Control Document for Section 1-258 (Companies Ordinance, 1984) (1) - Copy

8/3/2019 Control Document for Section 1-258 (Companies Ordinance, 1984) (1) - Copy

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From the notebook of Mr. Muhammad Ovais 13th MFC - Deloitte

1

SectionNumber

Title Reference to other Laws andSections

Short explanation

1. Short title, extent and commencement Article 246, 247(3) of the Constitutionof Pakistan(Definition of tribal areas &applicability of ord.)

Name; covered geographical area,applicability.

2. Definitions - -3. Meaning of subsidiary and holding company - Beneficially owns, controls or holds

voting securities; or have power to elecdirectors (>50%).

4. Ordinance not to apply to certain corporations - Trading corp., co-operative society or auniversity.5. Application of ordinance to non-trading

companies with purely financial objects- -

6. Ordinance to override memorandum, articles,etc.

- Hierarchical series:Ord.>MOA>AOA>Agreement>Resolution.

7. Jurisdiction of courts - -HC or Civil court empowered by FG atplace of reg. office.-For w/up longest duration reg. officepreceding 6months be considered.

8. Constitution of company benches - One or more by CJ of HC.9. Procedure of the court - Final judgment not later than 90 days

from petition, adjourned not for>14dayat once or 30 in all.

10. Appeals against court orders - Appeal against w/up order of courtempowered u/s 7 challenged in SC whe

P/up cap.>1mn, if20membeliable to be registered, otherwisepersonal liability. Exceptions noted.

15. Mode of forming a company Promoters guide: Formation &Incorporation of companies (Priorapproval from relevant authority +Documents & procedure)

Subscribe to MOA & comply withrequirements. 3(PLC), 2(PVT), 1(SMC).May be Limited by shares, guarantee orunlimited.

16. Memorandum of company limited by shares - Name, Place, Object, Liability,Authorized Capital.

17. Memorandum of company limited by guarantee - Name, Place, Object, Liability +undertaking, Authorized Capital (if havis/cap).

18. Memorandum of unlimited company - Name, Place, Object.19. Printing, signature, etc. of memorandum Clause 46, Table A (W/out sanction in

GM, O/S borrowing at any time shouldnot exceed issued capital)

Printed, divided, signed, dated anddeemed power to borrow.

20. Restriction on alteration of memorandum - Cannot be altered, except to the cases,mode & extent provided in Ord.

21. Alteration of Memorandum Rule-3 of Companies (General Provisionand Form) Rules, 1985 + Guidelines formaking Alteration in MOA(Application w/in 60 days of SR by aresponsible officer + Information &Enclosures)

-Cases: Object, place.-Extent & mode: Place & Object S.S (1To be confirmed by commission.

22. Power of commission when confirming alteration - Either wholly or in part, on such terms conditions deemed appropriate bycommission.

23. Exercise of discretion by commission - May order purchase of interest ofdissident members personally by sponso& not the company.

24. Procedure on confirmation of the alteration - -Certified copy of order of commissionaltered MOA to be filed with registrar foregistration w/in 90days of passing oforder by commission. The registrar shalcertify the registration under his hand.-Extension may be granted by thecommission.

25. Effect of failure to register within 90 days - Alteration, order and proceedingsbecome null & void if not filed w/in90days or w/in such extended timegranted b the commission. Applicationfor revival order may be filed w/in


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further 90days.

26. Registration of Articles - -Ltd. By shares may adopt Table A,mandatory for others to register AOAwith MOA, signed by subscribers of MOA-For Guarantee Ltd. Or Unlimited: StateAuthorized cap. (if have s/cap) Or # ofmembers (if no S/cap)-List & enumerate voting & other rightsattached to different classes of sharesand securities issued or to be issued bythe company.

27. Printing, signature, etc., of articles - Printed, divided, signed & dated.28. Alteration of articles - Through SR & Resolution passed by 3/4t

of affected class (if effect of alterationsubstantive).

29. Forms of memorandum and articles - Table B,C,D & E of 1st Sch.30. Registration of memorandum and articles Rule-4 of Companies (General Provision

and Form) Rules, 1985(4 copies [1 stamped] + declarationby CA, CMA or director or otherofficer)

-MOA+AOA+ Declaration of compliancewith req. of ord.-Supply deficiency or appeal to higherauthority in case of refusal, w/in 30dayof refusal order.

31. Effect of memorandum and articles - Bind the co. & members, covenant onpart of each member to observeprovisions of MOA,AOA & Ord.

32. Effect of registration - The registrar shall certify theincorporation of a company.

33. Conclusiveness of Certificate of Incorporation - Evidence of compliance with all req. ofOrd. in respect of registration.

34. Effect of alteration in memorandum or articles - Members are not bound by the alteratiowhich increases their liability or requirethem to subscribe for more shares unlehe agrees in writing.

35. Copies of memorandum and articles to be givento members

- W/in 14days of request on payment ofprescribed amount.

36. Alteration of memorandum or articles to benoted in every copy

- MOA & AOA to be in conformity withaltered MOA & AOA.

37. Prohibition of certain names Rule-5 of Companies (General Provisionand Form) Rules, 1985 (Enquiry ofavailability of proposed name fromregistrar by sponsors or responsibleofficer)

Circular 25/2003 (Word Bank of any ofits derivatives not allowed unless

approved by SBP)

SECP Guidelines for company nameselection + Company name availabilityguide (Rules + prohibition of certainnames)

-Name is inappropriate, deceptive,designed to exploit the religioussusceptibilities of the people-Identical with the name of the compaalready in existence.-Use of word The in the beginning ofthe name-Name containing a country name unles

justified-Names that create misleading impressiabout the business activities undertakeby the company-Names of the company under liquidatio-Names that signifies patronage of Govtdepartments

38. Rectification of name of a company - May with the approval & shall if registradirects (b4 expiration of 3yrs. fromregistration) w/in 30days of direction.

39. Change of name by a company - SR + Approval of registrar.40. Registration of change of name and effect

thereof- -Registrar shall issue a new certificate o

incorporation altered to meet thecircumstances of the case, and so thechange of name shall be complete-Continue to mention is former name

along with its new name on the outsideof every business place and in all thedocuments referred u/s 143-Change of name shall not affect therights & obligations of the company

41. Alteration of names of commencement ofordinance and change of status of company

- -

42. Power to dispense with Limited in the name ofcharitable and other companies

Circular 29/2009 (Conditions for grantof license)

Rule-6 of Companies (General Provisionand Form) Rules, 1985(Enclosures to be submitted with theapplication for grant of license).

Commission may waive req. to writeLimited to a co. promoting of arts,commerce, science, religion, charity et

43. Provisions as to companies limited by guarantee - No share of profit to non-member.


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44. Conversion of public company into privatecompany

Rule-7 of Companies (General Provisionand Form) Rules, 1985 (Application forpermitting conversion w/in 60 days ofS/R)

Regulation 30 of Listing Regulations ofKSE (Guarantee) Limited (Procedurefor voluntary delisting)

SMC Rules 2003 (Formalities &Modalities of conversion of SMC intoPvt. company, Role of CS & Nominee

directors, Conversion from Pvt. co toSMC)

With the approval of commission.

45. Prospectus or statement in lieu of prospectus tobe filed by private company ceasing to be aprivate company

SMC Rules 2003 (Modalities &formalities for conversion)

Alteration of AOA + File Prospectus orS.I.L.P.

46. Consequences of default in complying withconditions constituting a company a privatecompany

- Cessation of privileges & exemptionsavailed by a Pvt. Co. but may be relivedof the consequences of such noncompliance on an application made tothe commission

47. Liability for carrying on business with less thanthree or, in the case of a private company, twomembers

- Members severally liable for debtsincurred during the non-complianceperiod of after 6 months.

48. Service of documents on company - To the company or officer at reg. officeby post under certificate or by reg. posor personal delivery angst. an

acknowledgement.49. Service of documents on registrar Circular 02/2001 (Fax the notices of

AGM/EOGM to the commission on thesame day on which it is sent to theshare holders), 5/2002 (Above Fax +Copies of newspapers in whichnotices are published be sent to thecommission w/in 7days ofpublication)

Rules-8, 9, 27, 28, 30, 32 and 33 ofCompanies (General Provision andForm) Rules, 1985

By reg. post, personal delivery angst,acknowledgement.

50. Service of notice on members, etc. Rule 10 of Companies (GeneralProvision and Form) Rules, 1985

(Using courier service for thepurpose is allowed).

Circulars- 4/1999, 18/2000, 1/2008,2/2000

Personal delivery or by post at reg. addin Pak., if any. If no reg. add., in Pak.,

then newspaper adv., published generawill accomplish the purpose. Notice ofAGM to: member, legal representative omember & auditor.

51. Authentication of documents and proceedings Circular 7/2004 (Documents under thesignature of a director of a companymay be accepted for registration).

By CEO, director or Co. Sec.

52. Prospectus to be dated - Date of prospectus=Date of itspublication.

53. Matters to be stated and reports to be set out inprospectus

Rule-4 of Balloters, Transfer agents &underwriter Rules 2001 (Qualificationof underwriters)

Rule 3,4 & 8 of The Companies (Issueof Capital) Rules, 1996

-Certification (by CEO & CFO),Subscription days (not less than 7 andnot more than 30 days after the issueprospectus)-Form of application to be accompaniedwith the prospectus (exceptions noted-Non-applicability of this section isprescribed in certain situations.

54. Expert to be unconnected with the formation ormanagement of company

- Experts statement shall not be includein the prospectus unless he has given thstatement purely in his professionalcapacity, i.e. he is not engaged in thepromotion, formation or management othe company.

55. Experts consent to issue prospectus containingstatement by him

- A prospectus containing the statement an expert shall not be issued unless hehas given his written consent to the issu& has not withdrawn it, and thestatement to the fact that he has giventhe consent and has not withdrawn itappears in the prospectus.

56. Penalty and interpretation - Definition: Engineer, valuer, accountanor any other person whose profession


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gives him the authority to a statementmade by him.

57. Approval, issue and registration of prospectus Rule-11 of Companies (GeneralProvision and Form) Rules, 1985(application for approval beaccompanied with 3 copies ofprospectus + required documents +affidavit that all the information inthe prospectus and attacheddocuments are correct & true)

-Approval of the commission to beobtained within 60 days preceding itsissue, a copy of prospectus be deliveredto registrar with prescribed contents(experts consent; copy/memorandumof contracts; statement ofadjustments), facts to be disclosed onthe face of it.-Refusal of registration by registrar ifconsent of auditor, L.A, attorney, bank

or broker to act in that capacity notattached, or other req. not fulfilled.

58. Terms of contract mentioned in prospectus orstatement in lieu of prospectus not to be varied

- Except approval or authority given in G

59. Civil liability for misstatements in prospectus - -Liable persons for untrue statement:Director, proposed director inprospectus, promoter, (expert, auditorL.A, attorney, banker & broker: liableonly for untrue statement made by him-Defenses are available to Directors andexperts u/s 55 & 57(5).

60. Criminal liability for misstatements in prospectus - -Person authorizing the issue ofprospectus shall be liable in respect ofany untrue statement. Imprisonment upto 2 years or Rs. 2,000 fine or both unleproved blameless.

-Experts u/s 55 & 57(5) are not liableunder this section.

61. Document containing offer of shares ordebentures for sale to be deemed prospectus

- -Structure: Company>IssuingHouse>G.P.-Document shall be deemed to be aprospectus, company liable for its issueallotment is valid if: issue to G.P. w/in year after allotment or agreement toallot; no consideration received by thecompany on date of offer for sale; offemade in pursuant of the understanding which company was directly or indirecta party.-Additional disclosures in prospectus:Net amount to be received by thecompany & place and time of inspectio

of the contract.-Signed by: 2 directors or not less thanof partners of the firm.

62. Offer of shares or debentures for sale by certainpersons + Issue of securities outside Pakistan

Rule 9 of The Companies (Issue ofCapital) Rules, 1996 (Offer size=Lowerof Rs. 100mn or 25% of capital; ifintended to issue at premium thencomply with the requirements ofRule 4 of these rules).

Sale to public by 10% owner with theSECP approval & Signed as above.

63. Interpretation of provisions relating toprospectus

- Untrue statement orOmission=Misleading in form & context

64. Newspaper advertisement of prospectus - Newspaper publication of prospectus momit contents of MOA or signatories, orof shares subscribed by them.

65. Construction of references to offering shares ordebentures to the public etc.

- -Section of public includes existingmembers or debenture holders or clientof the person issuing the prospectus.-No offer or invitation shall be treated amade to public if renouncing right is noavailable to the person to whom the offor invitation is made or renouncing righis made available if the favor of domestconcern (person pre-identified by theissuer).

66. Penalty for fraudulently inducing persons toinvest money

- -

67. Application for, and allotment of, shares anddebentures

- Allotment to be made only if made on oapplication form and of such minimalamount prescribed by the commission.Such application shall be irrevocable.

68. Restriction as to allotment - -Prospectus issued: Minimumsubscription in full received in cash in aseparate bank account until certificate


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COB is obtained.-S.I.L.P issued: Min. subscription(specified in MOA or AOA OR wholes/cap to be issued in cash.) in fullreceived in cash-Private Company: Full nominal amounreceived in cash.

69. Statement in lieu of prospectus - -File S.L.I.P with the registrar at least 3days before allotment signed by everydirector and proposed director.-Criminal liability for untrue statementincludes imprisonment for 2 years or fin

of Rs. 10,000 or both.70. Effect of irregular allotment - -Allotment made in contravention of

section 68 or 69 is voidable at theinstance of the applicant w/in 30 days oStatutory Meeting or allotment even ifthe company is in the course of w/up.-Proceedings to recover loss or damageshall not be commenced after the expirof 2 years from the date of allotment.

71. Repayment of money received for shares notallotted

- -Decision of successful & unsuccessfulapplications w/in 10days of closing ofsubscription days & repay money ofunsuccessful applications w/in further10days of decision.-If refund not made w/in 15days,directors (jointly & severally) liable to

repay with surcharge unless provedguiltless.

72. Allotment of shares and debentures to be dealtin on stock exchange

Regulation 9 of Listing Regulations ofKSE (Guarantee) Limited (Inform theExchange about subscriptionreceived w/in 5days of closure of

subscription days + dispatch of sharecertificates w/in 30days of closure ofsubscription list)

-Any allotment made will be void ifapplication for listing is not appliedbefore 7days of issue of prospectus ofapplication not granted within21days+further 21days of closure ofsubscription list. Notify to the applicantof the fact w/in prescribed further21days.-Repayment should be made within 8daof becoming liable to repay otherwisedirectors will be personally responsible repay with surcharge unless provedblameless.

73. Return as to allotments Rule-12 of Companies (GeneralProvision and Form) Rules, 1985(contracts verified by affidavit ofresponsible officer or by certificateof public officer having custody oforiginal documents)

Rule 8 of The Companies (Issue ofCapital) Rules, 1996 (Issue of sharesfor consideration otherwise than incash).

W/in 30days of allotment file with the

registrar a return of allotment statingprescribed particulars including thecontracts in writing if allotment madeotherwise than in cash and resolutionauthorizing the issue in case of bonusissue and issue at discount along with thsanction order of the commission & ordof commission where discount exceeds10%. (Read with complete section).

74. Limitation of time for issue of certificates Regulation 9 of Listing Regulations ofKSE (Guarantee) Limited (W/in 30daysof closure of subscription days)

W/in 90days of allotment or 45 days(5days in case of CDC) of application fotransfer of shares or debentures.

75. Issue of duplicate certificates - -W/in 45days of application if originalsare proved to have been lost, destroyeddefaced, mutilated or torn and issurrendered to the company after maki

necessary inquiry & may charge fee notexceeding the prescribed amount oractual expenses of enquiry- Notify to the applicant w/in 30days ofapplication in case of any impediment.

76. Transfer of shares and debentures Regulation 13 & 14 of ListingRegulations of KSE (Guarantee) Limited-(W/in 45days of application [5 daysin case of CDC] after verification ofsignature of share holder in 48hrs )-Company shall not charge transferfee & shall issue transfer receiptimmediately on receiving shares fortransfer

Circular 16/2000 (Destruction of

physical share certificates [after

On an application made by transferor otransferee on delivery of properlystamped transfer deed to the company.If the T.D. is lost or destroyed, transfermay be made upon the satisfaction ofdirectors and after demanding anindemnity.


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6months or 3years of transfer as thecase may be] and transfer deed[after 3years of transfer] in thepresence of CEO & auditors of thecompany)

77. Directors not to refuse transfer of shares - Transfer of fully paid sharesnot to berefused unless the T.D. is invalid ordefective.Notify the applicant w/in 30days (5daysin case of CDC).

78. Notice of refusal to transfer - W/in 30days along with the reasonsthereof so that he can re-lodge the

application after removing defect.Appeal can also be made to thecommission against the refusal w/in 2months of the receipt of notice of refusto transfer or w/in 2 months of the expof 30days period referred above (Sectio78A).

79. Transfer to successor-in-interest - To be made on an application made bythe nominee filing the evidence ofnomination along with the application.Company may ask for a suitableindemnity before transfer.

80. Transfer to nominee of deceased member - -Member may deposit a nomination in tname of one or more successors (notother than spouse, mother, father,sister, son, daughter & step or adopte

child) specifying the extent of interest each nominee.-Nomination may be varied if at any timsubstituted by other nomination. Orbecome invalid on happening of acontingency or if the nomineepredeceases the member (Read withcomplete section)

81. Transfer by a nominee of legal representative - Transfer of shares of debentures by anominee shall be valid as if he had beenmember.

82. Power to pay certain commissions, andprohibition of payment of other commissions,discounts, etc.

Regulation 10 of Listing Regulations ofKSE (Guarantee) Limited (Payment ofbrokerage to the members ofExchange w/in 30 days of closure ofsubscription days @ of min. 1% of

shares sold through them)

-Lawful, where payment is authorized bAOA, amount not > fixed by SECP,disclosed in prospectus, S.I.L.P ordeemed prospectus or other statementdelivered to registrar & disclosure of #

shares agreed to subscribe by thepersons.-Brokerage < 1%.

83. Application of premium received on issue ofshares

- Writing off preliminary expenses; writinoff expenses, commission or discountallowed on issue of shares or debenturepremium payable on redemption ofredeemable preference shares; fully pabonus shares.

84. Power to issue shares at discount Guidelines for issue of shares atdiscount (Conditions)-Amortization of discount w/in 5years-Not allowed to financial sectorwhere issue is proposed to meetequity/paid up capital requirement-Commission may impose conditions

as deemed fit

Allowed after 1 year of COB; Passed bycompany in GM and sanctioned by thecommission, specifying maximum rate odiscount and issued w/in 60days ofsanction by the commission.

85. Redemption of preference shares - Only fully paid, out of reserves, sinkingfund, proceeds of fresh issue or saleproceeds of property. Where out of oththan proceeds of fresh issue, CRRF iscreated & where out of proceeds of freissue, premium is paid out of profits orshare premium a/c & not from s/cap a/

86. Further issue of capital Regulation 23 & 24 of ListingRegulations of KSE (Guarantee)Limited:-Issue right letters/bonus sharecertificates w/in 30days from the dateof re-opening of share transfer registerfor the purpose.

-Right issue to existing members inproportion to existing s/holding,irrespective of class. Circular shall besigned by directors accompanied with anotice which shall specify the # of share& time of acceptance & filed withregistrar. Fractional shares are disposedoff.


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SRO 192/1986 (Material info. aboutcompany & necessity of issue)

SRO 975/2009 (BOD announcement ofright issue cannot be varied,cancelled, withdrawn or postponed)

Rules 5 and 6 of The Companies (Issueof Capital) Rules, 1996 Issue of rightand bonus shares by listedcompanies)

Rule 5 of Companies share capital(Variation in rights and privileges)Rules, 2000

Public companies (Employee StockOption Scheme) Rules, 2001

-Deviation is acceptable if permitted bFG on the basis of SR, ESOS or whereoffer not accepted by the existingmembers.

87. Issue of shares in lieu of outstanding balance ofany loans, etc.

- -Company may grant option to convertthe 20% of the OS any loan, advance orcredit as defined in BCO from ascheduled bank or a financial institutionhaving a term of not less than 3 years-Such option be granted or exercised onwhen in any 2 of the preceding 3 yearsafter the expiry of 2 years from the datof COB, the return on such balance hasfallen below the minimum rate as laid

down by SBP for the said years.88. Deposits not to be invited without issuing and

advertisementCompanies (Invitation and Acceptanceof Deposits) Rules 1987 (Allow abilityof deposits & obligations of personinviting deposits)

Under the limits, manner & conditionsprescribed by FG, Not applicable onbanking co. & others specified.-Provisions of prospectus be applicable such adv.

89. Nature of shares and certificate of shares - Name of allot tee, with distinctivenumber under common seal

90. Classes and kinds of share capital Share capital (Variation of rights &privileges) Rules, 2000 (Nature ofrights & privileges on different kindsand classes of s/cap as specified inMOA & AOA to be provided in AOA)

Classes & kinds provided in MOA & AOAwith their right & privileges prescribed.

91. Only fully paid shares to be issued - No further issue till the conversion intofully paid shares; proportionate dividenno redemption of such pref., shares;

directors entitle to refuse transfer.92. Power of a company limited by shares to alter itsshare capital

- -Increase, consolidate, and sub divide ocancellation of shares not taken u.-Where authorized capital is fullysubscribed or unsubscribed portion isinsufficient to issue shares to a bankingcompany or financial institution, it isdeemed increased to such extent.(Read with complete section)

93. Notice to registrar of consolidation of s/cap etc, - File notice w/in 15 days of consolidatioand division.

94. Notice of increase of share capital or of members - File notice w/in 15days of passing S/R ithis regard. Where deemed increaseu/s 92(3A), notice may be filed by thescheduled bank or F.I. & therefore,charges are recoverable from thecompany.

95. Prohibition of purchase or grant of financialassistance by a company for purchase of its ownor its holding companys sharesExceptions:-Redemption of shares or other redeemablesecurity-Purchase of own shares by listed company

- Exception to a subsidiary company whesubsidiary acts as a trustee and itsholding company is not the beneficiaryunder the trust & where subsidiary deain shares of its holding company in itsordinary course of business under thebusiness of brokerage (voting rights shastand free zed).No direct or indirect financial assistanceby way of loan, guarantee or provision osecurity for purchase of its own shares of its holding company except it is thepart of the contract of service ofemployees (salaried employees, CEO whwas not the director before appointmenexcluding all other directors).


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95A. Power of a company to purchase its own shares Companies (Buy Back of Share) Rules1999(-Debt equity ratio 75:25-Current ration 1:1-Availability of sufficient cash-purchase procedure)

-Allowed for a listed company forcancellation or treasury stock.-Where retained as treasury stock, novoting rights, no cash dividend and nodistribution in w/up. (Bonus shares andredemption allowed)-Decision by BODMembers through S/& communication to SECP on date of BOmeeting.-Purchase shall be made in cash and outof distributable profits or reservesmaintained for the purpose.

-Purchase shall be made through tendeoffer or through SE.-Maintenance of register of purchase bycompany.

96. Reduction of share capital - Allowed under the authority of S/R +creditors consent after approval fromBOD followed by confirmation of thecourt through order & its registration.

97. Application to court for confirming order - After passing S/R.

98. Addition to name of a company of and reduced - From the date of passing S/R or courtorder till the date specified by the courMay be dispensed in some cases.

99. Objection by creditors and settlement of list ofobjecting creditors

- Entitled creditors: Entitled to any debtor claim on date fixed by the court if thdate were the date of commencement ow/up; date will be fixed by the court fo

to be entered on the list of objectingcreditors.

100. Power to dispense with consent of the creditoron security being given for his debt

- Where the company agrees to securepayment of his debt or claim.Amount= Full amount or amount fixed bthe court (where the company doesnadmit his debt or claim).

101. Order confirming reduction - Court may make an order confirming threduction if it is satisfied with w.r.tevery creditor who is entitled to objecteither as in above section or has given hconsent for reduction.

102. Registration of order and minute of reduction - -Order of the court + Minutes approvedby the court confirming the reduction os/cap + description of altered s/cap +amount deemed to be paid on each sha

filed with the registrar.-Registrar shall issue a certificate ofregistration of order and minutes asconclusive evidence.

103. Minute to form part of memorandum - Registered minute to form part of eachcopy of MOA issued after registration.

104. Liability of members in respect of reduced shares - -Liability of member after reduction:Revised Face value or Face value amount paid or amount deemed to havebeen paid.-The court may enforce the amount ofcall receivable from every person whowas a member at the date of reduction the event of claim by any creditor to thsatisfaction of court whether thecompany has wound up or not.

106. Publication of reasons for reduction - Court may require the company topublish reasons, other information &causes of reduction.

107. Increase and reduction of share capital in case ofa company limited by guarantee having sharecapital

- Same manner & conditions to which acompany limited by shares is therebyrequired abiding by.

108. Variation of shareholders rights Section 28 (3/4th Resolution ofaffected class is required forvariation of s/holders rights if theeffect of alteration is substantive innature)

-10% or more s/holders of affected clasmay apply to court for cancellation ofresolution w/in 30days of it. Such anapplication may be made by 1 on behalof all, if authorized by others in writing-Company shall w/in 15days of courtorder forward it to registrar.

109. Registration of unlimited company as limited - No effect on rights & obligations attainebefore re-registration of un-ltd. as ltd.co.


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110. Power of unlimited company to provide forreserve share capital on re-registration

- May increase nominal amount of sharecapital by increasing the nominal amouof each share & such increased amountshall not be called up except in the eveof w/up.

111. Limited company may have directors withunlimited liability

- Permitted if provided in MOA.On the appointment of a director, thefact that his liability will be unlimitedshall be disclosed in the proposal,furthermore the promoters & officersshall give him a notice before he takescharge of his office that his liability wil

be unlimited.112. Special resolution of unlimited company making

liability of directors unlimited- -If so authorized by AOA+SR, alter MOA

provide for unlimited liability ofdirectors.-Such alteration of MOA shall not applyw/out the consent of present director.

113. Right of debenture holder and share holder tohave copies of trust deed

- Where issue of debentures has beenmade to GP or issued in Debenture stocto a syndicate.

114. Debentures not to carry voting rights - No voting rights in General Meeting,except convertible into ord. shares whevoting rights are determined w.r.t. clasof shares which will be issued uponconversion.

115. Perpetual debentures - Debentures are allowed to be maderedeemable on the happening of a

contingency or expiration of period.116. Power to re-issue redeemed debentures in

certain cases- -Not allowed where: AOA does not

provide, Conditions of issue does notprovide or redemption has been made ocourt order.-Transfer from nominee shall be treatedas re-issue-New stamp duty & registration on re-issue(Read with complete section)

117. Specific performance of contract to subscribe fordebentures

- May be enforced in court for specificperformance (take up and pay fordebentures).

118. Payment of certain debts out of assets subject tofloating charge in priority to claims under charge

Section 405(Nature of preferential payments[Government dues, wages & salaries,

funds maintained for welfare ofemployees, etc].+ repayment rule)[Due in next 12 months from date ofcommencement of w/up or date ofappointment of receiver]

Where receiver appointed u/s 137 orpossession is taken of assets subject tofloating charge, firstly payment of

preferential debts u/s 405 and thenrepayment of loan.

119. Powers and liabilities of trustee - Right to sue for all redemption monies interest in certain cases.

120. Issue of securities and redeemable capital notbased on interest

SRO 747/2000 (Pension Fund Trusts)SRO 1142/1991 (Investment FinanceCompanies)SRO 537/2004 (Corporate brokers,mutual funds, trusts, P.F, G.F)SRO 98/2005 (All companies includinginsurance companies, bodycorporate, entities governed byspecial enactments u/s 503).

Guidelines for issue of commercialpaperGuidelines for issue of TFCs toGeneral Public

-To scheduled banks, financialinstitutions, & others as specified by FG-Agreement for redeemable capital mayprovide for the following:

Mode & basis of repayment Creation of participation

reserve

Agreement for sharing of profor loss

Right of holder to convert theOS balance of capital intoordinary shares of the compain case of Net loss

121. Certain mortgages and charges to be void if notregistered

Rule 13 of Companies (GeneralProvision and Form) Rules, 1985(Instrument creating charge beverified by affidavit of a responsibleofficer or certification of publicofficer in case the property issituated wholly or partly in Pakistan;where property is solely outsidePakistan, verified by the affidavit ofthe responsible officer or personinterested in mortgage or charge)

Prescribed particulars of mortgage orcharge along with the instrumentevidencing it w/in 21days after itscreation.Lender & Property outside Pakistan:21days from the date of receipt ofdocuments if dispatched with duediligence & care (otherwise from thedate of creation).Lender in & Property inside Pakistan:21days from the date of creation.Realization in favor of lender not more

than his interest in the property.


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Person acquiring charged property by wof sale shall be deemed to have thenotice of such charge.

122. Registration of charges on properties subject tocharge

- Company acquiring charged propertyshall file the prescribed particulars +instrument of charge w/in 21days ofacquisition or receipt of documents asthe case may be.

123. Particulars in case of series of debenturesentitling holderspari passu

- File with the registrar w/in 21days ofexecution of deed or execution ofdebenture series:Amount; date of authorization through

resolution; description of propertycharged; and names of trustees (if any)Issue of debenture in series: Date andamount of each issue.

124. Particulars in case of commission, etc. ondebentures

- -File prescribed particulars with theregistrar: Amount or % of commission.-Deposit of debentures as security ofdebt not to be construed as issue atdiscount.

125. Register of mortgages and charges - By registrar for each company.

126. Index to register of mortgages and charges - In chronological sequence in prescribedform.

127. Certificate of registration - Conclusive evidence of compliance withprocedures. Stating the amount secured

128. Endorsement of certificate of registration ondebenture of certificate of debenture stock

- Which is secured by mortgage or chargeregistered by the company.

129. Duty of company and right of interested party asregard registration

- -May be effected by interested personentitled to recover fee from thecompany.-In case of modification, prescribedparticulars of modification + instrumenevidencing modification to be filed w/i21days.

130. Copy of instrument creating mortgage or chargeto be kept at registered office

- -

131. Rectification of register of mortgages - Order of Rectification of omission &misstatement of Commission to be filedwith registrar w/in 21days receipt oforder.

132. Registration of payment or satisfaction ofmortgages and charges

- Intimate registrar w/in 21days ofpayment. Registrar will confirm fromlender by a notice to show cause w/in 1

days.133. Power of registrar to make entries of satisfaction

and release in absence of intimation from thecompany

- Where debt satisfied in whole or part oproperty released from charge or thecharged property cease to form part ofthe co.s property.

135. Companys register of mortgages - Description of property, amount andname of mortgagees to be entered in thregister.

136. Right to inspect copies of instruments creatingmortgages and charges and companys register ofmortgages

- W/out fee by members & creditors. Feefor others.

137. Registration of appointment of receiver ormanager

- W/in 15days of appointment of a personappointed in compliance with court ordor under powers contained in anyinstrument.

138. Filing of account of receiver or manager - W/in 30 days of the expiry of each of th

six months during his appointment as areceiver-W/in 30 days of ceasing to act as areceiver-File a notice with the registrar of thefact of cessation of his office w/in 15days

139. Disqualification for appointment as receiver ormanager

- Minor; person of unsound mind; bodycorporate; director of the company;undischarged insolvent; or disqualified court for taking part in management.

140. Application to court - Receiver or manager may apply to courfor directions in any matter connectedwith the performance of his duties.

141. Power of court to fix remuneration, etc., orreceiver of manager

- Court may fix the remuneration ofreceiver of manager on an applicationmade by him.


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142. Registered office of company - -Have a registered office w/in 28days oincorporation or from the day ofbeginning of the business, whichever isearlier.-Notice of the fact or change therein tobe communicated to the registrar w/in28days of incorporation or changetherein.

143. Publication of name by a limited company - -On the outside of every office or placeof business-Engraved on common seal-Bill-heads, letter papers, document,

notices and in other official publication144. Penalties for non-publication of name - Name not engraved on the seal or not

printed as above, personal liability of tone who authorizes the use of seal ordocument.

145. Publication of authorized as well as paid-upcapital

- Paid up capital to be mentionedwherever the authorized capital is somentioned in the same manner.

146. Restrictions on commencement of business - -Shares allotted up to the amount ofminimum subscription; full amountreceived from directors in respect ofshares; No liability to repay subscriptionmoney u/s 72Declaration of compliance & S.I.L.P. tobe filed with the registrar.-Contracts made before obtaining

certificate of COB shall be provisionalonly.-N/A to a private company, or to a co.ltd. by guarantee not having s/cap.

147. Register of members and index - Name, address, occupation, date ofbecoming & ceasing to be a member

148. Trusts not to be entered on register - Rather the name of trustee is entered othe register.

149. Register and index of debenture holders - Name, address, occupation, date ofbecoming & ceasing to be a member

150. Inspection of registers - By members at least 2 hours extracts tobe provided w/in 10 days (excluding noworking days)

151. Power to close register Regulation 14 of Listing Regulationsof KSE (Guarantee) Limited:-Company shall give min. 14days notice

to KSE prior to closure of ShareTransfer Books-Min. closure period of 7days < 15 days& not exceeding 45 days in a year

-By a notice of not less than 7day by waof advertisement in a newspapers.-Closure not exceeding 30days at one

time and not exceeding 45days in a yea

152. Power of court to rectify register - Where name fraudulently entered oromitted; or unnecessary delay in enterior removing the name of the memberCourt may decide dispute for title.

154. Notice to registrar of rectification of register - File the order of the court w/in 15 daysof the order.

155. Register to be evidence - Prima Facie evidence of any matterwhich by this ordinance is directed isauthorized to be inserted therein.

156. Annual list of members, etc. - Company with s/cap = Form ACompany w/o s/cap = Form BParticulars as on the date of AGM or las

day of calendar year (Dec 31, whereAGM not held or held but notconcluded)Listed co. = W/in 45 days (extension mbe granted for not > 15days)Other co. = W/in 30days

157. Statutory meeting of company - -Meeting of members of a companylimited by shares and guarantee (havings/cap) w/in 3-6 months from C.O.B.-Statutory report (F-25) certified by atleast 3 directors (one of them shall bethe CEO) be forwarded to every membeat least 21days before the meeting.5copies of the report be delivered to thregistrar for registration.-At the commencement of meeting, listof members with their particulars shall


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be presented by the directors which shabe open to inspection during themeeting.-Court may order holding of the meetinor to file statutory report rather thanorder for windup in case of noncompliance.-N/A to private company other than theprivate company converted to publiccompany (except the one converted aft1 year of incorporation).(Read with complete section)

158. Annual general meeting Rule-14 of Companies (GeneralProvision and Form) Rules, 1985(Application for seeking extension tobe submitted at least 30days beforethe date of meeting along withparticulars such as: Reg. #, Name,Address, Date of Last AGM, Maximumdate by which the meeting shouldhave been held under the saidsection, Reasons for extension, latestaudited financial statements).

Regulation 21 of Listing Regulationsof KSE (Guarantee) Limited:-Minutes of AGM & EOGM to befurnished to KSE w/in 60days

thereof.

Circular 01/2008 Publication of noticein Urdu as well.

Circular 05/2002 Notice of themeeting to be faxed to the commissionon the date it is sent to the S/holders;Copy of newspaper in which notice ispublished to be sent to the commissionw/in 7days of publication.

Circular 04/1999 Publication ofnotices in generally known, commonlyread and province or country widecirculated morning newspaper.

Circular 02/2000 Publication atappropriate, distinctive andconspicuous place in a newspaper.

-W/in 18months from incorporation andthereafter once in every calendar yearwithin a period of not more than 4months from the closing of financial ye& not more than 15months from theholding of last AGM (Commission maygrant extension to listed company inholding of subsequent AGM for notmore than 30days but on specialreasons only) Circular 4/2000.

- In the town of reg. office + notice toevery member at least 21days beforemeeting & published in newspaper incase of listed company.

159. Calling of extraordinary general meeting Circulars as noted above. -Directors of the company or directors the request of members representing aleast 10% voting power or membersthemselves if directors fail to call ameeting (w/in 3months of deposit ofrequisition) w/in 21days of their reques-Requisition shall be signed by themembers, state the objects of themeeting and deposited at the registeredoffice.-Notice of the meeting shall be sent atleast 21days before the meeting, butregistrar may allow a shorter notice

period in case of an emergency affectinthe business.-Expenses of convening the meetin shalbe reimbursed by the company to therequisitionists.

160. Provisions as to meetings and votes - -Persons entitled to receive notice ofmeeting-Statement of material facts for specialbusinesses-Quorum of a meeting-Status of the meeting where quorum isnot present-Chairman of the meeting-Votes available to the members(Read with complete section)

160A. Circumstances in which proceedings of a general

meeting may be declared invalid

- W/in 30days of the meeting on a petitio

filed by members having 10% or more


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voting rights where material defects oromission in the notice or irregularproceedings of the meeting.

161. Proxies Circular 01/2000(Proxy shall produce his originalNIC/passport at the time of meetingor BOD Resolution/power of attorney)

-Not more than 1 person for 1 meetingcan be appointed by a member,of acompany having share capital,entitleto vote and attend at a meeting.-Must be a member unless AOA providesotherwise-Rights of proxy: Attend; vote; speak;demand poll; abstain from voting; not texercise full voting rights.

-Notice of a meeting shall mention theright to appoint proxy and must beaccompanied with the proxy form.-Instrument be lodged with the companat least 48hrs before the meeting inwriting and signed by the appointer orattorney (common seal or signed byattorney in case of body corporate).

162. Representations of corporations at meetings ofcompanies and of creditors

- -A company being a member byresolution of its directors authorizes anof its officials or any person as a proxy.-A creditor may authorize any of itsofficials to represent it at the creditormeeting

163. Representation of federal government, etc, atmeetings of companies

- Where FG or PG as a member appoints proxy, he shall be a deemed member an

shall also have the right to appoint prox164. Notice of resolution - -Along with a draft resolution other tha

routine and procedural resolutions.-Members having > 10% voting power mgive a resolution and its notice to thecompany to be circulated to all themembers.

165. Voting to be by show of hands in first instance - Applies to all General Meetings.

166. Chairmans declaration of result of voting byshow of hands to be evidence

- The facts about the resolution entered the minutesbook with chairmansdeclaration are evidence of the fact.

167. Demand for poll - On or before declaration of results ofshow of hands by the chairman himself on the order of him on demand ofmembers as prescribed.(Read with complete section)

168. Time of taking poll - Purpose: At same time, for election ofchairman or adjournment of meetingPurpose: w/in 14days of demand of polfor other purposes.

169. Resolution passed at adjourned meeting - Date of passing a resolution = Date onwhich it was in fact passed and not theearlier date

170. Power of commission to call meetings - If default in holding SM, AGM, EOGM asrequested by members; on its ownmotion or on an application by anydirector or member.

172. Filing of resolution, etc. - -Copy or SR authenticated by CEO of Cosecretary to be filed with the registrarw/in 15days of passing thereof.-Copy of SR to be forwarded to membeon his request on payment of a fee.-Copy of every SR to be annexed toregistered AOA.

173. Minutes of proceedings of general meetings anddirectors

Code of Corporate Governance:-Minutes of the meetings circulated todirectors w/in 30days.

-Proceedings of the meetings along withthe names of the participants to beentered in properly maintained bookskept at the registered office, which shabe open to inspection by members w/ocharge for not less than 2hrs duringbusiness hrs.-Minutes of the meeting of BOD shall becirculated to every director w/in 14dayof the meeting.

174. Minimum number of directors of a company Code of Corporate Governance:-Executive directors not more than 75%of elected directors, including C.E.O.

SMCAt least 1Other privateAt least 2PLC (other than listed) At least 3Listed PLCAt least 7

175. Only natural persons to be directors - No director shall be the variable


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representative of a body corporate.

176. First directors and their term - All the subscribers of MOA deemeddirectors unless number & names of firsdirectors determined by majority of thein MOA.Term: Till election of directors in 1stAGM.

177. Retirement of directors Section 180 First directors: 1st AGM.Subsequent: 3years.

178. Procedure for election of directors Proviso to Section 183 (c) (AvailableVotes Minimum number of votessufficient to ensure success in theelection)

-Number of directors to be fixed by BODat least 35days before AGM, & shall notchange w/out approval of GeneralMeeting.-Notice of the meeting shall state thenumber of elected directors & names ofretiring directors.-Invitation to contest before 14 days ofAGM, by retiring as well as new directowilling to contest. Their intention to beforwarded to members at least 7daysbefore the meeting- Available votes= Number of votes*Voteper share*Number of elected directors.

1788A. Fresh election of directors on request ofsubstantial acquirer

- In the forthcoming AGM on an applicatioto the commission by a person holding12.5% voting shares of a listed companyin his own name; s/holding not to bedisposed for at least 1year from the dat

of fresh election.179. Circumstances in which election of directors may

be declared invalid- On the application of members with >

20% voting power w/in 30days ofelection, if there is material irregularitin the holding of election.

180. Term of office of directors Code of Corporate Governance (In alisted company, casual vacancy shallbe filled up by the directors w/in30days thereof)

Circular 03/2006 (Companies shouldtake immediate steps to hold electionof directors on due dates[whether inAGM or EOGM] and reportimpediments to the Registrar w/in15days of the expiry of the term)

3 years unless resigns earlier, becomesdisqualified or cease to hold office.Casual vacancy may be filled up by thedirectors for the remainder of the term

181. Removal of directors - -The resolution for removal of director(is not deemed to have been passed if:Elected Directors: Number of votescasted against the resolution (i.e. infavor of director) > minimum # of votescasted at the immediately precedingelection of directors.First or Casual Directors: Number ofvotes casted against the resolution (i.e.in favor of director) > Total availablevotes [u/s 178 (5)] divided by number odirectors for the time being.

182. Creditors may nominate directors - By creditors or other special interestholders by virtue of contractualarrangement.

183. Certain provisions not to apply to directorsrepresenting special interest

Section 178 (5) Provisions ofElection; Term of Office;Removal N/A on following directors:-Directors nominated by company orcorporation (by virtue of investment ocredit facilities) owned or controlled bFG or PG-Directors nominated by FG or PG-Directors nominated by foreign equityholders-Votes not available to such director=Minimum # of votes sufficient to beelected as director.Term: As per the contractualarrangement or on the discretion ofnominator.

184. Consent to act as director to be filed withregistrar

Code of Corporate Governance:-Declaration in the consent about theawareness of duties & powers under

the law, MOA, AOA & Listing Reg.

Consent given to the company; & w/in14days of appointment the company shfile with the registrar a list of them alo

with their consent.


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185. Validity of acts of directors - Acts and meetings attended shall remaivalid on subsequent discovery of defectin his appointment, but he shall notexercise his rights till the removal ofdefect.

187. Ineligibility of certain persons to becomedirector

Code of Corporate Governance:-Ineligible if serving as a director of 10listed companies; if his name is notborne on register of National Tax Payer(except non-resident); if convicted bycourt as defaulter in repayment ofloan; if declared defaulter by stock

exchange if he is a member; if engagedin business of brokerage.

Minor; unsound mind; applicant ofadjudicated insolvent; undischargedinsolvent; convicted for moral turpitudedebarred under ordinance; betrayed lacof fiduciary behavior; not a member;defaulter of loan; engaged in brokeragebusiness or is a spouse of such person o

is a director, sponsor or officer ofbrokerage house.Exception of not a member:-Person representing govt. or institution-Whole time director who is an employe-CEO-Person representing creditor

188. Vacation of office by directors Section 187 & 195. Becomes ineligible u/s 187; absent for consecutive meetings of board or from meetings in a continuous period of3months w/out leave of absence;accepts other office other than of CEO,banker, legal or technical advisor w/ouapproval in general meeting; acceptsloan or guarantee in contravention ofsection 195.

191. Restriction on directors remuneration, etc. - -For performing extra services, asdetermined by directors or company in general meeting as per AOA.-For attending meetings, shall not excethe scale approved by directors or by thcompany in accordance with AOA.

192. Restriction on assignment of office by director - Assignment: Transfer of all rights,privileges & obligations.-Assignment made by virtue of agreemeor provided in AOA should be approved the company in general meeting by SR.-Appointment of alternate director withthe approval of directors by reason ofabsence from Pakistan for not less thanmonths till the time of returning ofdirector.

193. Proceedings of directors Code of Corporate Governance:-Chairman of the company (electedfrom among the non-executivedirectors) shall preside over themeeting.-Notice of the meeting to be served atleast 7days before the meeting (exceptin case of emergency)-Minutes of the meetings circulated todirectors w/in 30days.

Circular 18/2005 (Board meetings oflisted companies may be heldthrough video conferencing)

Circular 12/2004 (Board meetings ofunlisted public companies may be

held through video conferencing)

Quorum: 4 or 1/3rd whichever is higheDirectors of PLC shall meet once in evequarter of a year.

194. Liabilities, etc., of directors and officers - -Provisions w.r.t. exemption or givingindemnity to director, C.E.O., or officein respect of liability of the companywhich he may have incurred upon himseby virtue of non compliance with anylaw, shall be void.-Exception: liability incurred by him inrespect of defending any proceedings inwhich judgment is given in his favor or is found innocent.

195. Loans to directors, etc. -

196. Powers of directors Rule-14A of Companies (GeneralProvision and Form) Rules, 1985(Approval of BOD for Capitalexpenditure / Disposal of asset having

W.D.V. shall be > 1,000,000 /

Ask call receivable; issue shares,debentures or redeemable capital;borrow money; invest funds; issue loansapprove accounts; approve bonus to

employees; incur capital expenditure &


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100,000 respectively) dispose asset; undertake leasingobligation > 1,000,000; declare interimdividend; etc.(Read with complete section)

197. Prohibition regarding making of politicalcontributions

- To any political party, individual or bodfor any political purpose.

197A. Prohibition regarding distribution of gifts Circular 01/1991 (Listed companiesshould refrain from offering gifts tos/holders in AGM)

No distribution of gifts to members inmeetings.

198. Appointment of first chief executive Section 218:-Memorandum of terms of appointmentor contract or variation of C.E.O., &nature of interest of director to besent to every member w/in 21days ofappointment or variation of contract ofappointment.-Where subsequent interest isdeveloped, Memorandum of interest ofthe director w/in 21days of becominginterested.

-Every company (other than a companymanaged by managing agent which mayappoint) shall have CEO appointed by thdirectors w/in 15 days of incorporationthe date from which in commencebusiness whichever is earlier, appointCEO for up to 1st AGM or shorter perioddetermined by directors.

199. Appointment of subsequent chief executive - Appointed by the directors w/in 14daysof election of directors or occurrence ocasual vacancy, not for more than 3yeafrom the date of appointment. RetiringCEO eligible for re-appointment.

200. Terms of appointment of chief executive andfilling up of casual vacancy

- -To be determined by directors or by thcompany in general meeting inaccordance with AOA.

-C.E.O. = Deemed directors (if notalready a director).

201. Restriction on appointment of chief executive - If he is ineligible on the groundsmentioned u/s 187.

202. Removal of chief executive - By 3/4th of total number of directors orcompany by S/R.

203. Chief executive not to engage in businesscompeting with companys business

- Whether directly or indirectly (carried oby spouse or minor children).

204. Penalty - May be debarred from becoming directoor C.E.O. of a company for not exceedi3years.

204A. Certain companies to have secretaries Code of Corporate Governance:-Appointed by C.E.O with the approvalof BOD.-Shall attend the meetings of BOD; notentitled to cast vote unless elected as

a director.

Circular 15/2003 (Whole timesecretary means a full time employeeas designated as secretary; duties ofsecretary may not be assigned to anyofficer in addition to his own duties &responsibilities; but a whole timesecretary can be assigned additionaljob if the management considers itappropriate).

Rule 14Bof Companies (GeneralProvision and Form) Rules, 1985(Qualifications of company secretary)

SMC Rules 2003 (Duties of a companysecretary).

-Listed company = Whole time secretar& independent share registrar-SMC = as prescribed (not a whole timesecretary)Listed company: Member of recognized

body of professional accountants ORcorporate or chartered secretaries ORperson holding a master degree inbusiness administration or commerce orlaw graduate from a universityrecognized by HEC & having at least 2years relevant experience

SMC: Person holding bachelor degreefrom a university recognized by HEC.

205. Register of directors, officers, etc. - Maintain register and filing of form 28, & 29.

206. Bar on appointment of managing agents, solepurchase, sales agents, etc.

- -No company whether incorporated insior outside Pakistan, except a companywholly owned of controlled by FG or PG

-No company incorporated in or outsidePakistan & carrying on business inPakistan shall appoint sole purchase,sale or distribution agent except wherecompany incorporated outside Pakistansuch major portion of its business isconducted outside Pakistan.

207. Terms and conditions of appointment ofmanaging agent

- As the FG may deem fit to impose.


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208. Investment in associated companies andundertakings

SRO 819/2007(Exempt companies)

SRO 865/2000 (Contents of statementof material facts)

-Investment and change in the nature oinvestment to be under the authority ofS/R which shall indicate PANT (Period,Amount, Nature & Terms)-Return on investment > borrowing costof the lending company.

209. Investment of company to be held in its ownname

- Exceptions:-shares transferred in the name of anominee director as qualification share-shares of subsidiary company in thename of nominees to ensure that numbof members is not reduced below

minimum # of members-where principal business is sale andpurchase of securities-deposit of shares or securities forcollection of interest and dividend-deposit by way of security for repaymeof any loan advanced to the company-transfer or register in the name of CDC-transfer in the name of issuing house.

210. Form of contract - Contracts on behalf of the company mabe:-May or may not be in writing; signed ba person acting under the authority;varied or discharged.

211. Bills of exchange and promissory notes - Deemed to have been made, drawn,endorsed, or accepted on behalf of the

company if made, drawn, endorsed,accepted on behalf of the company byany person acting under the authority.

212. Execution of deeds - Deeds signed by the attorney(empowered by company in writingunder its common seal) under hiscommon seal on behalf of the companyshall bind the company as if it wereunder its common seal.

213. Power of company to have official seal for useabroad

- -If authorized by AOA, co. may haveseparate official seal for any territoryoutside Pakistan.-That seal shall be the exact copy ofcommon seal with the addition of thename of territory where it is intended tbe used.

-May appoint agent as in above section authorize him to affix the official seal tany deed or document to which thecompany is a party in that territory.

214. Disclosure of interest by directors Section 195(1) Requirement ofapproval of transaction by BOD u/s196 where director is interested inthe following manner:Director; Firm of which he is a partner;Any partner of the firm of which he isa partner; Private company wheredirector is a member or partner.

-Whether directly or indirectly,concerned or interested, in any contracor arrangement, entered or to be enterinto, by or on behalf of the company.-Disclosure to be made at BOD meetingwhere question for entering in to thecontract is considered, or at subsequenBOD meeting where he becomessubsequently interested.-Notice of disclosure shall expire at endof financial year, & renewed by a freshnotice given before one month of expiry

215. Interest of other officers, etc. - No other officer shall enter into any

contract or arrangement with thecompany in which he is directly orindirectly concerned or interested, unlehe makes a disclosure & obtains approvof directors.

216. Interested director not to participate or vote inproceedings of directors

- Over the approval of matter where he ithe interested director. Not to becounted for the purpose of quorum ovethat matter.Exceptions:-Private company not being holding orsubsidiary of PLC.-Contract of indemnity for loss which thdirector may suffer as a result of beingsurety for the co.-Directorship by virtue of nomination.


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217. Declaring a director to be lacking fiduciarybehavior

- By the court if he contravenes section214, 215(1) & 216.

218. Disclosure to members of directors interest incontract appointing chief executive, managingagent or secretary

- -Attach abstracts of terms ofappointment or contract or variation tothe Directors Report & nature of intereof director.-Memorandum of terms of appointmentor contract or variation of C.E.O., &nature of interest of director to be sentto every member w/in 21days ofappointment or variation of contract ofappointment.

-Where subsequent interest is developeMemorandum of interest of the directow/in 21days of becoming interested.

219. Register of contracts, arrangements andappointments in which directors, etc., areinterested

- Particulars: Date, Name of parties,Terms & conditions, Date of placement contract with directors, Name ofdirectors voting for, against & remainedneutral. (Where directors approval isrequired, w/in 7days of approval ofdirectors ORin any other case w/in 7daof receipt of particulars of contract orw/in 30days of contract whichever islater).Exceptions: Value or cost of contract is200,000 or contracts by banking co. forcollection of bills in ord. course of

business220. Register of directors shareholdings, etc. - -By a listed co. in respect of number,

description & amount of shares ordebentures of the co. being thesubsidiary or holding co. or the subsidiaof holding co. held by Director, CEO, MACFO, CS, auditor or 10% beneficial owne(direct + indirect + owned by partnershfirm + owned by PVT. co. in which he ismember of partner).-Kept at reg. office & open for inspectiosubject to restrictions imposed by AOA in GM for > 2hours each day. From 14dabefore AMG & 3days of its conclusion,open for members & debenture holder.For person acting on behalf of SECP, alltime.

221. Duty of directors, etc, to make disclosure ofshareholdings, etc.

- For the purpose of section 220, personsmentioned above shall give notice ofdisclosure w/in 15days of acquisition orchange of interest.

222. Submission of statements of beneficial owner oflisted securities

- To the registrar & SECP, by personsmentioned in section 220, w/in 30days occupying the position, acquisition orlisting & w/in 15days of change ofinterest.

223. Prohibition of short selling -Short selling: Purchase and sale, or Saand purchase w/in a period of less than6months-By director, CEO, CFO, CS, MA, auditorand beneficial owner of listed company

224. Trading by directors, officers and principalshareholders

Rule 16 of Companies (GeneralProvision and Form) Rules, 1985

-Computation of amount to betendered to a listed co. = Highestprice of 6months (Sale Price) minusLowest price of 6months (purchaseprice)-Purchase and sales shall me matchedw.r.t purchase & sale of shares ofsame class and of same listed co.-Bonus shares & allotment of rightshares either on the basis of his ownentitlement or on account of purchaseof right allotment letters shall be notconstitute a purchase.-Losses arising in such transactionsshall not be offset against gaincomputed in above manner;

brokerage, stamp duty & other

-Gains made by persons mentioned insection 220 by way of short selling shall

make a report & tender the amount ofgain computed in the prescribed manneto the company, and intimate the fact the registrar & SECP. Exception ofpurchase may include security acquiredin good faith in satisfaction of previouslcontracted debt.-Such person shall tender the amount ogain to the co. w/in 6months of accruaor 60days of demand whichever is laterfailure to which renders the amount ofgain to vest in the SECP. And unlessdeposited to SECP in prescribed accounthe commission may direct recovery ofthe same as an arrear of land revenue.


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expenditures may be deducted subjectto documentary evidence of suchpayments.

225. Contracts by agents of company in whichcompany is undisclosed principal

Agent or officer of such a contract shallmake a memorandum of terms of suchcontract & with whom it has been made& shall deliver it to the company &directors which shall be laid before thedirectors at their next meeting.

226. Securities and deposits, etc. Section 229 Personal liability to paythe loss suffered by the depositor of

security.

-No company, officer of agent shallreceive or utilize the securities or

deposits except in accordance with acontract in writing, & all moneysreceived shall be deposited in a separatbank account.-N/A to deposits received as advancepayment for goods to be delivered.

227. Employees provident funds and securities Section 229 Personal liability to paythe loss suffered by the employee.

SRO 258/2002 Employees P.F. (Inv. Inlisted securities) Rules, 1996-Total inv. up to 30% of PF contribution-Inv. in particular company < 5% ofp/up capital of the investee company-Minimum operational record of 5 years-At least 15% dividend in preceding

consecutive 3years-No default in financing facilitypublicly known-Securities have been rated as aninvestment grade with min. rating ofBBB.-No default in financing facilitypublicly known

-Unfunded P.F.: Moneys or securitiesdeposited by employees shall w/in 15daof deposit be deposited in separate bana/c or in NSS.-Funded P.F.: Moneys or securitiescontributed by employee & the employshall be paid to the trustees a/c in15days of collection. From thereon,obligations of the co. shall pass to thetrustees.

-Such contribution shall be deposited inNSS, separate bank a/c, or in a specialaccount in itself where the company isthe scheduled bank; or invested in govtsecurities or bonds, redeemable capitalWAPDA securities or in listed securities.

228. Right to see bank receipts for money orsecurities

Section 229 Personal liability to paythe loss suffered by the employee.

Person depositing money or securityunder the above section shall have theright to see bank receipts on request tothe company or trustee.

230. Books of accounts to be kept by company Sector wise general order formaintaining cost accounting record:Cement, Vegetable ghee, Sugar,Fertilizers, Thermal energy, Petroleum

refining, Natural gas & Polyester fiber.

-At reg. office w.r.t: sale & purchase;assets; liabilities; receipts & paymentsalong with matters in respect of receiptand payments; particulars relating to

utilization of material, labor or otherinput costs.-Notice to registrar w/in 7days ofdecision of such other place with fulladdress where the directors decided tokeep the aforesaid books of accounts atplace other than reg. office.-Summarized returns of transactionseffected at branch office should be madat least quarterly.-Open to inspection by directors duringbusiness hours. Inspection by members the discretion of the directors.-Books of accounts of not less than10years to be kept.

231. Inspection of books of account by registrar, etc. - -By registrar or person authorized bySECP

-Above persons may make copies & placidentification marks on books; report toSECP after inspection-Duty of director, officer or otheremployee to produce books for inspecti& provide necessary assistance Inconnection with inspection.

233. Annual accounts and balance sheet Regulation 18 of Listing Regulationsof KSE (Guarantee) Limited:-Annual report and audited accounts tobe sent to KSE not later than 21daysbefore a meeting of s/holders

-Directors place the accounts before AGnot later than 18months afterincorporation and subsequently once atleast in every calendar year.-Period of 1st accounts= Period since theincorporation date till the closing date.-Period of accounts shall not exceed12months except after special permissioby registrar (SECP in case of listed co.)

and accounts be audited.

SHARES

OTHER THAN SHARES


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-At least before 21days of meeting, sencopy of accounts to every member, andkeep a copy at reg. office for inspectionby members.-5 copies of accounts to SECP, stockexchange & registrar.

234. Contents of balance sheet - -Listed co. & private and unlisted publico. which is a subsidiary of listed co=4th

sch. Other cases=5th sch.-N/A to insurance or banking co.-Such notified IASs be followed.-Listed co. shall annex S.O.C.I.E, Cash

Flow statement & accounting policies &any changes therein.

234A. Special audit - -Commission may appoint an auditor foconduction special audit, on its ownmotion or up on application made bymembers holding > 20% voting rights-1/2of audit expenses shall be borne &paid in advance by members and other shall be payable by the co (co. liable toreimburse the commission whereexpenses payable by the co. were settleby the commission).-On receipt of special audit report,commission may issue directions forimmediate compliance, to the co. &management.

235. Treatment of surplus arising out of revaluation offixed assets

SRO 45/2003-At first, incremental depreciation is tobe provided in Statement ofComprehensive Income to take effecton E.P.S.-In S.O.C.I.E, transfer the amount toun-appropriated profit/loss from thesurplus equal to the amount ofincremental depreciation.

-Transferred to Surplus of RevaluationFixed Assets Account shown after capi& reserves.-Shall not be set off unless realized ondisposal; may be applied in setting off oin diminution of any deficit arising fromrevaluation of any other fixed asset;incremental depreciation may be chargto surplus account.-May be amortized according to life ofthe asset.

236. Directors report Section 218(1)Additional content (abstract of termsof appointment or contract or variation& nature of concern or interest of thedirector) w.r.t. appointment of CEO,MA or CS where any director isinterested in the contract ofappointment.

-Report w.r.t state of companys affairsthe amount of recommended dividend &amount proposed to carry to reserve fuor general reserves.-Additional for PLC or PVT co. beingsubsidiary of PLC is also prescribed.-Shall be signed by Chairman of directoor CEO on behalf of directors if soauthorized or CEO & such number ofdirectors as are reqd. to sign accountsu/s 241 [1 director].-Prepare separate in the standpoint ofholding co. to attach it with consolidateF/S.

237. Consolidated financial statements - -Mandatory for every company whetherlisted or otherwise.-Shall be attached to F/S of holding co.made in accordance with the req. of 4 th

sch.-Where financial year end of subsidiaryprecedes that of its holding co. by morethan 3months, the subsidiary shall make

an interim closing as on the date ofyearend of holding co. Such interim F/Sshall be reviewed by the auditors of thasubsidiary.

238. Financial year of holding company and subsidiary - -Directors of holding co. should ensurethat F/Y of both the companies coincidexcept where there are good reasonsangst. it.-SECP may direct that submission ofaccounts & holding of AMG shall not berequired where it seems appropriate foholding or subsidiary company to extenits financial year in order to agree F/Yof both the companies.

239. Rights of holding companys representatives andmembers

- Inspection of subsidiarys books duringbusiness hours by a representative of

holding co. authorized by the resolution


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240. Balance sheet of modaraba company to includemodaraba accounts, etc.

- -F/S as at the yearend of modarabawhere financial year of modarabacoincides with that of modaraba compa- F/S as at the yearend of modaraba lasbefore that of modaraba company if itdoesnt coincides.

241. Authentication of balance sheet Code of Corporate Governance:-CEO & CFO shall present the F/S dulyendorsed under their respectivesignatures for consideration & approvalof BOD.

-Approved by directors; signed by CEO +at least 1 director or 2 directors onlywhere CEO is out of Pakistan for the timbeing.-Attach a statement to the accountsexplaining reason for non-compliance.

242. Copy of balance sheet to be forwarded to theregistrar

- -W/in 30days of AGM > 3 in case of listeco. and 2 for every other co.-N/A to PVT co. having p/up cap.


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-Intimate the exchange as soon as allthe warrants are posted.

debarred from becoming CEO or directoof the company and any other companyfor 5years, 2years imprisonment + Fine 1.0mn Rupees.-Exceptions to delay in payment ofdivided.

252. Appointment and remuneration of auditors Regulation 29 of Listing Regulationsof KSE (Guarantee) Limited:-No person/firm shall be appointed asan auditor if he/partner of a firm isfound guilty of professional misconductfor 3 years from the date of

declaration by commission or court;engaged by company to provideprohibited services.

-First auditors: By directors w/in 60dayof incorporation till the conclusion of 1AGM (Removed by SR in GM)ORBy co.GM (Removed in GM by resolution forremoval & appointment).-Subsequent auditors: By co. in each

AGM until conclusion of next AGM(Removed by SR in GM)-Casual vacancy may be filled bydirectors w/in 30days to hold such officuntil conclusion of next AGM.-SECP may fill the casual vacancy ifauditors not appointed as aforesaid (bydirectors, in GM, Casual vacancy notfilled) or appointed directors areunwilling to act, upon the notice given the company w/in 1week of occurrenceof above events.

253. Provision as to resolutions relating toappointment and removal of auditors

- -Notice shall be required for a resolutioat AGM for appointing a person as auditother than a retiring auditor, not lessthan 14days before AGM which shall be

sent to every member & retiring auditonot less than 7days before AGM.-Fact of representation made by theretiring auditor shall be made in suchnotice & copy of such representation issent with the notice.-Intimate the registrar w/in 14days ofappointment or removal together withthe consent of appointed auditor.

254. Qualification and disqualification of auditors Code of Corporate Governance:-Auditors should not at any time holdshares of listed co. or any of itsassociated co. or undertaking; if so,disclose the interest w/in 14days ofappointment and divest themselvesw/in 90days thereof.-No listed co. shall appoint a firm ofauditors which has not been givensatisfactory rating under QCRprogram me of ICAP; if a firm orpartner is non-compliant with IFACCode of Ethics.-Listed companies shall change theirauditors every 5years, if impracticalthen rotate the partner in charge afterconsent of SECP.

-Qualification: CA for PLC or PVT co.which is subsidiary of PLC or PVT co.having paid up s/cap > 3mn Rupees.-Disqualification: Director, other officeor employee during preceding 3years;Partner or employee of director, officeor employee of co.; spouse of director;indebted to co. (other than credit carddues of < 500,000 or utility bills of90days); body corporate; s/holder of coor its associate co.-Also disqualified where disqualified forappointment as auditor of subsidiary orholding co.

255. Power and duties of auditors Code of Corporate Governance:-Furnish Management Letter to BOD oflisted co. w/in 30days of audit report-Partner of the firm of external auditorshall attend AGM at which auditedaccounts are placed for consideration& approval.

Powers:-All time access to books, papers,accounts & vouchers whether kept at reoffice or elsewhere-Require from co., directors & otherofficers such information & explanationnecessary to carry out the duties as

auditor-Access to copies of & extracts frombooks and papers of branch in case thebranch office is situated outsidePakistan.-Attend GM, receive notices ofcommunications relating to GM & to beheard at GM on any part of businesswhich concerns him as auditor.Duties:-Make a report to members of thecompany-Present himself in GM in which F/S areto be discussed.

256. Reading and inspection of auditors report - Read out in GM & open to inspection byany member


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257. Signature on audit report, etc. - Signed (by auditor or partner of auditfirm practicing in Pakistan); dated;indicate the place at which it is signed

258. Audit of cost accounts -Cost auditors shall be appointed bydirectors with the approval of the SECPw/in 60days of close of financial year-Circulation and distribution of costaudit report along with thereconciliation statement of costaccounts with audited financialaccounts, w/in 6months of close offinancial year end to the members,

directors, s/holders, commission &registrar.-Cost audit report shall not be printed,& it shall be permissible to circulatephoto-copies thereof.

-On the direction of FG by a CA or CMA,having same powers, duties & liabilitiesas an auditor of the co.

-For last 5 sectors mentioned in section230, cost audit applicability is w.r.t F/Ycommencing from 01.07.2010

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