Corporate law topic wise

Pakistan: in the development of Company Law

Recommendation made by

commission 1961

Not considered and turned down by Government of

Pakistan

Some changes brought in 1972

Which abolished Managing Agency

System

In Companies Act 1913

Companies Ordinance 1984 was developed

In 1984 General Zia ul Haq

Government took initiatives

Note: Pakistan adopted British Company Act 1913 after independence 1947

Company

Ownership ObjectiveLiability Incorporation

Public Or

Private

1. Limited by Shares2. Limited by Guarantee3. Unlimited Company

Profit Or

Non Profit

1. By Charter of King/ Queen

2. By Special Act or Ordinance

3. By Companies Ordinance 1984 (PO)

4. By Companies ordinance (NPO)

5. By Special Law for Non Trading Corporation

Formation/ Incorporation of the Company

By Charter By OrdinanceBy Act By Companies

Ordinance 1984

In those place where King/

Queen are in ruling

By passing Act in National or Provincial Assembly

By the Order of President of

Pakistan or Governor of

Province

Normally all companies are registered/ incorporated under Companies ordinance 1984

Company

Objective

Not for Profit.These Companies are registered

U/s 42 of Co. Ord 1984Earning Profits

Such companies do not pay dividend to their

Members

Companies Ordinance 1984

Does not applicable on

Non Trading Cooperation

Owned or controlled by

Provincial Government

Carrying on business

within Province

Cooperative Society

University

Company

Owners/ Members/

Share HoldersDirectors

Control Affairs of the CompanyInvest in the Company

Types formation of Company

Following Companies can be formed Under

Co. Ord 1984

Company Limited by

Shares

An Unlimited Company

Company Limited by Guarantee

With or Without Share

Capital

Companies

Enacted by Special Laws

Insurance Companies

MudarbasBanking

Companies

CODE IBM

Governed by Insurance

Ordinance

Governed by Mudarba

Ordinance

Governed by Banking

Ordinance

Companies Ordinance is General law for these companies and also applicable

Incorporation of Different Companies

Private Company

Preparation of documents

Submission of Documents to REGISTRAR

If REGISTRAR satisfies

Yes

Registrar Issues Certificate of

Incorporation

Registrar Checks/ scrutiny the documents

Private Company now carry on its business

No

REGISTRAR directs the Subscriber/Promotors to fulfill deficiencies

Resubmission of Documents after

meeting deficiencies

Private Company

Include in AOA

Restricts the right to transfer of

shares

Limits number of members upto maximum 50

Prohibits any invitation to public

to subscribe shares/ debenture

Excluding persons

Under the employment of

Company

Public Company




Yes

Registrar Issues COI


Public Company now carry on its business

No




Company issues shares & minimum Subscription

must be received

Company files Prospectus or SILOP to Registrar

Statutory Declaration of compliance signed by CEO/

Director/Secretary to Registrar

Registrar Issues COCOB

Promoters must submit documents to ROC in order to get COI

Private Public

MOAAOA

Statutory DeclarationForm 27 LOD Fee Challan

MOAAOA

Statutory DeclarationForm 27 LODForm 28 COD Fee Challan

Form 27, if not submitted then SOM are deemed to

be Directors

SOM mean Signatories of Memorandum of Association

Submission of Form 27 LOD

If not submitted then SOM are deemed to be

Directors

Public Company must

Submit

Private company may

submit

SOM: Signatories of Memorandum

LOD = List of Directors

Company

Private Public

Submission of Statutory Declaration

Submission of Statutory Declaration

Before COIBefore getting

COCOBBefore COI

Other requirements to be met by Public Company

MinimumSubscription

received

Prospectus or SILOP filed with

ROC

Directors pay full

amount for Shares

purchased by them

Submission of Statutory

Declaration by CEO/Directors/Se

cretary to ROC

After completing all above requirements

ROC Issues COCOCB

Certificate

Certificate of Incorporation Certificate of

Commencement of Business

Both Private & Public Company get it from

Registrar

Only Public Company gets it from Registrar after taking COI

and meeting other requirements

Public Company

Requires

First COI from ROC

Second COCOB from ROC

Incorporation/Registration of Company

Documents to be submitted to Registrar

Private Limited Public Limited Guarantee Limited with or without SHARE CAPITAL

Association not for Profit

4 copies of MOA & AOA

Prepared & Submitted to Registrar which shall be signed by each subscriber




Form 1 Declaration of compliance

Declaration of compliance



Form 29 Particulars of Directors / CEO

Particulars of Directors / CEO



Copy of Treasury Challan

Payment of Fees for registration




Form 27 List of Directors /CEO

List of Directors /CEO


Form 28 Consent of Directors/ CEO

Consent of Directors/ CEO


Form -1: Declaration shall be given by Advocate of High Court or Member ICAP, or ICMAP or any Director of the Company

Association nor for Profit do not write Limited / Private Limited after the name

Following types of ROC

Additional Registrar (AR)

Below than Registrar

Registrar (R)Top Hierarchy

Joint Registrar (JR) Below than Additional Registrar

Register Companies

Promoters prepare documents

Submit documents to R/ AR/ JR

ROC accepts then

Issue COI

ROC pointed out Defects in

Documents

ROC office pass Order for not registering

Company

Appeal within 1-30

days by Promoters

SECP

Registrar

If Order was passed by Registrar

If Order was Passed by Additional

Registrar/ Joint Registrar

Appointment of Company Secretary

Optional Mandatory

Listed Company

SMC

Unlisted Company

Private Company

Contracts

Made & Signed by Promoters

Before COI

Company can not Ratify and not Bound

Company may

Adopt & pay

Company reject them

Contract before getting COI• Such contracts are called pre commencement or

preliminary expenses. • Promoters make these contracts• After getting COI, members may reject them • Promoters are personally liable. Prompters must

take due care because Company may refuse to accept them

• Company can not ratify them • Company may adopt them if members agrees to

accept pre commencement contracts.

Contracts before getting COCOB• Private Company does not need COCOB

• Public Company first get COI and then gets COCOB from ROC

• Contracts before getting COCOB are provisional in nature.

• Public Company is not bound to accept these contracts

Contract after COI-Private Company

• After COI company get birth so company is liable.

• If these contracts are made within scope of MOA & AOA then Company is liable.

• Directors Or Members must know their power before making contracts.

Public Company After COI but before COCOB

• Contracts before COCOB are provisional in nature. Public Company is not bound.

• The Public Company can ratify those contract which are made after COI. (As after COI, company gets birth)

• Contracts before COI, can not be ratified by the Public company but may be adopted

Public Company is not bound by Contracts

Before COI After COI

and Before COCOB

Directors Share

Holders

After COCOB During Life of Company

Exceeds powers which are defined in MOA & AOA

Known as Ultra Vires

Private Company is not bound by Contracts

Before COI

Directors Share

Holders

After COIDuring Life of Company

Exceeds powers which are defined in MOA & AOA

Known as Ultra Vires

Incorporation/Registration of Company

Documents to be submitted to Registrar

Private Limited Public Limited Guarantee Limited with or without SHARE CAPITAL


4 copies of MOA & AOA





Form 1 Declaration of compliance




Form 29 Particulars of Directors / CEO




Copy of Treasury Challan





Form 27 List of Directors /CEO



Form 28 Consent of Directors/ CEO



Form -1: Declaration shall be given by Advocate of High Court or Member ICAP, or ICMAP or any Director of the Company

Association nor for Profit do not write Limited / Private Limited after the name

Share Holders Duties/Responsibilities• Use of proper voting power in election• Choose best Directors for company• Ensure Corporate Governess compliance• Conduct EOGM wherever necessary• Declared directors elections invalid if they finds irregularities happened in

election.• Declared meeting proceeding invalid if irregularities happened in meeting• Appoint reputed audit firm as Auditor• Always aware about company affairs• Read Directors and Auditors report before coming in AGM• Read Agenda items, prepare questions before attending meeting• Ask demand for poll where personality influence arises• Attend regularly meting of directors; speak on issues discuss in meeting• Inspect books of accounts when books are open for inspection

Share Holders

Equity

Type

Preference

At payment of Dividend

At time of Winding UP

Classes A, B, C

Real Owners Not real Owners

At them time of Winding up they are paid

at last

Company has to Compliance following


Indoor Management

Articles of Association

Memorandum of Association

Changes in MOA and AOA

Director has no power to

change MOA and AOA

Members by Special

Resolution NO

MOA

Define RelationsFormat

Printed

Divided in to Paragraphs

Witnessed

Signed by subscribers

Consecutively numbered

With Company

Members

Outsiders

Between Members

If Private Company does not file List of Directors (LOD-Form 27) at time of

incorporation then these Signatories , if natural person are deemed to be First

Directors

MOA

Powers of Company

Define

Object/ Scope of Activities of

Company

Limits of Company

Constitution of Company

Subordinate to Co. Ord 1984 but

Superior to AOA

Public Document

Ultra Vires

Share Holders

When

Directors

Exceed Powers defined in MOA & AOA

Company is not responsible

TABLES in the Companies Ordinance 1984

A CB D E


for

Public Company



Articles of Association for





Public Limited

Company



Unlimited Companies

Without share Capital

With Share Capital With or without

share capital

Memorandum of Association (MOA)

Capital Clause

Association &

Subscription Clause

Liability Clause

Objective Clause

Registered office Clause

Name Clause

Authorized Capital is

mentioned with

denomination

Example : Authorized Capital of Rs.

100,000 shared divided in Rs. 5/-

Note: MOA: Constitution/Charter of the Company. It is under companies ordinance 1984 and superior and above AOA

It means in physical forms

there are 20,000 shares


Capital Clause

Association &

Subscription Clause

Liability Clause

Objective Clause


Name Clause

Authorized Capital is

mentioned with

denomination

Example : Authorized Capital of Rs.

100,000 shared divided in Rs. 10/-


It means in physical forms

there are 10,000 shares


Capital Clause

Association &

Subscription Clause

Liability Clause

Objective Clause


Name Clause

Limited by Shares

Limited by Guarantee

Unlimited



Capital Clause

Association &

Subscription Clause

Liability Clause

Objective Clause


Name Clause

Address of registered of

is written

Example : The registered office of the company is situated at 84-B

SMCHS Karachi.



Capital Clause

Association &

Subscription Clause

Liability Clause

Objective Clause


Name Clause

All possible business activities related to

company are written

Remember activities must not deviate the original

business


Limits, Scope,

Powers, Business

activities are mentioned


Capital Clause

Association &

Subscription Clause

Liability Clause

Objective Clause


Name Clause

Limited by Shares


Unlimited

Even by amendment the liability of members can not be made UNLIMITED

By Amendment Liability of Directors become unlimited


Capital Clause

Association &

Subscription Clause

Liability Clause

Objective Clause


Name Clause

We mention the name of original subscribers who

formed company.

Name, father’s /Husband’s name, nationality, occupation, residential address, number of shares taken,

signature of Subscribers.



Capital Clause

Association &

Subscription Clause

Liability Clause

Objective Clause


Name Clause

Name of the company

along with liability is written

If company is Private Limited by Shares then:

ABC (Private) Limited


If company is Public Limited by Shares then:

ABC Limited

Single Member Company ABC(SMC-Private) Limited

Association not for Profit only writes it Name. No Private

Limited or Limited is written


Pakistan Institute of Public & Finance

AccountantsPIPFA

Institute of Corporate Governors

No word Private Limited or Limited is written after

its name.

No word Private Limited or Limited is written after its

name.

Sports

Arts Science Charity Religion

COMPANIES FORMED UNDER 42 HAVE FOLLOWING PURPOSES


Capital Clause

Association &

Subscription Clause

Liability Clause

Objective Clause


Name Clause

Name of the company


If company is Private Limited by Guarantee then:

ABC Guarantee (Private) Limited


If company is Public Limited by Guarantee Shares then: ABC Guarantee Limited





Capital Clause

Association &

Subscription Clause

Liability Clause

Objective Clause


Name Clause

Name of the company


If company is Private Unlimited by Shares then:

ABC (Private) Unlimited


If company is Public unlimited by Shares then:

ABC Unlimited





Capital Clause

Association &

Subscription Clause

Liability Clause

Objective Clause


Name Clause

Name of the company


If company is Private Unlimited without Shares Capital then:

ABC (Private) Unlimited


If company is Public Unlimited without Shares Capital then:

ABC Unlimited





Rules & Regulation For

Internal Management

Format

Printed

Divided in to Paragraphs

Witnessed

Signed by subscribers

Consecutively numbered

Public Limited Company

Prepare its own AOA

May

Adopt Table “A” for AOA


With Memorandum of

Association

Conflict

Memorandum of Association will prevail and overrides AOA

Company

Table C, D, E

May include additional Matters in

But inclusion are not against requirement of Provisions of Table

Table D

Table C

Table E

Articles of Association • Issue of Shares including right issuance• Forfeiture of shares• Issue of Debentures/ Redeemable capital• Borrowing powers of Directors• Banks Account Operations• Audit of Accounts• Holding of Meetings• Allotment of Shares• Dividend Payments


• Dissolution/ Winding Up of Company• Calling of Shares• Accounts preparation• Procedure of Director Elections• Meeting Quorum

IF IBA HAD DEW CAP

Companies Ordinance

Any requirement Of following

MOA AOA

Conflict

Indoor Management

In all case Companies Ordinance 1984 prevails As Co. 1984 is superior of MOA, AOA, Indoor Management

MOA

Any requirement Of following

AOA

Conflict

Indoor Management

In all case MOA prevails As MOA is superior to AOA and Indoor Management

Changes in MOA

S.NO DESCRIPTION

NAME REGISTERED

OFFICE OBJECT CAPITAL

CLAUSE CLAUSE CLAUSE CLAUSE

1 BOARD MEETIMG

2 NOTICE OF MEETING

3 MEETING OF MEMBERS

4 SPECIAL RESOLUTION

5 NOTICE TO CREDITORS

6 CONSENT OF CREDITORS

7 FILE PETITION TO SECP (WITHIN 1-60 DAYS OF SPR)

8 CONFIRMATION OF SECP

9SUBMISSION OF CONFIRMATION FROM SECP TO ROC

(WITHIN 90DAYS OF SECP CONFIRMATION)

10 PETITION TO COURT

11 SUBMISSION OF COURT ORDER TO ROC

12 OLD NAME WITH A NEW NAME FOR A YEAR

13 REVISED “COI” ISSUED BY ROC

14WORD "& REDUCED" AFTER NAME OF THE COMPANY

PERIOD OF "0" DAY OR ANY DAY AS ORDERD BY THE COURT

IF Registered office is changed within province then Confirmation from SECP is not required. Intimation to ROC is must within 1-14 days

BASES FOR CHANGES IN MOA

ALTERATION IN SHARE CAPITAL

Just Read less important for Exam

Alteration of Share Capital

Increase of Shares Reduction Sub Division



through

Issue of Prospectus

Submission of SILOP

Issue of Rights Shares

Reissue of Prospectus

Special Resolution Approval from Federal Government



through

Issue of Prospectus

Submission of SILOP



Shares are issued to General Public First time

If funds are got from private arrangements



through

Issue of Prospectus

Submission of SILOP



Subsequent issuance as per existing holding of shares

ratio.

If some members buy shares

As per their holding Ratio

As per not their holding Ratio

All shares are allotted to

them

Directors issue shares to members & remaining where

they thin fit



Smaller Larger

Amount Same

Only Change in

Denomination

Special Resolution of MembersIntimation to ROC within 15 days



Consent from Creditors

Confirmation of Court

Cancellation of Shares

“And Reduced” word written with

the name of Company

fix a period for writing “and reduced” with

the name of company

not fix a period for writing “and reduced” with the name

of company

Court may

For no Objection

Word “& reduced” will be written



Unpaid Share Capital

Paid Up Share Capital

Unsubscribed Share Capital

Buy back of Shares

When Some

assets are

DESTROYED, THEFT, LOST

Word “& reduced” will be written



Unpaid Share Capital

Paid Up Share Capital

Unsubscribed Share Capital

Liability of Share Holders is reduced by cancelling of unpaid

Capital Word “& reduced” will be written

Reduction in Share Capital

Uncalled

Situations

Paid Up

Extinguished part which is not called but issued

It means cancellation of uncalled capital

Returning of Capital

It means cancellation of paid up capital

Can directors liability be made unlimited?

• Yes• Provision must be mention in AOA• Only Members can make Liability of all

directors / any director be unlimited• Intimation must be made to directors before

making their liability unlimited• If Director contests in election, company must

inform him that Liability of Director is unlimited.

Co. 1984MOA, AOA,

Constructive noticeIndoor Management

Company has to Compliance following


Indoor Management



Doctrine of Constructive Notice

In the favor of Company

Not in the favor of

OUTSIDER

Because

Outsider during dealing with company are presumed to have read MOA, AOA even if he

has not read

Outsider Can not

plead for ignorance

Doctrine of Indoor Management (DIM)

Outsider

Has read MOA and AOA before dealing with company or

entering in contract

Has presumed internal

requirements

Have Duly observed and

complied with

Has no knowledge of internal

irregularities

In the favor of Outsider

Due internal proceedings have not

been observed or complied

If it is proved outsider had not read MOA & AOA then outsider will not get

benefit of DIM

Doctrine of Indoor Management (DIM)

Outsider

Has read MOA and AOA before dealing with company or

entering in contract

Has presumed internal

requirements

Have Duly observed and

complied with

Has no knowledge of internal

irregularities

In the favor of Outsider

Due internal proceedings have not

been observed or complied

If it is proved outsider had not read MOA & AOA or knew internal

irregularities then outsider will not get benefit of DIM

Doctrine of Constructive Notice

In the favor of Company

Not in the favor of

OUTSIDER

Because

Person dealing with company are presumed to have read MOA, AOA even if he has not read

Outsider Can not

plead for ignorance

•ILLEGAL ASSOCIATION

ASSOCIATION or PARTNERSHIP

More than 20 person

Association is ILLEGAL

Exceptions

Any Society, Body of Association formed

Under Law of Pakistan

Joint Family Business

Business Objectives

Audit/ Legal Practice

Any profession who are not

entitled to form Company

CODE- BAJA

Fine Rs. 5,000 and Liability is Unlimited in case of Illegal Association

Minimum statutory Members

• Minimum statutory Members• Business carry on less than Minimum

statutory requirement of Members

When minimum requirement of members of each company is not met

Single member Company

Public Unlisted

Company

Private Company

Public Listed Company

Zero One or zero Two or below

Six or below

All members knowingly the shortfall in members shall be personally liable for all obligations arises from the contract during the

shortfall. If company unable to meet the contract obligation then liability of surviving members will be unlimited.

Companies Members

Single member Company

Public Unlisted

Company

Private Company

Public Listed Company

Minimum One

Minimum 2 Minimum 3 Minimum 7

Maximum One

Maximum 50 Maximum Unlimited

Maximum Unlimited

Company formed in July 10, 2010

From July 10, 2010 to October 25, 2011 members are 10 which is more than the minimum requirement. 30 contracts with banks, suppliers were made

From October 26, 2011 to April 30, 2012 members were 2 (A, B) which is less than the minimum requirement. In this period new 10 contracts were signed

Company wound up with Heavy losses on October 1, 2012, even all assets were sold.

The two (A, B) surviving members will be liable for remaining amount for the contract made during October 26,2100 to April 30, 2012

From May1, 2012 to September 20, 2012 members were 12 which is more than the minimum requirement. In this period new 40 contracts were signed

•Appointment of Company Secretary & Share Registrar Officer

Appointment by Companies

Company Secretary

Share Registrar

officer

By Listed Company By Listed Company

By SMC

Stock Exchange(Organized Market for Shares & Debentures

Private Company Unlisted

CompanyListed Company

Trade on Does not Trade On

Shares of Following Companies

Company Secretary : Secretarial Duties• Knowledge of Companies Ordinance and related laws.• Expert in Statutory Compliance• Knowledge & Compliance of MOA, AOA• Ensure Maintenance of Statutory Registers• Agenda, Notice, Quorum and Arrangement of Meetings of Members & Directors• Attend Meeting & Prepare Meeting Minutes• Holding of Election of Directors• Arrange Vote casting by Show of Hands / Demand for Poll• Preparation & Submission of Forms to ROC including annual return.• Drafting of resolutions, letters, memos, agenda, notices, meeting minutes.• Command over English Language

Qualification of Company Secretary

• Member of Professional Body• CA, ACCA, CIMA, ICMA, CPA, CIA, ACIS, CICA• Local or Master degree in Finance having

Experience 5 years

Secretarial Compliance Certificate

• Company Secretary shall furnish annually Compliance Certificate in prescribed form to ROC

• It means all Legal Compliance as per law has made & fulfilled / Completed by Company.

Appointment of Company Secretary

Optional Mandatory

Listed Company

SMC

Unlisted Company

Private Company

Company Secretary

Functions & Duties

Secretarial

Liaison Administrative Managerial Coordination

Non Secretarial

Code : CALM

Types of Companies

Types of Companies in Pakistan

Public CompanyUnlisted

Trading Corporation

Public Company

Listed

Private Company

Single Member Company

Owned & controlled by

Province + carrying on

Business within province

It is also a type of Private

company

Types of Private Company

Single Member

Company

Private CompanyMembers

from 2 to 50

Liability of Company

Limited by Shares


Without Share

Capital

Unlimited CompanyWith or without Share

Capital

Limited by Guarantee with Share

Capital

Unlike partnership;In case of winding up in

losses the owner does not pay debts from personal

resourcesAgainst shares nothing will be taken in case

of losses


Limited by Shares


without share

Capital

Unlimited Company

with or without Share

Capital


Capital

Unlike partnership;In case of winding up in

losses the owner will pay to the extent of their

guarantee not more than the guaranteed amount

In this case as there are no

shares so nothing will be taken against

shares


Limited by Shares


without Share

Capital

Unlimited Company

with or without Share

Capital


Capital

Like partnership;In case of winding up in losses the owner pay debts from personal resources also but first company will

pay then the remaining if ay, by owners


Limited by Shares


without Share

Capital

Unlimited CompanyWith or with out

Share Capital


Capital

Unlike partnership;In case of winding up in losses

the owner will pay to the extent of their guarantee not more

than the guaranteed amount. Against share he will not take

anything in case of losses

Types of Public Limited

Limited by Shares


Capital

Unlimited Company


without Share Capital

Share Capital

Personal Guarantee of Owners

Both

Types of Private Limited

Limited by Shares


Capital

Unlimited Company


without Share Capital

Share Capital

Personal Guarantee of Owners

Both

Winding up Organization

Partnership

CompanyLimited by

Shares

Losses and dues shall be paid from Business by

selling all business assets

Remaining amount if any, shall be paid by personal resources of all owners

Remaining amount if any, Shall not be paid by

personal resources of owners




Partnership

CompanyLimited by Guarantee




Remaining amount if any, Shall be paid as per the

guaranteed amount from personal resources of owners




Partnership

CompanyUnlimited Liability







SILOP and Prospectus

Difference between SILOP & Prospectus

Description SILOP Prospectus

Issuance of Shares Not General Public General Public

Status Not an invitation to Offer An invitation to Offer

Definition in Co. Ord 1984 Not Defined Properly Defined

Compensation to Subscriber/ buyer/ Allottee Shares

No compensation to buyer of Shares

Compensation to buyer of Shares By Civil & Criminal Law

Format Mention in Co. Ord 1984 No Prescribed Format is mentioned. Company makes as per their requirement. It may be in a circular. But set rules are defined within which Prospectus is designed

Report are to be set in Prospectus

Section 2 Part 1, Schedule II Section 2 Part 1, Schedule I

Funds arrangement Privately / outsider may invest but it is not general invitation like prospectus.

Publicly

Registration to ROC Required Required

Issuance Shares/ Debenture Shares/ Debenture

Difference between SILOP & Prospectus

Description SILOP Prospectus

Company Public Company files only Public issues only

Private Company When Private Company converts into Public then it files SILOP

When Private Company converts into Public and want to raise capital by getting funds from Public

Minimum subscription Mentioned Mentioned

Issuance of Shares

Issue of Shares not in Cash • Value of asset must be determined by Engineer

• Engineer must be registered with Pakistan Engineer Council (PEC)

• Engineer must be at least in the panel of two Financial Institution

• Past & current Depreciation shall be reduced from Value of Asset

• Intangible asset are not accepted against Shares only

• Tangible assets are accepted against Shares

• Certificate from Chartered Accountant shall be obtained for the compliance

• Code CV-TIPE

Directors Powers

Issuance

Shares Debentures

Issuance

Shares/ DebenturesIssuance

Inside Pakistan

Outside Pakistan

Approval SECP is must

Issuance of Shares

At par At DiscountAt Premium

When issuance value per share is

equal to Face ValueFace Vale Rs. 10/- and issuance per Share is Rs. 10/-

This is called

issuance at par value

Issuance of Shares


When issuance value per share is greater than Face

Value Face Value Per Share is

10/- Issuance Value is 12/-

here Rs. 2 per share is

Premium

Issuance of Shares


When issuance value per share is

less than Face Value

Face value is Rs. 10/-

issuance Value is Rs. 7/- here

Rs. 3 is discount per

share

Issue Of Share/Denture

At Par Discount Premium

Share issued on Discount

Resolution passes by Members

Specified maximum

rate of discount

Sanction from SECP is necessary for Discount

Issuance of shares on DISCOUNT within 60 days from Sanctioned acquired from SECP

Disclosures in subsequent Balance Sheets & prospectus

At least one year has been elapsed from

commencementBoard Meeting & Resolution

Within 30 days Return on

Allotment on Form 3 shall be

submitted to Registrar

MAY BE WRITTEN OF

WITHIN 5 YEARS

SUBMISSION OF

DOCUMENTS TO SECP

Utilization of Premium on shares issued

Writing off

Preliminary Expenses

Commission Paid

Discount allowed

Issuance of Shares &

Debentures

Issuance of Bonus Shares

Providing for the Premium on redemption

Preference Shares /

Debentures

Preparation & Printing of MOA, AOA, and other Documents,

Payment of Capital Duty, Initiative expenses, lawyers fee, etc

Utilization of Premium

Preliminary Expenses Writing off

Discount allowed on issuance of

shares/ debenture

Commission payment of

Underwriters

Premium payable on

redemption of redeemable preference

share / debenture

In paying up

unissued share of

the company

To be issued to members as fully bonus shares Code- PC-RUD

Company can issue

Non Voting Ordinary Shares

If already mentioned in MOA & AOA

If not mentioned in MOA & AOA

Company can issueCompany passes

Special Resolution and add in MOA & AOA

Company can issue

Non Voting Ordinary Shares• In AOA & MOA it is mentioned that company can issue non

voting rights shares

• If it is not mentioned then amend MOA & AOA by passing Special Resolution

• Pass SR for issuing non voting rights shares

• Obtain approval from SECP

• Mentioned on Shares offering documents that shareholders will not have rights so buyer of shares will not be confused.

Share Issuance

With Voting Rights

Without Voting Rights

It is generally present In certain exceptional

Cases

Variation in voting Rights & Privileges

Company can issue

Variation in Voting Ordinary Shares

If already mentioned in MOA & AOA

If not mentioned in MOA & AOA

Company can issueCompany passes

Special Resolution and add in MOA & AOA

Company can issue

Share Issuance

With Voting Rights

Without Voting Rights


Rights & Privileges

For a particular

period, specific purpose

Entitlement for

Receiving Of Notices Of Attending Meeting,

Bonus Shares, Dividend

Disproportionate to value of shares

Note: Companies Ordinance Allows Different Classes Of Shares

Share Issuance

Voting RightsWithout

Voting Rights

Specified in MOA

Members passes Special

Resolution

Approval from SECP

In offering & attracting

documents

It must be clearly

mentioned

Buyers of shares will not enjoy voting rights

So buyers before buying know it


Information

Business

Capital Structure

Business Plan

It is an Invitation to offer

In writing

To Public

Not for particular Group or People

Shares

Debenture

Notice, Advertisement,

circular

Not oral

It is not Offer

Prospectus

CEO, Directors, Auditors,

Legal Advisors

Contains

Format Legal

Status Purpose to issue

Status in Prospectus

Circular, Notice,

Advertisement

Public Company

Invitation to Sale

OffersMay or

may not accept

Prospectus

Purpose

Subscribe

Shares Debenture

Invitation

Privately Publicly

Prospectus is issuedSILOP is submitted to

ROC

Outsiders are invited to buy shares but privately

not Open for All

Issuance of Prospectus

First time Subsequent

Normally instead of Prospectus

Right Shares are issued

To existing shareholders

In proportion to their holding of

shares

Issuance of Prospectus

First time Subsequent

Meeting of Shares Holders (AGM/EOGM)

Members passes SPECIAL

RESOLUTION

For issuing of Prospectus to

Public

Permission from Federal Government is must

To Issue Prospectus Publicly For Subscribing

SHARE to Public

Subsequent

Issuing of Prospectus

Public buys shares

Make dilution in holding of existing holders of Shares

New shares holders come and old holders % of holding dilute

Debenture Acknowledgement of debtLong

term Loan

Denture holders have charge against

Company's assets

In case default in payment of denture repayment or

interest

Charged Assets may be sold

To Recover money

Secured debtParties

Company Public

Debenture Holders

Debenture issuer

Issue Of Denture

At Par Discount Premium

Debenture

Contract

Written Document

Debenture trust deed

RedemptionTypes

Convertible Non

Convertible

Company will make repayment

of 100% debt with Interest

Completely or Partly

Debenture

Contract Written

Document

Debenture trust deed

Contains

Ranking Redemption

terms Non Pari Pasu

Pari pasu

Debenture

Convertible Debentures

Refund part in Cash

Remaining in Equity Shares &

Preference Shares

No Refund just conversion in

Preference Shares

Remaining in Equity only

Remaining in Preference Shares only

No Refund just conversion in Equity Shares & Preference

Shares

No Refund just conversion in Equity

Shares

4 conversion possibilities

(1)

(2)

(4)

(3)

Debenture

Contract Written

document

Debenture Trust Deed

Contains

Conversion

Redemption terms

Partly

Completely

Non Convertible

Convert in Equity Shares or Preference

SharesRefund of entire debt with interest

Debenture

Ranking Pari Pasu Non Pari

Pasu

Old and new debenture Holders

Stands on same footing

They all are fully or proportionately paid at the

time of settlement

As per series of debenture

Old holders Subsequent

holders

Settlement Payment

later First

Debenture types

Bearer

Redeemable

Registered

Irredeemable SecuredSecured

We hardly see unsecured and irredeemable debenture

Private Company




Yes

Registrar Issues Certificate of

Incorporation


Private Company now carry on its business

No




Public Company




Yes

Registrar Issues COI


Public Company now carry on its business

No




Company issues shares & minimum Subscription

must be received

Company files Prospectus or SILOP to Registrar

Statutory Declaration of compliance signed by CEO/

Director/Secretary to Registrar

Registrar Issues COCOB


When Minimum

Subscription received


ROC

Directors pay full

amount for Shares

purchased by them



cretary to ROC


ROC Issues COCOCB

Shares to be Issued for Rs. 100,000 through prospectus

contains

Minimum Subscription

Rs. 70,000

Over & above Minimum

Subscription Rs. 30,000

If this amount is not received then shares subscription is cancelled

For Public Company Only

Optional part.

Shares to be issued for through Prospectus Rs. 100,000


Rs. 70,000

Over & Above Minimum


Total Amount to be received Rs. 100,000

Actual Amount received

If actual amount received

Rs. 65,000 105,000

Underwriter pays remaining

amount

Company refunds Rs. 5,000 OR

Issue further shares of Rs. 5,000

Green Shoe Option

For Public Company

Only

Shares to be issued for through Prospectus Rs. 100,000; Minimum Subscription 70,000;

Underwriting Rs. 25,000


If actual amount

received

Rs. 65,000 105,000


amount



For Public Company

Only

Rs. 2,000

Below Mini Subscription

Underwriting

All amount Rs. 2,000

will be refunded

Green Shoe Option

When owners themselves inject funds as capital

When owners themselves not inject

funds as capital

Prospectus is issued

Prospectus is not issued

SILOP is filed to Registrar(Statement in lieu of

Prospectus)

Prospectus is filed to Registrar

When Funds are needed to Company

For Public Company

Only

Shares to be Issued for Rs. 100,000 through prospectus

contains


Rs. 70,000

Over & above Minimum


If this amount is not received then shares subscription is cancelled

For Public Company Only

Optional part.

Shares to be issued for through Prospectus Rs. 100,000


Rs. 70,000

Over & Above Minimum


Total Amount to be received Rs. 100,000


If actual amount received

Rs. 65,000 105,000


amount



Green Shoe Option

For Public Company

Only

Green Shoe Mean • Suppose • Company planed to issue 100,000 Shares @ 10 each.

Rs. 1,000,000• Minimum Subscription 900,000 for 90,000 shares• But received amount is 1,200,000 for 120,000 shares• Rs. 200,000 is over subscription• Company planned to issue 100,000 shares but now

issuing 120,000 shares for 1,200,000

Shares to be issued for through Prospectus Rs. 100,000; Minimum Subscription 70,000;

Underwriting g Rs. 25,000


If actual amount

received

Rs. 65,000 105,000


amount



For Public Company

Only

Rs. 2,000

Below Mini Subscription

Underwriting

All amount Rs. 2,000

will be refunded

Green Shoe Option

Description Shares Debenture

Status of Holder He is Member/Owner He is an outsider and Creditor

Earning of holder Dividend Interest

Ban on Buying Company can not buy its Shares. Only Listed Company can buy its Shares

Company can buy its debenture

Status of Investment Capital Debt/Loan

Voting Rights in meetings

Holder of Share enjoys voting rights.

No Voting rights in meeting

Payments From profits Part of Expense

Profit from Sale of Fixed Assets

No payment is given to Share Holder as Dividend is paid out of profit not from sale of assets

Payment is made. No Restrictions

Nomination of Directors

If Share Holder is a Foreign entity or Financial Institution then they can nominate Director

Creditor can nominate Director

In case of no profit No dividend is paid to share holders

Interest is paid to debenture holder/outsider

Prospectus•Avoiding Liability from Prospectus

•CIVIL •Criminal

Prospectus Silop

Offer for sales

Subscription Date

15/6/2010

8th June, 2010

15th May, 2010

Prospectus date

As early as Seven days before

Subscription

As far as Maximum 30 days

before Subscription

The date when people submits

application t buy SHARES/

DEBENTURES

Subscription Date

15/6/2010

8th June, 2010

15th May, 2010

Prospectus date

As early as Seven days before

Subscription As far as

Maximum 30 days before Subscription

If Company wants to subscribe share just

after issuance prospectus

Maximum Gap between Prospectus issuance and

Subscription is 30 days not more than 30 days

Minimum Gap between

Prospectus issuance and Subscription is 7 days not less than 07

days

Power of SECP

• Company may request SECP to reduce or increase gap between Prospectus and Subscription date.

• If SECP satisfies then it may accept the request of Company

Expert to the Prospectus

In Prospectus

Gives written consent to include his statement

Has not with draw his

statement

Before delivery of Copy

Prospectus to ROC

Note: Is shall be written in Prospectus that Expert/(s) have not withdrawn his/their Consent


Gives Consent

To include his expert Statement

in prospectus

does not include

2BASAL

Banker, Brokers (Being Broker of Stock

Exchange) Auditor, Solicitor,

Attorney, Legal Advisor

Include

EAVA

EngineerAccountant

ValuerAny other

person who profession gives him authority to give a statement


Architect

If business of Building

Construction/renovation

Any other person who profession

gives him authority to give a statement

Animal Doctor

If BusinessPoultry Farm

Liability in Prospectus

Civil Criminal

ALLOTEE (BUYER) of IMPRISONMENT 1 TO 2 YEARSFINE 1- 10,000OR BOTH

Claim all losses

STATEMENT GIVEN BY following1.DIRECTORS2. PROPOSED DIRECTOR3. EXPERTS4. PROMOTERS5. ANY PERSON WHO AUTHORIZE ISSUE OF PROSPECTUSCODE : PADE

HOW TO AVOID CRIMINAL LIABILITIES

MISSTATEMENT

Was proved to be Immaterial

AT THE TIME OF MAKING

STATEMENT

Statement was based on truth

DIRECTORSPROPOSED DIRECTOREXPERTSPROMOTERSANY PERSON WHO AUTHORIZE ISSUE OF PROSPECTUS

Future circumstances made it untrue

Criminal Liability (MWIPAI)

• Motive• Will• Intention• Preparation• Attempt• Injury • If it proves that expert made MWIPAI• Code: MWIPAI

(2) Prospectus Issues but before

allotment

(1) Before Issue Of Prospectus

(3) After Shares Allotment

STAGES

He withdrew his consent to

become a director

Prospectus Issued Without His Consent

On awareness about statement he gives reasonable public notice that he has

withdrawn his Authority & Consent

Consent can not be

withdrawn

CONSENT WITHDRAWN

1.Directors2. Proposed Director3. Experts4. Promoters5. Any Person Who Authorize Issue Of Prospectus

Registration of Companies

Private Company

Public Company

Preparation of Documents

Submission of Documents to ROC

ROC issues COI



ROC issues COI

Issue of Prospectus or Submission of

SILOP to ROC

ROC issues COCOB

Company starts its Business


Registration of Companies

Private Company

Public Company



ROC issues COI



ROC issues COI

Issue of Prospectus fails or

Submission of SILOP is not possibleCompany

Wind Up process start


Re issue of Prospectus in Future Date


When Minimum

Subscription received


ROC

Directors pay full

amount for Shares

purchased by them



cretary to ROC


ROC Issues COCOCB

Public Company

After receiving COI from ROC

FILE SILOP to ROC

File Prospectus

to ROC

When Company privately arranges

Funds To General Public when ample funds

are needed

and then Issue Prospectus

Public Company

After receiving COI from ROC

File Prospectus to ROC

Issue Prospectus

Minimum Subscription (MS) Not Received Received

Allot Shares to Public

Refund Amount

File Return of Shares Allotment to ROC 1-30 days from the date of Allotment

Company can get COCOB from ROC if MS is received


Not Received

Options

(1) Funds arranged by

Members

File SILOP to ROC

Allot Shares

(2) Reissue Prospectus

in Future Date

(3) Wind up Company

Prospectus & OFSDescription Prospectus Offer for Sale

Issue by Company Holder of 10% or more capital in the Company

Minimum Subscription Must be received Not required

Shares Fresh Old existing

Issuance on Par, Discount, Premium Par, Discount, Premium

Underwriter involvement Company may make contract with Under writers

Individual may make contract with Under writers

Alternate document SILOP may be used as alternative

No SILOP is used alternative

Both are printed document

Offer of Sales

A person having 10% or more Share Holding

Share Holders Can freely sale Shares

If he holds less than 10% of the

total Share Capital of the Company Can not

freely sale Shares

If he wants to sale shares he has to

make

Offer of Sales is

similar to prospectus

Note: Normally rich person or companies hold such quantity of

shares

Offer of Sales

Offer To Public

1 Million Or 25% Of Holding

Whichever Is Less

If Premium Is Charged

Service Of Underwriter Must Be Taken

Underwriter

Must Not Be Associated

Companies Of Seller Of Shares

Also Issue Due Diligence Report

Justification Of Premium Must Be Mentioned

Offer Shall Be Fully Underwritten

Company Must Have Profitable Record At

Least 1 Year

•MINIMUM SUBSCRIPTION


Mentioned in

Second Schedule Clause 5

Section(1) Part I

In the opinion of the

following

Directors Signatories to MOA

Must be raised By issuing of Shares

To get amount required to meet the expenditure

specified by law.


• Is it necessary to mention In MOA, AOA, Prospectus about Minimum Subscription.– Not compulsory

• If Minimum subscription is 8 (M) and total Subscription is 10 (M). Can shares be issued if people buy 8(m) or above but less than 10(M)– Yes.

Irregular Allotment

Irregular Allotment

Prospectus SILOPMinimum Subscription

When

Is not received

Not Submitted to Registrar

Duplicate Certificate issuance

Applicant-holder of Shares/ Debenture

File an application to Company

Along with Mutilated/Maim

Certificate

In case of lost evidence of lost

Company

Within 45 days from the date of application

Issues Duplicate

Inquiry

In case of not

issuing

Within 30 days

intimate to applicant

Right issuance calculation

Right Issuance

At Par At Premium At Discount

Existing Shares of following Members

A =10,000 C= 5,000B=20,000 D= 15,000

Total Shares 60,000

Shares Held by Member/ Total Shares

10,000/50,000 *100

20,000/50,000 *100

5,000/50,000 *100

15,000/50,000 *100

20% 30%40% 10%

A 10,000 50,000 20B 20,000 50,000 40C 5,000 50,000 10D 15,000 50,000 30Total 50,000 100

Existing Shares of following Members

A =10,000 C= 5,000B=20,000 D= 15,000

Total Shares 60,000


20% 30%40% 10%

A 10,000 50,000 20B 20,000 50,000 40C 5,000 50,000 10D 15,000 50,000 30Total 50,000 100

% of existing Holding before issuance 150,000

A =20% C= 10%B=40% D= 30%

Right Issuance 150,000 new shares


150,000*20%= 30,000 150,000*30%

= 45,000150,000*10%

= 15,000150,000*40%= 60,000 A 20% 150,000 30,000

B 40% 150,000 60,000 C 10% 150,000 15,000 D 30% 150,000 45,000 150,000

% of existing Holding before issuance 150,000

A =20% C= 10%B=40% D= 30%

Right Issuance 150,000 new shares


150,000*20%= 30,000 150,000*30%

= 45,000150,000*10%

= 15,000

150,000*40%= 60,000 A 20% 150,000 30,000

B 40% 150,000 60,000 C 10% 150,000 15,000 D 30% 150,000 45,000 150,000

Member

% of Holding Shares

Right Shares

IssuanceShares

Entitlement

But Shares Taken

Not Taken by

Member

Directors issues to anyone

A 20% 150,000

30,000 20,000

10,000

10,000

B 40% 150,000

60,000 30,000

30,000

30,000

C 10% 150,000

15,000 15000

-

-

D 30% 150,000

45,000 40,000

5,000

5,000

150,000

-

Issuance of New Shares

Right Issuance to existing

Shareholders

Issuance other than existing Shareholders

Board Meeting & Resolution

Members Meeting & Resolution


Circular 86(3) with updated accounts

position & reason of issuing of shares

Permission of Federal Government

Approval from SECP

Issuance of Right by Private Limited / Public Unlisted Company to Members

Issuance of Shares by Public Listed Company to Members

Application Rule of Capital issued

Not Applicable Applicable


Yes Yes

Members Meeting & Special Resolution

Not required Not Required

Signed Circular U/s. 86(3) or Rights Vouchers is sent to each Member.

Directors send Circular U/s 86(3) to all members mention proportion of shares and date & mode of offer.

Circular u/s 86(3) with Rights Vouchers are sent to members. Such issuance is also published in newspaper

Issuance of Right by Private Limited / Public Unlisted Company to Members

Issuance of Shares by Public Listed Company to Members

Filing of 86(3) Circular to Registrar with Accounts with Challan Fees

Directors will file Accounts copy & Circular to Registrar

Directors will file Accounts copy & Circular to Registrar

Funds from Members against shares issuance

Member buys shares and pay amount.

Members buys shares and pay amount or Members can sell Rights to public. If members do not exercise any power then Directors can sell shares as they deem fit.

Return of Allotments Form 3 with Challan fee

Directors/Secretary files the Return of Allotments to Registrar within 30 days of allotment

Directors/Secretary files the Return of Allotments within Registrar within 30 days of allotment

At Par At Premium At Discount

Restriction year/(s) of Issuance

No restriction. Issuance is possible just after commencement.

No restriction. Issuance is possible just after commencement.

At least (1) one year should have been elapsed from the date of Commencement.

Resolution Both Board & Members Board mentioning the amount of premium. Members Meeting.

Both Board Meeting and Meeting of Members Company mention the amount of discount

Authorization of Company for discount

No need No need Company authorization is necessary

Submission of documents to SECP & Sanction of SECP

No need No need SECP sanctioned the discount. After studying documents

Presentation In all balance sheet In all balance sheet In all balance sheet & Prospectus

Issuance period After meeting requirements

After meeting requirements

After meeting requirements and Within 60 days after sanctioned by SECP. SECP may further extend the period

Right shares-• How do directors raise capital from right

issuance?– Directors issued Circular 86(3) to members.

• What is the format of circular – Circular is signed by Directors or any officer

authorized by Directors.– It is in the prescribed form

Right shares: Circular 86(3)• Prescribed form

• Directors signs or authorized person signs

• Use to issue right shares

• Before sending to members it is filed to ROC

• Certain other documents are attached with it

• Material information about affairs of Company

• Latest financial statements

• Reason of needing capital

• The last date

Information Are Attached With Circular

• What other information are attached with circular?– Material information about affairs of Company– Latest financial statements– Reason of needing capital – The last date

Shares issue by Directors

Section 196 allowed

Shares issues to New

Shareholders by issuing

Prospectus

Allowed

Shares issue on Discount

Not allowed without

In case of

Shares Holders Approval

Shares issue through Prospectus

A,B,C,D, E, F, G, H

New Prospectus Issuance not allowed

Right Issuance according to ratio

Only to A,B,C,D, E, F, G, H

Debenture issue through Prospectus

A,B,C,D, E, F, G, H

New Prospectus Issuance allowed for

Debenture

Not necessary to issue only to A,B,C,D, E, F, G, H

No concept of Right in

debenture but in Shares

concept of Right Issuance

is must

MEETINGS

Meeting of Members

Members Meetings

Board Meetings

Statutory Meeting (Public

Company)

EOGM

Annual General Meeting

Quorum of Members Meeting

Public Listed

Company

Private Limited

Company

Public Unlisted

Company

Single Member

Company

Type of Company Members Present Voting rights

Listed Public Company

10 members 25% or more

Unlisted Public Company


Private Company 02 members 25% or more


01 Member

Proxy is inclusive in numbers

Meeting

Directors Calls

EOGM if they hold 10% or more Voting

Rights

Members Call

Statutory MeetingIn case of Public

Company

AGM in all Companies

EOGM in all Companies

SECP has power to call

Alternative available for Presiding a Meeting in the absence of Chairman

• If after 15 minutes the Chairman does not come or refuse to chair the meeting

– Any director can be elected to chair the meeting– If all directors are not interested to chair the

meeting then members shall choose any member to act as chairman on that particular meeting.

Chairman Duties in meeting• Check Quorum of the meeting• Adjourn meeting if quorum is short after 30

minutes.• Preserve order of the meeting• Conduct proceeding of meeting in proper manner• Control participants• Give ruling in meeting• Maintain decorum of meeting • Exercise vote wherever necessary

Special business in Agenda of Meeting

• CEO-Removal• Auditor-Removal• Directors-Removal• Conversion of Company into Public • Conversion of Company into Private• Issue of Shares on Discount• Amendment in AOA• Buy back of Shares• Amendment in MOACODE CAD-CIA-BA

Ordinary business in Agenda of Meeting

• Confirmation of last meeting minutes• Consideration of Accounts • Appointment of Auditors & fixing remuneration of

Auditors• Dividend Declaration • Election of Directors• Any other item with the permission of Chair

Code is CACADE

Meeting of Members

Statutory Meeting

Extra Ordinary General Meeting


Only held by Public Company

Held by both Public & Private

Company


Company

Once in life time of

company

Once in a year

company

On need basis

Meeting of Members

Statutory Meeting





Company


Company

Convened by

Directors

Conveyed by

Directors

Convened by Directors or by

Members

Meeting of Members

Statutory Meeting





Company


Company

Convened by

Directors

Convened by

Directors

Convened by Directors or by

Members; but for members at least they have 10% voting rights

Notice for Meeting of Members

Statutory Meeting





Company


Company

Notice period 21

days minimum

Notice period 21

days minimum

Shorter period is

allowed if registrar allows

Notice for Meeting of Members

Statutory Meeting





Company


Company

Notice published in

newspaper if it is listed

Company

Notice published in newspaper if

it is listed Company

Notice published in

newspaper if it is listed

Company

Statutory Meeting

Conduction by Companies

Which companies are required to convene Statutory Meeting

All Public Companies

If a company was incorporated as

Private Company and within one year converts

into Public Company

Such meeting is held after 3 months of

commencement of business but before expiry of sixth month

Such meeting is held after 3 months of

conversion of company but before expiry of sixth month

of conversion

Private Company converts in to Public Company

After one year A Private Limited

converts into Public

Within year Private Company

converts into Public Company

Statutory Meeting is optional to be

conducted

Statutory Meeting shall be held after 3

months of commencement of

business but before expiry of sixth month

Statutory Report- Present in Statutory Meeting

Prepared on

Form 25

Authenticated by Auditors

Signed by 2 Directors and CEO

Approved by

Directors

All receipts & Payments from the beginning up to

a date within 7 days prior to the date of Statutory Meeting

ISSUES :Allotments of

Shares, Underwritings

Contracts & Commissions,

Subsequent Changes in Contracts,

Approval to be taken,

Abstracts of Receipts & Payments, Particulars of

Directors, CEO, Secretary, Auditors,

Legal Advisor,Preliminary Expenses

5 copies of Statutory is

submitted to Registrar

Along with Fees of submission

Statutory Report in Statutory Meeting of members

Items of Statutory report

Allotment of Shares

Preliminary Expenses

Particulars of CEO,

Directors, CEO,

Secretary, Auditors,

Legal Advisor,

Subsequent changes

after issuing of

Prospectus or allotment

of Shares

Abstracts of receipt

and Payments

Underwriting Contracts & Commission

Preparation & Printing of MOA, AOA, and other Documents,

Payment of Capital Duty, Initiative expenses, lawyers fee, etc

Allotment of Shares

On Cash Otherwise than Cash

Issuing of Shares to public and instead of Cash other assets were taken by company from buyer of

shares.

The directors shall cause a list of showing names, occupations, nationality, addresses, of members and number of shares held by them.

Annual General Meeting Is held

by every Company

First AGMSubsequent

AGMs

Maximum Gap Between

two AGMs

Within 18 months

Is held

Not more than 15 months

Every YearWithin 4 months

after closing of Financial

Year

First Annual General Meeting

First DirectorsRetires in 1st

AGM

First Auditor Retires in 1st

AGM

First CEO Retires in 1st

AGM

Following are retired at the end/conclusion of First meeting

Now by Election new Directors will be elected

Within 14 days After election of

new Directors CEO will be appointed

New Auditor will be appointed by

Members

Tenure 3 years

Tenure 3 years

TILL THE CONCULSION OF next AGM

Extension in Holding of subsequent AGMs

Public Company

Listed

Non Trading Corporation

Public Company Unlisted

Private Company




Business within

province

SECP

Company Applies for

Extension to

Extends period maximum up to 60 more days

Company Applies for

Extension to

Registrar

Extends period maximum up to 60 more days

Notice and Avenue of Listed Company for AGM

Notice 21 days before AGM

Venue

Publish in Newspaper

Circulating in the province where

stock exchange is situated

1 Urdu & 1 English

In the town where Registered Office is situated

Other than In the town where

Registered Office is situated

On special reason SECP

allows

When Company requests to SECP

To all members

Holding of Members 'Meeting

Directors Members

Statutory Meeting

EOGM

AGM

Provided they have 10% voting

rights

Hold EOGM

Normally it is Directors who hold meeting but in some case Members want to conduct such meeting

Business Operational, Tactical & Strategic Activities

But in some issues Board is handicapped they want to meet

members and ask approvalsEOGM is called by

Directors

Board Meetings resolve and

covers all issues

Sometimes Meeting

are inevitable

Directors have

substantial powers Directors

are agents of company

Notice of EOGM

Normal Shorter

21 days before

meeting

On the application of Directors to Registrar

The Registrar may allow considering the importance

as shorter notice as requested by Directors

In case of listed company , notice shall be published 1 in Urdu

and 1 in English newspaper circulating

the province where Stock Exchange is

situated

Shorter Notice of EOGM

Directors Apply to Registrar and

mention the period of notice

If Register considers

Registrar authorizes meting to be held at such shorter period

as specified by Directors

When Members Call EOGM

They give requisition to company at its Registered office & show

their intention to call EOGM

They must have 10% voting rights

Requisition must specify the Object of the meeting

& signed by members

Directors if do not hold

meeting within 21 days

Meeting is held and matters are discussed

and Resolved

Directors hold meeting within

21 days

Members hold meeting within 3 months from the

date of actual request

Meeting will be held and matters are discussed and

Resolved by members

Expenses are paid from company and company deducts such

expense amount from Directors fee/dues/ remuneration

Meeting of Members

Members Meetings

Board Meetings

Public Company

Both listed & Unlisted

Private

Number of meetings

Minimum one ‘1’ in

each QuarterDecided by AOA

Meeting of Members

Members Meetings

Board Meetings

Listed Company

Unlisted company

Quorum

4 directors OR 1/3rd OF DIRECTORS

WHICHEVER IS HIGHER

Decided by AOA

Directors position does not Vacant

2 months 29 days

10 meetings

Director remains Director if he joints even on 90th

day (3 months)

2 months 29 days

70 meetings

2 months 29 days

50 meetings

2 months 29 days 3 meetings

2 months 29 days 80 plus

meetings


3 months 2

meetings

Director remains Director if he joints the 3rd

meeting

7 months 2 meetings

4 months 1 meeting

3 months 1 meeting

9 months 2 meetings

In every quarter directors meeting is must in listed company so 9 moths is

maximum

Members MeetingsNOTICE

MEETINGQUORUM

RESOLUTION

Notice of Meeting

Day of sending notice

48 days transmission

period

Meeting Day

21 days notice

Does not include in 21 days

Notice of Members

If Proper Name , Address and through registered office

Chances

Reached to destination

Lost in transit

Both are validCompany is not

responsible for lost

Notice to Members

Local members orResident Members

Foreigners Members Or non Resident Members

To the address provided by

members

To The Address In Pakistan Provided By

Non Resident Or Foreigner

Foreigner/ Non Resident Member always provide an

address in Pakistan at the time of

becoming Member

By hand or through Registered post

Service

Service of Notice of Meeting

Members Auditors

Alive Deceased Insolvent

Official Assignee

Legal Representative

To member

Single Holder

Joint Holder

First name Share Holder

Manner of Notice is provided in AOA or

Provision of CO. 1984

Share Holders

Joint Share

Holding

Notice to first person having first name of Share

Syed Ali Abbas Abidi & Syed Amir Zahir here send to Syed Ali Abbas Abidi is must

Notice of Meeting

By Chance

Not send to any member

Meeting will not be held invalidated

Why I was not invited. I m member

Demand for Poll

Passing of Resolution

Easy method Lengthy

procedure

Demand for Poll Show of Hands

Note Show of Method is normal method. Demand for poll is demanded on need basis and it has certain requirements.

Demand for Poll

Before On

Declaration of the results of the VOTING on any resolution

On the basis of Show of Hands

The Chairman of the Meeting

By his own motion

On the demand by members

The demand for a Poll may be withdrawn at any time by members

Type Members Description

Public Company At least 5 members/ proxies having right to vote

Private Company At least 1 members/ proxies having right to vote

If total members present are 7 or less

Private Company At least 2 members/ proxies having right to vote

If total members present are more than 7

Member of any type of company

One member / or group or proxy can demand if he/they holds 10% of more voting power

DEMAND FOR POLL

Time of taking Poll

Forthwith

Within 14 day from the

demand made

If poll is demanded on the grounds of following

Election of Chairman

On question of

Adjournment

As per the order of

Chairman but within 14 days

Other grounds

Result announcement by

Poll demanded

Voting

Chairman of Meeting / his

nominee

If poll demanded

by members

Chairman / his nominee and representative of Members

If poll demanded

by Chairman

Results of the Poll

Deemed to be the Decision of

Meeting on the resolution on which poll was taken

Resolution

Passed by MembersPassed by Directors

Less than 3/4th

3/4th or more

Ordinary Resolution

Special Resolution

Less than 3/4th

3/4th or more

Simple Majority

3/4th Majority

Send to Registrar

within days through FORM

21 days notice necessary

before passing in meeting

Resolution

Passing

In Meeting Through Circulation

Passing of resolution no in meeting but by circulation

No face to face meeting. Resolution is acceptable but

meeting Is not counted

Agenda

Saves time in Members can home work

before

Focus Members & Confine

them

MEETING Explanatory Statements

include

Directors/ Officer

Interests In Contracts

Material facts

Meeting of Members

Members Meetings

Board Meetings

Statutory Meeting

EOGM


Proceeding of Meeting Declared invalid

Members having

20% or more Voting Power

To declare

File petition within 30 days from

impugned meeting

COURT

Material defect /

Omission in Notice

Irregularities in the proceedings of the meeting preventing

members using effectively their rights

May declare entire proceeding or part of

proceeding invalid

Direct Holding of Fresh Meeting to

Management of the Company

Quorum of Members Meeting

Public Listed

Company

Private Limited

Company

Public Unlisted

Company

Single Member

Company

Type of Company Members Present Voting rights

Listed Public Company


Unlisted Public Company


Private Company 02 members 25% or more


01 Member

Proxy is inclusive in numbers

Quorum is not present within half an hour from the time of meeting

Status of Meeting

Adjourned Absolved

To other day in the next week at the same time & Place

If quorum is not present in adjourned meeting

within half an hour

Meeting stands valid

Members have come 2

or more

Members have come less than 2

If AOA specifies more than 2 members in adjourned meeting then meeting will only be valid if requirement of AOA is fulfilled

If meeting is called by

Members & Quorum is not presented then

meeting is absolved

Passing of resolution no in meeting but by circulation

No face to face meeting. Resolution is acceptable but

meeting Is not counted

Proxy Instrument

• Proxy Instrument mean form of Proxy.• It is not an equipment but a Form • Don’t get confused with Instrument

Proxy

Membersappoints

Through proxy instrument

At least 48 hours before Meeting

More than 48 hours are valid Less than 48 hours

are invalid

Name of proxy is mentioned

on instrument

File to Company

Proxy is Void

Members

Deposits more than 0ne Instrument of

Proxy

Member deposit Proxy

Instrument less than 48 hours

before meeting

If more than on name is

mentioned for Proxy

Jurisdiction of Court

Only High Court

Civil Court

Provided Federal Government (FG)

By notification in Official Gazette

Subject to such restriction & condition

which FG thinks fit

Empowers any civil Court to exercise

all/any of jurisdiction by Companies

Ordinance 1984

Place at which the Registered Office of

the Company is situate

For the purpose of WINDING UP the place which has longest been the registered office during last six months

immediately preceding the petition for winding up

Constitution of Company Benches in Court

One or more benches

Constituted by CJ High Court

To exercise jurisdiction vested under section 7 of CO. 1984

Court

Shall dispose of and pronounce Judgment

As expeditiously as possible but not later than 90 from the date of

presentation of the petition/application to court

Except in extraordinary circumstances & on grounds to be

recorded

The court shall hear the case from day to day

Here judgment means a

final judgment in

writing

MAXIMUM 30 ADJOURNMENTS

ARE ALLOWED

ADJOURNMENTS

CONSECUTIVELY

14 DAYS ALLOWED

IN TOTALITY

30 DAYS ALLOWED INCLUDED

CONSECUTIVELY 14 DAY S

Appeal in the Supreme Court

If Share Capital more than or

equal to 1,000,000

If Share Capital less than 1,000,000

Decision of High Court

against

Possible

Only possible if Supreme

(GLTA) grant leave to appeal

Mortgage and

Charge

Registration of Charge/Mortgage(CM)

• Borrower & Lender agreement• Mortgage/ Charge of Property is created• Register the CM to register within 21 days

from the date of Mortgage/Charge• However SECP may further extend time after

expiry of 21 days.

Company prepares Register of Mortgage & Charges

• Date of Creation of Mortgage• Property Mortgaged• Name of Mortgagee• Amount of Borrowing• Nature of Charge i.e. First/ Second etc• Register is open for inspection to ROC, SECP,

Directors, Members, Auditors, Holding Company Members.

Agreement list • A mortgage or Charge for the purpose of securing issue of Debentures• A mortgage or Charge on uncalled Share Capital of the Company• A mortgage or Charge on any immovable assets of the company• A mortgage or Charge on any book debt (A/R) of the Company• A mortgage or Charge not being pledge on any movable assets of the company• A floating charge on the undertaking / property of the company including stock• A mortgage or Charge on any ship or share in ship• A mortgage or Charge on goodwill, patent, license under patent, on trade mark,

or on copy right or license on copy right• A mortgage or Charge or other interest based on agreement for issue any

instrument n the nature of redeemable capital• A mortgage or Charge or other than interest based on Mushrikah agreement• A mortgage or Charge or other interest based on hire purchase or n leasing

agreement on acquisition of fixed assets

Mortgage & Charge

By Company By Lender/

Creditor

Application to Registration to ROC

After payment of fess. Fee Can be recovered

from Company

Mortgage & Charge

Register Modify Discharge

On Satisfaction

ROC charges fees

Within 21 days registration must be

done

Inspection of Documents

Mortgage & Charge

Short Particulars

Amount of Mortgaged/

Charge

Date of Creation of Mortgage

ROC records


done

Name of Lender/

Mortgagee

CODE

SAND

Assets Type & Charge Creation

Good WillCopy RightTrade MarkPatent

Tangible

Immovable

Intangible

Movable

Non Floating

FloatingLike Stock

Fixed Charged is created

Floating Charge is created

Becomes Fixed Charged on Winding UP

Company took Loan from HBL Pakistan

26th January 2010 will be

last date

Land & Building were Mortgaged on

05/1/2010

To register Mortgage & Charge at ROC

Company took Loan from HBL Pakistan


last date

Land & Building were in Dacca


Mortgaged in Pakistan on 05/1/2010

Company took Loan from Bengal Bank Dacca


last date

Land & Building were in Dacca &

Mortgaged in Dacca on 05/1/2010


Documents received in Pakistan on 10/1/2010

Mortgage & Charge

Property Inside

Pakistan

Property Outside

Pakistan

Location of Property

Mortgage charged

created inside Pakistan

Mortgaged & Charge created outside

Pakistan

When documents will be received in

Pakistan

Within 21 days

registration at ROC

Mortgage & Charge

Issuance of Debentures

or Redeemable

Capital

Leasing / Hire Purchase

Execution Mushrikah

Agreement

Creation to secure Borrowing

Transaction


done

General Borrowing

Asset type

Type

Fixed Floating

Stock

Debtors

Immovable Moveable

Nature

Floating

Non Floating

Cash

Movable Asset

Floating Non Floating

CarMachines

ShipsFurniture

Stock

Debtors

Cash

Fixed Charge is created on : On Fixed Assets and on Movable non Floating Assets

Floating Charge is created On: Movable Floating Assets

Floating Charge becomes fixed (Crystallization)

• Floating Charge is an equitable charge but under following condition floating charge becomes fixed charged.– When Company cease to carry on business– When receiver is appointed– When company is in winding up – When company fails to pay interest or

repayments to creditors

Forms used in Mortgage

Form 10 Form 15 Form 16 Form 17Form 13

Rectification of Mortgage Register

• Application to SECP• Rectification is allowed only when – Sufficient cause– On ground of just & equitable– Share holder/ Creditors not efected due to

rectification – Accidental – Due to inadvertence CODE SO-SAD

Where any Person

Obtains an Order from the Court

Appoints a receiver under any powers

contained in Instrument

For the appointment Receiver

of the property

Of a person to Manage the

property Of the

Company

He shall within 1 – 15 days inform to

ROC

Enters the fact in Register of

Mortgage and charge Fees

If not inform to ROC; Fine 0 to 200 daily till the default continues

Receiver

Make contracts which are

necessary to carry out his work

Liability To be compensated by Company for the

expenses he incur during his work for

the Company

If he makes unnecessary

contract which causes losses to

company

He will be liable to the company to pay

losses

Filing Of Accounts Of Receiver/ Manager

• Receiver / Managers are in possession of property of the company under the power contained in instrument. (mortgage deed)

• He shall file to ROC an abstract in the prescribed form of his receipts & payments during his engagement of work– Within 30 days of expiry of 6 months while he

remains working.– Within 30 days on completion/ leaving of his work.

Following Person Can not become Receiver/ Manager

• Minor, • Director of a Company• Unsound Mind, • Disqualified by law • Undercharged insolvent• Body Corporate• Code MUD-DUB

Difference between Receiver & Liquidator

• Liquidator is appointed to wind up the company

• Receiver is appointed to sell the charged asset so payment to creditor is possible.

• Liquidator is appointed to start the winding up process starts.

• Receiver is appointed when company is unable to pay to creditor

Power of Registrar to Call for Information &

Explanation

Power of Registrar to Call for Information & Explanation

WHAT, WHY, WHERE, WHEN, HOW, WHOM

From

Past Directors, Officers,

Auditors, if their left over is 6 or below months

All of the above are bound to give

information & Explanation

CURRENT Directors, Officers, Auditors

For any

Notice issued

Circular issued

Documented submitted to

ROC

Advertisement made

Documents prepared

By Company

Code CD- AND

•Members are reduced below Statutory Requirements

If Members are reduced below Statutory Requirements

• If member dies or left company– Private Company below 2– Public Company below 3– SMC below 1

• If minimum statutory requirement is not fulfilled with 6 months of short fall and contracts made in these months then remaining members liability for these contract will be unlimited.

Public Company

Had “4“ membersX, Y, Z, K

2 (Mr. Y & Z, ) dies in accident

on 1/1/2010

From 1/1/2010 to June 3/6/2010

Contract made & 10 million borrowed

Company position becomes bad

Wind Up process starts

Only 9 million

recovered by

Liquidator from selling of all assets

Mr. X & K will pay 1 million as his liability was

unlimited during 1/1/2010 to 30/6/2010

IF X & K KNOW THE SHORT FALL THEN are LIABLE

OTHERWISE NOT

Private Company

Had “3“ membersX, Y, Z

2 (Mr. Y & Z) dies in accident on

1/1/2010

From 1/1/2010 to June 3/6/2010

Contract made & 10 million borrowed

Company position becomes bad

Wind Up process starts

Only 9 million

recovered by

Liquidator from selling of all assets

Mr. X will pay 1 million as his liability was

unlimited during 1/1/2010 to 30/6/2010

IF MR. X KNOW THE SHORT FALL THEN HIS IS LIABLE

OTHERWISE NOT

DIVIDENDDIVIDEND

Companies Ordinance-1984Section-248 to 251

Companies Ordinance-1984Section-248 to 251

Dividend Dividend

Recommended byRecommended by

CEOCEO

Responsibility to disburse

Responsibility to disburse

DirectorsDirectors

Approved byApproved by

Members in AGMMembers in AGM

Certain restrictions on declaration of dividends

Certain restrictions on declaration of dividends

No dividend shall exceedNo dividend shall exceed

The amount recommended by directorsThe amount recommended by directors

No dividend shall be paid in any financial year

No dividend shall be paid in any financial year

Out of profit by selling Out of profit by selling

Immoveable property

Immoveable property

Asset in capital nature

Asset in capital nature

Unless the business is said

nature and made adjustment of

its losses

Unless the business is said

nature and made adjustment of

its losses

No dividend shall be paidNo dividend shall be paid

Otherwise than out of profitOtherwise than out of profit

Dividend shall be paidDividend shall be paid

Registered Share holder

Registered Share holder

OROR

To his orderTo his order

To his BankerTo his Banker

To his nominated financial InstitutionTo his nominated

financial Institution

Dividend Dividend

Shall be paid through Shall be paid through

Dividend warrantDividend warrant

Signed by CEO or SecretarySigned by CEO or Secretary

• After declaration Dividend shall not be Lawful for the directors of the company to withhold or defer its payment and Chief executive of the company shall be responsible to make the payment

Amount of DividendAmount of Dividend

Members can not Members can not

Decrease the amount declared

by Directors

Decrease the amount declared

by Directors

Members can Members can

Increase the dividend declared

by Directors

Increase the dividend declared

by Directors

After declaration of dividend payment shall be made

After declaration of dividend payment shall be made

Within 45 daysWithin 45 days

Other CompanyOther Company

Within 30 daysWithin 30 days

Listed CompanyListed Company

Dividend payment

Public Company

Listed

Non Trading Corporation

Public Company Unlisted

Private Company




Business within

province

45 days from the date of declaration

30 days from the date of Declaration

Note: Companies formed u/s 42 of Companies Ordinance “Association not for

Profit” do not pay Dividend

Companies Formed U/s 42 of Companies Ordinance 1984


Do not Pay

Dividend to Members

Dividend Statutory payment Period Count

When Director Approved Dividend

When Members Approved Dividend

Notice of Closure of

Shares Book

No Notice of closure of

Shares Book

From the date on which

closure period starts


dividend is approved


dividend is approved

Retention of Dividend by sending information to SECP

Due to operation

of Law

Shareholders direction is difficult to

fulfill

Dispute regarding receipt of Dividend

When shareholder is indebted

and dividend is

lawfully adjustable

Any other reason which

proves no default on company’s

end.

DOLDA

If dividend is not paid within the periodIf dividend is not paid within the period

CEO of the Company shall be punishable with

CEO of the Company shall be punishable with

Imprisonment Imprisonment FineFine

Maximum up to two years

Maximum up to two years Maximum 1 Million Maximum 1 Million

CEO shall cease to hold the office

and shall not be eligible for CEO or

Director of company or any other company for period of 5 years from that

date

CEO shall cease to hold the office

and shall not be eligible for CEO or

Director of company or any other company for period of 5 years from that

date

If Dividend is not paid in time

If CEO is found Guilty for making delays

CEO

Any other officer

Director

He shall not be eligible for 5 years for the post of He shall cease to

hold office of CEO

•DIRECTORS

Who can not be Director• A minor person

• No Artificial person, only natural person can become Director.

• No corporate/ Company can become director

• Unsound Mind Person

• Un-discharged insolvent

• He has applied to be adjudicated as an insolvent

• Convicted by Court on the ground of moral turpitude

• Has been debarred from holding office of Director

Director other than Members

• CEO (May be member/Employee/ Director)• Whole Time Director• Representative of

– FG– PG – Institution – Creditor

When Director is automatically removed

• If he accepts loan • If he remain absent from 3 consecutive

meeting or 3 months which ever is larger• Code of ineligibility. IN-MODE-DUB• He holds office of profit• Not disclosing personal interest.

Period/Term of Office

Chief Executive

Officer

Members Directors

3 years 3 years

Chairman

Decided by the Board of

Directors

Company

Owners/ Members/

Share Holders

Directors

Control Affairs of the CompanyInvest in the Company

Directors of the Company

Owners/ Members/

Share Holders

Following persons can become Director

Nominee

Full time Employee of

the company

Financial Institution

Chief Executive Officer, if he is not director

even then he is deemed to be the Director

Creditors

Federal Government

OrProvincial

Government

Elected

Stewards of the

company

Agents of the

company

appointed


2 months 29 days

10 meetings

Director remains Director if he joints even on 90th

day (3 months)

2 months 29 days

70 meetings

2 months 29 days

50 meetings

2 months 29 days 3 meetings

2 months 29 days 80 plus

meetings


3 months 2

meetings

Director remains Director if he joints the 3rd

meeting

7 months 2 meetings

4 months 1 meeting

3 months 1 meeting

9 months 2 meetings

In every quarter directors meeting is must in listed company so 9 moths is

maximum

Signature on Accounts/ Financial Statements

Chief Executive

Officer

If CEO does not

Sign

Then only Two

Directors will sign

OneDirector

Reason shall be mentioned why

CEO has not signed

Director Types

OwnerChief

ExecutiveOfficer

Chairman of the Board

Alternate Director

NomineeDirector

Elected Appointed by Board

of Directors

Nominated by existing

Director when goes

on leave

Nominated by Creditor/

Financial Institution/

Government

Full time Employee

Directors liability

• Members liability can not be unlimited in case of limited by Share having Limited liability company

• Members liability can not be unlimited in case of limited by Guarantee having Share Capital or without having Share Capital

• But Directors Liability may become unlimited by Shares Holders

Liability in Limited Liability Company

MembersAll

Directors

DirectorsAll

Directors

Under normal circumstances, liability is always limited of

followings:

Members / Creditors may make liability of Directors unlimited

Liability of Directors in “Limited Liability Company “

AllDirectors

Any Directors

Members may make Liability of Directors Unlimited

Creditors may make liability of Directors unlimited

By passing Special Resolution limited liability becomes unlimited

of followings :

When Creditors takes personal Guarantee for debts. Limited liability

becomes unlimited of followings:

AllDirectors

Any Directors


AllDirectors

Any Directors



Unless members change liability remains unlimited of followings:

When debt is paid liability again becomes limited of followings:

AllDirectors

Any Directors

Loan to Directors

Only to CEO & Whole Time Directors

Process

Application to BOARD

If Board Approves

Board Approval sent to SECP

SECP Approves

Loan disbursement

Loan already taken before becoming

CEO/Director

Within 14 days inform to ROC with loan

documents

Director Leave (Holidays)

Approval from Board

Less than 3months

within Pakistan

No assignment is required

More than 3 months outside

Pakistan

Board appoints Alternative

Director

But When Original Director Comes

this Alternative Director leaves

Directors

Invest funds of the Company

other than Associated Company

Not allowed to Invest in Associated Companies

Section 208

BODM

Notice Shareholders

In meeting Passing Special Resolution

Section 196

Directors of the Company

Owners/ Members/

Share Holders

Following persons can become Director

Nominee

Full time Employee of

the company

Financial Institution

Chief Executive Officer, if he is not director

even then he is deemed to be the Director

Creditors

Federal Government

OrProvincial

Government

Elected

Stewards of the

company

Agents of the

company

appointed

AGM September 2000 AGMNovember 2001

AGM August 2002

AGM October 2003

A,B,C,D,E are elected as Directors by Members

A,B,C,D,E are remain as Directors by Members

A,B,C,D,E are remain as Directors by Members

A,B,C,D,E are remain as Directors by Members. New Election is now due. In this AGM new Election shall be held. Previous Directors may be reelected if they get votes from members.

Mr. Younis has been appointed as Auditor of the Company

Mr. Younis tenure is complete. He may or any other person will be appointed. Suppose Mr. Younis again has been reappointed as Auditor of the Company

Mr. Younis tenure is complete. He may or any other person will be appointed. Suppose Mr. Asad has been appointed as Auditor of the Company

Mr. Asad tenure is complete. He may or any other person will be appointed. Suppose Mr. Imran Asad has been appointed as Auditor of the Company

Mr. Riaz has been Appointed by Directors as CEO

Mr. Riaz remains CEO Mr. Riaz remains CEO Mr. Riaz now retire. He ay be reappointed by Board as CEO

Director Types

OwnerChief

ExecutiveOfficer

Chairman of the Board

Alternate Director

NomineeDirector

Elected Appointed by Board

of Directors

Nominated by existing

Director when goes

on leave

Nominated by Creditor/

Financial Institution/

Government

Full time Employee

Election of Directors of Company

With Share Capital Without Share

Capital

As per provision of Articles of

Association

Directors will be chosen

Members will give votes to the candidate who are contesting for Director

Topic Election of Directors

How votes are given

Share Holding of members

Multiplied by Directors to be

elected


Election of Director

Existing DirectorsFix

No of Directors to be elected

Before at least 35 days

Only members

can change this fixing

from the date of Meeting for Election

of Directors


DATE of meeting in which Election is to

be conducted

Election of Director

Existing Directors

Give NoticeNUMBER of

Directors to be elected in

upcoming elections

Name of existing Directors who are going to be retired

To Members


Members who are interested in

Election

Send/file intention to the companyfor participating/contesting in

upcoming election

Before at least 14 days


of Directors


Member can withdraw his

intention notice anytime before

holding of election

Notice is not binding on member to stand for

contest

Company

To all members


of Directors

Topic Election of Directors Will send before 07 days of

meeting , the intention notice of interested members to be

contested in election for Director in upcoming Election

If company is listed

Such notice

shall be Published 1 in

Urdu & 1 in English news

paper circulating in the province where company

is listed

If company is not listed

Election of Directors

Existing directors fix date of Meeting & also fix number of directors to be elected

Send notice to members 35 days before meeting

Interested members when read notice will send their documents to company for contesting 14 days before

meeting

Company after receiving documents of interested members send before 07 days to all members and also

publish in newspapers in case of listed company

Meeting and election on decided date , time & venue

Withdrawal of member

notice is possible before

meeting

Declaring Directors Election Invalid

Within 30 days from the date of

election

If they have 20% voting

powers

The High court may on application declared all or any one of Directors election invalid, if members

proves material irregularities in election

Application to High Court

within 30 days by members having 20%

Voting rights

If irregularities not found then application will be turned down

by Court

Members Individual / Group Single Person

Voting Power 20% or More 12.5% or More

Section 179 178A

Filing Application Petition is filed to Court Application to SECP

Time of Action taken from 1 to 30 days from the date of Election

Any time after acquiring Shares

Decision If Court finds IRREGULARITIES was happened in election then court order for reelection any or entire director

SECP considers INTEREST OF COMPANY, MINORITY AND STOCK MARKET first then direct for fresh election.

Reasons If member/(s) think irregularities happen in election

Change of Board of Directors

Effected on Single, more or entire election

Entire Board

Board of Directors

12.5 Single Member

File Application to SECP

SECP

First Considers

interest of

Company

Minority Shares Holders

Stock Market

After Consideration of Interest

May

Reject Application

Direction fresh

Application

Now holder of 12.5% can not

sell shares for a year

Period/Term of Office

Chief Executive

Officer

Members Directors

3 years 3 years

Chairman

Decided by the Board of

Directors

Holding of Office

Chief Executive

Officer

Directors

Appointed by Board

Elected by Members

Chairman

Appointed by Board

Signature on Accounts/ Financial Statements

Chief Executive

Officer

If CEO does not

Sign

Then only two Directors

will sign

OneDirector

Reason shall be mentioned why

CEO has not signed

Liability in Limited Liability Company

MembersAll

Directors

DirectorsAll

Directors

Under normal circumstances, liability is always limited of

followings:

Members / Creditors may make liability of Directors unlimited


AllDirectors

Any Directors



By passing Special Resolution limited liability becomes unlimited

of followings :

When Creditors takes personal Guarantee for debts. Limited liability

becomes unlimited of followings:

AllDirectors

Any Directors


AllDirectors

Any Directors



Unless members change liability remains unlimited of followings:

When debt is paid liability again becomes limited of followings:

AllDirectors

Any Directors

Loan, guarantee, security provided to Whole/Full time Employee Director/(s)

Private Company

Public Company

Private Company but a subsidiary of

Public Company

AllowedAllowed by conducting

EOGM or as per AOA

Construction of House

House Loan

ConveyanceMedical

Treatment

Loan, guarantee, security provided to directly or indirectly Elected or Nominated Director/(s)

Private Company

Public Company

Private Company but a subsidiary of

Public Company

Not allowed directly or even indirectlyAllowed by conducting

EOGM or as per AOA

Loan, guarantee, security provided to directly / indirectly Elected or Nominated Director/(s)

A person who is

Partner of Director of

lending company

A Firm in which lending

Company’s Director is

partner

A Relative of lending company’s

director

A Private company

where Directors/

Members of lendee also Director/(s) Member of

lending company

A Body Corporate

Where CEO / Directors of lendee company act

as per direction of lending company ‘s

CEO/ Directors

Where 25% or more voting rights are

exercised by one or more Directors /

relative of Directors of lending company

Company can not lend money to

Lendee means : receiver of loan


Company Name Avon Limited,

A,B,C, D, E, F, G, H are Directors

Mr. X is partner of Mr. C in a

Firm named XYZ Avon Limited can not

lend money to Mr. X

As Mr. X is Partner of Mr. C

Mr. C is a Director in

AVON & Partner of

Mr. X




Mr. X is partner of Mr. C in a

Firm named XYZ Avon limited can not

lend money to XYZ firm

As Mr. C is partner in XYZ firm

with Mr. X

Mr. C is a Director in Avon




Mr. E is Director in HEHE (Pvt)

Limited Avon Limited can not lend money to HEHE

(PVT) Limited

As Mr. E is also

Director in HEHE (Pvt)

Ltd

Mr. E is a Director in

Avon Limited



A,B,C, D, E, F, G, H are DirectorsMr. Y is Son

of Mr. D

Avon Limited can not lend money to Mr. Y

As Mr. Y is son of

Mr. D

Mr. D is a Director in

Avon Limited




TATA LimitedIs separate

company but its CEO &

Directors act on the advice

of Avon Limited

Avon Limited can not lend money to TATA

Limited

As Management

of TATA is under

influence of Avon Limited

As Avon Limited has control over the management

of TATA




TETE LimitedIs separate

company but Mr. A has 25% voting rights in TETE Limited

ABC can not lend money to TETE Limited

As Management of TETE Ltd,

is under influence of

Mr. A

Mr. A has control over the

management of TETE Ltd


Company Name Avon Limited


HOHO LimitedIs separate

company but Mrs. Diana,

wife of Mr. F has 25% voting rights in HOHO

Limited

Avon Limited can not lend money to TETE

Limited

As Management of HOHO Ltd,

is under influence of Mrs. Diana

Mrs. Diana is wife of Mr. F, who is director of Avon

Limited

If Elected/Nominated Director

Has already taken Loan, guarantee, security provided

directly / indirectly

Before becoming Director

He must disclose it before taking charge of Director

Further inform to Registrar within 1- 14 days after becoming Director

Director discloses his interest

To be discussed for approval now in Board

Meeting for execution in Future Date

Contracts already approved in past BOARD meeting

Interest of Director arises after approval

Interested Director must disclose in the meeting conduct just after his

interest arises

Director must disclose his interest to other Directors

and shall not participate and vote for selection /

approval of contract

If company is making contract with outsider

If director is making contract on behalf of the company with outsider

If such contract benefits him/his spouse/minor children at the time of

contract

It is the duty of Director to disclose the interest/benefit by such contract to the

company to the meeting of Directors

It is for transparency

purpose

If he does not declare his interest to company then Court may declare a Director to be lacking of fiduciary behavior

ABC Limited is making Contract with XYZ Limited

Director of ABC Ltd Mr. Khan, is also director in XYZ ltd

Mr. Khan must disclose to the ABC Ltd

About his directorship in XYZ Ltd.

ABC Limited is making Contract with XYZ Limited

Director of ABC Ltd Mr. Zaheer’ Wife is director in XYZ ltd

Mr. Zaheer must disclose to the ABC Ltd

About his his wife status in XYZ Ltd.

ABC Limited is making Contract with TOTO

Director of ABC Ltd Mr. Khan, is also Partner in TOTO


About his status in

TOTO

ABC Limited is making Contract with VIP firm

Director of ABC Ltd Mr. Khan’s Son , is also Partner in VIP firm


About his Son status in

VIP firm

When company is making contract with outsider

When director is making contract on behalf of the company with outsider

If such contract benefits him/his spouse/minor

children even after the contract

It is the duty of Director to disclose the interest/benefit by such contract to the

company to the meeting of Directors

It is for transparency

purpose

Director discloses his interest

To be discussed for approval now in Board

Meeting for execution in Future Date

Contracts already approved in past BOARD meeting

Interest of Director arises after approval

Interested Director must disclose in the meeting conduct just after his

interest arises

Director must disclose his interest to other Directors

and shall not participate and vote for selection /

approval of contract

DIRECTOR of Public / Private but subsidiary of Public Company

SHALL NOT

Participate Vote

In the proceedings/meetings of Directors in which he directly / indirectly have personal interest

Not applicable on Private Company

Chief Executive Officer

First Appointment

Subsequent Appointment

Or maximum Within 1-15 days from the date of

incorporation

At the time of commencement of

business

Within 14 days from the date of

election of Directors

Deemed to be

Director

Be entitled to all rights & privilege & subject to all liabilities which a

Directors enjoy


Retirement of First CEO

Retirement of Subsequent

CEO

Maxim period 18 months

On First AGMFor 3 years from

the date of election of appointment

Deemed to be

Director

Note : CEO can perform his duties unless his successor is

appointment


Entitled all

RIGHTS & PRIVILEGES

Subject to all the

LIABILITIES

Of the Office of DIRECTORS

Who can be CEO

Eligibility Criteria

Person Who Become

Same as Directors

Chairman

Employee

Member

DirectorCorporate

Governance accentuate that Chairman & CEO

should be different persons.

Chief Executive may be appointed

among from

Members

Among from

Directors

Among from employees

Outsider

Termination of Chief Executive Officer

By Board of Directors with

¾ total majority of Directors

By Members with special Resolution

21 days notice of meeting and ¾ majority of members present in in meeting

Notwithstanding anything contained anywhere whether in Articles or in agreement with CEO


Shall not

Directly Indirectly

Engage in any business

Which of the same NATURE and DIRECTLY COMPETE

with the business carried on

By Company Of which he

is CEO

By subsidiary of such company of which he is CEO

Spouse, Minor

Children, Parents

Chief Executive officer

Mr. Aslam CEO in Sugar Industry.

Name of CompanyExcellent Sugar Mills Ltd

SEIKO Limited is subsidiary of Excellent Sugar Mills Ltd

Business of Seiko is Floor Mills

VIP Sugar Ltd

Mr. Aslam Can not become

CEO of

Business of VIP Sugar is similar with Excellent Sugar Mills Ltd so Mr. Aslam can not become CEO of VIP






BABA Mana Floor Mills

Mr. Aslam Can not become

CEO of

Business of BABA Mana is similar with the business of subsidiary of Excellent Sugar Mills, so Mr. Aslam can

not become CEO of Baba Mana







Wife of Mr. Aslam , Mrs.

reena Can not become CEO of

Business of BABA Mana is similar with the business of subsidiary of Excellent Sugar Mills, so Mrs. Rena being wife of Mr. Aslam can not become CEO of Baba Mana





Business of Seiko is Floor

Mills

VIP Sugar Mills

Wife of Mr. Aslam , Mrs.

Reena Can not become CEO of

Business of VIP Sugar Mills is similar with the business of Excellent Sugar Mills, so Mrs. Reena being wife of

Mr. Aslam can not become CEO of VIP Sugar Mills






VIP Sugar Ltd

Son of Mr. Aslam, Mr.

Khan Can not become CEO of

Business of VIP Sugar is similar with Excellent Sugar Mills Ltd so Mr. Khan being of Son of Mr. Aslam can not

become CEO of VIP







Son of Mr. Aslam, Mr.

Khan Can not become CEO of

Business of Baba Mana is similar with subsidiary of Excellent Sugar Mills Ltd so Mr. Khan being Son of Mr. Aslam, can not become CEO of BABA Mana Floors Mills

Only listed Company can Buy Back its

Shares

Company :Purchase of its own Share

• Can a company purchase its share?– It is called buyback. – Only Listed Company can buy back its share by

passing Special Resolution• Approval of SECP• Debt Equity Ratio 60:40• Current Ration 1:1• Going concern should not be disturbed

Company :Purchase of its own Debenture

• Can a company purchase its Debenture?• Yes.• Debenture is a debt

Buy Back Shares• If company buys its shares; what problem may

arise?• Cash shortage; we have seen in history

company had bought shares and then cash crisis came and then company has issued right shares to overcome.

• Law only allows listed company with restrict requirement to buy back

Buy Back Shares• Listed Company Only• Members Pass resolution• Explanatory statement is attached with resolution• Directors/CEO submit Declaration of insolvency that

payments to Share holders will not bring liquidity crisis (cash crisis) in the company

• Purchase will be on tender system• Mode of Payment shall be decided by members in meeting• Ratio: Current ratio 1:1 Debt Equity Ratio 60:40• Purchase may be at part, premium, discount• Purchase shall be in Cash out of un-distributable profits.• Shares shall be cancelled and capital will be reduced• Members register shall be updated• Intimation to SECP and ROC within 30 days

Buyback of Shares

Passing of Special

Resolution

Explanatory Statement

Contains

Numbers Of Shares

To Be Purchased

Maximum

Price to be paid

Period / time when share to be purchased

Buyback of Shares

Passing of Special

Resolution

Explanatory Statement

Justification for the purchase Effect on

financial Statement

Extent & Nature of Directors interest

Source of Funding to pay Share Holders

after heavy buy back & payments

CODE - JESE

Purchase of Shares

Holding Company

Subsidiary Company

Buy Shares of its Subsidiary

Can further

Can not

Buy Shares of its Holding

If subsidiary buys shares of holding then it becomes BUY BACK. Which is prohibited

Issued Share Capital

Shares Outstanding

Treasury Share Capital

Are those issued shares which are not treasury shares.

These are all the shares held by the investors in the company

Are those issued shares which are held by the issuing company itself, the usual result of a BUYBACK

Increase EPS

Reduced excess

Liquidity

Funds Transfer to Associated Company

Investment Purpose Normal Trade Credits

Prepaid

No shareholders meeting required

It is general Accounting practice

BODM

Notice Shareholders

Passing Special Resolution

Investment in Associated Company

Section 208

Not allowed by Directors to Invest

Shareholders passes special resolution

Indicates

Period

% Return

Terms

Nature

Amount

Code PANT-R

Includes Loan / Advances

Changes in the Investment made in Associated Company

Section 208

BODM

Notice Shareholders

Members decides

Changes include

Period

Percentage Return

Terms

Nature

Amount

Investment In Associated company

Section 208

Particulars/ Documents / Evidences Of Investments

Invest in the name of Lending Company

May be in the name of Subsidiary Company

if anyLending

Company shall keep at

safe place

Bank of lending

Company on behalf of Company

Power of SECP

Exempt requirement of Section 208

For any class of company

Section 208 does not apply

On certain companies

Modarba Company Associate of NBFC licenses by

SECP

In Modarba

To carry on Assets

Management Services

For Investment made in Open End Scheme

Section 208 does not apply

On certain companies

Other than Equity

Investment

Banking Company

DFI/ NBFC

Tender for Buy Back Shares

Maximum Number of

Shares

Last date by which the

offer to sell to Shares be

made

Name & address of

the Branches of Bank

Manner in which the offer

shall be communicated

To be purchased by

CompanyShares Holders offer to

Company for Selling their Shares in writing to the

designated Bank authorized by Company

Tender is an Invitation to Offer

Buy Back Shares Disclosure

Balance Sheet Mode of Payment

Purchase Price

Necessary details

Shall be mentioned/provided in the Explanatory Notes of Final Accounts

As reduction in Share Capital

Deposits

No Company SHALL

Receive or Utilize

MONEY Received

As Security & Deposit

Except

In accordance with a Contract in Writing

But

All Money So Received

Shall be kept in Special Accounts

With a Scheduled

Bank

Company Uses

These Funds

Without Any Contract

Any Permission

Therefore Liable under Law

•MANAGING AGENT

Managing Agent- MA

Manages

Affairs of the Company

Companies are not allowed to

appoint MA

Case Law WAPDA vs KAPCO PLD 2000 Lahore 461

Concept of MA has been done away in Pakistan as far back as 1974

Only FG/PG

Controlled/ owned Government can

appoint MA

Managing Agent- MA

Only FG/PG

Controlled/ owned Government can

appoint MA

Companies are not allowed to

appoint MA

FG by notification in Official Gazette

For such contracts/

agreements only an MA is

appointed

Exempt certain Agreement/

Contracts

Managing Agent

• No company is allowed with out approval of Commission to appoint Sole – Purchase Agent– Distribution Agent– Sales Agent

MANAGING AGENT- MA

With COMMISSION

Approval

Sole Distribution Agent

Sole Purchase Agent Sole Sales Agent

Following sole agent may be appointed

Managing Agent (MA)

• Other than PG/FG owned or controlled companies are not allowed to appoint MA

• Company is only allowed to appoint MA if FG in notification in Official Gazette gives exemption.

• If Company Owned / Controlled by FG/PG can appoint MA

Federal Govt Exemptions

Company Managing Agent

Investment Company registered under rules of Securities Exchange Ordinance 1969

Investment Advisor

Company doing Hotel business

Foreign Collaborator

Company purpose is to contribute Economic Development in Pakistan

Formed by one or more public sector

Financial Institutions or

Industrial Undertakings

Federal Government

satisfies

Such companies can also be appointed to act Managing Agent

Federal Govt Exemptions

•AUDITOR

Auditor

Public Company

Listed

Trading Corporation

Private Company

with Subsidiary of Public Company

Private Company

having more than 3 million Capital




Business within province

Must be Chartered Accountant Any person who

have knowledge of Accounts & Audit

Note : Chartered Accountant may be appointed for Private Company, Single member Company and Non Trading Corporations

Public CompanyUnListed

Private CompanyCAPITAL

<3 Million

Appointment of AuditorAuditors Time of

appointmentAppointing Authority

Tenure Appointment Authority in First default

Appointment Authority in second default

First Auditor Within 1-60 days from the date of COI

First Directors

Till the end of First AGM

Members, after 60 to 120 days from the date of COI

SECP, after 120 days from the date of COI

Subsequent appointment of Auditor

On every AGM

Members One year, till the conclusion of next AGM

SECP, if members do not appoint Auditor in AGM

Casual Vacancy Within 1- 30 days

Directors Till Conclusion of next AGM

SECP, after 30 days from the date of Casual vacancy

Removal of Auditor

After appointment within audit period

After completing of Tenure in the

Next AGM

Member passes Special

Resolution

Terminate Existing Auditor

Appoint new Auditor by Ordinary Resolution

Removal of Auditor

After appointment within audit period

After completing of Tenure in the Next AGM

Any member can sent notice to company for change of auditor before 14 days to AGM

Directors send this notice to every shareholders & retiring auditor who is going to be retired in AGM before 7 days to AGM

Retiring Auditor can make representation to Management. Directors send it to every members

Members appoint new auditor or reappoint retiring auditor in AGM

Within 14 days of AGM, Company inform to Registrar by submitting form 29

For reappointment of previous / retiring auditor

for the appointment of new Auditor with the letter of consent letter of new auditor

Publish in Newspaper

in case of listed

company

Action to be taken Person to take Action

Receiver Timings

Change of Auditor Members send notice of Change

Company / Director/ Secretary

1-14 days days of AGM

Copy of Notice of Member

Company / Directors/ Secretary

All Members Forthwith to the Retiring Auditor

Copy of Notice of Member

Company / Directors/ Secretary

Retiring Auditor Within 1-7 days before AGM

Publication of Notice in Newspaper for listed company

Any time before AGM

Representation by Auditors

All Members Send to every members before AGM

Notification of Change

Registrar Send within 1-14 days after AGM

Corporate law topic wise

Law

Transcript of Corporate law topic wise