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021111
SECURITIES AND EXCHANGE COMMISSION OF PAKISTAN, ISLAMABAD
Circular No. 14
Reference No.CLD Co./Amend/2001
Nov 11 , 2002
COMPANIES (AMENDMENT)
ORDINANCE 2002
The “Companies (Amendment) Ordinance 2002”
(Ordinance No. C OF 2002) which has been promulgated on
October 26, 2002, and amends the Companies Ordinance, 1984
has been placed on the Commission’s web-site and also sent
to you by e-mail. A hard copy of the same is enclosed.
Significant amendments in the Ordinance, have been indicated
below:
(i) Section 2: Definition of a Financial Institution has been provided.
(ii) Section 15, 47, 160,
174 and 305: A new concept of single member private company
(SMC) has been introduced to admit the individual businessmen in the corporate
sector as a company having limited liability. Amendment has further been made in
sections 47, 160, 174 and 305 with respect to the SMC.
(iii) Sections 15 and 174: The minimum number of seven members and
directors of a public company is reduced to three. However, the listed companies
shall continue to have at least seven directors.
(iv) Section 19, 27, 73
and 205: The particulars of subscribers, allotees and
officers shall be prescribed.
(v) Section 78-A:
Amendment has been made to provide a right of appeal to the
shareholder before the Commission against refusal of directors
or delay in registration of transfer of shares within
prescribed period.
(vi) Section 84: The maximum limit of 10% on issue of shares at discount
has been omitted.
(vii) Section 131: Power to grant extension for the delay in
registration, modifications and satisfaction of a mortgage or charge created by
companies has been entrusted to the Commission.
(viii) Section 157: A public
company that has been converted from a private company after
one year of its incorporation has been exempted to hold
statutory meeting.
(ix) Sections 158 and 233:
Amendments have been made to hold the annual general meeting
of the companies, for consideration and approval of audited
accounts within a period of four months from the closure of
accounts. The Commission has given a general extension of
sixty days in holding of the annual general meeting to all the
companies whose financial years have closed before October 26,
2002, the date of promulgation of the amending ordinance.
(x) Section 160: Quorum of a general meeting of a public listed company is
increased from three members to ten members present in person representing not
less than 25% of total voting power either of their own account or as proxies.
In case of SMC the quorum shall be single member present in person or by proxy.
(xi) Section 160-A:
Section has been shifted from 161(8).
(xii) Section 170: Power to call meeting has been entrusted to the
Commission.
(xiii) Section 173:
Amendments has been made to circulate the minutes of the
meetings to members of the Board of Directors of companies
within 14 days of the meeting.
(xiv) Section 178: Amendment provides for procedure of election of
directors of companies not having shares capital to be provided in the articles
of association of the company and provisions of section 178 shall not apply in
such cases.
(xv) Section 184: The period of filing of list of persons consenting to act
as directors of companies and their consent to do so has been increased to 14
days.
(xvi) Section 187: Defaulters of financial institutions declared by the
court of competent jurisdiction and stock exchange members engage in business of
brokerage or spouse of such members have been made ineligible to be directors of
listed companies.
(xvii) Section 204: Appointment of a whole time qualified company secretary
is made mandatory both for a listed and a single member company. Qualifications
of company secretary would be prescribed in the rules.
(xviii) Section 208: Members of a company shall now be able to make
final decision for investment in associated companies through special
resolution, after having full disclosure of the investments. The maximum limit
of thirty per cent of the paid up capital plus free reserves of the investing
company has been removed and the role of the regulator to grant waiver to
certain companies has been done away with.
(xix) Section 234: The
private and non-listed public companies that are subsidiaries
of the listed companies are also made liable to prepare their
accounts in accordance with requirements of Fourth Schedule.
The statutory provisions are made in conformity with the
International Accounting Standards. All companies are now
required to prepare their accounts in accordance with IAS.
(xx) Section 245: Listed
companies are now required to prepare quarterly accounts.
(xxi) Section 252: Change has been made so that a company can remove its
auditors through special resolution. However, appointment of new auditor
would require approval of the Commission.
(xxii) Section 237: Amendment has been made for preparation of
consolidated financial statements for holding and subsidiary companies.
(xxiii) Sections 321, 323, 364: Amendment has been made to restrict the
appointment of any official liquidator up-to three companies at a time and no
remuneration to be paid if winding up proceeding are not complete within the
prescribed period.
(xxiv) penalties for various defaults, wherever applicable have been
revised.
2. The Companies
(Amendment) Ordinance, 2002 has introduced many other changes
in addition to those mentioned above. It is therefore,
necessary that all officers in your office thoroughly study
the amendments and take note of the changes for enforcement as
the Ordinance has already came into force from October 26,
2002.
(Nazir Ahmad Shaheen)
Additional Registrar of Companies