a member; iii. the date at which any person ceased to be a member and the reason forceasing to be a member. Every company having more than fifty members shall, unless the registerof members is in such a form as to constitute in itself an index, keep an index of thenames of the members of the company and shall, within fourteen days after the date atwhich any alteration is made in the register of members, make the necessary alteration inthe index. The index shall, in respect of each member, contain a sufficientindication to enable the entries relating to that member in the register to be readily found. If default is made in complying with the requirements of sub-section (1)or unnecessary delay takes place in entering in the register of members the name andparticulars of any person who has become or ceased to be a member of a company, as thecase may be, the company shall be liable to a fine not exceeding two hundred rupees forevery day during which the default continues; and every officer of the company whoknowingly and willfully authorizes or permits the default or causes unnecessary delay inentering in the register the name and particulars of any person who has become or ceasedto be a member of a company, as the case may be, shall be liable to the like penalty.
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If default is made in complying with the requirements of sub-section (2)or sub-section (3), the company and every officer of the company who knowingly andwillfully authorizes or permits the default shall be liable to a fine not exceeding twothousand rupees. 148. TRUSTS NOT TO BE ENTERED ON REGISTER: No notice of any trust, expressed,implied or constructive, shall be entered on the register of members, or be receivable bythe registrar. 149. REGISTER AND INDEX OF DEBENTURE-HOLDERS: 1) Every company shallkeep in one or more books a register of the holders of its debentures and enter therein thefollowing particulars, namely:a. the name in full, father's name (in the case of a married woman orwidow, the name of her husband or deceased husband), nationality,address, and the occupation, if any, of each debenture-holder; b. the debentures held by each holder, distinguishing each debenture by itsnumber and the amount paid or agreed to be considered as paid on thedebentures held by each holder; c. the date at which each person was entered in the register as a debentureholder;and d. the date at which any person ceased to be a debenture-holder. 2) Every company having more than fifty debenture-holders shall unless theregister of debenture-holders is in such a form as to constitute in itself an index, keep anindex of the names of the debenture-holders of the company and shall, within fourteendays after the date at which any alteration is made in the register of debenture-holdersmake the necessary alteration in the index. 3) The index shall, in respect of each debenture-holder, contain a sufficientindication to enable the entries relating to that holder in the register to be readily found. 4) If default is made in complying with sub-sections (1), (2) or (3), thecompany and every officer of the company shall be liable to a fine as provided in subsection(4) or sub-section (5), as the case may be, of section 147. 5) This section shall not apply with respect to debentures which, ex-facie,are payable to the bearer thereof. 150. INSPECTION OF REGISTERS: 1) The register of members commencingfrom the date of the registration of the company and the index referred to in section 147,the register of debenture-holders and the index referred to in section 149 and the registersreferred to in sub-section (4) of section 156 shall be kept at the registered office of thecompany and, except when closed under the provisions of this Ordinance, shall, duringbusiness hours, subject to such reasonable restrictions, as the company in general meetingmay impose, so that not less than two hours in each day be allowed for inspection, beopen to the inspection of members or debenture-holders gratis and to the inspection ofany other person on payment of such amount not exceeding the prescribed amount as thecompany may fix; and any such member, debenture-holder or other person may makeextracts therefrom. 2) Any member or debenture-holder or other person may require a certifiedcopy of the registers and index thereof mentioned in sub-section (1), or of any partthereof, on payment of such amount not exceeding the prescribed amount as the companymay fix, and the company shall cause any copy so required by any person to be sent tothat person within a period of ten days, exclusive of non-working days and days on whichthe transfer books of the company are closed, commencing on the day next after the dayon which the requirement is received by the company. 3) If any inspection required under sub-section (1) is refused, or if any copyrequired under sub-section (2) is not sent within the specified period, the company andevery officer of the company who is in default shall be liable, in respect of each offence,to a fine not exceeding five hundred rupees and to a further fine not exceeding fiftyrupees for every day after the first during which the refusal or default continues; and theregistrar may by an order compel an immediate inspection of the register and index ordirect that copies required shall be sent to the persons requiring them. 151. POWER TO CLOSE REGISTER: A company may, on giving not less thanseven days' previous notice by advertisement in some newspaper having circulation in theProvince, or part of Pakistan not forming part of a Province, in which the registeredoffice of the company is situate and, in the case of a listed company, also in a newspaperhaving circulation in the Province, or other part as aforesaid, in which the stock exchangeon which the company is listed is situate, close the register of members or debentureholders,as the case may be, for any time or times not exceeding in the whole fortyfivedays in a year and not exceeding thirty days at a time. 152. POWER OF COURT TO RECTIFY REGISTER: 1) If a. the name of any person is fraudulently or without sufficient causeentered in or omitted from the register of members or register ofdebenture-holders of a company; or b. default is made or unnecessary delay takes place in entering on theregister of members or register of debenture-holders the fact of theperson having become or ceased to be a member or 5)
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debentureholder;the person aggrieved, or any member or debenture -holder of the company, or thecompany, may apply to the Court for rectification of the register. 2) The Court may either refuse the application or may orderrectification of the register on payment by the company of any damages sustained byany party aggrieved, and may make such order as to costs as it in its discretion thinksfit. 3) On any application under sub-section (1) the Court may decide anyquestion relating to the title of any person who is a party to the application to have hisname entered in or omitted from the register, whether the question arises betweenmembers or debenture-holders or alleged members or debenture-holders, or betweenmembers or alleged members, or debenture-holders or alleged debenture-holders, onthe one hand and the company on the other hand; and generally may decide anyquestion which it is necessary or expedient to decide for rectification of the register. 4) An appeal from a decision on an application under sub-section (1), oron an issue raised in any such application and tried separately, shall lie on thegrounds mentioned in section 100 of the Code of Civil Procedure, 1908, a. if the decision is that of a civil court subordinate to a High Court, to the High Court; and b. if the decision is that of a Company Bench consisting of a singleJudge, to a Bench consisting of two or more Judges of the HighCourt. 153. PUNISHMENT FOR FRAUDULENT ENTRIES IN AND OMISSION FROM REGISTER: Anyone who fraudulently or without sufficient cause enters in, or omits from theregister of members or the register of debenture-holders the name or other particularsof any person shall be punishable with imprisonment for a term which may extend toone year, or with fine which may extend to ten thousand rupees, or with both. 154. NOTICE TO REGISTRAR OF RECTIFICATION OF REGISTER: When it makes anorder for rectification of the register of members in respect of a company which isrequired by this Ordinance to file a list of its members with the registrar, the Courtshall cause a copy of the order to be forwarded to the company and shall, by its order,direct the company to file notice of the rectification with the registrar within fifteendays from the receipt of the order. 155. REGISTER TO BE EVIDENCE: The registers referred to in sections 76,147, 149 and 156 shall be prima facie evidence of any matter which by thisOrdinance is directed or authorised to be inserted therein. 156. ANNUAL LIST OF MEMBERS, ETC: 1) Every company having a sharecapital shall, once in each year, prepare and file with the registrar a return containingthe particulars specified in Form A of the Third Schedule as on the date of the annualgeneral meeting or, where no such meeting is held or if held is not concluded, on thelast day of the calendar year. 2) A company not having a share capital shall in each year prepare andfile with the registrar a return containing the particulars specified in Form B of theThird Schedule as on the date of the annual general meeting or, where no suchmeeting is held or if held is not concluded, on the last day of the calendar year. 3) The return referred to in sub-section (1) or sub-section (2) shall be filed with the registrar a. in the case of a listed company, within forty-five days; and b. in the case of any other company, within thirty days; from the date of the annual general meeting held in the year or, when no suchmeeting is held or if held is not concluded, from the last day of the calendar year towhich it relates: Provided that, in the case of a listed company, the registrar may for specialreasons extend the period of filing of such return by a period not exceeding fifteendays. 4) All the particulars required to be submitted under sub-section (1) andsub-section (2) shall have been previously entered in one or more registers kept bythe company for the purpose. 5) If a company makes default in complying with any requirement ofthis section, the company and every officer of the company who knowingly andwillfully authorizes or permits the default shall be liable a. in the case of a listed company, to a fine not exceeding ten thousandrupees and to a further fine not exceeding two hundred rupees forevery day after the first during which the default continues; and b. in the case of any other company, to a fine not exceeding twothousand rupees and to a further fine not exceeding fifty rupees forevery day after the first during which the default continues.
MEETINGS AND PROCEEDINGS 157.

1) STATUTORY MEETING OF COMPANY: Every company limited by sharesand every company limited by guarantee and having a share capital shall, within a periodof not less than three months, nor more than six months, from the date at which thecompany is entitled to commence business, hold a general meeting of the members of thecompany, which shall be called "the statutory meeting". The directors shall, at least twenty-one days before the date on which themeeting is held, forward a report, in this Ordinance referred as "the statutory report", toevery member.
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3) The statutory report shall be certified by not less than three directors, oneof whom shall be the chief executive of the company, and shall statea. the total number of shares allotted, distinguishing shares allottedotherwise than in cash, and stating the consideration for which they havebeen allotted; b. the total amount of cash received by the company in respect of all theshares allotted; c. an abstract of the receipts of the company and of the payments madethereout up to a date within seven days of the date of the report,exhibiting under distinctive headings the receipts of the company fromshares and debentures and other sources, the payments made thereout,and particulars concerning the balance remaining in hand, and an accountor estimate of the preliminary expenses of the company showingseparately any commission or discount paid or to be paid on the issue orsale of shares or debentures; d. the names, addresses and occupations of the directors, chief executive,secretary, auditors and legal advisers of the company and the changes, ifany, which have occurred since the date of the incorporation; e. the particulars of any contract the modification of which is to besubmitted to the meeting for its approval, together with the particulars ofthe modification or proposed modification; f. the extent to which underwriting contracts, if any, have been carried outand the extent to which such contracts have not been carried out, togetherwith the reasons for their not having been carried out; and g. the particulars of any commission or brokerage paid or to be paid inconnection with the issue or sale of shares to any director, chiefexecutive, secretary or officer or to a private company of which he is adirector. The statutory report shall also contain a brief account of the state of thecompany's affairs since its incorporation and the business plan, including any change orproposed change affecting the interest of shareholders and business prospects of thecompany. The statutory report shall, so far as it relates to the shares allotted by thecompany, the cash received in respect of such shares and to the receipts and payments ofthe company, be accompanied by a certificate of the auditors of the company as to thecorrectness of such allotment, receipt of cash, receipts and payments. The directors shall cause at least five copies of the statutory report,certified as aforesaid, to be delivered to the registrar for registration forthwith aftersending the report to the members of the com pany. The directors shall cause a list showing the names, occupations,nationality and addresses of the members of the company, and the number of shares heldby them respectively, to be produced at the commencement of the meeting and to remainopen and accessible to any member of the company during the continuance of themeeting. The members of the company present at the meeting shall be at liberty todiscuss any matter relating to the formation of the company or arising out of the statutoryreport, whether previous notice has been given or not, but no resolution of which noticehas not been given in accordance with the articles may be passed. The meeting may adjourn from time to time, and at any adjournedmeeting any resolution of which notice has been given in accordance with the articles,either before or after the original meeting, may be passed, and an adjourned meeting shallhave the same powers as an original meeting. If a petition is presented to the Court in manner provided by Part Xl forwinding up the company on the ground of default in filing the statutory report or inholding the statutory meeting, the Court may, instead of directing that the company bewound up, give directions for the statutory report to be filed or a meeting to be held, ormake such other order as may be just. In the event of any default in complying with the provisions of any of thepreceding sub-sections, the company and every officer of the company who knowinglyand willfully authorizes or permits such default shall be liable, a. if the default relates to a listed company, to a fine not less than tenthousand rupees and not exceeding twenty thousand rupees and in thecase of a continuing default to a further fine not exceeding two thousandrupees for every day after the first during which the default continues;and b. if the default relates to any other company, to a fine not exceeding fivethousand rupees and in the case of a continuing default to a further finenot exceeding two hundred rupees for every day after the first duringwhich the default continues. This section shall not apply to a private company but if any such privatecompany is converted into a company of either of the classes mentioned in sub-section(1), this section shall become applicable thereto and a reference in that sub-section to thedate of commencement of business shall be construed as a reference to the date of suchconversion. The provisions of this section shall not apply to a public company whichconverts itself from a private company after one year of incorporation. ANNUAL GENERAL MEETING:
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1) Every company shall hold, in addition toany other meeting, a general meeting, as its annual general meeting, within eighteenmonths from the date of its incorporation and thereafter once at least in every calendaryear within a period of four months following the close of its financial year and notmore than fifteen months after the holding of its last preceding annual general meeting: Provided that, in the case of a listed company, the Commission, and, in any othercase, the registrar, may for any special reason extend the time within which any annualgeneral meeting, not being the first such meeting, shall be held by a period not exceeding thirty days. An annual general meeting shall, in the case of a listed company, be heldin the town in which t he registered office of the company is situate: Provided that the Commission, for any special reason, may, on the application ofsuch company, allow the company to hold a particular meeting at any other place. The notice of an annual general meeting shall be sent to the shareholdersat least twenty-one days before the date fixed for the meeting and, in the case of a listedcompany, such notice, in addition to its being dispatched in the normal course, shall alsobe published at least in one issue each of a daily newspaper in English language and adaily newspaper in Urdu language having circulation in the Province in which the stockexchange on which the company is listed is situate. If default is made in complying with any provision of this section, thecompany and every officer of the company who is knowingly and willfully a party to thedefault shall be liable,a. if the default relates to a listed company, to a fine not less than fifty thousand rupees and not exceeding five hundred thousand rupees andto a further fine not exceeding two thousand rupees for every day afterthe first during which the default continues; and b. if the default relates to any other company, to a fine not exceeding one hundred thousand rupees and to a further fine not exceeding five hundred rupees for every day after the first during which the defaultcontinues. CALLING OF EXTRAORDINARY GENERAL MEETING: All general meetingsof a company, other than the annual general meeting referred to in section 158 and thestatutory meeting mentioned in section 157, shall be called extraordinary generalmeetings. The directors may at any time call an extraordinary general meeting ofthe company to consider any matter which requires the approval of the company in ageneral meeting, and shall, on the requisition of members representing not less than onetenthof the voting power on the date of the deposit of the requisition, forthwith proceedto call an extraordinary general meeting. The requisition shall state the objects of the meeting, be signed by therequisitionists and deposited at the registered office of the company, and may consist ofseveral documents in like form, each signed by one or more requisitionists. If the directors do not proceed within twenty-one days from the date ofthe requisition being so deposited to cause a meeting to be called, the requisitionists, or amajority of them in value, may themselves call the meeting, but in either case anymeeting so called shall be held within three months from the date of the deposit of therequisition. Any meeting called under sub-section (4) by the requisitionists shall becalled in the same manner, as nearly as possible, as that in which meetings are to becalled by directors. Any reasonable expense incurred by the requisitionists by reason of thefailure of the directors duly to convene a meeting shall be repaid to the requisitionists bythe company, and any sum so repaid shall be retained by the company out of any sum dueor to become due from the company by way of fees or other remuneration for theirservices to such of the directors as were in default. Notice of an extraordinary general meeting shall be sent to the membersat least twenty-one days before the date of the meeting, and in the case of a listedcompany shall also be published in the manner provided for in sub-section (3) of section158: Provided that, in the case of an emergency affecting the business of the company,the registrar may, on the application of the directors, authorize such meeting to be held atsuch shorter notice as he may specify. Every officer of the company who knowingly or willfully fails to complywith any of the provisions of this section shall be liable,a. if the default relates to a listed company, to a fine not less than tenthousand rupees and not exceeding twenty thousand rupees and in thecase of a continuing default to a further fine which may extend to twothousand rupees for every day after the first during which the defaultcontinues; and b. if the default relates to any other company, to a fine which may extend totwo thousand rupees and in the case of a continuing default to a furtherfine which may extend to two hundred rupees for every day after the firstduring which the default continues. PROVISIONS AS TO MEETINGS AND VOTES: The following provisionsshall apply to the general meetings of a company or meetings of a class of members ofthe company, namely:-
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159.
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a. notice of the meeting specifying the place and the day and hour of themeeting alongwith a statement of the business to be transacted at the meeting shall be given i. to every member of the company; ii. to any person entitled to a share in consequence of death of amember if the interest of such person is known to the company;and iii. to the auditor or auditors of the company;in the manner in which notices are required to be served by section 50,but the accidental omission to give notice to, or the non-receipt of noticeby, any member shall not invalidate the proceedings at any meeting; b. where any special business, that is to say business other thanconsideration of the accounts, balancesheets and the reports of thedirectors and auditors, the declaration of a dividend, the appointment andfixation of remuneration of auditors, and the election or appointment ofdirectors, is to be transacted at a general meeting, there shall be annexedto the notice of the meeting a statement setting out all material factsconcerning such business, including, in particular, the nature and extentof the interest, if any, therein of every director, whether directly orindirectly, and, where any item of business consists of the according ofan approval to any document by the meeting, the time when and theplace where the document may be inspected shall be specified in thestatement; c. subject to the provisions of this Ordinance so far as they relate to theelection and appointment of directors, the provisions of clause (b) shallapply mutatis mutandis to a meeting where ordinary business, beingbusiness other than special business, is to be transacted; d. all the members may participate in the meeting either personally orthrough proxy. The quorum of a general meeting shall be a. in the case of a public listed company, unless the articles provide for alarger number, not less than ten members present personally whorepresent not less than twenty-five per cent of the total voting power,either of their own account or as proxies; b. in the case of any other company, unless the articles provide for alarger number, two members present personally who represent not lessthan twenty-five per cent of the total voting power, either of their ownaccount or as proxies; and c. in the case of a single member company, single member present in person or by proxy: Provided that, if within half an hour from the time appointed forthe meeting a quorum is not present, the meeting, if called upon therequisition of members, shall be dissolved; in any other case, it shallstand adjourned to the same day in the next week at the same time andplace, and, if at the adjourned meeting a quorum is not present withinhalf an hour from the time appointed for the meeting, the memberspresent, being not less than two, shall be a quorum, unless the articlesprovide otherwise. The chairman of the board of directors, if any, shall preside as chairmanat every general meeting of the company, but if there is no such chairman, or if at anymeeting he is not present within fifteen minutes after the time appointed for holding themeeting, or is unwilling to act as chairman, any one of the directors present may beelected to be chairman, and if none of the directors is present or is unwilling to act aschairman the members present shall choose one of their number to be the chairman. In the case of a company having a share capital, every member shall havevotes proportionate to the paid-up value of the shares or other securities carrying votingrights held by him according to the entitlement of the class of such shares or securities, asthe case may be: Provided that, at the time of voting, fractional votes shall not be taken intoaccount. No member holding shares or other securities carrying voting rights shallbe debarred from casting his vote, nor shall anything contained in the articles have theeffect of so debarring him. In the case of a company limited by guarantee and having no sharecapital, every member thereof shall have one vote. On a poll, votes may be given either personally or by proxy. Every officer of the company who knowingly or willfully fails to complywith any of the provisions of this section shall be liable,a. if the default relates to a listed company, to a fine which may extend to fifty thousand rupees and in the case of a continuing default to afurther fine which may extend to two thousand rupees for every day afterthe first during which the default continues; and b. if the default relates to any other company, to a fine not exceeding ten thousand rupees and in the case of a continuing default to a further finewhich may extend to two hundred rupees for every day after the firstduring which the default continues.
2)
3)
4)
5) 6) 7) 8)
160 A. CIRCUMSTANCES IN WHICH PROCEEDINGS OF A GENERAL MEETING MAY BE DECLARED INVALID:
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The Court may, on a petition by members having not less than ten percent of the voting power in the company that the proceedings of a general meeting bedeclared invalid by reason of any material defect or omission in the notice or irregularityin the proceedings of the meeting which prevented members from using effectively theirrights, declare such proceedings or part thereof invalid and direct holding of a freshgeneral meeting: Provided that the petition shall be made within thirty days of the impugned meeting. 161. PROXIES: 1) Any member of a company entitled to attend and vote at ameeting of the company shall be entitled to appoint another person, as his proxy to attendand vote instead of him, and a proxy so appointed shall have such rights as respectsspeaking and voting at the meeting as are available to a member: Provided that a. this sub-section shall not apply in the case of a company not having ashare capital; b. a member shall not be entitled to appoint more than one proxy to attendany one meeting; c. if any member appoints more than one proxy for any one meeting andmore than one instruments of proxy are deposited with the company, allsuch instruments of proxy shall be rendered invalid; and d. a proxy must be a member unless the articles of the company permitappointment of a non-member as proxy. 2) Every notice of a meeting of a company shall prominently set out themember's right to appoint a proxy and the right of such proxy to attend, speak and vote inthe place of the member at the meeting and every such notice shall be accompanied by aproxy form. 3) The instrument appointing a proxy shalla. be in writing; and b. be signed by the appointer or his attorney duly authorised in writing, or ifthe appointer is a body corporate, be under its seal or be signed by anofficer or an attorney duly authorised by it. 4) An instrument appointing a proxy, if in the form set out in regulation 39of Table A in the FIRST SCHEDULE shall not be questioned on the ground that it failsto comply with any special requirements specified for such instruments by the articles. 5) The proxies shall be lodged with the company not later than forty-eighthours before the time of the meeting and any provision to the contrary in the company'sarticles shall be void. 6) The members or their proxies shall be entitled to do any or all thefollowing things in a general meeting, namely:a. subject to the provisions of section 167, demand a poll on any question;and b. on a question before the meeting in which poll is demanded, to abstainfrom voting or not to exercise their full voting rights;and any provision to the contrary in the company's articles shall be void. 7) Every member entitled to vote at a meeting of the company shall beentitled to inspect during the business hours of the company all proxies lodged with thecompany. 8) Deleted 9) The provisions of this section shall apply mutatis mutandis to themeeting of a particular class of members as they apply to a general meeting of all themembers. 10) Failure to issue notices in time or issuing notices with material defect oromission or any othe r contravention of this section which has the effect of preventingparticipation or use of full rights by a member or his proxy shall make the company andevery officer of the company who knowingly and willfully is a party to the default orcontravention liable to a fine which may extend to five thousand rupees if the defaultrelates to a listed company and to a fine which may extend to two thousand rupees if thedefault relates to any other company. 162. REPRESENTATION OF CORPORATIONS AT MEETINGS OF COMPANIES AND OF CREDITORS: 1) A company which is a member of another company may, by resolutionof the directors, authorize any of its officials or any other person to act as itsrepresentative at any meeting of that other company, and the person so authorised shallbe entitled to exercise the same powers on behalf of the company which he represents asif he were an individual shareholder of that other company. 2) A company which is a creditor of another company may authorize any ofits officials or any other person to act as its representative at any meeting of the creditorsof that other company held in pursuance of this Ordinance or any other meeting to whichit is entitled to attend in pursuance of the provisions contained in any debenture or trustdeed or any other document and the person so authorised shall be entitled to exercise thesame powers as are available to the company which he represents. 163. REPRESENTATION OF FEDERAL GOVERNMENT, ETC., AT MEETINGS OF COMPANIES: 1) The Federal Government, or a Provincial Government, as the case maybe, if a member of a company, may appoint such person as it thinks fit to act as itsrepresentative at any meeting of the company or at any meeting of any class of membersof the company. 2) A person appointed to act as aforesaid shall, for the purpose of thisOrdinance, be deemed to be a member of such a company and shall be entitled toexercise the same rights and powers, including the right to
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appoint proxy, as the FederalGovernment or the Provincial Government, as the case may be, may exercise as amember of the company. 164. NOTICE OF RESOLUTION: 1) With the notice for a meeting, the companyshall send to the members copies of draft resolutions, other than routine or proceduralresolutions, which are proposed for consideration in the meeting. 2) The members having not less than ten per cent voting power in thecompany may give notice of a resolution and such resolution together with the supportingstatement, if any, which they propose to be considered at the meeting, shall be forwardedso as to reach the companya. in the case of a meeting requisitioned by the members, together with therequisition for the meeting; b. in any other case, at least fifteen days before the meeting;and the company shall forthwith circulate such resolution to all the members. 3) In the event of any default in complying with any of the provisions ofthis section, the company and every officer of the company who is knowingly or willfullya party to such default shall be liable to a fine which may extend to five thousand rupeesif the default relates to a listed company and to a fine which may extend to two thousandrupees if the default relates to any other company. 165. VOTING TO BE BY SHOW OF HANDS IN FIRST INSTANCE: At any generalmeeting, a resolution put to the vote of the meeting shall, unless a poll is demanded, bedecided on a show of hands. 166. CHAIRMAN S DECLARATION OF RESULT OF VOTING BY SHOW OF HANDS TO BE EVIDENCE: At any general meeting, a declaration by the chairman that on a show ofhands, a resolution has or has not been carried, or has or has not been carried eitherunanimously or by a particular majority, and an entry to that effect in the bookscontaining the minutes of the proceedings of the company, shall, until the contrary isproved, be evidence of the fact, without proof of the number or proportion of the votescast in favour of or against such resolution. 167. DEMAND FOR POLL: 1) Before or on the declaration of the result of thevoting on any resolution on a show of hands, a poll may be ordered to be taken by thechairman of the meeting of his own motion, and shall be ordered to be taken by him on ademand made in that behalf by the persons or person specified below, that is to say,a. in the case of a public company, by at least five members having theright to vote on the resolution and present in person or by proxy; b. in the case of a private company, by one member having the right to voteon the resolution and present in person or by proxy if not more thanseven such members are personally present, and by two such memberspresent in person or by proxy if more than seven such members arepersonally present; c. by any member or members present in person or by proxy and having notless than one-tenth of the total voting power in respect of the resolution;or d. by any member or members present in person or by proxy and holdingshares in t e company h conferring a right to vote on the resolution, beingshares on which an aggregate sum has been paid up which is not lessthan one-tenth of the total sum paid up on all the shares conferring thatright. 2) The demand for a poll may be withdrawn at any time by the person orpersons who made the demand. 168. TIME OF TAKING POLL: 1) A poll demanded on the election of a chairmanor on a question of adjournment shall be taken forthwith and a poll demanded on anyother question shall be taken at such time, not more than fourteen days from the day onwhich it is demanded, as the chairman of the meeting may direct. 2) When a poll is taken, the chairman or his nominee and a representative ofthe members demanding the poll shall scrutinize the votes given on the poll and the resultshall be announced by the chairman. 3) Subject to the provisions of this Ordinance, the chairman shall havepower to regulate the manner in which a poll shall be taken. 4) The result of the poll shall be deemed to be the decision of the meetingon the resolution on which the poll was taken. 169. RESOLUTION PASSED AT ADJOURNED MEETING: Where a resolution ispassed at an adjourned meeting ofa. a company; b. the holders of any class of shares in a company; c. the directors of a company; or d. the creditors of a company; the resolution shall, for all purposes, be treated as having been passed on the date onwhich it was in fact passed, and shall not be deemed to have been passed on any earlierdate.
170.
POWER OF COMMISSION TO CALL MEETINGS:
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If default is made inholding the statutory meeting, annual general meeting or any extraordinary generalmeeting on the requisition of members in accordance with section 157, section 158 orsection 159, as the case may be, the Commission may, notwithstanding anythingcontained in this Ordinance or in the articles of the company, either of its own motionor on the application of any director or member of the company, call, or direct the callingof, the said meeting of the company in such manner as the Commission may think fit,and give such ancillary or consequential directions as the Commission thinks expedientin relation to the calling, holding and conducting of the meeting and preparation of anydocument required with respect to the meeting. Explanation:The directions that may be given under sub-section (1) mayinclude a direction that one member of the company present in person or by proxy shallbe deemed to constitute a meeting. 2) Any meeting called, held and conducted in accordance with any suchdirection shall, for all purposes, be deemed to be a meeting of the company duly called,held and conducted, and all expenses incurred in connection thereto shall be paid by the company unless the Commission directs the same to be recovered from any officer ofthe company which he is hereby authorised to do. 171. PENALTY FOR DEFAULT IN COMPLYING WITH THE DIRECTIONS OF THE COMMISSION FOR HOLDING THE MEETING: If default is made in complying with any directions of the Commission under section 170, the company and every officer of thecompany who is in default shall be liable to a fine which may extend to ten thousandrupees and in the case of a continuing default to a further fine which may extend to twohundred rupees for every day after the first during which the default continues. 172. FILING OF RESOLUTION, ETC.: 1) A printed or typed copy of every specialresolution shall, within fifteen days from the passing thereof, be filed with the registrarduly authenticated by the chief executive or secretary of the company. 2) Where articles have been registered, a copy of every special resolutionfor the time being in force shall be embodied in or annexed to every copy of the articlesissued after the date of the resolution. 3) A copy of every special resolution shall be forwarded to any member athis request on payment of such fee not exceeding the prescribed amount as the companymay determine. 4) In the event of any default in complying with the provisions of subsection(1), the company and every officer who is knowingly and willfully in default shallbe liable to a fine which may extend to one hundred rupees for every day during whichthe default continues. 5) In the event of any default in complying with the provisions of subsection(2) or (3), the company and every officer who is knowingly and willfully indefault shall be liable to a fine which may extend to one thousand rupees for each default. 173. MINUTES OF PROCEEDINGS OF GENERAL MEETINGS AND DIRECTORS: 1) Everycompany shall cause a fair and accurate summary of the minutes of all proceedings ofgeneral meetings and meetings of its directors and committee of directors, along with thenames of those participating in such meetings, to be entered in properly maintained books. A copy of the minutes of meeting of the board of directors shall be furnished toevery director within fourteen days of the date of meeting. 2) Any such minute, if purporting to be signed by the chairman of themeeting at which the proceedings were had, or by the chairman of the next succeedingmeeting, shall be evidence of the proceedings. 3) Until the contrary is proved, every general meeting of the company ormeeting of directors or committee of directors in respect of the proceedings whereofminutes have been so made shall be deemed to have been duly called and held, and allproceedings had thereat to have been duly had, and all appointments of directors orliquidators shall be deemed to be valid. 4) The books containing the minutes of proceedings of the general meetingsof a company and those of the meetings of the directors and committee of directors shallbe kept at the registered office of the company. 5) In the event of failure to comply with the provisions of sub-section (1) orsub-section (4), the company and every officer of the company who is knowingly indefault shall be liable to a fine which may extend to five thousand rupees and to a furtherfine which may extend to one hundred rupees for every day after the first day duringwhich the failure continues. 6) The books containing the minutes of proceedings of the general meetingsshall be open to inspection by members without charge during business hours, subject tosuch reasonable restrictions as the company may by its articles or in general meetingimpose so that not less than two hours in each day be allowed for inspection. 7) Any member shall at any time after seven days from the meeting beentitled to be furnished, within seven days after he has made a request in that behalf tothe company, with a certified copy of the minutes of any general meeting at such chargenot exceeding the prescribed amount as may be fixed by the company. 8) If any inspection required under sub-section (6) is refused, or if any copyrequired under sub-section (7) is not furnished within the time specified therein, thecompany and every officer of the company who is 1)
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knowingly and willfully in defaultshall be liable in respect of each offence to a fine which may extend to one thousandrupees and to a further fine which may extend to fifty rupees for every day after the firstday during which the default continues, and the registrar may direct immediate inspectionor supply of copy, as the case may be.
DIRECTORS 174.
MINIMUM NUMBER OF DIRECTORS OF A COMPANY: 1) Notwithstandinganything contained in any other law for the time being in force, a. every single member company shall have at least one director; b. every other private company shall have not less than two directors; and c. every public company other than a listed company shall have not lessthan three directors,appointed and elected in the manner provided in this Ordinance. 2) Every listed company shall have not less than seven directors to beelected in a general meeting in the manner provided in this Ordinance. 175. ONLY NATURAL PERSONS TO BE DIRECTORS: Only a natural person shall be adirector and no director shall be the variable representative of a body corporate. 176. FIRST DIRECTORS AND THEIR TERM: 1) In default of and subject to anyprovisions in the articles of a company and section 174, the number of directors and thenames of the first directors shall be determined in writing by a majority of the subscribersof the memorandum, and until so determined, all the subscribers of the memorandumwho are natural persons shall be deemed to be the directors of the company. 2) The first directors shall hold office until the election of directors in thefirst annual general meeting. 177. RETIREMENT OF DIRECTORS: On the date of the first annual generalmeeting of a company all directors of the company for the time being who are subject toelection shall stand retired from office and thereafter all such directors shall retire on theexpiry of the term laid down in section 180: Provided that the directors so retiring shall continue to perform their functionsuntil their successors are elected: Provided further that the directors so continuing to perform their functions shalltake immediate steps to hold the election of directors and in case of any impedimentreport the circumstances of the case to the registrar within fifteen days of the expiry ofthe term laid down in section 180. 178. PROCEDURE FOR ELECTION OF DIRECTORS: 1) The directors of a companyshall, subject to section 174, fix the number of elected directors of the company not laterthan thirty-five days before the convening of the general meeting at which directors are tobe elected, and the number so fixed shall not be changed except with the prior approvalof a general meeting of the company. 2) The notice of the meeting at which directors are proposed to be electedshall among other matters, expressly state a. the number of elected directors fixed under sub-section (1); and b. the names of the retiring directors. 3) Any person who seeks to contest an election to the office of directorshall, whether he is a retiring director or otherwise, file with the company, not later thanfourteen days before the date of the meeting at which elections are to be held, a notice ofhis intention to offer himself for election as a director: Provided that any such person may, at any time before the holding of election,withdraw such notice. 4) All notices received by the company in pursuance of sub-section (3) shallbe transmitted to the members not later than seven days before the date of the meeting, inthe manner provided for sending of a notice of general meeting in the normal manner orin the case of a listed company by publication at least in one issue each of a dailynewspaper in English language and a daily newspaper in Urdu language havingcirculation in the Province in which the stock exchange on which its securities are listedis situate. 5) The directors of a company having a share capital shall, unless thenumber of persons who offer themselves to be elected is not more than the number ofdirectors fixed under sub-section (1), be elected by the members of the company ingeneral meeting in the following manner, namely:a. a member shall have such number of votes as is equal to the product ofthe number of voting shares or securities held by him and the number ofdirectors to be elected; b. a member may give all his votes to a single candidate or divide thembetween more than one of the candidates in such manner as he maychoose; and c. the candidate who gets the highest number of votes shall be declaredelected as director and then the candidate who gets the next highestnumber of votes shall be so declared and so on until the total number ofdirectors to be elected has been so elected.
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The directors of a company not having share capital shall be elected bymembers of the company in general meeting in the manner as provided in articles of association of the company. 178A. FRESH ELECTION OF DIRECTORS ON REQUEST OF SUBSTANTIAL ACQUIRER: 1) Notwithstanding anything contained in this Ordinance, where a person acquires 12.5% ormore voting shares in a listed company, in his own name, he may apply to theCommission for requiring the company to hold fresh election of directors in accordancewith the procedure laid down in section 178 in the forthcoming annual general meeting ofthe company. 2) The Commission may, if it deems appropriate in the interest of the company,its minority shareholders or the capital markets generally, direct the company to hold theelection of directors in the manner provided under section 178, and the company shallcomply with such direction. 3) The person on whose request fresh election of directors is held shall not sellor otherwise dispose of the shares acquired by him for at least one year from the date ofelection of directors held under sub-section (2). 179. CIRCUMSTANCES IN WHICH ELECTION OF DIRECTORS MAY BE DECLARED INVALID: The Court may, on the application of members holding not less than twentypercent of the voting power in the company, made within thirty days of the date ofelection, declare election of all directors or any one or more of them invalid if it issatisfied that there has been material irregularity in the holding of the elections andmatters incidental or relating thereto. 180. TERM OF OFFICE OF DIRECTORS: 1) A director elected under section 178shall hold office for a period of three years unless he earlier resigns, becomes disqualifiedfrom being a director or otherwise ceases to hold office. 2) Any casual vacancy occurring among the directors may be filled up bythe directors and the person so appointed shall hold office for the remainder of the termof the director in whose place he is appointed. 181. REMOVAL OF DIRECTOR: A company may by resolution in general meetingremove a director appointed under section 176 or section 180 or elected in the mannerprovided for in section 178: Provided that a resolution for removing a director shall not be deemed to havebeen passed if the number of votes cast against it is equal to, or exceeds i. the minimum number of votes that were cast for the election of a directorat the immediately preceding election of directors, if the resolutionrelates to removal of a director elected in the manner provided in subsection(5) of section 178; or ii. the total number of votes for the time being computed in the manner laiddown in sub-section (5) of section 178 divided by the number ofdirectors for the time being, if the resolution relates to removal of adirector appointed under section 176 or section 180. 182. CREDITORS MAY NOMINATE DIRECTORS: In addition to the directors electedor deemed to have been elected by shareholders, a company may have directorsnominated by the company's creditors or other special interests by virtue of contractualarrangements. 183. CERTAIN PROVISIONS NOT TO APPLY TO DIRECTORS REPRESENTING SPECIAL INTERESTS: Nothing in section 178, section 180 or section 181 shall apply to a. directors nominated by a corporation or company formed under any law in force and owned or controlled, whether directly or indirectly, bythe Federal Government or a Provincial Government on the board ofdirectors of a company in or to which such corporation or companyhas made investment or otherwise extended credit facilities; b. directors nominated by the Federal Government or a ProvincialGovernment or the Commission on the board of directors of thecompany; or c. directors nominated by foreign equity holders on the board of thePakistan Industrial Credit and Investment Corporation Limited, or of anyother company set up under a regional co-operation or other co-operationarrangement approved by the Federal Government: Provided that, where a director referred to in clause (a), (b) or (c) isnominated, such number of the votes computed in the manner laid down in subsection(5) of section 178 as is equal to the minimum number of votes whichwould have been sufficient to elect such director if he had offered himself forelection shall stand excluded from the total number of votes otherwise availableat an election of the directors to the authority or person nominating him: Provided further that a director nominated under this section shall holdoffice during the pleasure of the corporation, company, Government or authoritywhich nominates him. 6)
184.
1)
CONSENT TO ACT AS DIRECTOR TO BE FILED WITH REGISTRAR: Noperson shall be appointed or nominated as a director or chief executive of a company orrepresent as holding such office, nor shall any person describe or name any other personas a director or proposed
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director or chief executive or proposed chief executive of anycompany, unless such person or such other person has given his consent in writing forsuch appointment or nomination. 2) Within fourteen days from the date of appointment or nomination, asthe case may be, the company shall file with the registrar a list of persons who haveconsented to act as director or chief executive of the company alongwith their consent to do so in the prescribed form. 3) This section shall not apply to a private company, not being a privatecompany which is a subsidiary of a public company. 185. VALIDITY OF ACTS OF DIRECTORS: No act of a director, or of a meeting ofdirectors attended by him, shall be invalid merely on the ground of any defectsubsequently discovered in his appointment to such office: Provided that, as soon as any such defect has come to notice, the director shallnot exercise the right of his office till the defect has been rectified. 186. PENALTIES: Whoever knowingly and willfully contravenes or fails tocomply with any of the provisions of sections 174 to 185 or is a party to thecontravention of the said provisions shall be liable to a fine which may extend to tenthousand rupees and may also be debarred by the authority which imposes the fine frombecoming or continuing a director of the company for a period not exceeding three years. 187. INELIGIBILITY OF CERTAIN PERSONS TO BECOME DIRECTOR: No person shallbe appointed as a director of a company if hea. is a minor; b. is of unsound mind; c. has applied to be adjudicated as an insolvent and his application ispending; d. is an undischarged insolvent; e. has been convicted by a court of law for an offence involving moralturpitude; f. has been debarred from holding such office under any provision of thisOrdinance; g. has betrayed lack of fiduciary behaviour and a declaration to this effecthas been made by the Court under section 217 at any time during thepreceding five years; h. is not a member: Provided that clause (h) shall not apply in the case of i. a person representing the Government or an institution orauthority which is a member; ii. a whole-time director who is an employee of the company; iii. a chief executive; or iv. a person representing a creditor; i. has been declared by a Court of competent jurisdiction as defaulter inrepayment of loan to a financial institution, exceeding such amount asmay be notified by the Commission from time to time; and j. is engaged in the business of brokerage, or is a spouse of suchperson or is a sponsor, director or officer of a corporate brokerage house: Provided that clauses (i) and (j) shall be applicable only in case of a listed company Provided further that the prohibition contained in clause (j)shall not apply where the company is a stock exchange 188. VACATION OF OFFICE BY THE DIRECTORS: 1) A director shall ipso factocease to hold office if a. he becomes ineligible to be appointed a director on any one or more ofthe grounds enumerated in clauses (a) to (h) of section 187; b. he absents himself from three consecutive meetings of the directors orfrom all the meetings of the directors for a continuous period of threemonths, whichever is the longer, without leave of absence from thedirectors; c. he or any firm of which he is a partner or any private company of which he is a director i. without the sanction of the company in general meeting acceptsor holds any office of profit under the company other than that ofchief executive or a legal or technical adviser or a banker; or ii. accepts a loan or guarantee from the company in contraventionof section 195. 2) Nothing contained in sub-section (l) shall be deemed to preclude acompany from providing by its articles that the office of director shall be vacated on anygrounds additional to those specified in that sub-section. 189. PENALTY FOR UNQUALIFIED PERSON ACTING AS DIRECTOR, ETC.: If a personwho is not qualified to be a director or chief executive or who has otherwise vacated theoffice of director or chief executive describes or represents himself or acts as a director orchief executive, or allows or causes himself to be described as such, he shall be liable inrespect of each day during which he so describes or represents or acts, or allows or causeshimself to be described, as such, to fine which ma y extend to two hundred rupees.
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INELIGIBILITY OF BANKRUPT TO ACT AS DIRECTOR, ETC.: If any personbeing an undischarged insolvent acts as chief executive, director or managing agent of acompany, he shall be liable to imprisonment for a term not exceeding two years, or to afine not exceeding ten thousand rupees, or to both. 2) In this section the expression "company" includes a companyincorporated outside Pakistan which has a place of business in Pakistan. 191. RESTRICTION ON DIRECTOR'S REMUNERATION, ETC.: 1) The remuneration of adirector for performing extra services, including the holding of the office of chairman,shall be determined by the directors or the company in general meeting in accordancewith the provisions in the company's articles. 2) The remuneration to be paid to any director for attending the meetings ofthe directors or a committee of directors shall not exceed the scale approved by thecompany or the directors, as the case may be, in accordance with the provisions of thearticles. 192. RESTRICTION ON ASSIGNMENT OF OFFICE BY DIRECTORS: 1) If in the case ofany company provision is made by the articles or by any agreement entered into betweenany person and the company for empowering a director of the company to assign hisoffice as such to another person, any assignment of office made in pursuance of the saidprovision shall, notwithstanding anything contained in the said provision, be of no effectunless and until it is approved by a special resolution of the company. 2) Notwithstanding anything contained in sub-section (1), the appointmentby a director, with the approval of the directors, of an alternate or substitute director toact for him during his absence from Pakistan of not less than three months, shall not bedeemed to be an assignment of office. 3) The alternate director appointed under sub-section (2) shall ipso factovacate office if and when the director appointing him returns to Pakistan. 193. PROCEEDINGS OF DIRECTORS: 1) The quorum for a meeting of directors ofa listed company shall not be less than one-third of their number or four, whichever isgreater. 2) The directors of a public company shall meet at least once in each quarter of a year. 3) If a meeting of directors is conducted in the absence of a quorumspecified in sub-section (1), or a meeting of directors is not held as required by subsection(2), the chairman of the directors and the directors shall be liable a. to a fine not exceeding ten thousand rupees and in the case of acontinuing default to a further fine not exceeding one hundred rupees forevery day after the first during which the default continues, if thecontravention relates to a listed company; or b. to a fine not exceeding two thousand rupees and in the case of acontinuing default to a further fine not exceeding fifty rupees for everyday after the first during which the default continues, if the contraventionrelates to a non-listed company. 194. LIABILITIES, ETC., OF DIRECTORS AND OFFICERS: Save as provided in thissection, any provision, whether contained in the articles of a company or in any contractwith a company or otherwise, for exempting any director, chief executive or officer of thecompany or any person, whether an officer of the company or not, employed by thecompany as auditor, from, or indemnifying him against, any liability which by virtue ofany law would othe rwise attach to him in respect of any negligence, default, breach ofduty or breach of trust of which he may be guilty in relation to the company, shall bevoid: Provided that, notwithstanding anything contained in this section, a companymay, in pursuance of any such provision as aforesaid, indemnify any such director, chiefexecutive, officer or auditor against any liability incurred by him in defending anyproceedings, whether civil or criminal, in which judgment is given in his favour or inwhich he is acquitted, or in connection with any application under section 488 in whichrelief is granted to him. 195. LOANS TO DIRECTORS, ETC.: 1) Save as otherwise provided in sub-section(2), no company, hereafter in this section referred to as "the lending company'', shall,directly or indirectly, make any loan to, or give any guarantee or provide any security inconnection with a loan made by any other person to, or to any other person by, a. any director of the lending company or of a company which is its holdingcompany or any partner or relative of any such director; b. any firm in which any such director or relative is a partner; c. any private company of which any such director is a director or member; d. any body corporate at a general meeting of which not less than twentyfiveper cent of the total voting power may be exercised or controlled byany such director or his relative, or by two or more such directorstogether or by their relatives; or 1)
190.
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any body corporate, the directors or chief executive whereof are or isaccustomed to act in accordance with the directions or instructions of thechief executive, or of any director or directors, of the lending company: Provided that a company may, with the approval of theCommission, make a loan or give any guarantee or provide any securityin connection with a loan made by any other person to a director who isin the whole-time employment of the company for the purpose ofacquisition or construction of a dwelling house or land therefor or fordefraying the cost of any conveyance for personal use or house-holdeffects or for defraying any expense on his medical treatment or themedical treatment of any relative as are ordinarily made or provided bythe company to its employees. Explanation: "Relative'' in relation to a director means his spouse and minorchildren. Sub-section (1) shall not apply to a. any loan made, guarantee given or security provided i. by a private company, unless it is a subsidiary of a publiccompany; or ii. by a banking company; b. any loan made by a holding company to its subsidiary; or c. any guarantee given or security provided by a holding company inrespect of any loan made to its subsidiary. Where any loan made, guarantee given or security provided by a lendingcompany and outstanding at the commencement of this Ordinance could not have beenmade, given or provided, if this section had then been in force, the lending company shallwithin six months from the commencement of this Ordinance enforce the repayment ofthe loan made or, as the case may be, of the loan in connection with which the guaranteewas given or the security was provided, notwithstanding any agreement to the contrary: Provided that this sub-section shall not apply where the loan made, guaranteegiven or security provided to a whole-time director is approved by the Commission asprovided in the proviso to sub-section (1). Every person shall within fourteen days of his appointment as director orchief executive of a company file with the registrar the particulars of any loan taken, orguarantee or security obtained, prior to his becoming director or chief executive of thelending company which could not have been taken or obtained without the prior approvalof the Commission had he at the time of taking the loan or obtaining the guarantee orsecurity been the director or chief executive of the lending company. Every person who is knowingly a party to any contravention of thissection, including in particular any person to whom the loan is made or who has taken theloan in respect of which the guarantee is given or the security is provided, shall bepunishable with fine which may extend to five thousand rupees or with simpleimprisonment for a term which may extend to six months: Provided that where any such loan, or any loan in connection with which anysuch guarantee or security has been given or provided by the lending company, has beenrepaid in full, no punishment by way of imprisonment shall be imposed under this subsection,and where the loan has been repaid in part, the maximum punishment which maybe imposed under this sub-section by way of imprisonment shall be proportionatelyreduced. All persons who are knowingly parties to any contravention of subsection(1) or (3) shall be liable, jointly and severally, to the lending company for therepayment of the loan or for making good the sum with markup not less than theborrowing cost of the lending company] which the lending company may have beencalled upon to pay by virtue of the guarantee given or the security provided by suchcompany. Sub-section (1) shall apply to any transaction represented by a book-debtwhich was from its inception in the nature of a loan or an advance. No officer of the lending company or of the borrowing body corporateshall be punishable under sub-section (5) or shall incur the liability referred to in subsection(6) in respect of any loan made, guarantee given or security provided after thecommencement of this Ordinance in contravention of clause (d) or (e) of subsection (1),unless at the time when the loan was made, the guarantee was given or the security wasprovided by the lending company, he knew or had express notice that that clause wasbeing contravened thereby. POWERS OF DIRECTORS: The business of a company shall be managed bythe directors, who may pay all expenses incurred in promoting and registering thecompany, and may exercise all such powers of the company as are not by this Ordinance,or by the articles, or by a special resolution, required to be exercised by the company ingeneral meeting. The directors of a company shall exercise the following powers on behalfof the company, and shall do so by means of a resolution passed at their meeting, namely a. to make calls on shareholders in respect of moneys unpaid on theirshares; b. to issue shares; c. to issue debentures or any instrument in the nature of redeemablecapital; e.
2)
3)
4)
5)
6)
7) 8)
196.
1)
2)
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to borrow moneys otherwise than on debentures; to invest the funds of the company; to make loans; to authorize a director or the firm of which he is a partner or any partnerof such firm or a private company of which he is a member or director toenter into any contract with the company for making sale, purchase orsupply of goods or rendering services with the company; h. to approve annual or half-yearly or other periodical accounts as arerequired to be circulated to the members; i. to approve bonus to employees; j. to incur capital expenditure on any single item or dispose of a fixed asset in accordance with the limits as prescribed by theCommission from time to time: Provided that the acceptance by a banking company in the ordinarycourse of its business of deposits of money from the public repayable ondemand or otherwise and withdrawable by cheque, draft, order orotherwise, or the placing of moneys on deposit by a banking companywith another banking company on such conditions as the directors mayprescribe, shall not be deemed to be a borrowing of moneys or, as thecase may be, a making of loans by a banking company within themeaning of this section; k. to undertake obligations under leasing contracts exceeding one millionrupees; l. to declare interim dividend; and m. having regard to such amount as may be determined to be material (asconstrued in the Generally Accepted Accounting Principles) by the Board, i. to write off bad debts, advances and receivables; ii. to write off inventories and other assets of the company; and iii. to determine the terms of and the circumstances in which a lawsuit may be compromised and a claim or right in favour of acompany may be released, extinguished or relinquished. 3) The directors of a public company or of a subsidiary of a public companyshall not except with the consent of the general meeting either specifically or by way ofan authorization, do any of the following things, namely: a. sell, lease or otherwise dispose of the undertakings or a sizeable partthereof, unless the main business of the company comprises of suchselling or leasing; and b. remit, give any relief or give extension of time for the repayment of anydebt outstanding against any person specified in sub-section (1) ofsection 195. 4) Whosoever contravenes any provision of this section shall be punishablewith a fine which may extend to one hundred thousand rupees and shall be individuallyand severally liable for losses or damages arising out of such action. THE COMPANIES (GENERAL PROVISIONS AND FORMS) RULES, 1985 RULE 14A APPROVAL OF CAPITAL EXPENDITURE ETC. BY THE DIRECTORS: The amount of capital expenditure to be incurred on any single item and the amount of book value for the disposal of a fixed asset, for the purpose of clause (j) of sub-section (2) of section 196, shall be exceeding one million rupees and one hundred thousand rupees respectively. PROHIBITION REGARDING MAKING OF POLITICAL CONTRIBUTIONS: Notwithstanding anything contained in this Ordinance, a company shall not contribute any amount a. to any political party; or b. for any political purpose to any individual or body. 2) If a company contravenes the provisions of sub-section (1), then i. the company shall be liable to a fine which may extend to ten thousandrupees; and ii. every director and officer of the company who is knowingly and willfullyin default shall be punishable with imprisonment of either description fora term which may extend to two years and shall also be liable to fine. 197-A PROHIBITION REGARDING DISTRIBUTI ON OF GIFTS: 1) Notwithstandinganything contained in this Ordinance, a company shall not distribute gifts in any form toits members in its meetings. 2) If default is made in complying with this section, the company and everyofficer of the company who is a party to the default shall be liable to a fine not exceeding five hundred thousand rupees. 1) d. e. f. g.
197.
CHIEF EXECUTIVE 198.

1) APPOINTMENT OF FIRST CHIEF EXECUTIVE: Every company, other thana company managed by a managing agent, shall have a chief executive appointed in themanner provided in this section and section 199.
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The directors of every company shall as from the date from which itcommences business or as from a date not later than the fifteenth day after the date of itsincorporation, whichever is earlier, appoint any individual to be the chief executive of thecompany. 3) The chief executive appointed as aforesaid shall, unless he earlier resignsor otherwise ceases to hold office, hold office up to the first annual general meeting ofthe company or, if a shorter period is fixed by the directors at the time of hisappointment, for such period. 199. APPOINTMENT OF SUBSEQUENT CHIEF EXECUTIVE: 1) Within fourteendays from the date of election of directors under section 178 or the office of the chiefexecutive falling vacant, as the case may be, the directors of a company shall appoint anyperson, including an elected director, to be the chief executive, but such appointmentshall not be for a period exceeding three years from the date of appointment. 2) On the expiry of his term of office under section 198 or sub-section (1), achief executive shall be eligible for reappointment. 3) The chief executive retiring under section 198 or this section shallcontinue to perform his functions until his successor is appointed unless non-appointmentof his successor is due to any fault on his part or his office is expressly terminated. 200. TERMS OF APPOINTMENT OF CHIEF EXECUTIVE AND FILLING UP OF CASUAL VACANCY: 1) The terms and conditions of appointment of a chief executive shall bedetermined by the directors or the company in general meeting in accordance with theprovisions in the company's articles. 2) The chief executive shall, if he is not already a director of the company,be deemed to be its director and be entitled to all the rights and privileges, and subject toall the lia bilities, of that office. 201. RESTRICTION ON APPOINTMENT OF CHIEF EXECUTIVE: No person who isineligible to become a director of a company under section 187 shall be appointed orcontinue as the chief executive of any company. 202. REMOVAL OF CHIEF EXECUTIVE: The directors of a company by resolutionpassed by not less than three-fourths of the total number of directors for the time being,or the company by a special resolution, may remove a chief executive before theexpiration of his term of office notwithstanding anything contained in the articles or inany agreement between the company and such chief executive. 203. CHIEF EXECUTIVE NOT TO ENGAGE IN BUSINESS COMPETING WITH COMPANY'S BUSINESS: 1) A chief executive of a public company shall not directly or indirectlyengage in any business which is of the same nature as and directly competes with thebusiness carried on by the company of which he is the chief executive or by a subsidiaryof such company. Explanation:A business shall be deemed to be carried on indirectly by thechief executive if the same is carried on by his spouse or any of his minor children. 2) Every person who is appointed as chief executive of a public companyshall forthwith on such appointment disclose to the company in writing the nature of suchbusiness and his interest therein. 204. PENALTY: Whoever contravenes or fails to comply with any of theprovisions of sections 198 to 203 or is a party to the contravention of the said provisionsshall be liable to a fine which may extend to ten thousand rupees and may also bedebarred by the authority which imposes the fine from becoming a director or chiefexecutive of a company for a period not exceeding three years. 204-A CERTAIN COMPANIES TO HAVE SECRETARIES AND SHARE REGISTRARS: 1) A listed company shall have a whole time secretary and a single member companyshall have a secretary possessing such qualification as may be prescribed. 2) Listed companies shall have an independent share registrar possessingsuch qualifications and performing such functions as may be specified by the Commission. 2) THE COMPANIES (GENERAL PROVISIONS AND FORMS) RULES, 1985 RULE 14B QUALIFICATIONS OF COMPANY SECRETARY: 1) The directors of a public listed company shall take reasonable steps to ensure that the company secretary is a person who appears to them to have the requisite knowledge and experience to discharge his functions as company secretary, and who is: a. a member of, i. a recognized body of professional accountants; or ii. a recognized body of corporate or chartered secretaries; or b. a person holding a master degree in business administration or commerce or being a law graduate from a university recognized by the Higher Education Commission and having at least two years relevant
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c. experience; or a retired government servant in BS-19 or equivalent or above with at least fifteen years service:
th
Provided that a person already engaged by a public listed company as company secretary before the 26 October, 2002, may continue in that capacity if he has an experience of not less than five years in that position. 2) The company secretary of a single member company shall be a person holding a bachelor degree from a university recognized by the Higher Education Commission.
REGISTER OF DIRECTORS AND OTHER OFFICERS

REGISTER OF DIRECTORS, OFFICERS, ETC.: 1) Every company shall keep atits registered office a register of its directors and officers, including the chief executive,managing agent, secretary, chief accountant, auditors and legal adviser, containing withrespect to each of them such particulars as may be prescribed. 2) Every person referred to in sub-section (1) shall, within a period of tendays of his appointment or any change therein, as the case may be, furnish to thecompany the particulars specified in sub-section (1) and, within the periods respectivelymentioned in this section, the company shall file with the registrar a return in duplicate inthe prescribed form containing the particulars specified in the said register andnotification in the prescribed form of any change among the directors, the chiefexecutive, managing agent, chief accountant, secretary, auditor or legal advisor or in anyof the particulars contained in the register. 3) The period within which the said return is to be filed with the registrarshall be a period of fourteen days from the date of incorporation of the company and theperiod within which the said notification of a change is to be sent shall be fourteen daysfrom the happening thereof. 4) The register to be kept under this section shall during business hours,subject to such reasonable restrictions as the company may by its articles or in generalmeeting impose so that not less than two hours in each day be allowed for inspection, beopen to the inspection of any member of the company without charge and of any otherperson on payment of the prescribed fee or such lesser sum as the company may specifyfor each inspection. 5) If any inspection required under this section is refused or if default ismade in complying with sub-section (1) or sub-section (2) or sub-section (3), thecompany and every officer of the company or other person who is knowingly andwillfully in default shall be liable to a fine which may extend to five hundred rupees andto a further fine which may extend to fifty rupees for every day after the first duringwhich the default continues. 6) In the case of any such refusal, the registrar on application made by theperson to whom inspection has been refused and upon notice to the company, may byorder direct an immediate inspection of the register. THE COMPANIES (GENERAL PROVISIONS AND FORMS) RULES, 1985 RULE 14C PARTICULARS OF DIRECTORS AND OFFICERS, ETC.: 1) The following shall be the particulars of directors and officers, including the chief executive, managing agent, secretary, chief accountant, auditors and legal adviser, for the purpose of sub-section (1) of section 205, namely:-a. in the case of an individual, his present name in full, his father s name, in the case of a married woman or a widow, the name of her husband or deceased husband, his national identity card number and in case of foreign national passport number, his usual residential address, nationality and, if th at nationality is not the nationality of origin, nationality of origin and his business occupation, if any, and if he holds any other directorship or other office the particulars of such directorship or office; b. in the case of a person other than natural person, its name and address of registered or principal office, and particulars as stated in clause (a) of each of its directors or office bearers; and c. in the case of a firm, the full name, address and particulars as stated in clause (a) of each partner, an d the date on which each became a partner.
205.
THE COMPANIES (APPOINTMENT OF LEGAL ADVISERS) ACT, 1974

1. SHORT TITLE, EXTENT AND COMMENCEMENT. 1) This Act may be called the Companies (Appointment of Legal Advisers) Act, 1974. 2) It extends to the whole of Pakistan. 3) It shall come into force at once. 2. DEFINITIONS:
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In this Act, unless there is anything repugnant in the subject or context: a. "Advocate" means an advocate entered in any roll under the provisions of theLegal Practitioners and Bar Councils Act, 1973. b. "Company" means a company formed and registered under the Companies Act, 1913, but does not include a company the paid -up capital of which isless than five lakh rupees or a company limited by guarantee or an associationregistered under section 26 of that Act; c. "Legal Adviser" means a person appointed as such under section 3; and d. "Registered firm" means firm registered under the Partnership Act, 1932, all the partners of which are advocates. 3. APPOINTMENT OF LEGAL ADVISER: 1) Every company shall appoint at least one LegalAdviser on retainership to advise such company in the performance of its functions and thedischarge of its duties in accordance with law: Provided that a company in existence immediately before the commencement of this Actshall be deemed to have complied with the provisions of this sub -section if it appoints a LegalAdviser before the expiration of three months from such commencement. 2) No person other than an advocate or a registered firm shall be appointed to be a LegalAdviser. 4. RETAINER: Every Legal Adviser appointed by Company shall be paid by the company a retainerwhich shall in no case be less than one thousand two hundred rupees per men sum. 5. WHO MAY NOT BE APPOINTED LEGAL ADVISER: 1) A company shall not appoint anadvocate or a registered firm to be its Legal Adviser, if upon such appointment, the number ofcompanies of which such advocate or firm is a Legal Adviser will exceed--, a. in the case of the advocate, three: or b. in the case of the firm, the product of three and the total number of partners of thefirm: Provided that a company in existence immediately before the commencement of this Actshall be deemed to have complied with the provisions of this subsection if, before the expiration ofthree months from such commencement, it terminates the appointment of the advocate orregistered firm the appointment of whom or which is prohibited by this subsection. 2) No compensation shall be payable for the termination of an appointment of agreement under orby virtue of the operation of the provisions of subsection (2). 6. POWER TO EXEMPT: The Federal Government may, by notification in the officialGazette, exempt any company or class of companies from the operation of the provisions ofsubsection (1) of section 3 subject to such conditions and for such period as may be specified inthe notification. 7. PENALTY AND PROCEDURE: 1) If a company contravenes, or fails to comply with any ofthe provisions of this Act or the rules made thereunder, manager or other officer responsible for theconduct of its affairs shall unless he proves that the contravention or failure took place without hisknowledge or that he exercised all diligence to prevent such contravention or failure, he deemed tobe guilty of such contravention or failure and be punishable with simple imprisonment for a termwhich may extend to three months or with fine, or with both. 2) No Court shall take cognizance of any offence punishable under this Act except on areport in writing of the facts constituting such offence made by an officer of the FederalGovernment or of a Provincial Government authorised by the Federal Government in this behalf. 3) No Court inferior to that of a Magistrate of the first Class shall try an offence punishableunder this Act. 8. POWER TO MAKE RULES: 1) The Federal Government may by notification in the officialGazette, make rules for carrying out the purposes of the Act. 2) In particular and without prejudice to the generality of the foregoing provision, suchrules may provide for the maintenance of registers of Legal Advisers by companies, the form inwhich such registers shall be maintained, the furnishing of information by companies and theintervals at which such information shall be furnished.
BAR ON APPOINTMENT OF MANAGING AGENTS, SOLE PURCHASE AND SALE AGENTS, ETC. 206. BAR ON APPOINTMENT OF MANAGING AGENTS , SOLE PURCHASE, SALES AGENTS, ETC.:
1) No company whether incorporated in Pakistan or outside Pakistan shall appointany managing agent, by whatever name called, that is to say, a person, firm or companyentitled to the management of the affairs of a company, by virtue of an agreement orcontract with the company: Provided that this sub-section shall not apply to a company which is managed bya managing agent wholly owned or controlled by the Federal Government or a ProvincialGovernment.
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2) The Federal Government may, by notification in the official Gazette,exempt any of the following classes of agreements or contracts from the operation of subsection (1), namely: a. an agreement or contract with an investment adviser in relation to aninvestment company registered under the rules made under the Securitiesand Exchange Ordinance, 1969; b. an agreement or contract, approved by the Federal Government, with aforeign collaborator in relation to a company which owns an hotel in Pakistan; c. an agreement or contract approved by the Federal Government in relationto a company formed for setting up, in collaboration with one or morepublic sector financial institutions, an industrial undertaking which, inthe opinion of the said Government, is likely to contribute to theeconomic development of Pakistan; d. an agreement or contract with an NBFC licensed to undertake assetmanagement services in relation to an investment company registeredwith the Commission; and e. an agreement or contract with an NBFC licensed as a venture capitalcompany in relation to a fund registered with the Commission. No company whether incorporated in Pakistan or outside Pakistan whichis carrying on business in Pakistan shall, without the approval of the Commission,appoint any sole purchase, sale or distribution agent: Provided that this sub-section shall not apply to a sole purchase, sale ordistribution agent appointed by a company incorporated, or person ordinarily residing,outside Pakistan, unless the major portion of the business of such company or person isconducted in Pakistan. Whoever contravenes any of the provisions of this section shall bepunished with imprisonment for a term which may extend to two years, or with finewhich may extend to one hundred thousand rupees, or with both; and, if the person guiltyof the offence is a company or other body corporate, every director, chief executive, orother officer, agent or partner thereof shall, unless he proves that the offence wascommitted without his knowledge or that he exercised all due diligence to prevent itscommission, be deemed to be guilty of the offence.
3)
4)
TERMS OF APPOINTMENT OF MANAGING AGENT 207.

1) TERMS AND CONDITIONS OF APPOINTMENT OF MANAGING AGENT: Wherea managing agent is appointed in pursuance of any exemption available under section206, such appointment shall be subject to such terms and conditions as the FederalGovernment may deem fit to impose. In the event of any contravention of the terms and conditions imposed bythe Federal Government under sub-section (1), the company and every officer thereofwho is knowingly and willfully in default shall be liable to a fine which may extend totwenty thousand rupees and such officer shall, in the event of the company incurring aloss on account of such contravention, be jointly and severally liable for the loss.
2)
MISCELLANEOUS PROVISIONS REGARDING INVESTMENTS, CONTRACTS, OFFICERS AND SHAREHOLDINGS, TRADING AND INTERESTS 208.
INVESTMENTS IN ASSOCIATED COMPANIES AND UNDERTAKINGS: Subject to sub-section (2A) a company shall not make any investment in any of itsassociated companies or associated undertakings except under the authority of a specialresolution which shall indicate the nature, period and amount of investment and termsand conditions attached thereto: Provided that the return on investment in the form of loan shall not be less thanthe borrowing cost of investing company. Explanation:The expression investment shall include loans, advances, equity,by whatever name called, or any amount which is not in the nature of normal trade credit. 2A) The Commission may a. by notification, in the official Gazette, specify the class of companies orundertakings to which the restriction provided in sub-section (1) shallnot apply; and b. through regulations made thereunder, specify such conditions andrestrictions on the nature, period, amount of investment and terms andconditions attached thereto, and other ancillary matters, companies as it deems fit. 3) If default is made in complying with the requirements of this section, or the regulations, every director of a company who is knowingly and willfully indefault shall be liable to fine which may extend to ten million rupees and in addition,the directors shall jointly and severally reimburse to the company any loss sustained bythe company in consequence of an investment which was made without complying withthe requirements of this section. THE COMPANIES (GENERAL PROVISIONS AND FORMS) RULES, 1985 RULE 15 1)
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COPY OF RESOLUTION, ETC., REFERRED TO IN SECTION 208 TO BE FILED WITH THE COMMISSION AND REGISTRAR A copy of every resolution passed pursuant to section 208 together with the information and documents specified in Form 30 shall be filed with the Commission and the registrar concerned in the case of a listed company, and with the registrar concerned in the case of any other company to which section 208 applies, within fifteen days from the passing of the said resolution.
209.
INVESTMENTS OF COMPANY TO BE HELD IN ITS OWN NAME: Save asotherwise provided in sub-sections (2) to (5) or any other law for the time being in force,and subject to the provisions of sub-sections (6) to (8), a. all investment made by a company on its own behalf shall be made andheld by it in its own name; and b. where any such investments are not so held immediately before thecommencement of this Ordinance the company shall, within a period ofone year from such commencement, either cause them to be transferredto its own name, or dispose of them. 2) Where the company has a right to appoint or get elected any person as adirector of any other company and a nominee of the company in the exercise of such righthas been so appointed or elected, the shares in such other company of an amount notexceeding the nominal value of the qualification shares which are required to be held by adirector thereof, may be registered or held by such company jointly in its own name andin the name of such person or nominee, or in the name of such person or nominee alone. 3) A holding company may hold any shares in its subsidiary company in thename of its nominee or nominees if and in so far as it is necessary so to do for ensuringthat the number of members of the subsidiary company is not reduced below seven incase it is a public company, or below two in case it is a private company. 4) Sub-section (1) shall not apply to investments made by an investmentcompany, that is to say, a company whose principal business is the purchase and sale ofsecurities. 5) Nothing in this section shall be deemed to prevent a company a. from depositing with a bank, being the banker of the company, anyshares or securities for the collection of any dividend or interest payablethereon; or b. from depositing with or transferring to or holding in the name of ascheduled bank or a financial institution approved by the Commissionshares or securities in order to facilitate the transfer thereof: Provided that, if, within a period of six months from the date onwhich shares or securities are so deposited, transferred or held, notransfer of such shares or securities takes place, the company shall assoon as practicable after the expiry of such period have the shares orsecurities retransferred to itself from the scheduled bank or, as the casemay be, the financial institution, and again hold the shares or securities in its own name; c. from depositing with, or transferring to any person any shares orsecurities, by way of security for the repayment of any loan advanced tothe company or the performance of any obligation undertaken by it ;or d. from depositing with, or transferring to, or holding, or registering in thename of a central depository any shares or securities. 6) The certificates or the letter of allotment relating to the shares orsecurities in which investments have been made by a company shall, except in the casesreferred to in sub-sections (4) and (5), be in the custody of the company or of suchscheduled bank or financial institution as may be approved by the Commission. 7) Where, in pursuance of sub-section (2), (3), (4) or (5), any shares orsecurities in which investments have been made by a company are not held by it in itsown name, the company shall forthwith enter in a register maintained by it for thepurpose at its registered office a. the nature, value and such other particulars as may be necessary fully toidentify such shares or securities; and b. the bank or person in whose name or custody such shares or securitiesare held. 8) The register kept under sub-section (7) shall be open to the inspection ofany member or debenture-holder or creditor of the company without charge, duringbusiness hours, subject to such reasonable restrictions as the company may, by its articlesor in general meeting, impose so that not less than two hours in each day are allowed forsuch inspection. 9) If default is made in complying with any of the requirements of subsections(1) to (8), the company, and every officer of the company who is knowingly andwillfully in default, shall be liable to a fine which may extend to five thousand rupees andto a further fine not exceeding two hundred rupees for every day after the first duringwhich the default continues. 10) Without prejudice to the provisions of sub-section (9), if any inspectionrequired under sub-section (8) is refused, the registrar may on an application direct animmediate inspection of the register. 210. FORM OF CONTRACT: 1) Contracts on behalf of a company may be made as follows, that is to say, 1)
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any contract which, if made between private persons, would be by lawrequired to be in writing, signed by the parties to be charged therewith,may be made on behalf of the company in writing signed by any personacting under its authority, express or implied, and may in the samemanner be varied or discharged; ii. any contract which, if made between private persons, would by law bevalid although made by parol only, and not reduced into writing, may bemade by parol on behalf of the company by any person acting under itsauthority, express or implied, and may in the same manner be varied ordischarged. 2) All contracts made according to sub-section (1) shall be effectual in lawand shall bind the company and its successors and all other parties thereto, their heirs, orlegal representatives as the case may be. 211. BILLS OF EXCHANGE AND PROMISSORY NOTES: A bill of exchange, hundi orpromissory note shall be deemed to have been made, drawn, accepted or endorsed onbehalf of a company if made, drawn, accepted or endorsed in the name of, or by or onbehalf or on account of, the company by any person acting under its authority, express orimplied. 212. EXECUTION OF DEEDS: A company may, by writing under its commonseal, empower any person, either generally or in respect of any specified matters, as itsattorney, to execute deeds on its behalf in any place either in or outside Pakistan; andevery deed signed by such attorney, on behalf of the company, and under his seal, wheresealing is required, shall bind the company, and have the same effect as if it were underits common seal. 213. POWER FOR COMPANY TO HAVE OFFICIAL SEAL FOR USE ABROAD: 1) Acompany whose objects require or comprise the transaction of business beyond the limitsof Pakistan may, if authorized by its articles, have for use in any territory not situate inPakistan, an official seal which shall be a facsimile of the common seal of the company,with the addition on its face of the name of every territory where it is to be used. 2) A company having such an official seal may, by writing under itscommon seal, authorize any person appointed for the purpose in any territory not situatein Pakistan to affix the same to any deed or other document to which the company isparty in that territory. 3) The authority of any such agent shall, as between the company and anyperson dealing with the agent, continue during the period, if any, mentioned in theinstrument conferring the authority, or if no period is mentioned therein, then until noticeof the revocation or determination of the agent s authority has been given to the persondealing with him. 4) The person affixing any such official seal shall, by writing under hishand, on the deed or other document to which the seal is affixed, certify the date andplace of affixing the same. 5) A deed or other document to which an official seal is duly affixed shallbind the company as if it had been sealed with the common seal of the company. 214. DISCLOSURE OF INTEREST BY DIRECTOR: 1) Every director of a companywho is in any way, whether directly or indirectly, concerned or interested in any contractor arrangement entered into, or to be entered into, by or on behalf of the company shalldisclose the nature of his concern or interest at a meeting of the directors: Provided that a director shall be deemed also to be interested or concerned if anyof his relatives, as defined in the Explanation to sub-section (1) of section 195, is sointerested or concerned. 2) The disclosure required to be made by a director under sub-section (1) shall be made, a. in the case of a contract or arrangement to be entered into, at the meetingof the directors at which the question of entering into the contract orarrangement is first taken into consideration or, if the director was not,on the date of that meeting, concerned or interested in the contract orarrangement, at the first meeting of the directors held after he becomesso concerned or interested; and b. in the case of any other contract or arrangement, at the first meeting ofthe directors held after the director becomes concerned or interested inthe contract or arrangement. 3) For the purposes of sub-sections (1) and (2), a general notice given to thedirectors to the effect that a director is a director or a member of a specified bodycorporate or a member of a specified firm and is to be regarded as concerned or interestedin any contract or arrangement which may, after the date of the notice, be entered intowith that body corporate or firm, shall be deemed to be a sufficient disclosure of concernor interest in relation to any contract or arrangement so made. 4) Any such general notice shall expire at the end of the financial year inwhich it is given, but may be renewed for further period of one financial year at a time,by a fresh notice given in the last month of the financial year in which it would otherwiseexpire. 5) No such general notice, and no renewal thereof, shall be of effect unlesseither it is given at a meeting of the directors, or the director concerned takes reasonablesteps to ensure that it is brought up and read at the first meeting of the directors after it isgiven. 6) A director who fails to comply with sub-section (1) or sub-section (2)shall be liable to a fine which may extend to five thousand rupees. i.
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Nothing in this section shall be taken to prejudice the operation of anylaw restricting a director of a company from having any concern or interest in anycontract or arrangement with the company. 215. INTEREST OF OTHER OFFICERS, ETC.: 1) Save as provided in section 214 inrespect of directors, no other officer of a company who is in any way, directly orindirectly, concerned or interested in any proposed contract or arrangement with thecompany shall, unless he discloses the nature and extent of his interest in the transactionand obtains the prior approval of the directors, enter into any such contract orarrangement. 2) An officer who contravenes sub-section (1) shall be liable to a fine whichmay extend to five thousand rupees. 216. INTERESTED DIRECTOR NOT TO PARTICIPATE OR VOTE IN PROCEEDINGS OF DIRECTORS: 1) No director of a company shall, as a director, take any part in thediscussion of, or vote on, any contract or arrangement entered into, or to be entered into,by or on behalf of the company, if he is in any way, whether directly or indirectly,concerned or interested in the contract or arrangement, nor shall his presence count forthe purpose of forming a quorum at the time of any such discussion or vote; and if hedoes vote, his vote shall be void. 2) Sub-section (1) shall not apply to a. a private company which is neither a subsidiary nor a holding companyof a public company; b. any contract of indemnity against any loss which the directors, or anyone or more of them, may suffer by reason of becoming or being suretiesor a surety for the company; c. any contract or arrangement entered into or to be entered into with apublic company, in which the interest of the director aforesaid consistssolely in his being a director of such company and the holder of not morethan such shares therein as are requisite to qualify him for appointmentas a director thereof, he having been nominated as such director by thecompany referred to in sub-section (1). 3) Every director who knowingly contravenes any of the provisions of subsection(1) or sub-section (2) shall be liable to a fine which may extend to five thousandrupees. 217. DECLARING A DIRECTOR TO BE LACKING FIDUCIARY BEHAVIOR: The Courtmay declare a director to be lacking fiduciary behaviour if he contravenes the provisionsof section 214 or sub-section (1) of section 215 or section 216: Provided that before making a declaration the Court shall afford the directorconcerned an opportunity of showing cause against the proposed action. 218. DISCLOSURE TO MEMBERS OF DIRECTOR S INTEREST IN CONTRACT APPOINTING CHIEF EXECUTIVE, MANAGING AGENT OR SECRETARY: 1) Where a company a. appoints, or enters into a contract for the appointment of, a chiefexecutive, managing agent, wholetime director or secretary of thecompany, in which appointment or contract any director of the companyis in any way, whether directly or indirectly, concerned or interested ; or b. varies any such contract already in existence;the company shall make out and attach to the report referred to in section 236 an abstractof the terms of the appointment or contract or variation, together with a memorandumclearly specifying the nature of the concern or interest of the director in such appointmentor contract or variation. 2) Where a company appoints or enters into a contract for the appointmentof a chief executive of the company, or varies any such contract already in existence, thecompany shall send an abstract of the terms of the appointment or contract or variation toevery member of the company within twenty-one days from the date of the appointmentor of entering into the contract or varying of the contract, as the case may be, and if anyother director of the company is concerned or interested in the appointment or contract orvariation, a memorandum clearly specifying the nature of the concern or interest of suchother director in the appointment of contract or variation shall also be sent to everymember of the company with the abstract. 3) Where a director becomes concerned or interested as aforesaid in anysuch contract as is referred to in subsection (1) or sub-section (2) after it is made, theabstract and the memorandum, if any, referred to therein shall be sent to every member ofthe company within twenty-one days from the date on which the director becomes soconcerned or interested. 4) All contracts entered into by a company for the appointment of amanaging agent, chief executive or secretary shall be kept at the registered office of thecompany; and shall be open to the inspection of any member of the company at suchoffice; and extracts may be taken therefrom and certified copies thereof may be requiredby any such member, to the same extent, in the same manner and on payment of the samefee, as in the case of the register of members of the company; and the provisions ofsection 150 shall apply accordingly. 5) The provisions of this section shall apply in relation to any resolution ofthe directors of a company appointing a managing agent, a secretary or a chief executiveor other whole-time director, or varying any 7)
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previous contract or resolution of thecompany relating to the appointment of a managing agent, a secretary or a chiefexecutive or other whole-time director, as they apply in relation to any contract for thelike purpose. 6) If default is made in complying with any of the provisions of this section,the company and every officer of the company who is knowingly and willfully in defaultshall be liable to a fine which may extend to five thousand rupees. 219. REGISTER OF CONTRACTS, ARRANGEMENTS AND APPOINTMENTS IN WHICH DIRECTORS, ETC., ARE INTERESTED: 1) Every company shall keep a register in which shallbe entered separately particulars of all contracts, arrangements or appointments to whichsection 214 or section 215 or section 216 or section 218 applies, including the followingparticulars to the extent they are applicable in each case, namely: a. the date of the contract, arrangement or appointment; b. the names of the parties thereto; c. the principal terms and conditions thereof; d. the date on which it was placed before the directors; e. the names of the directors voting for and against the contract,arrangement or appointment and the names of those remaining neutral; f. the name of the director or officer concerned or interested in the contract,arrangement or appointment and the extent or nature of his interesttherein. 2) Particulars of every such contract, arrangement and appointment shall beentered in the relevant register aforesaid a. in the case of a contract, arrangement, or appointment requiring thedirectors' approval, within seven days of the meeting of the directors atwhich the contract, arrangement or appointment is approved; and b. in the case of any other contract, arrangement or appointment, withinseven days of the receipt at the registered office of the company of theparticulars of such other contract, arrangement or appointment or withinthirty days of the date of such other contract, arrangement orappointment, whichever is later; and the register shall be placed beforethe next meeting of the directors and shall then be signed by all thedirectors present at the meeting. 3) The register aforesaid shall also specify, in relation to each director ofthe company, the names of the firms and bodies corporate of which notice has been givenby him under sub-section (3) of section 214. 4) Nothing in sub-section (1), sub-section (2) or sub-section (3) shall apply a. to any contract or arrangement for the sale, purchase or supply of anygoods, materials or services, if the value of such goods and materials orthe cost of such services does not exceed two thousand rupees in theaggregate in any year; or b. to any contract or arrangement by a banking company for the collectionof bills in the ordinary course of its business. 5) The register referred to in sub-section (1) shall be kept at the registeredoffice of the company and shall be open to inspection by and extracts may be takentherefrom and certified copies thereof required by any member of the company in thesame manner and on payment of the same fee as in the case of register of members keptunder section 150. 6) If default is made in complying with the provisions of this section, thecompany and every director of the company who is knowingly and willfully in defaultshall, in respect of each default, be liable to a fine which may extend to five thousandrupees and to a further fine which may extend to two hundred rupees for every day afterthe first during which the default continues. 220. REGISTER OF DIRECTORS SHAREHOLDINGS, ETC.: 1) Every listed companyshall keep a register showing as respects each director, chief executive, managing agent,chief accountant, secretary or auditor of the company, and every other person holding notless than ten per cent of the beneficial interest in the company, the number, descriptionand amount of any shares in, or debentures of, the company or any other body corporate,being the company s subsidiary or holding company, or a subsidiary of the company'sholding company, which are held by or in trust for him, or of which he has a right tobecome holder, whether on payment or not. 2) Where any shares or debentures have to be recorded in the said registeror to be omitted therefrom or any particulars changed in relation to any director or otherperson as aforesaid by reason of a transaction entered into after the commencement ofthis Ordinance and while he occupies that position or holds such interest, the registershall also show the date of, and the price or other consideration for, the transaction: Provided that, where there is an interval between the agreement for any such transaction and the completion thereof, the date so shown shall be that of the agreement. 3) The nature and extent of any position or interest or right in or over anyshares or debentures recorded in relation to a director or other person in the said registershall, if he so requires, be indicated in the register.
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The company shall not, by virtue of anything done for the purposes ofthis section, be affected with notice of, or put upon inquiry as to, the rights of any personin relation to any shares or debentures. 5) The said register shall, subject to the provisions of this section, be kept atthe registered office of the company and shall be open to inspection during businesshours as follows, subject to such reasonable restrictions as the company may by itsarticles or in general meeting impose, so that no less than two hours in each day are allowed for inspection, a. during the period beginning fourteen days before the date of the annualgeneral meeting of the company and ending three days after the date ofits conclusion, it shall be open to the inspection of any member or holderof debentures of the company; and b. during that or any other period, it shall be open to the inspection of anyperson acting on behalf of the Commission. 6) Without prejudice to the rights conferred by sub-section (5), theCommission and the registrar may at any time require a certified copy of the said registeror any part thereof. 7) The said register shall also be produced at the commencement of theannual general meeting of the company and remain open and accessible during thecontinuance of the meeting to any person attending the meeting. 8) If defaults is made in complying with sub-section (7), the company andevery officer of the company who is knowingly and willfully in default shall be liable to afine which may extend to one thousand rupees, and if default is made in complying withsub-section (1) or sub-section (2), or if any inspection required under this section isrefused or and copy required thereunder is not sent within a reasonable time, thecompany and every officer of the company who is knowingly and willfully in default shallbe liable to a fine which may extend to ten thousand rupees. 9) Without prejudice to the provisions of sub-section (8), the registrar may,in the case of any refusal to allow inspection of register or supply of a copy thereof undersub-section (5) or sub-section (6), direct immediate inspection of such register or supplyof a copy thereof. 221. DUTY OF DIRECTORS, ETC., TO MAKE DISCLOSURE OF SHAREHOLDINGS, ETC.: 1) Every director, officer and such other person as is referred to in sub-section (1) of section220 shall give notice to the company of such matters relating to himself as may benecessary for the purpose of enabling the company to comply with the provisions ofsection 220. 2) The notice referred to in sub-section (1) shall be given in writing withinfifteen days of each requisition or change of interest or right, as the case may be, referredto in sub-section (1) of section 220 or date of agreement referred to in sub-section (2) ofthat section. 3) Any person who knowingly and willfully fails to comply with sub-section(1) or sub-section (2) shall be punishable with imprisonment for a term which may extendto two years, or with fine which may extend to five thousand rupees, or with both. 222. SUBMISSION OF STATEMENTS OF BENEFICIAL OWNERS OF LISTED SECURITIES: 1) Every director, chief executive, managing agent, chief accountant, secretary or auditorof a listed company who is or has been the beneficial owner of any of its equitysecurities, and every person who is directly or indirectly the beneficial owner of morethan ten per cent of such securities, shall submit to the registrar and the Commission areturn in the prescribed form containing the prescribed particulars pertaining to thebeneficial ownership of such securities and notify in the prescribed form the particularsof any change in the interest aforesaid. 2) The period within which the said return is to be submitted to the registrar and the Commission shall be, a. where the person occupies the position or office specified in sub-section(1), or is a person whose interest as beneficial owner of securitiesrequiring submission of the return as stated in the said subsectionsubsists on the commencement of this Ordinance, within thirty days fromsuch commencement; b. in any other case, including a case where the company is listed on thestock exchange after the commencement of this Ordinance or after theperson has occupied the position or office specified in sub-section (1) orhas acquired interest as beneficial owner of securities as aforesaid, withinthirty days of occupying the office in the company or acquisition ofinterest as beneficial owner requiring submission of the return aforesaidor listing of the company on the stock exchange, as the case may be; c. where there is any change in the position or interest as aforesaidincluding a change in the beneficial ownership of any equity security,within fifteen days of such change; or d. where the Commission by an order so requires, within such period asmay be specified in such order. 223. PROHIBITION OF SHORT SELLING: No director, chief executive, managingagent, chief accountant, secretary or auditor of a listed company, and no person who isdirectly or indirectly the beneficial owner of not less than ten per cent of the listed equitysecurities of such company, shall practice directly or indirectly short-selling suchsecurities. THE REGULATIONS FOR SHORT SELLING UNDERREADY MARKETOFISLAMABAD STOCK EXCHANGE (G) LIMITED 1. SHORT TITLE & COMMENCEMENT: 4)
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a) These Regulations may be called the Regulations for Short Selling under ReadyMarket, 2002 . b) These Regulations shall come into force with immediate effect. 2. DEFINITIONS: In these Regulations, unless the subject or context otherwise requires: a. Blank Sale means a sale by a party that does not own shares or the sale does notconstitute a sale with preexisting interest or is a sale by a party that has notentered into a contractual borrowing arrangement to meet delivery requirements. b. Board means Board of Directors of the Exchange . c. Downtick means the price below the previous price of a transaction of securityexecuted through the Islamabad Stock Exchange Computerized Trading System(ISECTS). In order for a downtick to occur, a transaction price must be followedby a decreased transaction price. d. Exchange means the ISLAMABAD STOCK EXCHANGE (Guarantee)Limited . e. Member means Member of the Exchange . f. Prior Contractual Borrowing arrangement means a written contract oragreement executed between the borrower and the lender of securities beforeexecution of short sale trade, for enabling the short seller who is the borrower insaid contract or agreement to make delivery on the settlement date. g. Sale with pre-existing interest means: The squaring up of an earlier purchase on the same exchange in the samesettlement. The squaring up of an earlier purchase on the same exchange in a differentsettlement which will settle prior to the settlement of the sale. The squaring up of an earlier purchase on another exchange in a differentsettlement which will settle prior to the settlement of the sale. The squaring up of an earlier purchase on another exchange in the samesettlement. h. Short Sale means a sale by a Member, on his Proprietary Account or onClient s Account, not owning securities at the time of sale or the sale withoutconstituting a Pre-Existing Interest but is a sale on Proprietary Account or Client sAccount entered into on the basis of Prior Contractual Borrowing Arrangement tomeet delivery requirements on the settlement date. i. Uptick means the price above the previous price of a transaction of a securityexecuted through the ISECTS. In order for an uptick to occur, a transaction pricemust be followed by an increased transaction price. j. Zero-Plus Tick means the price without any difference in the previous price ofa transaction of a security, which was an uptick, executed through the ISECTS . 3. SHORT SELLING a. Short Sale under Ready Market shall take place through the Islamabad StockExchange Computerized Trading System (ISECTS). b. Short Sale will only be permissible on Uptick or Zero -Plus Tick, for example: Time Previous Closing 10:00 am 10:02 am 10:10 am 10:11 am 10:12 am 12:00 noon 12:05 pm 12:10 pm 12:15 pm Rate 19.00 19.05 19.10 19.10 19.05 19.05 19.50 19.45 18.90 18.95 Remarks Short Sale Allowed Short Sale Allowed Short Sale Allowed Not Allowed Not Allowed Short Sale Allowed Not Allowed Not Allowed Short Sale Allowed
A B C D E F G H I 4. 5.
PROHIBITION ON BLANK SALES:Blank sales are not permissible. SHORT SALE PREREQUISITES: No Member on his Proprietary Account or Client s Account shall make a Short Saleunless: a. The sale is made at an Uptick or Zero-Plus Tick; and b. the trade is declared as a Short Sale at the time of placement of order throughISECTS in a special Short Sale Order Window designated in the system for thepurpose. Short Seller will have to declare Short Sale transactions while placing the order in thesystem in the manner and procedure as may be prescribed by the Exchange from time totime. This identification would be at the trade level to the Exchange, which would thendisclose the cumulative figures for public consumption at the close of market everyday. Short Seller will have to make delivery of the net shares involved in the short selling onthe day of settlement.
6.
7.
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CRITERIA FOR SECURITIES ELIGIBLE FOR SHORT SELLING : i. Short Sales are only allowed in the Securities which are prescribed by theExchange with prior approval of the Commission, based on their lowest impactcost, highest turnover and maximum free float market capital reviewed at the endof every quarter. ii. The Exchange shall give at least 30 days prior notice to the market participantsbefore including or excluding any security from the list of securities eligible forshort selling. 9. NON-COMPLIANC WITH THE REGULATIONS : a. In case of non-compliance of these Regulations by a member (on his proprietaryposition) or an individual or corporate/institutional investor on UIN basis,penalties shall be imposed on each instance of short/blank sale as follows: First violation 5% of the value of short/blank sale or Rs. 50,000/- whichever is higher,plus confiscation of profits made on short/blank sale. In case of non-compliance in proprietary account, 10% of the value ofshort/blank sale or Rs. 100,000/- whichever is higher, confiscation ofprofits made on short/blank sale and switching off all terminals, exceptone, to restrict right to trade, up to a maximum period of 03 da ys. Second violation within one year of first violation 10% of the value of short/blank sale or Rs. 100,000/- whichever is higher,plus confiscation of profits made on short/blank sale. In case of non-compliance in proprietary account, 20% of the value ofshort/blank sale or Rs. 200,000/- whichever is higher, plus confiscation ofprofits made on short/blank sale and switching off all terminals, exceptone, to restrict right to trade, up to a maximum period of 07 days. Subsequent violation For each subsequent violation after second violation within one year offirst violation, the amount of penalty shall be twice the amount of lastimposed penalty, plus confiscation of profits made on short/blank sale,plus, in case of non-compliance in proprietary account, switching off allterminals, except one, to restrict right to trade, up to a maximum period of07 days. b. The Exchange shall be responsible for monitoring compliance with thisregulation. 10. TEMPORARY PROHIBITION ON SHORT SALE The Board may with the prior approval of the Commission and after notice to themembers, temporarily prohibit short sale completely for a specified period with anyextension thereof. In case of non-compliance with this Regulation by a member, theExchange shall impose penalty as prescribed under Regulaton 9 of these i Regulationsand/or take any other disciplinary actions. 11. AMENDMENTS IN REGULATIONS The Board may, with the prior approval of the Securities and Exchange Commission,make changes in these Regulations after giving reasonable notice. 8.
224.
1)
2)
3)
TRADING BY DIRECTORS, OFFICERS AND PRINCIPAL SHAREHOLDERS: Where any director, chief executive, managing agent, chief accountant, secretary orauditor of a listed company or any person who is directly or indirectly the beneficialowner of more than ten per cent of its listed equity securities makes any gain by thepurchase and sale, or the sale and purchase, of any such security within a period of lessthan six months, such director, chief executive, managing agent, chief accountant,secretary or auditor or person who is beneficial owner shall make a report and tender theamount of such gain to the company and simultaneously send an intimation to this effectto the registrar and the Commission: Provided that nothing in this sub-section shall apply to a security acquired ingood faith in satisfaction of debt previously contracted. Where a director, chief executive, managing agent, chief accountant,secretary, auditor or person who is beneficial owner as aforesaid fails or neglects totender, or the company fails to recover, any such gain as is mentioned in sub-section (1)within a period of six months after its accrual, or within sixty days of a demand therefor,whichever is later, such gain shall vest in the Commission and unless such gain isdeposited in the prescribed account, the Commission may direct recovery of the same asan arrear of land revenue. For the purposes of sections 220 to 224, the term auditor of thecompany shall, where such auditor is a firm, include all partners of such firm. Explanation: a. For the purposes of this section and section 222, beneficialownership of securities of any person shall be deemed to include thesecurities beneficially owned, held or controlled by him or his spouse orby any
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of his dependent lineal ascendants or descendants not beinghimself or herself a person who is required to furnish a return undersection 222, and i. in the case where such person is a partner in a firm, shall bedeemed to include the securities beneficially held by such firm;and ii. in the case where such person is a shareholder in a privatecompany, shall be deemed to include the securities beneficiallyheld by such company: Provided that for the purposes of sub-section (1) the gain whichis required to be tendered to the company by such person shall bean amount bearing to the total amount of the gain made, as thecase may be, by the firm or private company the same proportionas his relative interest bears to the total interest in such firm orprivate company. b. For the purposes of this Explanation, control , in relation to securitiesmeans the power to exercise a controlling influence over the votingpower attached thereto. Whoever knowingly and willfully contravenes or otherwise fails tocomply with any provision of section 222, section 223 or section 224 shall be liable to afine which may extend to thirty thousand rupees and in the case of a continuingcontravention, non-compliance or default to a further fine which may extend to onethousand rupees for every day after the first during which such contravention, noncomplianceor default continues.
4)
THE COMPANIES (GENERAL PROVISIONS AND FORMS) RULES, 1985 RULE 16 COMPUTATION OF AMOUNT TO BE TENDERED TO A LISTED COMPANY BY CERTAIN BENEFICIAL OWNERS UNDER SEC. 224 1) Any gain made from the purchase and sale, or sale and purchase, of a listed security within a period of less than six months, which is required to be reported to the Commission and the registrar, and to be tendered to the company under section 224 shall be computed in the following manner, namely:-a. the purchase at lowest rates shall be matched against the sales at highest rates prevailing within the six months, and the recoverable amount calculated with respect to every individual transaction by reference to the difference between the purchase price and the sale price of any purchase and sale, or sale and purchase disregarding any other transactions, that is to say, the lowest in rate and highest out rate of the purchases and sales or the sales and purchases shall be matched; and b. the purchases and sales shall be matched as aforesaid so long as the securities involved in the purchase and sale are of the same class and of the same listed company and for this purpose the shares shall be deemed as fungibles. 2) For the purpose of sub-rule (1), distribution of bonus shares and allotment of right shares by a listed company to an existing shareholder either on the basis of his entitlement or on account of purchase of right allotment letters from market shall not constitute a purchase. 3) Any loss arising out of any transaction in a listed security shall not be setoff against the gain arising out of such security computed in the manner aforesaid: Provided that the amount of brokerage, stamp duty and other expenditure actually paid or incurred in making the gain may be deducted by the person by whom it is to be reported or tendered subject to production of such documentary evidence in support of the payment having been made or expenditure having been incurred as may be acceptable to the company.
LISTED COMPANIES (PROHIBITION OF INSIDERS TRADING) GUIDELINES

CHAPTER I PRELIMINARY 1. SHORT TITLE AND COMMENCEMENT: 1) These guidelines may be called theListed Companies (Prohibition Of Insiders Trading) Guidelines. 2) These shall come into force at once. 2. DEFINITIONS: In these guidelines, unless the context otherwise requires: a. "Act" means the Securities and Exchange Commission of PakistanAct, 1997; b. "associate" means an associate as defined in clause (ab) of subsection(1) of section 2 of the Ordinance; c. "Company" means a company as defined in clause (7) of subsection(1) of section 2 of the Companies Ordinance, 1984.
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d. e. "Commission" means the Securities and Exchange Commission ofPakistan. "connected person" means any person who i. is a director, as defined in clause (13) of sub-section (1) ofsection 2 of the Companies Ordinance, 1984; or ii. occupies the position as an officer or an employee of thecompany or holds a position involving a professional orbusiness relationship between himself and the companyand who may reasonably be expected to have an access tounpublished price sensitive information in relation to thatcompany; f. "dealing in securities" means an act of buying, selling or agreeingto buy, sell or deal in any securities by any person either asprincipal or agent; g. "insider" means i. a person who is a director, chief executive, managing agent,chief accountant, secretary or auditor of a listed company orthe beneficial owner holding directly or indirectly not lessthan 10% of the shares of a listed company; or ii. a person who, is or was connected with the company or isdeemed to have been connected with the company, and whois reasonably expected to have access, by virtue of suchconnection, to unpublished price sensitive information inrespect of securities of the company who has received or hashad access to such unpublished price sensitive information; h. "Listed" in relation to securities, means securities which have beenallowed to be traded on a stock exchange. i. "officer" means a person as defined in clause (24) of sub-section (1)of section 2 of the Companies Ordinance, 1984 and includes anauditor of the company; j. "Ordinance" means the Securities and Exchange Ordinance, 1969; k. "person is deemed to be a connected person" if such person i. is a company under the same management or group orany subsidiary company; ii. is an official or a member of a stock exchange or of aclearing house of that stock exchange, or any employeeof a member of a stock exchange; iii. is an investment bank, share transfer agent, registrar toan issue, Trustee of Term Finance Certificates,Investment Advisor, Investment Company (closed endmutual fund) or an employee thereof, or, is a member ofthe Board of Directors of an investment company or amember of the Board of Directors of the AssetManagement of an Investment Scheme (open-endmutual fund) or is an employee having fiduciaryrelationship with the company; iv. is a member of the Board of Directors, or an employee,of a financial institution as defined in clause (15A) ofsub-section (1) of section 2 of the companies Ordinance1984; v. is an official or an employee of a self-regulatoryorganizationrecognized by the Commission; vi. is a relative of any of the aforementioned persons; or vii. is a banker of the company. l. "stock exchange" means a stock exchange which is registered withthe Commission under section 5 of the Ordinance, 1969; m. "unpublished price sensitive information" in relation to a listedsecurity means any information which relates to the followingmatters or is of concern, directly or indirectly, to a company, andis not generally known or published by such company for generalinformation, but which if published or known, is likely tomaterially affect the price, of securities of that company in themarket: i. financial results (both half-yearly and annual) of thecompany; ii. intended declaration of dividends (both interim andfinal); iii. issue of shares by way of rights, bonus, etc.; iv. any major expansion plans or execution of new projects; v. amalgamation, mergers and takeovers; vi. disposal of the whole or substantially the whole of theundertaking; vii. such other information as may affect the earnings of thecompany; and viii. any changes in policies, plans or operations of thecompany.
CHAPTER II PROHIBITION ON DEALING, COMMUNICATING OR COUNSELING 3. PROHIBITION ON DEALING, COMMUNICATING OR COUNSELING BY INSIDERS : Noperson who is or has been, at any time during the preceding six monthsassociated with a company shall: i. either on his own behalf or on behalf of any other person,deal in securities of a company listed on a stock exchangeon the basis of any unpublished price sensitive information;or ii. communicate any unpublished price sensitive information toany person, with or without his request for suchinformation, except as required in the ordinary course ofbusiness or under any law; or iii. counsel or procure any other person to deal in securities ofany company on the basis of unpublished
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price sensitiveinformation. VIOLATION OF PROVISIONS RELATING TO INSIDER TRADING: A person who dealsin securities or communicates any information or counsels any person dealingin securities in contravention of the provisions of paragraph 3 shall be guilty ofinsider trading and shall be liable to penal action under section 15B of theOrdinance. CHAPTER III LIABILITY, ACTION BY COMMISSION ON BEHALF OF ISSUER 5. LIABILITY : 1) Every connected person who purchases, sells orotherwise deals in and with securities of an issuer with the knowledge ofunpublished price sensitive information with respect to the issuer that has notbeen generally disclosed is liable to compensate the seller or purchaser of thesecurities, as the case may be, for damages as a result of the trade unless, a. the connected person proves that the person reasonably believedthat the unpublished price sensitive information had beengenerally disclosed; or b. the unpublished price sensitive information was known or oughtreasonably to have been known to the seller or purchaser, as thecase may be. 2) Every insider who informs another person of unpublished price sensitiveinformation with respect to the issuer that has not been generally disclosed,shall be liable to compensate for damages any person that thereafter sellssecurities of the issuer to or purchases securities of the issuer from the personthat received the Information unless;i. the person who informed the other person proves that theinforming person reasonably believed the unpublished pricesensitive information had been generally disclosed; ii. the unpublished price sensitive information was known orought reasonably to have been known to the seller orpurchaser, as the case may be; or iii. in the case of an action against an issuer or a person inspecial relationship with the issuer, the information wasgiven in the necessary course of business; 3) Any person who has access to information concerning the investmentprogram of a mutual fund in Pakistan or in the investment portfolio managedfor a client by an investment adviser and uses that information for his, her orits direct benefit or advantage to purchase, sell or otherwise deal in and withsecurities of an issuer for his, her or its account where the portfolio securitiesof the mutual fund or the investment portfolio managed for the client by theinvestment adviser includes securities of that issuer is accountable to themutual fund or the client of the investment adviser, as the case may be, forany benefit or advantage received or receivable as a result of such purchase orsale. 4) Every person who is an insider or associate of an issuer that, a. sells or purchases the securities of the issuer with knowledge of aunpublished price sensitive information with respect to the issuerthat has not been generally disclosed; or b. communicates to another person, other than in the necessarycourse of business, knowledge of unpublished price sensitiveinformation with respect to the issuer that has not been generallydisclosed. 5) Where more than one person in a special relationship with an issuer isliable under sub-paragraph (I) or (2) of this paragraph as to the sametransaction or series of transactions, their liability is joint and several. 6) In assessing damages under sub-paragraph (1) or (2) of this paragraph,the Court may consider, a. if the plaintiff is a purchaser, the price paid by the plaintiff for the security less the average market price of the security in the twentytrading days following general disclosure of the unpublished pricesensitive information; or b. if the plaintiff is a vendor, the average market price of the securityin the twenty trading days following general disclosure of theunpublished price sensitive information less the price received bythe plaintiff for the security,In addition to the above, the Court may consider such other measures ofdamages as may be relevant in the circumstances. 6. ACTION BY COMMISSION ON BEHALF OF ISSUER : 1) Upon application by the Commission or by any person who was at thetime of a transaction referred to in subparagraph (1) or (2) of paragraph 5 or isat the time of the application a security holder of the issuer, the Court may, ifsatisfied that, a. the Commission or the person has reasonable grounds forbelieving that the issuer has a cause of action under subparagraph(4) of paragraph 5; and b. the issuer has failed to obtain prosecution of an actioncommenced by it under paragraph 5,make an order, upon such terms as to security for costs and otherwise as tothe Court seems fit, requiring the Commission or authorizing such person orthe Commission to commence or continue an action in the name of and onbehalf of the issuer to enforce the liability created by sub- paragraph (4) ofparagraph 5. 2) Where an action under sub-regulations (3) or (4) of regulation 5 is, a. commenced; 4.
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b. commenced and prosecuted; or c. continued, by a board of directors of an issuer or the Court may order that the costsproperly incurred by the Board in commencing, commencing and prosecutingor continuing the action, as the case may be, shall be paid by the issuer, if theCourt is satisfied that there were apparent grounds for believing the action wasin the best interest of the issuer and the security holders thereof. 3) Where an action under sub-paragraph (3) or (4) of paragraph 5 is, a. commenced; b. commenced and prosecuted; or c. continued, by a person who is a security holder of the issuer or the Court may order thatthe costs properly incurred by such person in commencing, commencing andprosecuting or continuing the action, as the case may be, shall be paid by theissuer, if the Court is satisfied that, i. the issuer failed to commence the action or had commencedit but had failed to prosecute it diligently; and ii. there are apparent grounds for believing that thecontinuance of the action is in the best interest of the issuerand the security holders thereof. 4) In determining whether there are apparent grounds for believing that anaction or its continuance is in the best interest of an issuer and thesecurity holders thereof, the Court shall consider the relationshipbetween the potential benefit to be derived from the action by the issuerand the security holders thereof and the cost involved in the prosecutionof the action. 5) Notice of every application under sub-paragraph (I) or (2) of paragraph 5shall be given to the Commission, the issuer or the mutual fund as thecase may be, and each of them may appear and be heard thereon. 6) Every order made under sub-paragraph (I) or (2) of this paragraph,requiring or authorizing the Commission to commence and prosecute orcontinue an action, shall provide that the issuer or mutual fund, as thecase may be, shall co-operate fully with the Commission in thecommencement and prosecution or continuation of the action, and shallmake available to the Commission all books, records, documents andother material or information known to the issuer or mutual fund orreasonably ascertainable by the issuer or mutual fund relevant to suchaction. CHAPTER IV INVESTIGATION 7. INVESTIGATION BY THE COMMISSION: 1) Where the Commission, on thebasis of the information available with it, is of the opinion that it is necessaryto investigate and inspect the books of account, other records and documentsof an insider and that of the member of a stock exchange for such a purpose, itmay appoint an enquiry officer for the said purpose. 2) The purpose referred to in sub-paragraph (1) may include: a. to investigate into the complaint received from an investor, marketintermediary or any other person on any matter having a bearingon the allegations of insider trading; and b. to investigate suo-moto on the basis of its own knowledge orinformation in its possession to protect the interest of investorsand the securities market. 8. PROCEDURE FOR INVESTIGATION: 1) Before undertaking any investigationunder paragraph 7, the Commission shall provide an opportunity of beingheard with a reasonable notice to the insider for that purpose. 2) Notwithstanding anything contained in sub-paragraph (1), where theCommission is satisfied that in the interest of investors or in public interest nosuch notice should be given, it may by an order in writing direct that theinvestigation be taken up without such notice. 3) On being empowered by the Commission, the enquiry officer shallundertake the investigation and inspection of books of accounts, records anddocuments of the insider. Such a person shall be bound to discharge hisobligations as provided in paragraph 9. 9. OBLIGATIONS OF INSIDER ON INVESTIGATION BY THE COMMISSION: 1) Itshall be the duty of every insider, who is being investigated, to produce to theenquiry officer such books of account and other documents in his custody orcontrol and furnish the statements and information relating to thetransactions in securities market within such time as the enquiry officer mayrequire. 2) The insider shall allow the enquiry officer to have reasonable access tothe premises occupied by such insider and also extend reasonable facility forexamining any books, records, documents and computer data in thepossession of the stock broker or any other person and also provide copies ofdocuments or other materials which, in the opinion of the enquiry officer arerelevant. 3) The enquiry officer, in the course of enquiry, shall be entitled toexamine or record statements of any member, director, partner, proprietor andemployee of the insider. 4) It shall be the duty of every director, proprietor, partner, officer andemployee of the insider to give the
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enquiry officer all assistance in connectionwith the investigation, which the insider may be reasonably expected to give. 10. SUBMISSION OF REPORT TO THE COMMISSION: The enquiry officer shallfurnish enquiry report to the Commission within such time as may bespecified by the Commission. 11. COMMUNICATION OF FINDINGS, ETC.: 1) The Commission shall afterconsideration of the enquiry report communicate the findings to the insiderand he shall be given an opportunity of being heard before any action is takenby the Commission on the findings of the enquiry report. 2) On receipt of the explanation, if any, from the insider, the Commissionmay call upon the insider to take such measures as the Commission maydeem fit to protect the interest of investors and in the interest of the securitiesmarket and for due compliance with the provisions of the Act, the Ordinanceand the guidelines. 12. APPOINTMENT OF AUDITOR: Notwithstanding anything contained inparagraph 6, the Commission may appoint an auditor who shall be apracticing Chartered Accountant to investigate into the books of account or theaffairs of the insider: Provided that, the auditor so appointed shall have the same powers of theenquiry officer as stated in paragraph 6 andthe insider shall have theobligations specified in paragraph 9. 13. DIRECTIONS BY THE COMMISSION: On receipt of the explanation, if any,from the insider under sub-paragraph (2) of paragraph 11, the Commissionmay without prejudice to its right to initiate criminal prosecution undersection 15B of the Ordinance, give such directions to protect the interest ofinvestors and in the interest of the securities market and for due compliancewith the provisions of the Act, the Ordinance and the guidelines, as it deemsfit for all or any of the following purposes, namely:a. directing the insider not to deal in securities in any particularmanner; b. prohibiting the insider from disposing of any of the securitiesacquired in violation of these regulations; c. restraining the insider to communicate or counsel any person todeal in securities.
225.
CONTRACTS BY AGENTS OF COMPANY IN WHICH COMPANY IS UNDISCLOSED PRINCIPAL: Every officer or other agent of a company, other than a private company,not being the subsidiary company of a public company, who enters into a contract for oron behalf of the company in which contract the company is an undisclosed principalshall, at the time of entering into the contract, make a memorandum in writing of theterms of contract, and specify therein the person with whom it has been made. 2) Every such officer or other agent shall forthwith deliver thememorandum aforesaid to the company and send copies to the directors and suchmemorandum shall be filed in the office of the company and laid before the directors attheir next meeting. 3) If any such officer or other agent makes default in complying with the requirements of this section, a. the contract shall, at the option of the company, be void as against thecompany; and b. such officer or other agent shall be liable to a fine not exceeding twothousand rupees. 226. SECURITIES AND DEPOSITS, ETC.: No company, and no officer or agent of acompany, shall receive or utilize any money received as security or deposit, except inaccordance with a contract in writing; and all moneys so received shall be kept ordeposited by the company or the officer or agent concerned, as the case may be, in aspecial account with a scheduled bank: Provided that this section shall not apply where the money received is in thenature of an advance payment for goods to be delivered or sold to an agent, dealer or subagentin accordance with a contract in writing. 1)
227.
1)
2)
EMPLOYEES PROVIDENT FUNDS AND SECURITIES: All moneys orsecurities deposited with a company by its employees in pursuance of their contracts ofservice with the company shall be kept or deposited by the company within fifteen daysfrom the date of deposit in a special account to be opened by the company for the purposein a scheduled bank or in the National Saving Schemes, and no portion thereof shall beutilized by the company except for the breach of the contract of service on the part of theemployee as provided in the contract and after notice to the employee concerned. Where a provident fund has been constituted by a company for itsemployees or any class of its employees, all moneys contributed to such fund, whether bythe company or by the employees, or received or accruing by way of interest, profit orotherwise from the date of contribution, receipt or accrual, as the case may be, shall either a. be deposited i. in a National Savings Scheme; ii. in a special account to be opened by the company for the purposein a scheduled bank; or
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iii. where the company itself is a scheduled bank, in a specialaccount to be opened by the company for the purpose either initself or in any other scheduled bank; or b. be invested in Government securities; or c. in bonds, redeemable capital, debt securities or instruments issued by thePakistan Water and Power Development Authority and in listedsecurities subject to the conditions as may be prescribed by the Commission. Where a trust has been created by a company with respect to anyprovident fund referred to in sub-section (2), the company shall be bound to collect thecontribution of the employees concerned and pay such contributions as well as its owncontributions, if any, to the trustees within fifteen days from the date of collection, andthereupon, the obligations laid on the company by that sub -section shall devolve on thetrustees and shall be discharged by them instead of the company.
3)
THE EMPLOYEES PROVIDENT FUND (INVESTMENT IN LISTED SECURITIES) RULES, 1996

1. SHORT TITLE AND COMMENCEMENT: 1) These rules may be called theEmployees Provident Fund (Investment in Listed Securities) Rules, 1996. 2) They shall come into force at once. INTERPRETATION: In these rules the words and expressions used shallhave the same meanings as are assigned to them in the Companies Ordinance, 1984. CONDITIONS FOR INVESTMENT IN LISTED SECURITIES, ETC.: Where it isdecided to make investment, out of the provident fund constituted for theemployees of a company, in securities of the companies listed on any stockexchange in Pakistan, such investment shall be subject to the followingconditions, namely:i. Total investment in listed securities shall not exceed thirty percent of the provident fund; ii. [] iii. investment in shares or other listed securities of a particularcompany shall not exceed five per cent of its paid up capital; iv. In the case of investment in the shares of listed companies, it shallbe made only where such companies a. have a minimum operational record of five years; and b. have paid not less than fifteen per cent dividend to their shareholders during the three preceding consecutive years; v. in the case of investment in securities other than shares of listedcompanies, it shall not be made unless such securities have beenrated as an investment grade with minimum rating of BBB by acredit rating company registered with the Authority under theSecurities and Exchange Ordinance, 1969, and therating is maintained as such at the time of investment; and vi. Investment shall not be made in a security if it is publicly known thatthe issuer of the security has committed default while availing ofany financing facility. POWERS OF AUTHORITY TO RELAX RULES: Where the Authority is satisfiedthat it is not practicable to comply with any condition of these rules in a particularcase or class of cases, the Authority may, for reasons to be recorded and subjectto such conditions as it may deem fit, relax any of the conditions specified in rule3 in the case of such company or class of companies. PENALTY: Whoever fails or refuses to comply with or contravenes anyprovision of these rules, or knowingly and willfullyauthorizes or permits suchfailure, refusal or contravention shall, in addition to any other liability under theordinance, be also punishable with fine not exceeding two thousand rupees, and,in case of continuing failure, refusal or contravention to a further fine notexceeding one hundred rupees for every day after the first during which suchcontravention continues.
2.
3.
4.
5.
228.
RIGHT TO SEE BANK RECEIPTS FOR MONEY OR SECURITIES: Any persondepositing any money or security or making any contribution under section 227 shall beentitled, on request made in this behalf to the company or the person concerned or to thetrustees referred to in sub-section (3) of section 227, as the case may be, to see thereceipt of the bank or other body for any such money, deposit or security as is referred toin that section. 229. PENALTY FOR CONTRAVENTION OF SECTION 226, 227 OR 228: Whoevercontravenes or authorizes or permits the contravention of any of the provisions of section226 or section 227 or section 228 shall be punished with a fine which may extend to fivethousand rupees and shall also be liable to pay the loss suffered by the depositor ofsecurity or the employee on account of such contravention.
ACCOUNTS 230.
1) BOOKS OF ACCOUNT TO BE KEPT BY COMPANY: Every company shallkeep at its registered office proper books of account with respect to
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all sums of money received and expended by the company and thematters in respect of which the receipt and expenditure takes place; b. all sales and purchases of goods by the company; c. all assets of the company; d. all liabilities of the company; and e. in the case of a company engaged in production, processing,manufacturing or mining activities, such particulars relating to utilizationof material or labour or the other inputs or items of cost as may beprescribed, if such class of companies is required by the Commission bya general or special order to include such particulars in the books ofaccounts: Provided that all or any of the books of account aforesaid may be kept at suchother place in Pakistan as the directors may decide, and when the directors so decide, thecompany shall, within seven days of the decision, file with the registrar a notice inwriting giving the full address of the other place. 2) Where a company has a branch office, whether in or outside Pakistan, thecompany shall be deemed to have complied with the provisions of sub-section (1) ifproper books of account relating to the transactions effected at the branch office are keptat the branch office and proper summarized returns, made up to date at intervals of notmore than three months are sent by the branch office to the company at its registeredoffice or the other place referred to in sub-section (1). 3) For the purposes of sub-sections (1) and (2), proper books of accountshall not be deemed to be kept with respect to the matters specified therein if there are notkept such books as are necessary to give a true and fair view of the state of affairs of thecompany or the branch office, as the case may be, and to explain its transactions. 4) The books of account and other books and papers of every company shallbe open to inspection by the directors during business hours. 5) The directors shall from time to time determine whether and to whatextent and at what time and places and under what conditions or regulations the accountsand books or papers of the company or any of them shall be open to the inspection ofmembers, not being directors, and no member, not being a director, shall have any rightof inspecting any account and books or papers of the company except as conferred by theOrdinance or authorised by the directors or by the company in general meeting. 6) The books of account of every company relating to a period of not lessthan ten years immediately preceding the current year shall be preserved in good order: Provided that, in the case of a company incorporated less than ten years beforethe current year, the books of account for the entire period preceding the current yearshall be so preserved. 7) If a company fails to comply with any of the requirements of this section,every director, including chief executive and chief accountant, of the company who hasknowingly by his act or omission been the cause of such default shall, a. in respect of a listed company, be punishable with imprisonment for aterm which may extend to one year and with fine which shall not be lessthan twenty thousand rupees nor more than fifty thousand rupees,and with a further fine which may extend to five thousand rupees forevery day after the first during which the default continues; and b. in respect of any other company, be punishable with imprisonment for aterm which may extend to six months and with fine which may extend to ten thousand rupees. Explanation:The term chief accountant shall include the chief accountant orany other person, by whatever name called, who is charged with the responsibility ofmaintenance of books of accounts of the company. 8) The provisions of this section except those of sub-section (6), shall applymutatis mutandis to the books of account which a liquidator is required to maintain andkeep. a.
231.
1)
2)
3)
4)
INSPECTION OF BOOKS OF ACCOUNT BY REGISTRAR, ETC.: The books ofaccount and books and papers of every company shall be open to inspection by theregistrar or by any officer authorised by the Commission in this behalf if, for reasons tobe recorded in writing, the registrar or the Commission considers it necessary so to do. It shall be the duty of every director, officer or other employee of thecompany to produce to the person making inspection under sub-section (1) all such booksof account and books and papers of the company in his custody or under his control, andto furnish him with any such statement, information or explanation relating to the affairsof the company, as the said person may require of him within such time and at such placeas he may specify. It shall also be the duty of every director, officer or other employee ofthe company to give to the person making inspection under this section all assistance inconnection with the inspection which the company may be reasonably expected to give. The person making the inspection under this section may, during the course of inspection,
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i. make or cause to be made copies of books of account and other booksand papers, or ii. place or cause to be placed by marks of identification thereon in token of the inspection having been made Where an inspection of the books of account and books and papers of thecompany has been made under this section by an officer authorised by the Commission,such officer shall make a report to the Commission. Any officer authorised to make an inspection under this section shallhave all the powers that the registrar has under this Ordinance in relation to the making ofinquiries. DEFAULT IN COMPLIANCE WITH PROVISIONS OF SECTION 231: If default ismade in complying with the provisions of section 231, every person who is in defaultshall be punishable with imprisonment for a term which may extend to one year and withfine which shall not be less than ten thousand rupees. Where a director or any other officer of a company has been convicted ofan offence under this section, he shall, on and from the date on which he is so convicted,be deemed to have vacated his office as such and, on such vacation of office, shall bedisqualified for holding such office in any company, for a period of five years. ANNUAL ACCOUNTS AND BALANCE SHEET: The directors of everycompany shall at some date not later than eighteen months after the incorporation of thecompany and subsequently once at least in every calendar year lay before the company inannual general meeting a balance-sheet and profit and loss account or in the case of acompany not trading for profit an income and expenditure account for the period, in thecase of the first account for the period since the incorporation of the company and in anyother case since the preceding account, made up to a date not earlier than the date of themeeting by more than four months: Provided that, in the case of a listed company the Commission, and in any othercase the registrar, may, for any special reason, extend the period for a term not exceeding one months. The period to which the accounts aforesaid relate shall not exceed twelvemonths except where special permission has been granted in that behalf by the registrar. The balance-sheet and the profit and loss account or income andexpenditure account shall be audited by the auditor of the company, in the mannerhereinafter provided, and the auditor s report shall be attached thereto. Every company shall in the form and manner specified by the Commission send a copy of such balancesheet and profit and loss account or incomeand expenditure account so audited together with a copy of the auditor s report and thedirector s report to every member of the company at least twenty-one days before themeeting at which it is to be laid before the members of the company, and shall keep acopy at the registered office of the company for the inspection of the members of thecompany during a period of at least twenty-one days before that meeting. A listed company shall, simultaneously with the dispatch of the balance sheetand profit and loss account together with the reports referred to in sub-section (4),send five copies each of such balance-sheet and profit and loss account and otherdocuments to the Commission, the stock exchange and the registrar. The provisions of sub-section (7) of section 230 shall apply to any personwho is a party to the default in complying with any of the provisions of this section.
5) 6)
232.
1)
2)
233.
1)
2) 3)
4)
5)
6)
THE COMPANIES (GENERAL PROVISIONS AND FORMS) RULES, 1985 RULE 17 NUMBER OF COPIES OF ACCOUNTS AND REPORTS TO BE FILED WITH COMMISSION, ETC.: For the purposes of sub-section (5) of section 233, sub-section (1) of section 242 or sub-section (1) of section 245, as the case may be, there shall be filed, a. in the case of a listed company, with the registrar concerned and the 36[Commission] five copies of the annual or half-yearly accounts and balance-sheet and other reports referred to in the aforementioned provisions of the Ordinance; and b. in the case of a public company which is not a listed company, with the registrar concerned, five copies of the annual accounts and balance-sheet and other reports referred to in section 242.
234.
CONTENTS OF BALANCE SHEET:
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Every balance-sheet of a company shallgive a true and fair view of the state of affairs of the company as at the end of its financialyear, and every profit and loss account or income and expenditure account of a companyshall give a true and fair view of the profit and loss of the company for the financial yearso, however, that every item of expenditure fairly chargeable against the year s incomeshall be brought into account and, in case where any item of expenditure which may infairness be distributed over several years has been incurred in any one financial year, thewhole amount of such item shall be stated, with the addition of the reasons why only aportion of such expenditure is charged against the income of the financial year. 2) The balance-sheet and profit and loss account or the income and expenditure account shall, i. in the case of a listed company 1[and a private and non-listed publiccompany which is subsidiary of a listed company, comply with therequirements of the Fourth Schedule so far as applicable thereto; and ii. in the case of any other company, comply with the requirements of theFifth Schedule so far as applicable thereto: Provided that, except to the extent otherwise notified in the official Gazette bythe Commission, this sub-section shall not apply to an insurance or banking company orto any other class of companies for which the requirements of balance-sheet and profitand loss account are specified in the law regulating such class of companies. 3) Subject to the provisions of this Ordinance i. such International Accounting Standards and other standards shall befollowed in regard to the accounts and preparation of the balance-sheetand profit and loss account as are notified for the purpose in the officialGazette by the Commission; and ii. in the case of a listed company, a. a statement of changes in equity and cash flow statement shallform part of the balance-sheet and profit and loss account; and b. accounting policies shall be stated and, where there is anychange in such policies, the auditor shall report whether heagrees with the change. iii. [] Explanation: International Accounting Standards shall be understood in theterms in which it is understood in the accounting circles. 4) The Federal Government may, of its own motion or upon application bya company, modify, in relation to that company, the requirements of the Fourth Scheduleor the Fifth Schedule for the purpose of adapting them to the circumstances of thecompany. 5) The Federal Government shall have power from time to time to grantexemption to any company or any class of companies if it is in the public interest so todo, from compliance wi th all or any of the requirements of the Fourth Schedule or theFifth Schedule. 6) The provisions of sub-section (7) of section 230 shall apply to any personwho is a party to the default in complying with any of the provisions of this section. 234A. SPECIAL AUDIT: 1) The Commission may on its own motion, or upon anapplication made by members holding not less that 20% voting rights in a company,order a special audit of the company and appoint an auditor to carry out detailed scrutinyof the affairs of the company. 2) The Commission may, during the course of the special audit, pass suchinterim orders and directions as may be deemed appropriate by the Commission. 3) On receipt of the special audit report, the Commission may issue suchdirections for immediate compliance to the company and its management as theCommission deems fit. 4) In case where the special audit has been ordered by the Commission onan application made by members of the company, one half of the expenses of the specialaudit shall be borne and paid in advance by such members, and the other half shall beborne by the company. 5) In case where the special audit has been ordered by the Commission onits own motion, the expenses of the special audit shall be payable by the company. 6) Where the expenses of the special audit are payable by the company,such expenses in the first instance may be defrayed by the Commission, and the companyshall be liable to reimburse the Commission in respect of such expenses. 7) The amount of expenses liable to be paid by the company, the membersor any other persons, as the case may be, shall be recoverable as arrears of land revenue. 8) The provisions of section 255 shall apply mutatis mutandis to the auditorappointed to carry out the special audit of the company under sub-section (1). 235. TREATMENT OF SURPLUS ARISING OUT OF REVALUATION OF FIXED ASSETS : 1) Where a company revalues its fixed assets, the increase in, or sums added by writing upof, the value of such assets as appearing in the books of accounts of the company shall betransferred to an account to be called 1)
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Surplus on Revaluation of Fixed Assets Account and shown in the balance-sheet of the company after Capital and Reserves. Except and to the extent actually realized on disposal of the assets whichare revalued, the surplus on revaluation of fixed assets shall not be applied to set off orreduce any deficit or loss, whether past, current or future, or in any manner applied,adjusted or treated so as to add to the income, profit or surplus of the company, or utilizeddirectly or indirectly by way of dividend or bonus: Provided that the surplus on revaluation of fixed assets may be applied by thecompany in setting off or in diminution of any deficit arising from the revaluation of anyother fixed asset of the company: Provided further that incremental depreciation arising out of revaluation offixed assets may be charged to surplus on revaluation of fixed assets account. The requirements of sub-sections (1) and (2) shall also apply to anyamount representing any increase in or addition to the value of any asset as a result ofany revaluation of any fixed assets done before the commencement of this Ordinance,howsoever described, to the extent of the amount thereof appearing in the books ofaccount of the company on such commencement. After revaluation as aforesaid, depreciation on the assets so revaluedshall be provided with reference to the value assigned to such assets before revaluationand surplus on revaluation may be amortized according to life of the assets. If default is made in complying with any requirements of this section, thedirectors of the company who are knowingly and willfully in default shall be punishablewith fine not exceeding twenty thousand rupees and shall also be jointly and severallyliable to the company for any loss sustained by the company on account of such default. DIRECTOR S REPORT: The directors shall make out and attach to everybalance-sheet a report with respect to the state of the company s affairs, the amount, ifany, which they recommend should be paid by way of dividend and the amount, if any,which they propose to carry to the Reserve Fund, General Reserve or Reserve Accountshown specifically in the balance-sheet or to a Reserve Fund, General Reserve or ReserveAccount to be shown specifically in a subsequent balance-sheet. In the case of a public company or a private company which is asubsidiary of a public company, the directors report shall, in addition to the mattersspecified in sub-section (1),a. disclose any material changes and commitments affecting the financialposition of the company which have occurred between the end of thefinancial year of the company to which the balance-sheet relates and thedate of the report; b. so far as is material for the appreciation of the state of the company'saffairs by its members, deal with any changes that have occurred duringthe financial year concerning the nature of the business of the companyor of its subsidiaries, or in the classes of business in which the companyhas interest, whether as a member of another company or otherwise,unless the Commission exempts any company from making suchdisclosure on the ground that such disclosures would be prejudicial to thebusiness of the company; c. contain the fullest information and explanation in regard to anyreservation, observation, qualification or adverse remarks contained inthe auditor s report; d. circulate with it information about the pattern of holding of the shares inthe form prescribed; e. state the name and country of incorporation of its holding company, ifany, where such holding company is established outside Pakistan; f. state the earning per share; g. give reasons for incurring loss and a reasonable indication of futureprospects of profit, if any; and h. contain information about defaults in payment of debts, if any, and reasons thereof. The report referred to in sub-section (1) shall be signed by the chairmanof the directors or the chief executive of the company on behalf of the directors ifauthorised in that behalf by the directors and, when not so authorised, shall be signed bythe chief executive and such number of directors as are required to sign the balance-sheetand profit and loss account under section 241. If a company fails to comply with any of the requirements of this section,every director including the chief executive, of the company who has knowingly by hisact or omission been the cause of any default by the company in complying with therequirements of this section shall, a. in respect of a listed company, be punishable with imprisonment for aterm which may extend to one year and with fine which shall not be lessthan twenty thousand rupees nor more than fifty thousand rupees,and with a further fine which may extend to five thousand rupees forevery day after the first during which the default continues; and b. in respect of any other company, be punishable with imprisonment for aterm which may extend to six months and with fine which may extend to ten thousand rupees.
2)
3)
4)
5)
236.
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4)
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5) The directors of a holding company required to prepare consolidatedfinancial statements under section 237 shall make out and attach to consolidated financialstatements, a report with respect to the state of group s affairs and all provisions of subsections(2), (3) and (4) shall apply to such report as if for the word company appearingin these sub-sections the word holding company were substituted. CONSOLIDATED FINANCIAL STATEMENTS: There shall be attached to thefinancial statements of a holding company having a subsidiary or subsidiaries, at the endof the financial year at which the holding company s financial statements are made out,consolidated financial statements of the group presented as those of a single enterpriseand such consolidated financial statements shall comply with the disclosure requirementof the Fourth Schedule and International Accounting Standards notified under sub-section(3) of section 234. Where the financial year of a subsidiary precedes the day on which theholding company s financial year ends by more than three months, such subsidiary shallmake an interim closing on the day on which the holding company s financial year ends,and prepare financial statements for consolidation purposes. Every auditor of a holding company appointed under section 252 shallalso report on consolidated financial statements and exercise all such powers and dutiesas are vested in him under section 255. All interim financial statements of a subsidiary as required under subsection(3) shall be reviewed by the auditors of that subsidiary appointed under section252 who shall report on such financial statements in the prescribed form. There shall be disclosed in the consolidated financial statements, a. any qualifications contained in the auditors reports on the accounts ofsubsidiary or subsidiaries for the financial year ending with or during thefinancial year of the holding company; and b. any note or saving contained in such accounts to call attention to a matterwhich, apart from the note or saving, would properly have been referredto in such a qualification, in so far the matter which is the subject of thequalification or note is not covered by the holding company s ownaccounts and is material from the point of view of its members. 1 Every consolidated financial statement shall be signed by the samepersons by whom the individual balance sheet and the profit and loss account or incomeand expenditure account of the holding company are required to be signed under section241. All provisions of sections 233, 242, 243, 244 and 245 shall apply to aholding company required to prepare consolidated financial statements under this sectionas if for the word company appearing in these sections, the words holding company were substituted. The Commission may, on an application or with the consent of thedirectors of a holding company, direct that in relation to any subsidiary, the provisions ofthis section shall not apply to such extent only as may be specified in the direction. If a holding company fails to comply with any requirement of thissection, every officer of the holding company shall be punishable with fine which mayextend to fifty thousand rupees in respect of each offense unless he shows that he took allreasonable steps for securing compliance by the holding company of such requirementsand that the non-compliance or default on his part was not willful and intentional. FINANCIAL YEAR OF HOLDING COMPANY AND SUBSIDIARY: The directorsof a holding company shall ensure that, except where in their opinion there are goodreasons against it, the financial year of each of its subsidiaries coincides with thecompany s own financial year. Where it appears to the Commission desirable for a holding company ora holding company s subsidiary to extend its financial year so that the subsidiary sfinancial year may end with that of the holding company, and for that purpose topostpone the submission of the relevant accounts to a general meeting from one calendaryear to the next, the Commission may on the application or with the consent of thedirectors of the company whose financial year is to be extended direct that, in the case ofthat company, the submission of accounts to a general meeting, the holding of an annualgeneral meeting or the making of an annual return shall not be required in the earlier ofthe said calendar years. RIGHTS OF HOLDING COMPANY S REPRESENTATIVES AND MEMBERS: Aholding company may, by resolution, authorize representatives named in the resolution toinspect the books of account kept by any of its subsidiaries; and the books of account ofany such subsidiary shall be open to inspection by those representatives at any timeduring business hours. The rights conferred by section 265 upon members of a company may beexercised, in respect of any subsidiary, by members of the holding company as if theyalso were members of the subsidiary. BALANCE SHEET OF MODARABA COMPANY TO INCLUDE MODARABA ACCOUNTS, ETC.: There shall be attached to the balance-sheet of a modaraba company, the annualaccounts and other reports circulated in pursuance of the provisions of section 14 of theModaraba Companies and Modaraba (Floatation and Control) Ordinance, 1980, made out
237.
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2)
3) 4)
5)
6)
7)
8)
9)
238.
1) 2)
239.
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2)
240.
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as at the end of the financial year of the modaraba where such financialyear coincides with the financial year of the modaraba company; and b. as at the end of the financial year of the modaraba last before that of themodaraba company, where the financial year of the modaraba does notcoincide with that of the modaraba company. 2) The provisions of sub-section (12) of section 237 shall apply to anyperson who is a party to the default in complying with any of the provisions of thissection. 241. AUTHENTICATION OF BALANCE-SHEET: 1) Save as provided by sub-section(2), the balance-sheet and profit and loss account or income and expenditure accountshall be approved by the directors and shall be signed by the chief executive and at leastone director. 2) When the chief executive is for the time being not in Pakistan, then thebalance-sheet and profit and loss account or income and expenditure account of thecompany shall be signed by not less than two directors for the time being in Pakistan, butin such a case there shall be subjoined to the balance-sheet and profit and loss account orincome and expenditure account a statement signed by such directors explaining thereasons for non-compliance with the provisions of sub-section (1). 3) If a company makes default in complying with the requirement of thissection, the company and every officer of the company who is knowingly and willfully indefault shall be liable to a fine not exceeding five thousand rupees. 242. COPY OF BALANCE-SHEET TO BE FORWARDED TO THE REGISTRAR: 1) Withoutprejudice to the provisions of sub-section (5) of section 233, after the balance-sheet andprofit and loss account or the income and expenditure account, as the case may be, havebeen laid before the company at the annual general meeting, such number of copiesthereof alongwith the reports and documents required to be annexed to the same, notbeing less than three in the case of a listed company or two in the case of any othercompany, as may be prescribed, signed by the chief executive, directors, chairman ofdirectors or the auditors of the company, as the case may be, in the manner provided bysections 236, 241 and 257, shall be filed with the registrar within thirty days from thedate of such meeting. 2) If the general meeting before which a balance-sheet is laid does not adoptthe balance-sheet and profit and loss account or the income and expenditure account ordefers consideration thereof or is adjourned, a statement of that fact and of the reasonstherefor shall be annexed to the said documents and also to the copies thereof required tobe filed with the registrar. 3) Nothing in this section shall apply to a private company having paid upcapital of less than 7.5 million rupees. 4) If a company makes default in complying with the requirements of thissection, the company and every officer of the company who is knowingly and willfully indefault shall be liable, a. if the default relates to a listed company, to a fine which may extend toten thousand rupees and to a further fine which may extend to twohundred rupees for every day after the first during which the defaultcontinues; and b. if the default relates to any other company, to a fine which may extend totwo thousand rupees and to a further fine which may extend to fiftyrupees for every day after the first during which the default continues. 243. RIGHT OF MEMBER OF COMPANY TO COPIES OF THE BALANCE-SHEET, ETC. ANDTHE AUDITOR S REPORT: Save as otherwise provided in this Ordinance, a member of acompany shall be entitled to be furnished with copies of the balance-sheet and the profitand loss account or the income and expenditure acc ount, the director s report and theauditor s report on payment of such sum as the company may fix not exceeding themaximum amount prescribed. 244. PENALTY FOR IMPROPER ISSUE, CIRCULATION OR PUBLICATION OF BALANCESHEETOR PROFIT AND LOSS ACCOUNT: If any copy of a balance-sheet is issued, circulated orpublished without there being annexed or attached thereto, as the case may be, a copyeach of (i) the profit and loss account or income and expenditure account, (ii) anyaccounts, reports, notes or statements referred therein, (iii) the auditor's report, and (iv)the directors report, the company, and every officer of the company who is knowinglyand willfully in default shall be punishable with fine which may extend to five thousandrupees. 245. QUARTERLY ACCOUNTS OF LISTED COMPANIES: 1) Every listed company shall, a. within one month of the close of first, second and third quarter of itsyear of account, prepare and transmit to the members and the stockexchange in which the shares of the company are listed a profit and lossaccount for, and balance-sheet as at the end of, that quarter, whetheraudited or otherwise; and a.
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simultaneously with the transmission of the quarterly profit and lossaccount and balance-sheet to the members and the stock exchange, filewith the registrar and the Commission such number of copies thereof, notbeing less than three, as may be prescribed. 2) The provisions of sub-sections (1) and (2), of section 241 shall apply tothe half-yearly accounts. 3) If a company fails to comply with any of the requirements of this section,every director, including chief executive and chief accountant of the company who hasknowingly by his act or omission been the cause of such default shall be liable to a fine ofnot exceeding one hundred thousand rupees and to a further fine of one thousand rupeesfor every day during which the default continues. 246. POWER OF COMMISSION TO REQUIRE SUBMISSION OF ADDITIONAL STATEMENTS OF ACCOUNTS AND REPORTS: 1) Notwithstanding anything contained in any otherprovision of this Ordinance, the Commission may, by general or special order, requirecompanies generally, or any class of companies or any particular company, to prepareand send to the members, the registrar, any authority, a stock exchange and any otherperson such periodical statements of accounts, information or other reports audited byan auditor, in such form and manner and within such time, as may be specified in theorder. 2) In the event of a default in complying with the order of the Commissionissued under sub-section (1), the company, and every officer of the company whoknowingly and wilfullyauthorises or permits the default, shall be liable to a fine notexceeding one million rupees and to a further fine which may extend to 8[ten] thousandrupees for every day during which the default continues. b.
247.
RIGHTS OF DEBENTURE-HOLDERS, ETC., AS TO RECEIPT AND INSPECTION OF REPORT, ETC.: The holders of debentures, including the trustees for holders of debentures,of a company shall have the same right to receive and obtain on payment copies of thebalance-sheets and profit and loss accounts or the income and expenditure account of thecompany and the reports of the auditors and other reports as is possessed by the holdersof ordinary shares in the company.
DIVIDENDS AND MANNER AND TIME OF PAYMENT THEREOF 248.

CERTAIN RESTRICTIONS ON DECLARATION OF DIVIDENDS : 1) The company ingeneral meeting may declare dividends; but no dividend shall exceed the amountrecommended by the directors. 2) No dividend shall be declared or paid by a company for any financialyear out of the profits of the company made from the sale or disposal of any immovableproperty or assets of a capital nature comprised in the undertaking or any of theundertakings of the company, unless the business of the company consists, whetherwholly or partly, of selling and purchasing any such property or assets, except after suchprofits are set off or adjusted against losses arising from the sale of any such immovableproperty or assets of a capital nature. Provided that no dividend shall be declared or paid out of unrealized gain oninvestment property credited to profit and loss account. 249. DIVIDEND TO BE PAID ONLY OUT OF PROFITS : No dividend shall be paid bya company otherwise than out of profits of the company. 250. DIVIDEND NOT TO BE PAID EXCEPT TO REGISTERED SHAREHO LDERS OR TO THEIRORDER OR TO THEIR BANKERS: 1) No dividend shall be paid by a company in respect ofany share therein except to the registered holder of such share or to his order or to hisbankers or to a financial institution nominated by him for the purpose. 2) Nothing contained in sub-section (1) shall be deemed to require thebankers of a registered shareholder or the financial institution nominated by him to makea separate application to the company for payment of the dividend. 3) The dividend warrants shall be sent by a company by registered postunless the shareholder entitled to receive the dividend requires otherwise in writing.
251.
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PERIOD FOR PAYMENT OF DIVIDEND : When a dividend has beendeclared, it shall not be lawful for the directors or the company to with-hold or defer itspayment and the chief executive of the company shall be responsible to make thepayment in the manner provided in section 250 within such time as the Commissionmay, from time to time, by notification in the official Gazette, specify. Explanation:Dividend shall be deemed to have been declared on the date of thegeneral meeting in case of a dividend declared or approved in the general meeting and onthe date of commencement of closing of share transfer for purposes of determination ofentitlement of dividend in the case of an interim dividend and
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where register of membersis not closed for such purpose, on the date on which such dividend is approved by thedirectors. Where a dividend has been declared by a company but is not paid withinthe period specified in sub-section (1), the chief executive of the company shall bepunishable with imprisonment for a term which may extend to two years and with finewhich may extend to one million rupees: Provided that no offence shall be deemed to have been committed within themeaning of the foregoing provisions in the following cases, namely a. where the dividend could not be paid by reason of the operation of anylaw; b. where a shareholder has given directions to the company regarding thepayment of the dividend and those directions cannot be complied with; c. where there is a dispute regarding the right to receive the dividend; d. where the dividend has been lawfully adjusted by the company againstany sum due to it from the shareholder; or e. where, for any other reason, the failure to pay the dividend or to post thewarrant within the period aforesaid was not due to any default on the partof the company; andthe Commission has, on an application of the company on the prescribed form madewithin forty-five days from the date of declaration of the dividend, and after providing anopportunity to the shareholder or person who may seem to be entitled to receive thedividend of making representation against the proposed action, permitted the company towithhold or defer payment as may be ordered by the Commission. A chief executive convicted under sub-section (2) shall from the day ofthe conviction cease to hold the office of chief executive of the company and shall not,for a period of five years from that day, be eligible to be the chief executive or a directorof that company or any other company.
2)
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AUDIT 252.
1) APPOINTMENT AND REMUNERATION OF AUDITORS : Every companyshall at each annual general meeting appoint an auditor or auditors to hold office from theconclusion of that meeting until the conclusion of the next annual general meeting: Provided that an auditor or auditors appointed in a general meeting may beremoved before conclusion of the next annual general meeting through a specialresolution. Appointment of a partnership by the firm name to be the auditors of acompany shall be deemed to be the appointment of all the persons who are partners in thefirm at the time of appointment. The first auditor or auditors of a company shall be appointed by thedirectors within sixty days of the date of incorporation of the company; and the auditor orauditors so appointed shall hold office until the conclusion of the first annual generalmeeting: Provided that a. the company in a general meeting may remove any such auditor orauditors and appoint in his or their place any other person or persons whohave been nominated for appointment by any member of the companyand of whose nomination notice has been given to the members of thecompany not less than fourteen days before the date of the meeting; and b. if the directors fail to exercise their powers under this sub-section, thecompany in general meeting may appoint the first auditor or auditors: Provided further that the auditors appointed in an annual general meeting shallnot be removed during their tenure except through a special resolution. The directors may fill any casual vacancy in the office of an auditor; but,while any such vacancy continues, the surviving or continuing auditor or auditors, if any,may act. Any auditor appointed to fill in any casual vacancy shall hold office untilthe conclusion of the next annual general meeting. Where the first auditors are not appointed under clause (b) of the provisoto sub-section (3) within one hundred and twenty days of the date of incorporation of thecompany, or where at an annual general meeting no auditors are appointed, or whereauditors appointed are unwilling to act as auditors of the company, or where a casualvacancy in the office of an auditor is not filled within thirty days after the occurrence ofthe vacancy, or where auditors are removed by the company, the Commission mayappoint a person to fill the vacancy. The company shall, within one week of the Commission s power undersub-section (6) becoming exercisable, give notice of that fact to the Commission. The remuneration of the auditors of a company shall be fixed, a. in the case of an auditor appointed by the directors or by theCommission, by the directors or by the Commission, as the case may be;and b. in all other cases, by the company in general meeting or in such manneras the general meeting may determine.
2) 3)
4) 5) 6)
7) 8)
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253.
PROVISIONS AS TO RESOLUTIONS RELATING TO APPOINTMENT AND REMOVAL OF AUDITORS: A notice shall be required for a resolution at a company s annual generalmeeting appointing as auditor a person other than a retiring auditor. 2) The notice referred to in sub-section (1) shall be given by a member ofthe company to the company not less than fourteen days before the annual generalmeeting, and the company shall forthwith send a copy of such notice to the retiringauditor and shall also give notice thereof to its members not less than seven days beforethe date fixed for the annual general meeting and, if the company is a listed company,shall also publish it at least in one issue each of a daily newspaper in English languageand a daily newspaper in Urdu language having circulation in the Province in which thestock exchange on which the company is listed is situate. 3) Where notice is given of such a resolution and the retiring auditor makeswith respect thereto a representation in writing to the company not exceeding areasonable length and requests its communication to the members of the company, thecompany shall, unless the representation is received by it too late for it to do so, a. in any notice of the resolution given to members of the company, statethe fact of the representation having been made; and b. send a copy of the representation to every member of the company towhom notice of the meeting is sent whether before or after receipt of therepresentation by the company;and if a copy of th e representation is not sent as aforesaid because it was received too lateor because of the company s default, the auditor may, without prejudice to his right to beheard in person, require that the representation shall be read out at the meeting: Provided that it shall not be necessary to send out or to read out therepresentation at the meeting if, on the application either of the company or of any otherperson who claims to be aggrieved, the registrar is satisfied that the rights conferred bythis section are being abused to secure needless publicity for defamatory matter; and theregistrar may order the company s costs on an application under this section to be paid inwhole or in part by the auditor, notwithstanding that he is not a party to the application. 4) Sub-section (3) of this section shall apply to a resolution to remove thefirst auditors by virtue of sub-section (3) of section 252 as it applies in relation to aresolution that a retiring auditor shall not be reappointed. 5) Every company shall, within fourteen days from the date of anyappointment of an auditor, send to the registrar intimation thereof, together with theconsent in writing of the auditor concerned. 6) Every company shall, within fourteen days from the date of retirement,removal or otherwise ceasing to hold office of an auditor, send intimation thereof to theregistrar. 254. QUALIFICATION AND DISQUALIFICATION OF AUDITORS : 1) A person shallnot be qualified for appointment as an auditor, i. in the case of a public company or private company which is subsidiaryof a public company unless he is a Chartered Accountant within themeaning of the Chartered Accountants Ordinance, 1961; and ii. in the case of a private company having paid up capital of three millionrupees or more unless he is a Chartered Accountant within the meaningof the Chartered Accountants Ordinance, 1961. 2) A firm whereof all the partners practising in Pakistan are CharteredAccountants may be appointed by its firm name as auditors of a company referred to insub-section (1) and may act in its firm name. 3) None of the following persons shall be appointed as auditor of a company, namely: a. a person who is, or at any time during the preceding three years was, adirector, other officer or employee of the company; b. a person who is a partner of , or in the employment of, a director, officeror employee of the company; c. the spouse of a director of the company; d. a person who is indebted to the company; e. a body corporate; and f. a person or his spouse or minor children, or in case of a firm, all partnersof such firm who holds any shares of an audit client or any of itsassociated companies: Provided that if such a person holds shares prior to hisappointment as auditor, whether as an individual or a partner in a firmthe fact shall be disclosed on his appointment as auditor and such personshall disinvest such shares within ninety days of such appointment. Explanation:Reference in this section to an officer or employee shall beconstrued as not including reference to an auditor. 3A) For the purposes of clause (d) of sub-section (3) a person who owes, a. a sum of money not exceeding five hundred thousand rupees to acredit card issuer ; or b. a sum to a utility company in form of unpaid dues for a periodnot exceeding ninety days,shall not be deemed to be indebted to the company. 1)
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4) A person shall also not be qualified for appointment as auditor of acompany if he is, by virtue of the provisions of sub-section (3), disqualified forappointment as auditor of any other company which is that company s subsidiary orholding company or a subsidiary of that holding company. If, after his appointment, an auditor becomes subject to any of thedisqualifications specified in this section, he shall be deemed to have vacated his office asauditor with effect from the date on which he becomes so disqualified. A person who, not being qualified to be an auditor of a company, orbeing or having become subject to any disqualification to act as such, acts as auditor of acompany shall be liable to fine which may extend to twenty five thousand rupees. The appointment as auditor of a company of an unqualified person, or ofa person who is subject to any disqualifications to act as such, shall be void, and, wheresuch an appointment is made by a company, the Commission may appoint a qualifiedperson in place of the auditor appointed by the company. POWERS AND DUTIES OF AUDITORS : Every auditor of a company shallhave a right of access at all times to the books, papers, accounts and vouchers of thecompany, whether kept at the registered office of the company or elsewhere, and shall beentitled to require from the company and the directors and other officers of the companysuch information and explanation as he thinks necessary for the performance of the dutiesof the auditors. In the case of a company having a branch office outside Pakistan, it shallbe sufficient if the auditor is allowed access to such copies of, and extracts from, thebooks and papers of the branch as have been transmitted to the principal office of thecompany in Pakistan. The auditors shall make a report to the members of the company on theaccounts and books of accounts of the company and on every balance-sheet and profitand loss account or income and expenditure account and on every other documentforming part of the balance-sheet and profit and loss account or income and expenditureaccount, including notes, statements or schedules appended thereto, which are laid beforethe company in general meeting during his tenure of office, and the report shall state a. whether or not they have obtained all the information and explanationswhich to the best of their knowledge and belief were necessary for thepurposes of the audit; b. whether or not in their opinion proper books of accounts as required bythis Ordinance have been kept by the company; c. whether or not in their opinion the balance-sheet and profit and lossaccount or the income and expenditure account have been drawn up inconformity with this Ordinance and are in agreement with the books ofaccounts; d. whether or not in their opinion and to the best of their information andaccording to the explanations given to them, the said accounts give theinformation required by this Ordinance in the manner so required and give a true and fair view i. in the case of the balance-sheet, of the state of the company saffairs as at the end of its financial year; ii. in the case of the profit and loss account or the income andexpenditure account, of the profit or loss or surplus or deficit, asthe case may be, for its financial year; and iii. in the case of the statement of changes in financial position orsources and application of funds of a listed company, of thechanges in the financial position or the sources and applicationof funds for its financial year; e. whether or not in their opinion i. the expenditure incurred during the year was for the purpose ofthe company s business; and ii. the business conducted, investments made and expenditureincurred during the year were in accordance with the objects ofthe company ; and f. whether or not in their opinion zakat deductible at source under the Zakat and Usher Ordinance, 1980, was deducted by thecompany and deposited in the Central Zakat Fund established undersection 7 of that Ordinance. Explanation:Where the auditor s report contains a reference to any otherreport, statement or remarks which they have made on the balance-sheet and profit andloss account or income and expenditure account examined by them, such statement orremarks shall be annexed to the auditor s report and shall be deemed to be a part of theauditor s report. Where any of the matters referred to in sub-section (3) is answered in thenegative or with a qualification, the report shall state the reason for such answeralongwith the factual position to the best of the auditor s information. The Commission may, by general or special order, direct that, in thecase of all companies generally or such class or description of companies as may bespecified in the order, the auditor s report shall also include a statement of suchadditional matters as may be so specified.
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The auditor of a company shall be entitled to attend any general meetingof the company, and to receive all notices of, and any communications relating to, anygeneral meeting which any member of the company is entitled to receive, and to be heardat any general meeting which he attends on any part of the business which concerns himas auditor: Provided that, in the case of a listed company, the auditor or a person authorisedby him in writing shall be present in the general meeting in which the balance-sheet andprofit and loss account and the auditor s report are to be considered. 7) If any officer of a company refuses or fails, without lawful justification, the onus whereof shall lie on him, to allow any auditor access to any books and papers inhis custody or power, or to give any such information possessed by him as and whenrequired, or otherwise hinders, obstructs or delays an auditor in the performance of hisduties or the exercise of his powers or fails to give notice of any general meeting to theauditor, he shall be liable to fine which may extend to five thousand rupees and in thecase of a continuing offence to a further fine which may extend to one hundred rupees forevery day after the first during which the default, refusal or contravention continues. 8) The provisions of this section shall apply mutatis mutandis to the auditorappointed for audit of the books of account of a liquidator. THE COMPANIES (GENERAL PROVISIONS AND FORMS) RULES, 1985 RULE 17A, 17B, 17C 17A. AUDITOR S REPORT ON THE ACCOUN TS OF A COMPANY The auditors report on the accounts and books of accounts and balance-sheet and profit and loss account of a company required by section 255 shall be in FORM 35-A; 17B. AUDITORS REPORT ON THE ACCOUNTS OF A BANKING COMPANY The Auditors Report on the accounts and books of accounts and balance-sheet and profit and loss account of a banking company required by section 255 shall be in FORM 35-B; 17C. AUDITORS REPORT ON CONSOLIDATED FINANCIAL STATEMENTS The auditors report on consolidated financial statements required by sub-section (3) of section 237 shall be in Form 35-C and review report on the subsidiary accounts as required by sub-section (4) of section 237 shall be in Form 35-D. 6)
256.
READING AND INSPECTION OF AUDITOR S REPORT: The auditor s report shallbe read before the company in general meeting and shall be open to inspection by anymember of the company. 257. SIGNATURE ON AUDIT REPORT, ETC.: 1) Only the person appointed asauditor of the company, or where a firm is so appointed in pursuance of subsection (2) ofsection 254, only a partner in the firm practising in Pakistan, shall sign the auditor'sreport or sign or authenticate any other documents of the company required by law to besigned or authenticated by the auditor. 2) The report of auditors shall be dated and indicate the place at which it issigned. 258. AUDIT OF COST ACCOUNTS: Where any company or class of companies isrequired under clause (e) of sub-section (1) of section 230 to include in its books ofaccount the particulars referred to therein, the Federal Government may direct that anaudit of cost accounts of the company shall be conducted in such manner and with suchstipulations as may be specified in the order by an auditor who is a chartered accountantwithin the meaning of the Chartered Accountants Ordinance, 1961, or a costand management accountant within the meaning of the Cost and ManagementAccountants Act, 1966; and such auditor shall have the same powers,duties and liabilities as an auditor of a company and such other powers, duties andliabilities as may be prescribed. 259. PENALTY FOR NON-COMPLIANCE WITH PROVISIONS BY COMPANIES: If defaultis made by a company in complying with any of the provisions of sections 252 to 254 or256 to 258, the company and every officer of the company who is knowingly and willfullya party to the default shall be punishable with fine which may extend to fifty thousandrupees and in the case of continuing default to a further fine which may extend to twothousand rupees for every day after the first during which the default continues.
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PENALTY FOR NON-COMPLIANCE WITH PROVISIONS BY AUDITORS: If anyauditor s report is made, or any document of the company is signed or authenticatedotherwise than in conformity with the requirements of section 157, section 255 or section257 or is otherwise untrue or fails to bring out material facts about the affairs of thecompany or matters to which it purports to relate, the auditor concerned and the person, ifany, other than the auditor who signs the report or signs or authenticates the document,and in the case of a firm all partners of the firm, shall, if the default is willful, bepunishable with fine which may extend to 2[one hundred] thousand rupees. If the auditor s report to which sub-section (1) applies is made with theintent to profit such auditor or any other person or to put another person to a disadvantageor loss or for a material consideration, the auditor
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shall, in addition to the penaltyprovided by that sub-section, be punishable with imprisonment for a term which mayextend to one year and with fine which may extend to 4[one hundred] thousand rupees. POWER OF REGISTRAR TO CALL FOR INFORMATION, ETC POWER OF REGISTRAR TO CALL FOR INFORMATION OR EXPLANATION: Where,on perusal of any document which is submitted to him under this Ordinance, or anynotice, advertisement or other communication, or otherwise, the registrar is of opinionthat any information, explanation or document is necessary with respect to any matter, hemay, by a written order, call upon the company and any of its present or past directors,officers or auditors to furnish such information or explanation in writing, or suchdocument, within such time not being less than fourteen days as he may specify in theorder: Provided that a director, officer or auditor who ceased to hold office more thansix years before the date of the order of the registrar shall not be compelled to furnishinformation or explanation or document under this sub-section. On the receipt of an order under sub-section (1) it shall be the duty of thecompany and all persons who are or have been directors, officers or auditors of thecompany to furnish such information, explanation or documents to the best of theirpower. If no information or explanation is furnished within the time specified orif the information or explanation furnished is, in the opinion of the registrar, inadequate,the registrar may if he deems fit, by written order, call on the company and any suchperson as is referred to in sub-section (1) or (2) to produce before him for his inspectionsuch books and papers as he considers necessary within such time as he may specify inthe order; and it shall be the duty of the company and of such persons to produce suchbooks and papers. If any such company or any such person as is referred to in sub-section(1), (2) or (3) refuses or makes default in furnishing any such information or in producingany such books or papers the company shall be liable in respect of each offence to a finewhich may extend to twenty thousand rupees and to a further fine which may extend tofive hundred rupees for every day after the first during which the default continues, andevery officer of the company who knowingly and willfullyauthorizes or permits, or is aparty to, the default shall be punishable with imprisonment of either description for aterm which may extend to one year, and shall also be liable to fine and the authoritytrying the offence may, on the application of the registrar and upon notice to thecompany, make an order directing the company to produce such books or papers as in itsopinion may reasonably be required by the registrar for his investigation. On receipt of such information or explanation or production of any booksand papers, the registrar may annex the same or any copy thereof or extract therefrom tothe original document submitted to him; and any document so annexed shall be subject tothe provisions as to inspection and the taking of extracts and furnishing of copies towhich the original document is subject. If the information or explanation or book or paper required by theregistrar under sub-section (1) is not furnished within the specified time, or if afterperusal of such information or explanation or books or papers the registrar is of opinionthat the document in question or the information or explanation or book or paperdiscloses an unsatisfactory state of affairs, or that it does not disclose a full and fairstatement of the matter to which it purports to relate, the registrar shall without prejudiceto any other provisions, and whether or not action under sub-section (3) or sub-section (4)has been taken, report in writing the circumstances of the case to the Commission. SEIZURE OF DOCUMENTS BY REGISTRAR: Where, upon information inhis possession or otherwise, the registrar has reasonable ground to believe that books andpapers of, or relating to, any company or any chief executive or officer of such companyor any associate of such person may be destroyed, mutilated, altered, falsified or secreted,the registrar may, after obtaining permission of the Magistrate of the first class or theCourt, search and seize such books and papers. For the purposes of sub-section (1), the registrar may, after he hasobtained the permission of the Magistrate or Court under that sub-section, also authorizeany officer subordinate to him, not inferior in rank to an assistant registrar, a. to enter, with such assistance as may be required, the place where suchbooks and papers are kept; b. to search that place in the manner specified in the order; and c. to seize such books and papers as he considers necessary. The registrar shall return the books and papers seized under this sectionas soon as may be and in any case not later than the thirtieth day after such seizure, to thecompany or, as the case may be, to the chief executive or any other person from whosecustody or power they were seized: Provided that the Commission may, after providing to the company anopportunity to show cause against the order proposed to be made by it, allow the registrarto retain any books and papers for a further period not exceeding thirty days:
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Provided further that the registrar may, before returning books and papers asaforesaid, take copies of, or extracts from them or put such marks of identificationthereon as he considers necessary. Save as otherwise provided in this section, every search or seizure madeunder this section shall be carried out in accordance with the provisions of the Code ofCriminal Procedure, 1898, relating to searches or seizures made underthat Code.
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Companies Ordinance, 1984

THE COMPANIES ORDINANCE, 1984 Ordinance number XLVII OF 1984

PART I PRELIMINARY 1. SHORT TITLE, EXTENT AND COMMENCEMENT:

D-9 Company Law

Companies Ordinance, 1984

D-9 Company Law

Companies Ordinance, 1984

D-9 Company Law

Companies Ordinance, 1984

3. MEANING OF "SUBSIDIARY" AND "HOLDING COMPANY":

4. ORDINANCE NOT TO APPLY TO CERTAIN CORPORATIONS:

5. APPLICATION OF ORDINANCE TO NON-TRADING COMPANIES WITH PURELY PROVINCIAL OBJECTS:

6. ORDINANCE TO OVERRIDE MEMORANDUM, ARTICLES, ETC:

PART II JURISDICTION OF COURTS

8. CONSTITUTION OF COMPANY BENCHES:

D-9 Company Law

Companies Ordinance, 1984

10. APPEALS AGAINST COURT ORDERS:

11. Deleted. 12. POWERS AND FUNCTIONS OF THE COMMISSION:

D-9 Company Law

Companies Ordinance, 1984

MEMORANDUM OF ASSOCIATION 15. MODE OF FORMING A COMPANY:

16. MEMORANDUM OF COMPANY LIMITED BY SHARES:

17. MEMORANDUM OF COMPANY LIMITED BY GUARANTEE:

D-9 Company Law

Companies Ordinance, 1984

18. MEMORANDUM OF UNLIMITED COMPANY:

19. PRINTING, SIGNATURE, ETC. OF MEMORANDUM:

20. RESTRICTION ON ALTERATION OF MEMORANDUM:

D-9 Company Law

Companies Ordinance, 1984

D-9 Company Law

Companies Ordinance, 1984

23. EXERCISE OF DISCRETION BY COMMISSION:

24. PROCEDURE ON CONFIRMATION OF THE ALTERATION:

25. EFFECT OF FAILURE TO REGISTER WITHIN NINETY DAYS:

ARTICLES OF ASSOCIATION 26. REGISTRATION OF ARTICLES:

27. PRINTING, SIGNATURE, ETC. OF ARTICLES:

D-9 Company Law

Companies Ordinance, 1984

FORMS OF MEMORANDUM AND ARTICLES 29. FORM OF MEMORANDUM AND ARTICLES:

31. EFFECT OF MEMORANDUM AND ARTICLES:

D-9 Company Law

Companies Ordinance, 1984

32. EFFECT OF REGISTRATION:

33. CONCLUSIVENESS OF CERTIFICATES OF INCORPORATION:

34. EFFECT OF ALTERATION IN MEMORANDUM OR ARTICLES:

35. COPIES OF MEMORANDUM AND ARTICLES TO BE GIVEN TO MEMBERS:

36. ALTERATION OF MEMORANDUM OR ARTICLES TO BE NOTED IN EVERY COPY:

PROVISIONS WITH RESPECT TO NAMES OF COMPANIES 37. PROHIBITION OF CERTAIN NAMES:

D-9 Company Law

Companies Ordinance, 1984

38. RECTIFICATION OF NAME OF A COMPANY :

39. CHANGE OF NAME BY A COMPANY:

40. REGISTRATION OF CHANGE OF NAME AND EFFECT THEREOF:

41. ALTERATION OF NAMES ON COMMENCEMENT OF ORDINANCE AND CHANGE OF STATUS OF COMPANY:

D-9 Company Law

Companies Ordinance, 1984

D-9 Company Law

Companies Ordinance, 1984