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PART VIII --
MANAGEMENT AND ADMINISTRATION REGISTERED OFFICE,
PUBLICATION OF NAME, ETC.
142. Registered office of
company.-- (1) A company shall as from the day on which it begins to carry on
business, or as from the twenty-eighth day after the date of its incorporation, whichever
is the earlier, have a registered office to which all communications and notices may be
addressed.
(2) Notice of the situation of the registered office and of any change therein shall be
given within twenty-eight days after the date of the incorporation of the company or of
the change as the case may be. to the registrar who shall record the same.
(3) The inclusion in the annual return or any other document of a company of the statement
as to the address of its registered office shall not be taken to meet the requirements of
subsection (2).
(4) If company fails to comply with the requirements of subsection (1) or (2), it shall be
liable to a fine which may extend to two hundred rupees for every day during which such
non-compliance continues, and every officer of the company who knowingly and wilfully
authorises or permits the default shall be liable to the like penalty.
143. Publication of name by a limited company.-- Every limited
company--
(a) shall paint or affix, and keep painted or affixed, its name on the outside of every
office or place in which its business is carried on, in a conspicuous position. in letters
easily legible and in English or Urdu characters, and also, if the registered office is
situate in a place beyond the local limits of the ordinary original civil jurisdiction of
a High Court, in the characters of one of the vernacular languages used in that place;
(b) shall have its name engraven in legible English or Urdu characters on its seal;
(c) shall have its name mentioned in legible English or Urdu characters, in all bill-heads
and letter papers and in all documents, notices and other official publications of the
company, and in all bills of exchange, hundis, promissory notes, endorsements, cheques and
orders for money or goods purporting to be signed by or on behalf of the company, and in
all bills of parcels, invoices, receipts and letters of credit of the company.
144. Penalties for non-publication of name.-- (1) If a limited
company does not paint or a affix and keep painted or affixed, its name in manner directed
by this Ordinance, it shall be liable to a fine which may extend to two hundred rupees for
every day during which its name is not so kept painted or affixed, and every, officer of
the company who knowingly and wilfully authorises or permits the default shall be liable
to the like penalty.
(2) If any officer of a limited company, or any person on its behalf, uses or authorises
the use of any seal purporting to be a seal of the company wherein its name is not so
engraven as aforesaid, or issues or authorises the issue of any bill-head, letter paper,
document, notice or other official publication of the company, or signs or authorises to
be signed on behalf of the company any bill of exchange, hundi promissory note,
endorsement, cheque or order for money or goods or issues or authorises to be issued any
bill of parcels, invoice, receipt or letter of credit of the company, wherein its name is
not mentioned in manner aforesaid, he shall be liable to a fine which may extend to two
thousand rupees, and shall further be personally liable to the holder of any such bill of
exchange, hundi, promissory. note, cheque or order for money or goods, for the amount
thereof, unless the same is duly paid by the company.
145. Publications of authorised as well as paid-up capital.--
(1) Where any notice, advertisement or other official publication of a company contains a
statement of the amount of the authorised capital of the company, such notice,
advertisement or other official publication shall also contain a statement in an equally
prominent position and in equally conspicuous characters of the amount of the capital
which has been subscribed and the amount paid up.
(2) Any company which makes default in complying with the requirements of subsection (1)
and every officer of the company who is knowingly a party to the default shall be liable
to a fine which may extend to five thousand rupees.
COMMENCEMENT OF BUSINESS BY A PUBLIC COMPANY
146. Restrictions on
commencement of business.-- (1) A company shall not commence any business or exercise
any borrowing powers unless--
(a) shares held subject to the payment of the .,whole amount thereof in cash have been
allotted to an amount not less in the whole than the minimum subscription;
(b) every director of the company has paid to the company full amount on each of the
shares taken or contracted to be taken by him and for which he is liable to pay in cash;
(c) no money is or may become liable to be repaid to applicants for any shares or
debentures which have been offered for public subscription by reason of any failure to
apply for or to obtain permission for the shares or debentures to be dealt in on any stock
exchange;
(d) there has been filed with the registrar duly verified declaration by the chief
executive or one of the directors and the secretary in the prescribed form that the
aforesaid conditions have been complied with and the registrar has issued a certificate
referred to in subsection (2); and
(e) in the case of a company which has not issued a prospectus inviting the public to
subscribe for its shares, there has been filed with the registrar a statement in lieu of
prospectus.
(2) The registrar shall, on the filing of a duly verified declaration in accordance with
the provisions of subsection (1) and after making such enquiries as he may deem fit to
satisfy himself that all the requirements of this Ordinance have been complied with in
respect of the commencement of business and matters precedent and incidental thereto,
certify that the company is entitled to commence business, and that certificate shall be
conclusive evidence that the company is so entitled:
Provided that, in the case of a company which has not issued a prospectus inviting the
public to subscribe for its shares, the registrar shall not give such a certificate unless
a statement in lieu of prospectus has been filed with him.
(3) Any contract made by a company before the date at which it is entitled to commence
business shall be provisional only, and shall not be binding on the company until that
date, and on that date it shall become binding.
(4) Nothing in this section shall prevent the simultaneous offer for subscription or
allotment of any shares and debentures or the receipt of any money payable on application
for debentures.
(5) If any company commences business or exercises borrowing powers in contravention of
this section, every, officer and other person who is responsible for the contravention
shall, without prejudice to any other liability, be liable to a fine not exceeding one
thousand rupees for every day during which the contravention continues.
(6) Nothing in this section shall apply to a private company, or to a company limited by
guarantee and not having a share capital.
REGISTER OF MEMBERS AND DEBENTURE-HOLDERS
147. Register of members
and index.-- (1) Every, company shall keep in one or more books a register of its
members and enter therein the following particulars, namely,--
(i) the name in full, father's name (in the case of a married woman or widow, the name of
her husband or deceased husband), nationality, address, and the occupation, if any, of
each member, and, in the case of a company having a share capital, a statement of the
shares held by each member, distinguishing each share by its number, and of the amount
paid or agreed to be considered as paid on the shares of each member;
(ii) the date at which each person was entered in the register as a member;
(iii) the date at which any person ceased to be a member and the- reason for ceasing to be
a member.
(2) Every company having more than fifty members shall, unless the register of members is
in such a form as to constitute in itself an index, keep an index of the names of the
members of the company and shall, within fourteen days after the date at which any
alteration is made in the register of members, make the necessary alteration in the index.
(3) The index shall, in respect of each member, contain a sufficient indication to enable
the entries relating to that member in the register to be readily found.
(4) If default is made in complying with the requirements of subsection (1) or unnecessary
delay takes place in entering in the register of members the name and particulars of any
person who has become or ceased to be a member of a company, as the case may be, the
company shall be liable to a fine not exceeding two hundred rupees for every day during
which the default continues; and every officer of the company who knowingly and wilfully
authorises or permits the default or causes unnecessary delay in entering in the register
the name and particulars of any person who has become or ceased to be a member of a
company, as the case may be, shall be liable to the like penalty.
(5) If default is made in complying with the requirements of subsection (2) or subsection
(3) the company and every officer of the company who knowingly and wilfully authorises or
permits the default shall be liable to a fine not exceeding two thousand rupees.
148. Trusts not to be entered on register.-- No notice of any
trust, expressed, implied or constructive, shall be entered on the register of members, or
be receivable by the registrar.
149. Register and index of debenture-holders.-- (1) Every
company shall keep in one or more books a register of the holders of its debentures and
enter therein the following particulars, namely:--
(a) the name in full, father's name (in the case of a married woman or widow, the name of
her husband or deceased husband), nationality, address, and the occupation, if any, of
each debenture-holder;
(b) the debentures held by each holder, distinguishing each debenture by its number and
the amount paid or agreed to be considered as paid on the debentures held by each holder;
(c) the date at which each person was entered in the register as a debenture-holder; and
(d) the date at which any person ceased to be a debenture-holder.
(2) Every, company having more than fifty, debenture-holders shall unless the register of
debenture holders is in such a form as to constitute in itself an index, keep an index of
the names of the debenture-holders of the company and shall, within fourteen days after
the date at which any alteration is made in the register of debenture-holders make the
necessary alteration in the index.
(3) The index shall, in respect of each debenture-holder, contain a sufficient indication
to enable the entries relating to that holder in the register to be readily found.
(4) If default is made in complying with subsection (1), (2) or (3), the company and every
officer of the company shall be liable to a fine as provided in subsection (4) or
subsection (5), as the case may be, of section 147.
(5) This section shall not apply with respect to debentures which, ex facie, are payable
to the bearer thereof.
150. Inspection of registers.-- (1) The register of members
commencing from the date of the registration of the company and the index referred to in
section 147, the register of debenture-holders and the index referred to in section 149
and the registers referred to in subsection (4) of section 156 shall be kept at the
registered office of the company and, except when closed under the provisions of this
Ordinance, shall, during business hours, subject to such reasonable restrictions, as the
company in general meeting may impose, so that not less than two hours in each day be
allowed for inspection, be open to the inspection of members or debenture-holders gratis
and to the inspection of any other person on payment of such amount not exceeding
prescribed amount as the company may fix; and any such member, debenture-holder or other
person may make extracts therefrom.
(2) Any member or debenture-holder or other person may require a certified copy of the
registers and index thereof mentioned in subsection (1), or of any part thereof, on
payment of such amount not exceeding the prescribed amount as the company may fix, and the
company shall cause any copy so required by any person to be sent to that person within a
period of ten days, exclusive of non-working days and days on which the transfer books of
the company are closed, commencing on the day next after the day on which the requirement
is received by the company.
(3) If any inspection required under subsection (1) is refused, or if any copy required
under subsection (2) is not sent within the specified period, the company and every
officer of the company who is in default shall be liable, in respect of each offence, to a
fine not exceeding five hundred rupees and to a further fine not exceeding fifty rupees
for every day after the first during which the refusal or default continues; and the
registrar may by an order compel an immediate inspection of the register and index or
direct that copies required shall be sent to the persons requiring them.
151. Power to close register.-- A company may, on giving not
less than seven days' previous notice by advertisement in some newspaper having
circulation in the Province, or part of Pakistan not forming part of a Province, in which
the registered office of the company is situate and, in the case of a listed company, also
in a newspaper having circulation in the Province, or other part as aforesaid, in which
the stock exchange on which the company is listed is situate, close the register of
members or debenture-holders, as the case may be, for any time or times not exceeding in
the whole forty-five days in a year and not exceeding thirty. days at a time.
152. Power of Court to rectify register,-- (1) If
(a) the name of any person is fraudulently or without sufficient cause entered in or
omitted from the register of members or register of debenture-holders of a company; or
(b) default is made or unnecessary delay takes place in entering on the register of
members or register of debenture-holders the fact of the person having become or ceased to
be a member or debenture-holder;
the person aggrieved, or any member or debenture-holder of the company, or the company,
may apply to the Court for rectification of the register.
(2) The Court may either refuse the application or may order rectification of the register
on payment by the company of any damages sustained by any party aggrieved, and may make
such order as to costs as it in its discretion thinks fit.
(3) On any application under subsection (I) the Court may decide any question relating to
the title of any person who is a party to the application to have his name entered in or
omitted from the register, whether the question arises between members or
debenture-holders or alleged members or debenture-holders, or between members or alleged
members, or debenture-holders or alleged debenture-holders, on the one hand and the
company on the other hand; and generally may decide any decide any question which it is
necessary or expedient to decide for rectification of the register.
(4) An appeal from a decision on an application under subsection (1), or on an issue
raised in any such application and tried separately, shall lie on the grounds mentioned in
section 100 of the Code of Civil Procedure, 1908 (Act V of 1908)--
(a) if the decision is that of a Civil Court subordinate to a High Court, to the High
Court; and
(b) if the decision is that of a Company Bench consisting of a Single Judge, to a Bench
consisting of two or more Judges of the High Court.
153. Punishment for fraudulent entries in and omission from register.--
Anyone who fraudulently or without sufficient cause enters in, or omits from the register
of members or the register of debenture-holders the name or other particulars of any
person shall be punishable with imprisonment for a term which may extend to one year, or
with fine which may extend to ten thousand rupees, or with both.
154. Notice to registrar of rectification of register.-- When it
makes an order for rectification of the register of members in respect of a company which
is required by this Ordinance to file a list of its members with the registrar, the Court
shall cause a copy of the order to be forwarded to the company and shall, by its order,
direct the company to file notice of the rectification with the registrar within fifteen
days from the receipt of the order.
155. Register to be evidence.-- The registers referred to in
sections 76, 147, 149 and 156 shall prima facie evidence of any matter which by his
Ordinance is directed or authorised to be inserted therein.
156. Annual list of members, etc.-- (1) Every company having a
share capital shall, once in each year, prepare and file with the registrar a return
containing the particulars specified in Form A of the Third Schedule as on the date of the
annual general meeting or, where no such meeting is held or if held is not concluded, on
the last day of the calendar year.
(2) A company not having a share capital shall in each year prepare and file with the
registrar a return containing the particulars specified in Form B of the Third Schedule as
on the date of the annual general meeting or, where no such meeting is held or if held is
not concluded, on the last day of the calendar year.
(3) The return referred to in subsection (1) or subsection (2) shall be filed with the
registrar.
(a) in the case of a listed company, within forty-five days; and
(b) in the case of any other company, within thirty days;
from the dale of the annual general meeting held in the year or, when no such meeting is
held or if held is not concluded, from the last day of the calendar year to which it
relates:
Provided that, in the case of a listed company, the registrar may for special reasons
extend the period of filing of such return by a period not exceeding fifteen days.
(4) All the particulars, required to be submitted under subsection (1) and subsection (2)
shall have been previously entered in one or more registers kept by the company for the
purpose.
(5) If a company makes default in complying with any requirement of this section, the
company and every officer of the company who knowingly and wilfully authorises or permits
the default shall be liable--
(a) in the case of a listed company, to a fine not exceeding ten thousand rupees and to a
further fine not exceeding two hundred rupees for every day after the first during which
the default continues; and
(b) in the case of any other company, to a fine not exceeding two thousand rupees and to a
further fine not exceeding fifty rupees for every day after the first during which the
default continues.
157. Statutory meeting of
company.-- (1) Every company limited by shares and every company limited by guarantee
and having a share capital shall, within a period of not less than three months, nor more
than six months, from the date at which the company is entitled to commence business, hold
a general meeting of the members of the company, which shall be called "the statutory
meeting".
(2) The directors shall, at least twenty-one days before the date on which the meeting is
held, forward a report, in this ordinance referred as "the statutory report", to
every member.
(3) The statutory report shall be certified by not less than three directors, one of whom
shall be the chief executive of the company, and shall state--
(a) the total number of shares allotted, distinguishing shares allotted otherwise than in
cash, and stating the consideration for which they have been allotted;
(b) the total amount of cash received by the company in respect of all the shares
allotted;
(c) an abstract of the receipts of the company and of the payments made thereout up to a
date within seven days of the date of the report, exhibiting under distinctive headings
the receipts of the company from shares and debentures and other sources, the payments
made thereout, and particulars concerning the balance remaining in hand, and an account or
estimate of the preliminary, expenses of the company showing separately any commission or
discount paid or to be paid on the issue or sale of shares or debentures;
(d) the names, addresses and occupations of the directors, chief executive, secretary,
auditors and legal advisors of the company and the changes, if any, which have occurred
since the date of the incorporation;
(e) the particulars of any contract the modification of which is to be submitted to the
meeting for its approval, together with the particulars of the modification or proposed
modification;
(f) the extent to which underwriting contracts, if any, have been carried out and the
extent to which such contracts have not been carried out, together with the reasons for
their not having been carried out; and
(g) the particulars of any commission or brokerage paid or to be paid in connection with
the issue or sale of shares to any director, chief executive, secretary or officer or to a
private company of which he is a director.
(4) The statutory report shall also contain a brief account of the state of the company's
affairs since its incorporation and the business plan, including any change or proposed
change affecting the interest of shareholders and business prospects of the company.
(5) The statutory report shall, so far as it relates to the shares allotted by the
company, the cash received in respect of such shares and to the receipts and payments of
the company, be accompanied by a certificate of the auditors of the company as to the
correctness of such allotment, receipt of cash, receipts and payments.
(6) The directors shall cause at least five copies of the statutory report, certified as
aforesaid, to be delivered to the registrar for registration forthwith after sending the
report to the members of the company.
(7) The directors shall cause a list showing the names, occupations, nationality and
addresses of the members of the company, and the number of shares held by them
respectively, to be produced at the commencement of the meeting and to remain open and
accessible to any member of the company during the continuance of the meeting.
(8) The members of the company present at the meeting shall be at liberty to discuss any
matter relating to the formation of the company or arising out of the statutory report,
whether previous notice has been given or not, but no resolution of which notice has not
been given in accordance with the articles may be passed.
(9) The meeting may adjourn from time to time, and at any adjourned meeting any resolution
of which notice has been given in accordance with the articles, either before or after the
original meeting, may be passed, and an adjourned meeting shall have the same powers as an
original meeting.
(10) If a petition is presented to the Court in manner provided by Part XI for winding up
the company on the ground of default in filing the statutory report or in holding the
statutory meeting, the Court may, instead of directing that the company be wound up, give
directions for the statutory report to be filed or a meeting to be held, or make such
other order as may be just.
(11) In the event of any default in complying with the provisions of any of the preceding
subsections, the company and every officer of the company who knowingly and wilfully
authorises or permits such default shall be liable--
(a) if the default relates to a listed company, to a fine not less than ten thousand
rupees and not exceeding twenty thousand rupees and in the case of a continuing default to
a further fine not exceeding two thousand rupees for every day after the first during
which the default continues; and
(b) if the default relates to any other company, to a fine not exceeding five thousand
rupees and in the case of a continuing default to a further fine not exceeding two hundred
rupees for every day after the first during which the default continues.
(12) This section shall not apply to a private company but if any such private company is
converted into a company of either of the classes mentioned in subsection (1), this
section shall become applicable thereto and a reference in that subsection to the date of
commencement of business shall be construed as a reference to the date of such conversion.
"(13) The provisions of this section shall not apply to a public company
which converts itself from a private company after one year of
incorporation.".
158. Annual general meeting.-- (1) Every company shall hold, in
addition to any other meeting, a general meeting, as its annual general meeting, within
eighteen months from the date of its incorporation and thereafter once at least in every
calendar year within a period of [
(2) Any such minute, if purporting to be signed by the chairman of the meeting at which
the proceedings were had, or by the chairman of the next succeeding meeting, shall be
evidence of the proceedings.
(3) Until the contrary is proved, every general meeting of the company or meeting of
directors or committee of directors in respect of the proceedings whereof minutes have
been so made shall be deemed to have been duly called and held, and all proceedings had
thereat to have been duly had. and all appointments of directors or liquidators shall be
deemed to be valid.
(4) The books containing the minutes of proceedings of the general meetings of a company
and those of the meetings of the directors and committee of directors shall be kept at the
registered office of the company.
(5) In the event of failure to comply with the provisions of sub-section (1) or
sub-section (4), the company and every officer of the company who is knowingly in default
shall be liable to a fine which may extend to five thousand rupees and to a further fine
which may extend to one hundred rupees for every day after the first day during which the
failure continues.
(6) The books containing the minutes of proceedings of the general meetings shall be open
to inspection by members without charge during business hours, subject to such reasonable
restrictions as the company may by its articles or in general meeting impose so that not
less than two hours in each day be allowed for inspection.
(7) Any member shall at any time after seven days from the meeting be entitled to be
furnished within seven days after he has made a request in that behalf to the company,
with a certificate copy of the minutes of any general meeting at such charge not exceeding
the prescribed amount as may be fixed by the company.
(8) If any inspection required under subsection (6) is refused, or if any copy required
under subsection (7) is not furnished within the time specified therein, the company and
every officer of the company who is knowingly and wilfully in default shall be liable in
respect of each offence to a fine which may extend to one thousand rupees and to a further
fine which may extend to fifty, rupees for every day after the first day during which the
default continues, and the registrar may direct immediate inspection or supply of copy, as
the case may be.
174.
Minimum number of directors of a company --
(1) Notwithstanding
anything contained in any other law for the time being in force,-
(a) every single member company shall have at least one director;
(b) every other private company shall have not less than two directors; and
(c) every public company other than a listed company shall have not less
than three directors, appointed and elected in the manner provided in this
Ordinance.
(2) Every listed company shall have not less than seven directors to be
elected in a general meeting in the manner provided in this Ordinance.".
175. Only natural person to be directors.-- Only a natural
person shall be a director and no director shall be the variable representative of a body
corporate.
176. First directors and their term.-- (1) In default of and
subject to any provisions in the articles of a company and section 174, the number of
directors and the names of the first directors shall be determined in writing by a
majority of the subscribers of the memorandum, and until so determined, all the
subscribers of the memorandum who are natural persons shall be deemed to be the directors
of the company.
(2) The first directors shall hold office until the election of directors in the first
annual general meeting.
177. Retirement of directors.-- On the date of the first annual
general meeting of a company all directors of the company for the time being who are
subject to election shall stand retired from office and thereafter all such directors
shall retire on the expiry of the term laid down in section 180:
Provided that the directors so retiring shall continue to perform their functions until
their successors are elected:
Provided further that the directors so continuing to perform their functions shall take
immediate steps to hold the election of directors and in case of any impediment report the
circumstances of the case to the registrar within fifteen days of the expiry of the term
laid down in section 180.
178. Procedure for election of directors.-- (1) The directors of
a company shall, subject to section 174, fix the number of elected directors of the
company not later than thirty-five days before the convening of the general meeting at
which directors are to be elected, and the number so fixed shall not be changed except
with the prior approval of a general meeting of the company.
(2) The notice of the meeting at which directors are proposed to be elected shall among
other matters, expressly state--
(a) the number of elected directors fixed under subsection (1); and
(b) the names of the retiring directors.
(3) Any person who seeks to contest an election to the office of director shall., whether
he is a retiring director or otherwise, file with the company, not later than fourteen
days before the date of the meeting at which elections are to be held, a notice of his
intention to offer himself for election as a director:
Provided that any such person may, at any time before the holding of election, withdraw
such notice.
(4) All notices received by the company in pursuance of subsection (3) shall be
transmitted to the members not later than seven days before the date of the meeting, in
the manner provided for sending of a notice of general meeting in the normal manner or in
the case of a listed company by publication at least in one issue each of a daily
newspaper in English language and a daily newspaper in Urdu language having circulation in
the Province in which the stock exchange on which its securities are listed is situate.
(5) The directors of a company having a share capital shall, unless the number of persons
who offer themselves to be elected is not more than the number of directors fixed under
subsection (1), be elected by the members of the company in general meeting in the
following manner, namely:
(a) a member shall have such number of votes as is equal to the product of the number of
voting shares or securities held by him and the number of directors to be elected;
(b) a member may give all his votes to a single candidate or divide them between more than
one of the candidates in such manner as he may choose; and
(c) the candidate who gets the highest number of votes shall be declared elected as
director and then the candidate who gets the next highest number of votes shall be so
declared and so on until the total number of directors to be elected has been so elected.
"(6)
The directors of a company not having share capital shall be elected by
members of the company in general meeting in the manner as provided in
articles of association of the company.".
179. Circumstances in which election of directors may be declared
invalid.-- The Court may, on the application of members holding not less than
twenty per cent of the voting power in the company, made within thirty days of the date of
election, declare election of all directors or any one or more of them invalid if it is
satisfied that there has been material irregularity in the holding of the elections and
matters incidental or relating thereto.
180. Term of office of directors.-- (1) A director elected under
section 178 shall hold office for a period of three years unless he earlier resigns,
becomes disqualified from being a director or otherwise ceases to hold office.
(2) Any casual vacancy occurring among the directors may be filled up by the directors and
the person so appointed shall hold office for the remainder of the term of the director in
whose place he is appointed.
181. Removal of director.-- A company may by resolution in
general meeting remove a director appointed under section 176 or section 180 or elected in
the manner provided for in section 178:
Provided that a resolution for removing a director shall not be deemed to have been passed
unless the number of votes cast in [against
it is equal to, or exceeds-]
(i) the minimum number of votes that were cast for the election of a director at the
immediately preceding election of directors, if the resolution relates to removal of a
director elected in the manner provided in subsection (5) of section 178; or
(ii) the total number of votes for the time being computed in the manner laid down in
sub-section (5) of section 178 divided by the number of directors for the time being, if
the resolution relates to removal of a director appointed under section 176 or section
180.
182. Creditors may nominate directors.-- In addition to the
directors elected or deemed to have been elected by shareholders, a company may have
directors nominated by the company's creditors or other special interests by virtue of
contractual arrangements.
183. Certain provisions not to apply to directors representing special
interests.-- Nothing in section 178, section 180 or section 181 shall apply to-
(a) directors nominated [.] by a corporation or company formed under any law in force and owned or
controlled, whether directly or indirectly, by the Federal Government or a Provincial
Government on the board of directors of a company in or to which
[.] such corporation or company has made investment or otherwise extended credit facilities;
(b) directors nominated by the Federal Government or a Provincial Government on the board
of directors of the company, or
(c) directors nominated by foreign equity holders on the board of the Pakistan Industrial
Credit and Investment Corporation Limited, or of any other company set up under a
regional co-operation or other co-operation arrangement approved by the Federal
Government:
Provided that, where a director referred to in clause (a), (b) or (c) is nominated, such
number of the votes computed in the manner laid down in subsection (5) of section 178 as
is equal to the minimum number of votes which would have been sufficient to elect such
director if he had offered himself for election shall stand excluded from the total number
of votes otherwise available at an election of the directors to the authority or person
nominating him:
Provided further that a director nominated under this section shall hold office during the
pleasure of the corporation, company, Government or authority which nominates him.
184. Consent to act as director to be filed with registrar.--
"(1) No person shall be appointed or nominated as a director or chief
executive of a company or represent as holding such office, nor shall any
person describe or name any other person as a director or proposed director
or chief executive or proposed chief executive of any company, unless such
person or such other person has given his consent in writing for such
appointment or nomination."; and
"(2) Within fourteen days from the date of appointment or nomination, as the
case may be, the company shall file with the registrar a list of persons who
have consented to act as director or chief executive of the company along
with their consent to do so in the prescribed form.".
(3) This section shall not apply to a private company, not being a private company which
is a subsidiary of a public company.
185. Validity of acts of directors.-- No act of a director, or of a
meeting of directors attended by him, shall be invalid merely on the ground of any defect
subsequently discovered in his appointment to such office:
Provided that, as soon as any such defect has come to notice, the director shall not
exercise the right of his office till the defect has been rectified.
186. Penalties.-- Whoever knowingly and wilfully contravenes or
fails to comply with any of the provisions of section 174 to 185 or is a party to the
contravention of the said provisions shall be liable to a fine which may extend to ten
thousand rupees and may also be debarred by the authority which imposes the fine from
becoming or continuing a director of the company for a period not exceeding three years.
187. Ineligibility of certain persons to become director.-- No
person shall be appointed as a director of a company if he,-
(a) is a minor;
(b) is of unsound mind;
(c) has applied to be adjudicated as an insolvent and his application is pending;
(d) is an undischarged insolvent;
(e) has been convicted by a Court of law for an offence involving moral turpitude;
(f) has been debarred from holding such office under any provision of this Ordinance;
(g) has betrayed lack of fiduciary behaviour and a declaration to this effect has been
made by the Court under section 217 at any time during the preceding five years;
(h) is not a member:
Provided that clauses (i) and (j) shall be applicable only in case of a
listed company.".
Provided that clause (h) shall not apply in the case or--
(i) a person representing the Government or an institution or authority which is a member;
(ii) a whole-time director who is an employee of the company;
(iii) a chief executive; or
(iv) a person representing a creditor;
(i) has been declared by a Court of competent jurisdiction as defaulter in
repayment of loan to a financial institution, exceeding such amount as may
be notified by the Commission from time to time; and
(j) is member of a Stock Exchange engaged in the business of brokerage, or
is a spouse of such member:
Provided that clauses (i) and (j) shall be applicable only in case of a
listed company.".
188. Vacation of office by the directors.-- (1) A director shall
ipso facto cease to hold office if-
(a) he becomes ineligible to be appointed a director on any one or more of the grounds
enumerated in clauses (a) to (h) of section 187;
(b) he absents himself from three consecutive meetings of the directors or from all the
meetings of the directors for a continuous period of three months, whichever is the
longer, without leave of absence from the directors;
(c) he or any firm of which he is a partner or any private company of which he is a
directors--
(i) without the sanction of the company in general meeting accepts or holds any office of
profit under the company other than that of chief executive or a legal or technical
adviser or a banker; or
(ii) accepts a loan or guarantee from the company in contravention of section 195.
(2) Nothing contained in subsection (1) shall be deemed to preclude a company from
providing by its articles that the office of director shall be vacated on any grounds
additional to those specified in that subsection.
189. Penalty for unqualified person acting as director, etc.-- If a
person who is not qualified to be a director or chief executive or who has otherwise
vacated the office of director or chief executive describes or represents himself or acts
as a director or chief executive, or allows or causes himself to be described as such, he
shall be liable in respect of each day during which he so describes or represents or acts,
or allows or causes himself to be described, as such, to fine which may extend to two
hundred rupees.
190. Ineligibility of bankrupt to act as director, etc.-- (1) If
any person being an undischarged insolvent acts as chief executive, director or managing
agent of a company, he shall be liable to imprisonment for a term not exceeding two years,
or to a fine not exceeding ten thousand rupees, or to both.
(2) In this section the expression "company" includes a company incorporated
outside Pakistan which has a place of business in Pakistan.
191. Restriction on director’s remuneration, etc.-- (1) The
remuneration of a director for performing extra services, including the holding of the
office of chairman, shall be determined by the directors or the company in general meeting
in accordance with the provisions in the company's articles.
(2) The remuneration to be paid to any director for attending the meetings of the
directors or a committee of directors shall not exceed the scale approved by the company
or the directors, as the case may be, in accordance with the provisions of the articles.
192. Restriction on assignment of office by directors.-- (1) If
in the case of any company provision is made by the articles or by any agreement entered
into between any person and the company for empowering a director of the company to assign
his office as such to another person, any assignment of office made in pursuance of the
said provision shall, notwithstanding anything contained in the said provision, be of no
effect unless and until it is approved by a special resolution of the company.
(2) notwithstanding anything contained in subsection (1), the appointment by a director,
with the approval of the directors of an alternate or substitute director to act for him
during his absence from Pakistan of not less than three months, shall not be deemed to be
an assignment of office.
(3) The alternate director appointed under subsection (2) shall ipso facto vacate office
if and when the director appointing him returns to Pakistan.
193. Proceedings of directors.-- (1) The quorum for a meeting of
directors of a listed company shall not be less than one-third of their number or four,
whichever is greater.
(2) The directors of a public company shall meet at least
[once
in each quarter of a year].
(3) If a meeting of directors is conducted in the absence of a quorum specified in
sub-section (1), or a meeting of directors is not held as required by subsection (2), the
chairman of the directors and the directors shall be liable-
(a) to a fine not exceeding ten thousand rupees and in the case of a continuing default to
a further fine not exceeding one hundred rupees for every day after the first during which
the default continues, if the contravention relates to a listed company; or
(b) to a fine not exceeding two thousand rupees and in the ease of a continuing default to
a further fine not exceeding fifty rupees for every day after the first during which the
default continues, if the contravention relates to a non-listed company.
194. Liabilities, etc., of directors and officers.-- Save as
provided in this section, any provision, whether contained in the articles of a company or
in any contract with a company or otherwise for exempting any director, chief executive or
officer of the company or any person, whether an officer of the company or not employed by
the company as auditor, from, or indemnifying him against, any liability which by virtue
of any law would otherwise attach to him in respect of any negligence, default, breach of
duty or breach of trust of which he may be guilty in relation to the company, shall be
void:
Provided that, notwithstanding anything contained in this section, a company may, in
pursuance of any such provision as aforesaid, indemnify any such director chief executive,
officer or auditor against any liability, incurred by him in defending any proceedings,
whether civil or criminal, in which judgment is given in his favour or in which he is
acquitted, or in connection with any application under section 488 in which relief is
general to him.
195. Loans to directors, etc.-- (1) Save as otherwise provided
in sub-section (2), no company, hereafter in this section referred to as "the lending
company" shall, directly or indirectly, make any loan to, or give any guarantee or
provide any security in connection with a loan made by any other person to, or to any
other person by--
(a) any director of the lending company or of a company which is its holding company or
any partner or relative of any such director;
(b) any firm in which any such director or relative is a partner;
(c) any private company of which any such director is a director or member;
(d) any body corporate at a general meeting of which not less than twenty-five per cent of
the total voting power may be exercised or controlled by any such director or his
relative, or by two or more such directors together or by their relatives; or
(e) any body corporate, the directors or chief executive whereof are or is accustomed to
act in accordance with the directions or instructions of the chief executive or any
director or directors, of the lending company:
Provided that a company may, with the approval of the Authority, make a loan or give any
guarantee or provide any security in connection with a loan made by any other person to a
director who is in the whole-time employment of the company for the purpose of acquisition
or construction of a dwelling house or land therefore or for defraying the cost of any
conveyance for personal use or household effects or for defraying any expense on his
medical treatment or the medical treatment of any relative as are ordinarily made or
provided by the company to its employees.
Explanation.-- "Relative" in relation to a director means his spouse and
minor children.
(2) Subsection (1) shall not apply to--
(a) any loan made, guarantee given or security provided-
(i) by a private company, unless it is a subsidiary of a public company; or
(ii) by a banking company;
(b) any loan made by a holding company to its subsidiary; or
(c) any guarantee given or security provided by a holding company in respect of any loan
made to its subsidiary.
(3) Where any loan made, guarantee given or security provided by a lending company and
outstanding at the commencement of this Ordinance could not have been made, given or
provided, if this section had then been in force, the lending company shall within six
months from the commencement of this Ordinance enforce the repayment of the loan made or,
as the case may be, of the loan in connection with which the guarantee was given or the
security was provided, notwithstanding any agreement to the contrary:
Provided that this subsection shall not apply where the loan made, guarantee given or
security provided to a whole-time director is approved by the Authority as provided in the
proviso to subsection (1).
(4) Every person shall within fourteen days of his appointment as director or chief
executive of a company file with the registrar the particulars of any loan taken, or
guarantee or security obtained, prior to his becoming director or chief executive of the
lending company which could not have been taken or obtained without the prior approval of
the Authority had he at the time of taking the loan or obtaining the guarantee or security
been the director or chief executive of the lending company.
(5) Every person who is knowingly a party to any contravention of this section, including
in particular any person to whom the loan is made or who has taken the loan in respect of
which the guarantee is given or the security is provided, shall be punishable with fine
which may extend to five thousand rupees or with simple imprisonment for a term which may
extend to six months:
Provided that where any such loan, or any loan in connection with which any such guarantee
or security has been given or provided by the lending company, has been repaid in full, no
punishment by way of imprisonment shall be imposed under this subsection, and where the
loan has been repaid; in part, the maximum punishment which may be imposed under this
subsection by way of imprisonment shall be proportionately reduced.
(6) All persons who are knowingly parties to any contravention of subsection (1) or (3)
shall be liable, jointly and severally, to the lending company for the repayment of the
loan or for making good the sum
[with
mark up not less than the borrowing cost of the lending company] which the lending company may have been called upon to pay
by virtue of the guarantee given or the security provided by such company.
(7) Subsection (1) shall apply to any transaction represented by a book-debt which was
from its inception in the nature of a loan or an advance.
(8) No officer of the lending company or of the borrowing body corporate shall be
punishable under subsection (5) or shall incur the liability referred to in subsection (6)
in respect of any loan made, guarantee given or security provided after the commencement
of this Ordinance in contravention of clause (d) or (e) of subsection (1), unless at the
time when the loan was made, the guarantee was given or the security was provided by the
lending company, he knew or had express notice that clause was being contravened thereby.
196. Powers of directors.-- (1) The business of a company shall be
managed by the directors, who may pay all expenses incurred in promoting and registering
the company, and may exercise all such powers of the company as are not by this Ordinance,
or by the articles, or by a special resolution, required to be exercised by the company in
general meeting.
(2) The directors of a company shall exercise the following powers on behalf of the
company, and shall do so by means of a resolution passed at their meeting, namely--
(a) to make calls on shareholders in respect of moneys unpaid on their shares;
(b) to issue shares;
(c) to issue debentures or participation term
certificate, any instrument in the nature of redeemable capital;
(d) to borrow moneys otherwise than on debentures;
(e) to invest the funds of the company;
(f) to make loans;
(g) to authorise a director or the firm of which he is partner or any partner of such firm
or a private company of which he is a member or director to enter into any contract with
the company for making sale, purchase or supply of goods or rendering services with the
company;
(h) to approve annual or half-yearly or other periodical accounts as are required to be
circulated to the members;
(i) to approve bonus to employees; [.]
(j) to incur capital expenditure [.] on any single item or
dispose of a fixed asset [in
accordance with the limits as prescribed by the Commission from time to time]
Provided that the acceptance by a banking company in the ordinary course of its business
of deposits of money from the public repayable on demand or otherwise and withdrawable by
cheque, draft, order or otherwise, or the placing of moneys on deposit by a
banking company with another banking company on such conditions as the directors
may prescribe, shall not be deemed to be a borrowing of moneys or, as the case
may be, a making of loans by a banking company within the meaning of this
section; [and]
(k)
to undertake obligations under leasing contracts exceeding one million rupees;
(l) to declare interim dividend; and
(m) having regard to such amount as may be determined to be material (as
construed in the Generally Accepted Accounting Principles) by the Board,-
(i) to write off bad debts, advances and receivables;
(ii) to write off inventories and other assets of the company; and
(iii) to determine the terms of and the circumstances in which a law suit
may be compromised and a claim or right in favour of a company may be
released, extinguished or relinquished.
(3) The directors of a public company or of a subsidiary of a public company shall not
except with the consent of the general meeting either specifically or by way of an
authorisation, do any of the following things, namely:-
(a) sell, lease or otherwise dispose of the undertakings or a sizable part thereof, unless
the main business of the company comprises of such selling or leasing; and
(b) remit, give any relief or give extension of time for the payment of any debt
outstanding against any person specified in sub section (1) of section 195.
(4) Whosoever contravenes any provision of this section shall be punishable with a fine
which may extend to [one hundred] thousand rupees and shall be individually and severally liable
for losses or damages arising out of such action.
197. Prohibition regarding making of political contributions.--
(1) Notwithstanding anything contained in this Ordinance, a company shall not contribute
any amount--
(a) to any political party, or
(b) for any political purpose to any individual or body.
(2) If a company contravenes the provisions of subsection (1), then-
(i) the company shall be liable to a fine which may extend to ten thousand rupees; and
(ii) every director and officer of the company who is knowingly and wilfully in default
shall be punishable with imprisonment of either description for a term which may extend to
two years and shall also be liable to fine.
197A. Prohibition regarding distribution of gifts.-
(1) Notwithstanding anything contained in this Ordinance, a company shall not distribute
gifts in any form to its members in its meetings.
(2) If default is made in complying with this section the company and every officer of the
company who is a party to the default shall be liable to a fine not exceeding five hundred
thousand rupees.
198. Appointment of first
chief executive.-- (1) Every company, other than a company managed by a managing
agent, shall have a chief executive appointed in the manner provided in this section and
section 199.
(2) The directors of every company shall as from the date from which it commences business
or as from a date not later than the fifteenth day after the date of its incorporation,
whichever is earlier, appoint any individual to be the chief executive of the company.
(3) The chief executive appointed as aforesaid shall, unless he earlier resigns or
otherwise ceases to hold office, hold office up to the first annual general meeting of the
company or, if a shorter period is fixed by the directors at the time of his appointment,
for such period.
199. Appointment of subsequent chief executive.-- (1) Within
fourteen days from the date of election of directors under section 178 or the office of
the chief executive falling vacant, as the case may be, the directors of a company shall
appoint any person, including an elected director, to be the chief executive, but such
appointment shall not be for a period exceeding three years from the date of appointment.
(2) On the expiry of his term of office under section 198 or subsection (1), a chief
executive shall be eligible for reappointment.
(3) The chief executive relating trader section 198 or this section shall continue to
perform his functions until his successor is appointed unless non-appointment of his
successor is due to any fault on his part or his office is expressly terminated.
200. Terms of appointment of chief executive and filing up of casual
vacancy.-- (1) The terms and conditions of appointment of a chief executive shall
be determined by the directors or the company in general meeting in accordance with the
provisions in the company's articles.
(2) The chief executive shall, if he is not already a director of the company, be deemed
to be its director and be entitled to all the rights and privileges, and subject to all
the liabilities, of that office.
201. Restriction on appointment of chief executive.-- No person who
is ineligible to become a director of a company under section 187 shall be appointed or
continue as the chief executive of any company.
202. Removal of chief executive.-- The directors of a company by
resolution passed by not less than three-fourths of the total number of directors for the
time being, or the company by a special resolution, may remove a chief executive before
the expiration of his term of office notwithstanding anything contained in the articles or
in any agreement between the company and such chief executive.
203. Chief executive not to engage in business competing with company
business.-- (1) A chief executive of a public company shall not directly or
indirectly engage in any business which is of the same nature as and directly competes
with the business carried on by the company of which he is the chief executive or by a
subsidiary of such company.
Explanation.-- A business shall be deemed to be carried on indirectly by the chief
executive if the same is carried on by his spouse or any of his minor, children.
(2) Every person who is appointed as chief executive of a public company shall forthwith
on such appointment disclose to the company in writing the nature of such business and his
interest therein.
204. Penalty.-- Whoever contravenes or fails to comply with any
of the provisions of sections 198 to 203 or is a party to the contravention of the said
provisions shall be liable to a fine which may extend to ten thousand rupees and may also
be debarred by the authority which imposes the fine from becoming a director or chief
executive of a company for a period not exceeding three years.
204A.
Certain companies to have secretaries.- A listed company shall have a
whole time secretary and a single member company shall have a secretary
possessing such qualifications as may be prescribed.
REGISTER OF DIRECTORS AND OTHER OFFICERS
205. Register of
directors, officers, etc.-- (1)
Every company shall keep at its registered office a register of its directors
and officers, including the chief executive, managing agent, secretary chief
accountant, auditors and legal adviser, containing with respect to each of them
[such
particulars as may be prescribed.]
Clauses (a), (b) and
(c) shall be omitted by Ordinance No. C of 2002 dated by 26.10.2002
(2) Every person referred to in subsection (1) shall, within a period of ten days of his
appointment or any change therein, as the case may be, furnish to the company the
particulars specified in subsection (1) and, within the periods respectively mentioned in
this section, the company shall file with the registrar a return in duplicate in the
prescribed form containing the particulars specified in the said register and notification
in the prescribed from of any change among the directors, the chief executive, managing
agent, chief accountant, secretary, auditor or legal adviser or in any of the particulars
contained in the register.
(3) The period within which the said return is to be filed with the registrar shall be a
period of fourteen days from the date of incorporation of the company and the period
within which the said notification of a change is to be sent shall be fourteen days from
the happening thereof.
(4) The register to be kept under this section shall during business hours, subject to
such reasonable restrictions as the company may by its articles or in general meeting
impose so that not less than two hours in each day be allowed for inspection, be open to
the inspection of any member of the company without charge and of any other person on
payment of the prescribed fee or such lesser sum as the company may specify for each
inspection.
(5) If any inspection required under this section is refused or if default is made in
complying with subsection (1) or subsection (2) or subsection (3), the company and every
officer of the company or other person who is knowingly and wilfully in default shall be
liable to a fine which may extend to five hundred rupees and to a further fine which may
extend to fifty rupees for every day after the first during which default continues.
(6) In the case of any such refusal, the registrar on application made by the person to
whom inspection has been refused and upon notice to the company, may by order direct an
immediate inspection of the register.
BAR ON APPOINTMENT OF MANAGING AGENTS, SOLE PURCHASE AND SALES AGENTS, ETC.
206. Bar on appointment of
managing agents, sole purchase, sales agents, etc.-- (1) No company whether
incorporated in Pakistan or outside Pakistan shall appoint any managing agent, by whatever
name called, that is to say, a person, firm or company entitled to the management of the
affairs of a company, by virtue of an agreement or contract with the company:
Provided that this subsection shall not apply to a company which is managed by a managing
agent wholly owned or controlled by the Federal Government or a Provincial Government.
(2) The Federal Government may, by notification in the official Gazette, exempt any of the
following classes of agreements or contracts from the operation of subsection (1),
namely--
(a) an agreement or contract with an investment adviser in relation to an investment
company registered under the rules made under the Securities and Exchange Ordinance, 1969
(XWI of 1969);
(b) an agreement or contract, approved by the Federal Government, with a foreign
collaborator in relation to a company which owns a hotel in Pakistan; and
(c) an agreement or contract approved by the Federal Government in relation to a company
formed for setting up, in collaboration with one or more public sectors financial
institutions, an industrial undertaking which, in the opinion of the said Government, is
likely to contribute to the economic development of Pakistan;"
(3) No company whether incorporated in Pakistan or outside Pakistan which is carrying on
business in Pakistan shall, without the approval of the Authority, appoint any sole
purchase, sale or distribution agent:
Provided that this subsection shall not apply to a sole purchase, sale or distribution
agent appointed by a company incorporated, or person ordinarily residing, outside
Pakistan, unless the major portion of the business of such company or person is conducted
in Pakistan.
(4) Whoever contravenes any of the provisions of this section shall be punished with
imprisonment for a term which may extend to two years, or with fine which may extend to
one hundred thousand rupees, or with both; and, if the person guilty of the offence is a
company or other body corporate, every director, chief executive, or other officer, agent
or partner thereof shall, unless he proves that the offence was committed without his
knowledge or that he exercised all due diligence to prevent its commission, be deemed to
be guilty of the offence.
TERMS OF APPOINTMENT OF MANAGING AGENT
207. Terms and conditions of
appointment of managing agent.-- (l) Where a managing agent is appointed in
pursuance of any exemption available under section 206, such appointment shall be subject
to such terms and conditions as the Federal Government may deem fit to impose.
(2) In the event of any contravention of the terms and conditions imposed by the Federal
Government under subsection (1), the company and every officer thereof who is knowingly
and wilfully in default shall be liable to a fine which may extend to twenty thousand
rupees and such officer shall, in the event of the company incurring a loss on account of
such contravention, be jointly and severally liable for the loss.
MISCELLANEOUS PROVISIONS REGARDING INVESTMENTS, CONTRACTS, OFFICERS AND SHAREHOLDINGS, TRADING AND INTERESTS
208. Investments in Associated
Companies and undertakings. -- (1) A
company shall not make any investment in any of its associated companies or
associated undertakings except under the authority of a special resolution
which shall indicate the nature, period and amount of investment and terms
and conditions attached thereto:
Provided that the return on investment in the form of loan shall not be less
than the borrowing cost of investing company.
Explanation.- The expression ‘investment’ shall include loans, advances,
equity, by whatever name called, or any amount which is not in the nature of
normal trade credit.
(2) No change in the nature of an investment or the terms and conditions
attached thereto shall be made except under the authority of a special
resolution.
(3) If default is made in complying with the requirements of this section,
every director of a company who is knowingly and willfully in default shall
be liable to fine which may extend to one million rupees and in addition,
the directors shall jointly and severally reimburse to the company any loss
sustained by the company in consequence of an investment which was made
without complying with the requirements of this section.
(4) This section shall not apply to-
(a) a banking company;
(b) any other financial institution approved by the Commission;
(c) a private company which is not a subsidiary of a public company; and
(d) a company whose principal business is the acquisition of shares, stock,
debentures or other securities.".
209. Investments of company to be held in its own name.-- (1)
Save as otherwise provided in subsections (2) to (5) or any other law for the time being
in force, and subject to the provisions of subsections (6) to (8)--
(a) all investments made by a company on its own behalf shall be made and held by it in
its own name; and
(b) where any such investments are not so held immediately before the commencement of this
ordinance the company shall, within a period of one year from such commencement, either
cause them to be transferred to its own name, or dispose of them.
(2) Where the company has a right to appoint or get elected any person as a director of
any other company and a nominee of the company in the exercise of such right has been so
appointed or elected, the shares in such other company of an amount not exceeding the
nominal value of the qualifications shares which are required to be held by a director
thereof, may be registered or held by such company jointly in its own name and in the name
of such person or nominee, or in the name of such person or nominee alone.
(3) A holding company may hold any shares in its subsidiary company in the name of its
nominee or nominees if and in so far as it is necessary so to do for ensuring that the
number of members of the subsidiary. company is not reduced below seven in case it is a
public company, or below two in case it is a private company.
(4) Subsection (I) shall not apply to investments made by an investment company, that is
to say, a company whose principal business is the purchase and sale of securities.
(5) Nothing in this section shall be deemed to prevent a company--
(a) from depositing with a bank, being the banker of the company, any shares or securities
for the collection of any dividend or interest payable thereon; or
(b) from depositing with or transferring, to or holding in the name of scheduled bank or a
financial institution approved by the Authority shares or securities in order to
facilitate the transfer thereof:
Provided that, if, within a period of six months from the date on which shares or
securities are so deposited, transferred or held, no transfer of such shares or securities
takes place. the company shall as soon as practicable after the expiry of such period have
the shares or securities retransferred to itself from the scheduled bank or, as the case
may be, the financial institution, and again hold the shares or securities* in its own
name;
(c) from depositing with, or transferring to any person any shares or securities, by way
of security for the repayment of any loan advanced to the company or the performance of
any obligation undertaken by it. or
(d) From depositing with, or transferring to, or holding, or
registering in the name of a central depository any shares or securities.
(6) The certificates or the letter of allotment relating to the shares or securities in
which investments have been made by a company shall, except in the cases referred to in
subsections (4) and (5), be in the custody of the company or of such scheduled bank or
financial institution as may be approved by the Authority.
(7) Where, in pursuance of subsection (2), (3), (4) or (5), any shares or securities in
which investments have been made by a company are not held by it in its own name, the
company shall forthwith enter in a register maintained by it for the purpose at its
registered office--
(a) the nature, value and such other particulars as may be necessary fully to identify
such shares or securities; and
(b) the bank or person in whose name or custody such shares or securities are held.
(8) The register kept under subsection (7) shall be open to the inspection of any member
or debenture-holder or creditor of the company without charge, during business hours,
subject to such reasonable restrictions as the company may by its articles or in general
meeting, impose so that no less than two hours in each day are allowed for such
inspection.
(9) If default is made in complying with any of the requirements of subsections (1) to
(8), the company, and every officer of the company who is knowingly and wilfully in
default, shall be liable to a fine which may extend to five thousand rupees and to a
further fine not exceeding two hundred rupees for every day after the first during which
the default continues.
(10) Without prejudice to the provisions of subsection (9), if any inspection required
under sub section (8) is refused, the registrar may on an application direct an immediate
inspection of the register.
210. Form of contract.-- (1) Contracts on behalf of a company may
be made as follows, that is to say--
(i) any contract which, if made between private persons, would be by law required to be in
writing, signed by the parties to be charged therewith, may be made on behalf of the
company in writing signed by any person acting under its authority, express or implied,
and may in the same manner be varied or discharged:
(ii) any contract which, made between private persons, would by law be valid although made
by parole only, and not reduced into writing, may be made by parole on behalf of the
company by any person acting under its authority, express or implied, and may in the same
manner be varied or discharged.
(2) All contracts made according to subsection (1) shall be effectual in law and shall
bind the company and its successors and all other parties thereto, their heirs, or legal
representatives as the case may be.
211. Bills of exchange and promissory notes.-- A bill of
exchange, hundi or promissory note shall be deemed to have been made, drawn, accepted or
endorsed on behalf of a company if made, drawn, accepted or endorsed in the name of, or by
or on behalf or on account of, the company by any person acting under its authority,
express or implied
212. Execution of deeds.-- A company may, by writing under its
common seal, empower any person; either generally or in respect of any specified matters,
as its attorney, to execute deeds on its behalf in any place either in or outside
Pakistan; and every deed signed by such attorney, on behalf of the company, and under his
seal, where sealing is required, shall bind the company, and have the same effect as if it
were under its common seal.
213. Power for company to have official seal for use abroad--
(1) A company whose objects require or comprise the transaction of business beyond the
limits of Pakistan may, if authorised by its articles, have for use in any territory not
situate in Pakistan, an official seal which shall be a facsimile of the common seal of the
company, with the addition on its face of the name of every. territory where it is to be
used.
(2) A company having such an official seal may, by writing under its common seal,
authorise any person appointed for the purpose in any territory not situate in Pakistan to
affix the same to any deed or other document to which the company is party in that
territory.
(3) The authority of any such agent shall, as between the company and any person dealing
with the agent, continue during the period, if any, mentioned in the instrument conferring
the authority, or if no period is mentioned therein, then until notice of the revocation
or determination of the agent's authority has been given to the person dealing with him.
(4) The person affixing any such official seal shall, by writing under his hand, on the
deed or other document to which the seal is affixed, certify the date and place of
affixing the same.
(5) A deed or other document to which an official seal is duly affixed shall bind the
company as if it had been sealed with the common seal of the company.
214. Disclosure of interest by director.-- (1) Every director of
a company who is in any way, whether directly or indirectly, concerned or interested in
any contract or arrangement entered into, or to be entered into, by or on behalf of the
company shall disclose the nature of his concern or interest at a meeting of the
directors:
Provided that a director shall be deemed also to be interested or concerned if any of his
relatives, as defined in the Explanation to subsection (1) of section 195, is so
interested or concerned.
(2) The disclosure required to be made by a director under subsection (1) shall be made,-
(a) in the case of a contract or arrangement to be entered into, at the meeting of the
directors at which the question of entering into the contract or arrangement is first
taken into consideration or, if the director was not, on the date of that meeting,
concerned or interested in the contract or arrangement, at the first meeting of the
directors held after he becomes so concerned or interested; and
(b) in the case of any other contract or arrangement, at the first meeting of the
directors hold after the director becomes concerned or interested in the contract or
arrangement.
(3) For the purposes of subsections (1) and (2), a general notice given to the directors
to the effect that a director is a director or a member of a specified body corporate or a
member of a specified firm and is to be regarded as concerned or interested in any
contract or arrangement which may, after the date of the notice, be entered into with that
body corporate or firm, shall be deemed to be a sufficient disclosure of concern or
interest in relation to any contract or arrangement so made.
(4) Any such general notice shall expire at the end of the financial year in which it is
given, but may be renewed for further period of one financial year at a time, by a fresh
notice given in the last month of the financial year in which it would otherwise expire.
(5) No such general notice, and no renewal thereof, shall be of effect unless either it is
given at a meeting of the directors, or the director concerned takes reasonable steps to
ensure that it is brought up and read at the first meeting of the directors after it is
given.
(6) A director who fails to comply with subsection (1) or subsection (2) shall be liable
to a fine which may extend to five thousand rupees.
(7) Nothing in this section shall be taken to prejudice the operation of any law
restricting a director of a company from having any concern or interest in any contract or
arrangement with the company.
215. Interest of other officers, etc.-- (1) Save as provided in
section 214 in respect of directors, no other officer of a company who is in any way,
directly or indirectly, concerned or interested in any proposed contract or arrangement
with the company shall, unless he directors, the nature and extent of his interest in the
transaction and obtains the prior approval of the directors, enter into any such contract
or arrangement.
(2) An officer who contravenes subsection (1) shall be liable to a fine which may extend
to five thousand rupees.
216. Interested director not to participate or vote in proceedings of
directors.-- (1) No director of a company shall, as a director, take any part in
the discussion of, or vote on, any contract or arrangement entered into, or to be entered
into, by or on behalf of the company, if he is in any way, whether directly or indirectly,
concerned or interested in the contract or arrangement, nor shall his presence count for
the purpose of forming a quorum at the time of any such discussion or vote: and if he does
vote, his vote shall be void.
(2) Subsection (1) shall not apply to--
(a) a private company which is neither a subsidiary nor a holding company of a public
company;
(b) any contract of indemnity against any loss which the directors, or any one or more of
them, may suffer by reason of becoming or being sureties or a surety for the company;
(c) any contract or arrangement entered into or to be entered into with a public company,
in which the interest of the director aforesaid consists solely in his being a director of
such company and the holder of not more than such shares therein as are requisite to
qualify him for appointment as a director thereof, he having been nominated as such
director by the company referred to in subsection (1).
(3) Every director who knowingly contravenes arty of the provisions of subsection (1) or
subsection (2) shall be liable to a fine which may extend to five thousand rupees.
217. Declaring a director to be lacking fiduciary behaviour.--
The Court may declare a director to be lacking fiduciary behaviour if he contravenes the
provisions of section 214 or subsection (1) of section 215 or section 216:
Provided that before making a declaration the Court shall afford the director concerned an
opportunity of showing cause against the proposed action.
218. Disclosure to members of director’s interest in contract
appointing chief executive, managing agent or secretary.-- (1) Where a company--
(a) appoints, or enters into a contract for the appointment of, a chief executive,
managing agent, whole-time director or secretary of the company, in which appointment or
contract any director of the company is in any way, whether directly or indirectly,
concerned or interested; or
(b) varies any such contract already in existence;
the company shall make out and attach to the report referred to in section 236 an abstract
of the terms of the appointment or contract or variation, together with a memorandum
clearly specifying the nature of the concern or interest of the director in such
appointment or contract or variation.
(2) Where a company appoints or enters into a contract for the appointment of a chief
executive of the company, or varies any such contract already in existence, the company
shall send an abstract of the terms of the appointment or contract or variation to every
member of the company within twenty-one days from the date of the appointment or of
entering into the contract or varying of the contract, as the case may be, and if any
other director of the company is concerned or interested in the appointment or contract or
variation, a memorandum clearly specifying the nature of the concern or interest of such
other director in the appointment of contract or variation shall also be sent to every
member of the company with the abstract.
(3) Where a director becomes concerned or interested as aforesaid in any such contract as
is referred to in subsection (1) or subsection (2) after it is made, the abstract and the
memorandum, if any, referred to therein shall be sent to every, member of the company
within twenty-one days from the date on which the director becomes so concerned or
interested.
(4) All contracts entered into by a company for the appointment of a managing agent, chief
executive or secretary shall be kept at the registered office of the company; and shall be
open to the inspection of any member of the company at such office; and extracts may be
taken therefrom and certified copies thereof may be required by any such member, to the
same extent, in the same manner and on payment of the same fee, as in the case of the
register of members of the company; and the provisions of section 150 shall apply
accordingly.
(5) The provisions of this section shall apply in relation to any resolution of the
directors of a company appointing a managing agent, a secretary or a chief executive or
other whole-time director, or varying any previous contract or resolution of the company
relating to the appointment of a managing agent, a secretary or a chief executive or other
whole-time director, as they apply in relation to any contract for the like purpose.
(6) If default is made in complying with any of the provisions of this section, the
company and every officer of the company who is knowingly and wilfully in default shall be
liable to a fine which may extend to five thousand rupees.
219. Register of contracts, arrangements and appointments in which
directors, etc., are interested.-- (1) Every company shall keep a register in
which shall be entered separately particulars of all contracts, arrangements or
appointments to which section 214 or section 215 or section 216 or section 218 applies,
including the following particulars to the extent they are applicable in each case,
namely:--
(a) the date of the contract, arrangement or appointment;
(b) the names of the parties thereto;
(c) the principal terms and conditions thereof,
(d) the date on which it was placed before the directors;
(e) the names of the directors voting for and against the contract, arrangement or
appointment and the names of those remaining neutral;
(f) the name of the director or officer concerned or interested in the contract,
arrangement or appointment and the extent or nature of his interest therein.
(2) Particulars of every such contract, arrangement and appointment shall be entered in
the relevant register aforesaid--
(a) in the case of a contract, arrangement, or appointment requiring the directors'
approval, within seven days of the meeting of the directors at which the contract,
arrangement or appointment is approved; and
(b) in the case of any other contract, arrangement or appointment, within seven days of
the receipt at the registered office of the company of the particulars of such other
contract, arrangement or appointment or within thirty days of the date of such other
contract, arrangement or appointment, whichever is later; and the register shall be placed
before the next meeting of the directors and shall then be signed by all the directors
present at the meeting.
(3) The register aforesaid shall also specify, in relation to each director of the
company, the names of the firms and bodies corporate of which notice has been given by him
under sub section (3) of section 214.
(4) Nothing in subsection (1), subsection (2) or subsection (3) shall apply--
(a) to any contract or arrangement for the sale, purchase or supply of any goods,
materials or services, if the value of such goods and materials or the cost of such
services does not exceed two thousand rupees in the agreement in any year; or
(b) to any contract or arrangement by a banking company for the collection of bills in the
ordinary course of its business.
(5) The register referred to in subsection (1) shall be kept at the registered office of
the company and shall be open to inspection by and extracts may be taken therefrom and
certified copies thereof required by any member of the company in the same manner and on
payment of the same fee as in the case of register of members kept under section 150.
(6) If default is made in complying with the provisions of this section, the company and
every director of the company who is knowingly and wilfully in default shall, in respect
of each default, be liable to a fine which may extend to five thousand rupees and to a
further fine which may extend to two hundred rupees for every day after the first during
which the default continues.
220. Register of directors shareholdings, etc.-- (1) Every listed
company shall keep a register showing as respects each director, chief executive, managing
agent, chief accountant, secretary or auditor of the company, and every other person
holding not less than ten per cent of the beneficial interest in the company, the number,
description and amount of any shares in, or debentures of, the company or any other body
corporate, being the company's subsidiary or holding company, or a subsidiary of the
company's holding company, which are held by or in trust for him, or of which he has a
right to become holder, whether on payment or not.
(2) Where any shares or debentures have to be recorded in the said register or to be
omitted therefrom or any particulars changed in relation to any director or other person
as aforesaid by reason of a transaction entered into after the commencement of this
Ordinance' and while he occupies that position or holds such interest, the register shall
also show the date of, and the price or other consideration for, the transaction:
Provided that, where there is an interval between the agreement for any such transaction
and the completion thereof, the date so shown shall be that of the agreement.
(3) The nature and extent of any position or interest or right in or over any shares or
debentures recorded in relation to a director or other person in the said register shall,
if he so requires, be indicated in the register.
(4) The company shall not, by virtue of anything done for the purposes of this section, be
affected with notice of, or put upon inquiry. as to, the rights of any person in relation
to any shares or debentures.
(5) The said register shall, subject to the provisions of this section, be kept at the
registered office of the company and shall be open to inspection during business hours as
follows, subject to such reasonable restrictions as the company may by its articles or in
general meeting impose, so that no less than two hours in each day are allowed for
inspection--
(a) during the period beginning fourteen days before the date of the annual general
meeting of the company and ending three days after the date of its conclusion, it shall be
open to the inspection of any member or holder of debentures of the company; and
(b) during that or any other period, it shall be open to the inspection of any person
acting on behalf of the Authority.
(6) Without prejudice to the rights conferred by subsection (5), the Authority and the
registrar may at any time required a certified copy of the said register or any part
thereof.
(7) The said register shall also be produced at the commencement of the annual general
meeting of the company and remain open and accessible during the continuance of the
meeting to any person attending the meeting.
(8) If defaults is made in complying with sub section (7), the company and every officer
of the company who is knowingly and wilfully in default shall be liable to a fine which
may extend to one thousand rupees, and if default is made in complying with subsection (I)
or subsection (2), or if any inspection required under this section is refused or and copy
required thereunder is not sent within a reasonable time, the company and every. officer
of the company who is knowingly and wilfully in default shall be liable to a fine which
may extend to ten thousand rupees.
(9) Without prejudice to the provisions of subsection (8), the registrar may, in the case
of any refusal to allow inspection of register or supply of a copy thereof under
subsection (5) or subsection (c), direct immediate inspection of such register or supply
of a copy thereof.
221. Duty of directors, etc. to make disclosure of shareholdings, etc.--
(1) Every director, officer and such other person as is referred to in subsection (1) of
section 220 shall give notice to the company of such matters relating to himself as may be
necessary for the purpose of enabling the company to comply with the provisions of section
220.
(2) The notice referred to in subsection (1) shall be given in writing within fifteen days
of each acquisition or change of interest or right, as the case may be, referred to in
subsection (1) of section 220 or date of agreement referred to in subsection (2) of that
section.
(3) Any person who knowingly and wilfully fails to company with subsection (1) or
subsection (2) shall be punishable with imprisonment for a term which may extend to two
years, or with fine which may extend to five thousand rupees, or with both.
222. Submission of statements of beneficial owners of listed securities.--
(1) Every, director, chief executive, managing agent, chief accountant, secretary or
auditor of a listed company who is or has been the beneficial owner of any of its equity
securities, and every person who is directly or indirectly the beneficial owner of more
than ten per cent of such securities, shall submit to the registrar and the Authority a
return in the prescribed form containing the prescribed particulars pertaining to the
beneficial ownership of such securities and notify in the prescribed form the particulars
of any change in the interest aforesaid.
(2) The period within which the said return is to be submitted to the registrar and the
Authority shall be--
(a) where the person occupies the position or office specified in subsection (1), or is a
person whose interest as beneficial owner of securities requiring submission of the return
as stated in the said subsection subsists on the commencement of this Ordinance, within
thirty days from such commencement;
(b) in any other case, including a case where the company is listed on the stock exchange
after the commencement of this Ordinance or after the person has occupies the position or
office specified in subsection (1) or has acquired interest as beneficial owner of
securities as aforesaid, within thirty days of occupying the office in the company or
acquisition of interest as beneficial owner requiring submission of the return aforesaid
or listing of the company on the stock exchange, as the case may be;
(c) where there is any change in the position or interest as aforesaid including a change
in the beneficial ownership of any equity security, within fifteen days of such change; or
(d) where the Authority by an order so requires, within such period as may be specified in
such order.
223. Prohibition of short-selling.-- No director, chief
executive, managing agent, chief accountant, secretary or auditor of a listed company, and
no person who is directly or indirectly the beneficial owner of not less than ten per cent
of the listed equity securities of such company, shall practise directly or indirectly
short-selling such securities.
224. Trading by directors, officer and principal shareholders.--
(1) Where any director, chief executive, managing agent, chief accountant, secretary or
auditor of a listed company or any person who is directly or indirectly the beneficial
owner of more than ten per cent of its listed equity securities makes any gain by the
purchase and sale, or the sale and purchase, of any such security within a period of less
than six months, such director, chief executive, managing agent, chief accountant,
secretary or auditor or person who is beneficial owner shall make a report and tender the
amount of such gain to the company and simultaneously send an intimation to this effect to
the registrar and the Authority:
Provided that nothing in this subsection shall apply to a security acquired in good faith
in satisfaction of debt previously contracted.
(2) Where a director, chief executive, managing agent, chief accountant, secretary,
auditor or person who is beneficial owner as aforesaid fails or neglects to tender, or the
company fails to recover, any such gain as is mentioned in subsection (1) within a period
of six months after its accrual; or within sixty days of a demand therefor, whichever is
later, such gain shall vest in the [Commission] and unless such gain is deposited in
the prescribed account, the [Commission] may direct recovery of the same as
an arrear of land revenue.
(3) For the purposes of sections 220 to 224, the term "auditor of the company"
shall, where such auditor is a firm, inc