Corporate Law
(CFAP – 2)
By Rizwan Manai
Analysis of Syllabus
Companies B) (15 – 25 Marks) (40 – 50 Marks) C)
Act, 2017 (30 – 40 Marks)
Other Laws & Governance,
NBFC Mediation, Winding up &
1. Companies Act, 2017 (S 1 Regulations. Ethics &
Arbitration, Other Matters Professionals.
to 275). 1. Sec. Act, 2015.*
2. Companies (Postal Ballot) Arrangements & 2. PSX Rule Book (chap. 1. COCG
Reconstruction. 5)
Reg. 2018.
3. Public offering Reg.
3. 1st, 2nd & 3rd schedule of CA, 2017.*
2017. 4. CDC Act, 1997.* Listed PSC
4. The COS (further issue of 5. Foreign Exchange
1. CORD, Regulation & Foreign
(N1) (N2)
shares) Reg. 2020. Selected Exchange Manual*
5. The Cos(Buy back of shares) 1984 282A CA, 2017
to 282N Sections 6. Takeover Regulations 2. Ch. 4 & 5
Reg. 2019. (S.276 to 292) 7. Mod Ord. 1980 & of Manag.
Mod Rules 1981*
6. The employees 8. Competition Act.
Bus. Ethics
contributory fund (inv. in 2. NBFC 2010*
(5th
Rules-2003 Edition) by
list sec.) Reg. 2018. 9. Banks & Insurance
Ordinances* Linda
7. The Cos(Inv. in associated
10. Prudential
co.) Reg. 2017. 3. NBFC - Regulations*
Reg. 2008 11. AML Act & Reg.
2018*
* = Selected Provisions
From the desk of Rizwan Manai
Analysis of Syllabus
N-1. S. 2(1)(38) Listed company means a public company, body corporate, or any other entity whose
securities are listed on securities exchange.
Govt. Owned & Controlled
N-2. Public Sector company 2(1)(54) S.2(1)(36) Not Less than 51% v. power Directly or
=FG/PG Indirectly
Elect, Nominate, or Appoint
majority of directors
• (Includes a Public Sector Association Not for Profit, licensed under u/s 42)
• Provided that nomination of directors by the Commission on the board of the securities exchange or
any other entity or operation of any other law shall not make it a public sector company
From the desk of Rizwan Manai
Basic Concepts
1. RETAINING EFFECT OF COMPANIES ORDINANCE, 1984
Although CO, 1984 is replaced w.e.f 30.05.17, but the necessary saving is provided for
S.282A NBFC
to NBFC Reg.
S.282N Rules, 2008
2003
2. ACT v/s ORDINANCE
Even if parliament Is in session, the President can
Enforced Enforced law enforce the ordinance, with the reason of emergent
law on the on the basis situation, but such an ordinance will require
basis of of
Parliament Presidential parliament’s ratification within 120 days of
approval order enforcement, in the absence of ratification, the
ordinance shall be void-ab-initio (Like CO, 2016)
From the desk of Rizwan Manai
Basic Concepts
3. SRO v/s CIRCULAR
Level 3 Penalty Penalty of up
to Rs. 5m and
Extension Explanation S. 510 S. 512 Rs. 100,000
of law of law Directions Regulations, per day
SECP
Empowered through
to issue
PRs seeking public
opinion of not
Codes less than 14
days
Guidelines
Circulars
Notifications
4. TYPES OF ENFORCEMENT
A- Piecemeal Different provisions on different dates,
B- At once Whole of the law enforced on a single day
(CA, 2017, made effective from 30.05.17).
From the desk of Rizwan Manai
Basic Concepts
5. WAYS TO ACQUIRE CORPORATE STATUS IN PAKISTAN
Foreign
Company Statutory body enactment
declared as body
corporate u/s
Companies 2(1)(9)
Act, 2017
Applicability of Companies Whole of the Companies Sections 130, 132, 230-239, 247-267 270 S. 434-450, for the place of
Act, 2017 Act, 2017 & 271 where securities are listed Business in Pakistan
Parliament’s special
enactment
All of the above corporate status, collectively called as body corporate
S.2(1)(9)
From the desk of Rizwan Manai
Basic Concepts
6. DEMARCATION B/W FEDERAL LEGISLATIVE POWER & PROVINCIAL LEGISLATIVE POWER
FG will make and enforce the law for FLP
Under The Constitution
PG will make and enforce the for PLP
CA, 2017 is an outcome of Federal Legislative Power
Laws relating to labor & employees
Law relating to sales tax on goods as the law under
Federal Legislative list
7. PREAMBLE
“An Act to Reform & Re-enact the law relating to companies and the matters connected
thereunder.”
2(1)(17) Company: Formed and registered under: 1913
o This Act;
Repealed 1984
o Company law. 2(1)(18)
2016
8. APPLICABILITY OF ACT, 2017 WHERE SEPARATE GOVERNING STATUTE ARE APPLICABLE:
Companies Act, 2017 shall apply but in case of inconsistency the separate enactment shall prevail.
From the desk of Rizwan Manai
Types & Structure of Companies
TYPES AND STRUCTURE OF COMPANIES
(Types of company)
Pvt. Company Public company
S. 2(1)(52) Means a
S. 2(1)(49)
company which is not a
private company.
Means a company which, by its articles,
i) Restricts the right to transfer its shares save as otherwise provided under this Act
ii) Limits the number of its members to 50 not including persons who are in employment of the company; and
iii) Prohibits any invitation to the public to subscribe for the shares; if any, or debentures or redeemable capital of the company.
Provided that, where two or more persons hold one or more shares in a company jointly, they shall, for the purpose of this definition, be treated as a single
member;
Possible structure of Private and Public Company
Company Ltd. by shares Company Ltd. by guarantee Unlimited company
(With or without Share Capital) (With or without Share Capital)
S. 2(1) (20) Means a
company having the S. 2 (1) (19) Means a S. 2 (1) (71) Means a
liability of its member company having the company not having any
limited by the liability of its members limit on the liability of its
memorandum to the limited by the members.
extent of amount, if any, memorandum to such
remaining unpaid on the amount as the members
shares respectively held may respectively
by them thereby undertake to
contribute to the assets
of the company in the
event of its being wound
up. From the desk of Rizwan Manai
Types & Structure of Companies
Company Ltd. by shares
Pvt. Company Public company
Single Other Listed company Unlisted company
member private
company company
Holding Company and Subsidiary Company
Holding Company {S.2 (1) (37)
Means a company which is another company’s holding company if, but only if, that other company is its subsidiary {S.2 (1) (37)}
Subsidiary Company { S.2 (1) (68)}
In relation to any other company (that is to say the holding company), means a company in which the holding company –
(a) Controls the composition of the board; or
(b) Exercises or controls more than one – half of its voting securities either by itself or; together with one or more of its subsidiary
companies : Provided that such class or classes of holding companies shall not have layers of subsidiaries beyond such numbers, as may
be notified,
Explanation : For the purpose of this clause –
(i) A company shall be deemed to be a subsidiary company of the holding company even if the control referred to in sub clause (a) or sub clause (b) is of
another subsidiary company of the holding company;
(ii) Composition of a company’s board shall be deemed to be controlled by another company if that other company by exercise of power exercisable by it
at its discretion can appoint or remove all or a majority of the directors;
(iii) The expression “ company” includes any body corporate;
(iv) “Layer” in relation to a holding company means its subsidiary or subsidiaries.
From the desk of Rizwan Manai
Deciding Parameter to form a company under CA, 2017
DECIDING PARAMETER TO FORM A COMPANY UNDER COMPANIES ACT, 2017
Compulsory Opt In Voluntary formation and registration
1) S. 9: Unregistered company o Separate legal entity / veil of incorporation (S. 18).
Association, partnership or entity consisting
of more than 20 members; Person who owns a business (members) and who runs the business (directors /
- Carrying on business; and officers) can take the shield of incorporation, from outsiders view, for their
defaults.
- With the object of acquisition of gain
2) S. 434(1): Foreign company The above veil is not workable in certain situations which are provided in the
Place of business in Pakistan (branch) of Ordinance where separate entity of the company will be derecognized and
company incorporated outside Pakistan to the rather the persons behind the company will be looked into in order to establish
the responsibilities of certain type of acts. Such situations are called “lifting of
extent as provided in S. 434-450.
veil of incorporation”.
3) S. 505 (2): Corporation or Body Corporate o Limited liability of members (S. 294)
Established under Special Enanctment All the liabilities / obligations contracted in the name of the company will be
Corporations established by any special discharged by the company, out of assets of the company. Members will not be
enactment (only where, their securities are required to contribute, in assets of the company, for the purpose of enabling
listed), to the extent of S. 130, 132, 220-239, the company to discharge the liabilities.
247-267, 270 and 271.
However, exceptionally, depending upon the structure of the company and as
4) Special Enactments and Rules specified under the Ordinance, members may require contributing a specified
i) NBFC amount, in assets of the company, in order to enable the company to discharge
ii) Bank its liabilities / obligations.
iii) Insurance o Perpetual succession (S. 18 , 17}
iv) Modaraba company
Incoming and outgoing of the members will not effect the constitution and its
v) Credit rating company
continuity. The company will be continued as a separate legal entity till its
vi) CDC
winding up / dissolution.
The memorandum and articles shall, when registered, bind the company and
the members thereof to the same extent as if they respectively had been
signed by each member.
From the desk of Rizwan Manai
