LO 1: The Features of a Company

CAF 07: Company Law LO 2: Definition and Types of Companies

Chapter 1: Introduction to Company LO 3: Authorities, Officials, Members and Resolutions
Secret Sheet for Quick Revision Premium Content
LO 4: Association Not for Profit u/s 42 (Spring 2024)
(By Muhammad Asif, FCA) LO 5: Incorporation (Registration) of a Company

LO 1: Features of a Company LO 3: Authorities, Officials, Members and Resolutions

1. Separate Legal Status External Internal

contracts with its own name
owns assets
Registrar: Court: Members Directors
liable for its debts Commission:
Reserves name May cancel following (Subscribers, Shareholders, Guarantors)
2. Share Capital Registers Association Not for Profit
Registers MOA/AOA Election of Directors
Shares have rights Alteration in Registered Office Clause.
Issues Certificate of Incorporation, and Variation in shareholders’ Rights
Shares are transferable Registers Prospectus. Ordinary Resolution Special Resolution
Commencement of Business. General Meetings and their
3. Separation of ownership from management Extends time for AGM (listed) (simple majority of (3/4th Majority of present
Receives Notices etc. Proceedings
4. Limited Liability of Members Approves loan to directors (listed) present members) members + 21 days' notice)
Extends time for AGM (unlisted)
Limited by shares (upto unpaid amount of shares) Call general meeting
Investigates Officers, Books
Limited by guarantee (upto amount agreed to Authority for Appeals against
contribute) Registrar
5. Legal Obligation
6. Liability to pay tax
7. Perpetual Succession
LO 2: Definition and Types of Companies

By Status
By Liability

Private Company: Public Company:

Limited by Shares: Limited by Guarantee: Unlimited Company:
฀Limits number of members to 50. A company which is not a private
Liability of members limited upto Liability of members limited upto Liability of members is unlimited.
Restricts right to transfer its shares. company.
unpaid amount of shares. amount agreed to contribute on winding
Prohibits invitation to general public. A public company can be either unlisted,
up (while he is a member or within 1
A private company can be either SMC or or listed.
year afterwards).
Other than SMC.

Other Types

Holding Company: Subsidiary Company: Association Not For Profit: Foreign Company: Body Corporate:
Holds more than one-half voting (Opposite of Holding Company) (discussed separately) 1. A company incorporated outside Body Corporate includes:
securities. Pakistan, and: (a) A company incorporated under Company Law.
Controls composition of Board (i.e. 2. conducts business activity in Pakistan, (c) A body corporate registered under other law
Wholly Owned Subsidiary: Public Sector Company: or has a place of business in Pakistan. (e.g. State Bank of Pakistan).
appoints or removes all or majority of
If 100% shares are owned by If Govt. holds more than one-half shares, (b) A company incorporated outside Pakistan.
directors).
other company. or can appoint majority of directors.
it includes public sector ANFP. Body Corporate does not include:
it does not include nomination of a co-operative society, and
directors by Commission. a body specified by Govt.
 LO 1: The Features of a Company
CAF 07: Company Law LO 2: Definition and Types of Companies
Chapter 1: Introduction to Company LO 3: Authorities, Officials, Members and Resolutions
Secret Sheet for Quick Revision Premium Content
LO 4: Association Not for Profit u/s 42 (Spring 2024)
(By Muhammad Asif, FCA) LO 5: Incorporation (Registration) of a Company

LO 4: Association Not for Profit u/s 42

Registration Revocation

Conditions for Registration: Privileges: Conditions for revocation: Effect of Revocation:

Formed for useful social objects Limited liability without words Conditions not complied. Stop operations (except recovery)
Object/activities not against Law/Pakistan. “Limited” or “Guarantee Limited”. Against law of Pakistan. Stop donations.
Prohibits dividend. Against public interest. Transfer net assets to another company within 90 days.
Applies profit in promoting objects. Did not file F/S or Annual Return for 2 consecutive Report to registrar within 15 days of transfer.
MOA/AOA as per specified Form. years. Start winding up within 30 days of acceptance of report by Registrar.
Additional conditions by Commission (if any). No. of members less than 3. Members/Officers not to hold office in transferee company for 5 years.
Management involved in fraud, money laundering, no Commission may appoint Administrator, if non-compliance.
proper books, against MOA/AOA, no business for 1 year.
Just and equitable.
However Notice + Hearing by Commission.

LO 5: Incorporation (Registration) of a Company

Reservation of Name: Effect of Registration:

Registrar, for 60 days, Company becomes Body Corporate.
Appeal to Commission in 30 days. With Separate Legal Status, Perpetual succession, Common Seal.
Subscribers become members.
Conditions of Registration: Persons named becomes director.
File MOA, AOA, Address (Company not liable for Pre-Incorporation contracts)
File Declaration of Compliance.

If Registration Approved: If Registration Refused:

Registrar issues Certificate of Incorporation Remove defect, or
(stating Name, Reg.#, Date, Status, Liability) File appeal to Commission in 30 days.
 Outlines:
CAF 07: Company Law Memorandum of Association:
Chapter 2: Memorandum and Articles Clauses of memorandum, Name Clause,
Secret Sheet for Quick Revision Registered Office Clause, Principal Line of Premium Content
(By Muhammad Asif, FCA) Business Clause (Spring 2024)
Articles of Association:
General Provisions:

MEMORANDUM OF ASSOCIATION

Clauses of Memorandum Registered Office Clause

Principal Line of Business Clause

1. Name Clause: (with words “Limited” etc.) ฀ Memorandum deemed to Complete Address: Change in Registered Office Clause:
2. Registered Office Clause: Province or Islamabad have borrowing power. 1. Notify Registrar within 30 days of incorporation. 1. Special Resolution.
3. Principal Line of Business Clause: Match with the MOA/AOA Signed by 2. Notify change to Registrar within 15 days. 2. Application to Commission. Commission makes order
name subscribers with Definition: Change in Principal line of business clause: 3. Also shift physical record (to new registrar). (considering interest of members/creditors).
4. Liability Clause: Limited by share, or Limited by particulars. Business with substantial 1. Special Resolution. 3. A copy of the order to Company and Registrar.
guarantee + Extent assets or revenue, whichever 2. Also change name, if necessary. 4. Within 30 days of order, file altered memorandum +
5. Authorized Capital Clause (if having): Authorized + is higher. 3. Within 30 days, file altered memorandum order to Registrar. (Order void after 30 days, however,
Division + Subscribers to Registrar. Commission may extend).
6. Undertaking or Subscription Clause: Undertaking 4. Registrar issues certificate. 5. Registrar issues certificate.
to form a company 6. Transfer physical record.

Name Clause

Name which are prohibited: Name which are restricted (requiring approval of Change of Name Publication of Name
1. identical. Commission):
2. inappropriate. Name showing patronage/connection with
3. offends religious feelings. ฀Head of State. By Registrar By Company COI at every place of business.
4. contains words prohibited by Commission. ฀Federal Govt. or Provincial Govt. Name and incorporation # (in
฀Foreign Govt. or international organization. English & Urdu) outside Registered
฀ Corporation set up under any Federal or Office and every place of business.
Issues order after
Provincial law. Reserve name. Name (in English & Urdu) on seal.
opportunity of hearing.
฀Modaraba management company. Special resolution. Name and other particulars on
Company rectifies (within 30
฀Business requiring a license. Apply to registrar. official documents.
days), or Registrar selects and
issues new Certificate. New Certificate.
Old name with New name for 90
days (on every office/document)
GENERAL PROVISIONS

ARTICLES OF ASSOCIATION
Copies of Memorandum Status/Effect of Effect of alteration in
and Articles Memorandum & Articles memorandum or articles

Contents Registration of Articles Alteration in Articles

To member within 14 days on payment of fee. MOA/AOA binding on company and members. No increase in liability of any
Subscribers pay money within 30 days of member, unless agreed by him in
incorporation, otherwise allotment of shares writing. 1. Business Company limited by guarantee or 1. Special Resolution.
cancelled and names removed. 2. Transfer/Transmission of shares, and its Form unlimited company --> Required. 2. Approval of 3/4th of affected
Report receipts to Registrar within 45 days of 3. Alteration of capital. Company Limited by Shares --> class (if necessary).
incorporation with Certificate from CA/CMA. 4. Voting and other rights attached to different classes Register Articles or Adopt Table A. 3. File altered articles within 30
of shares, and other securities. (Table A applies if articles not days.
5. Notice and Proceedings of General meetings. registered, or silent on a content)
6. Voting of members.
Tips for Case Studies 7. Proxy Instrument.
1. Order of Overriding document: Companies Act --> Memorandum --> Articles --> 8. Number of directors, their powers and duties.
Resolution 9. Proceedings of directors’ meeting.
2. Approval of Commission is required to change Registered Office Clause.
3. A private company cannot issue shares to general public.
10. Disqualification of directors and filling of vacancies.
11. Minute books.
12. Dividend, and Reserves.
13. Accounts.
14. The seal.
15. Indemnity.
16. Winding up.
 CAF 07: Company Law
Outlines:
Chapter 3: Directors Premium Content
Directors: Eligibility & Ineligibility, Appointment & Tenure, Election,
Secret Sheet for Quick Revision (For Spring 2024)
Vacation & Removal, Powers, Meetings, Protection, Restrictions,
(For students of Muhammad Asif, FCA)
Disclosure of Interest

DIRECTORS
LO 2: Eligibility & Ineligibility LO 4: Election of Directors

LO 3: Appointment and Tenure

Eligibility Criteria: Ineligibility Criteria: Procedure for Election of Directors for a company having share capital: Fresh election of directors:
฀be a natural person. 1. a body-corporate/Company. 1. Existing directors fix number 35 days before general meeting. Required shareholding
be a member (except Chief Executive, 2. a minor. Number of Directors: Appointment and Tenure of Directors: Casual Vacancy: (e.g. death, 2. Notice of meeting sent 21 days before meeting, with names of Apply company.
Executive Director, Nominee Director by 3. Insolvent disqualification, resignation) retiring director, and number fixed for next term. Company proceeds within 30 days.
Minimum ---> 1, 2, 3, 7 First directors: by subscribers till first
Body Corporate, Govt, Creditor). 4. unsound mind 3. Candidates file notice to company 14 days before meeting. (follow Commission, if listed)
Maximum ---> decided by AGM. Filled by directors (within 90 days if
Additional criteria (if any) 5. without NTN number. 4. Company transmit list of candidates to members 07 days before Number of directors not to reduce.
articles/directors Subsequent directors: by members, listed), for the remainder term.
6. Convicted of immorality. general meeting (+ 1 English & 1 Urdu newspaper publication for listed
for three years. Required if company is listed or
7. Convicted of lacking fiduciary behavior in company).
Nominee directors are appointed by number is less than minimum.
last 5 years. 5. Directors elected unopposed if candidates =< numbers fixed. Election of directors, invalid:
8. Broker and Defaulter (for listed companies) nominating body for period as they
6. If candidates > numbers fixed, election via Poll. 10% or more voting powers
please.
a. Number of votes = Shares * Number fixed. apply to Court
b. Members distribute their votes and highest candidates get within 30 days
selected. material irregularity is proved.
LO 6: Duties & Powers of Directors

De-facto director:
LO 5: Vacation & Removal of Direcror Duties of Directors: Powers of Directors: shall not act further as director.
Acts as per Articles, in best Absolute Powers: past acts are valid.
interest of company. 1. To issue shares and debentures.
Vacation of office by the directors: Removal of Directors: Act with due diligence. 2. To make loans and investments. LO 7: Meeting of Directors
If director He will be saved if votes against resolution Disclose his interest. Don’t 3. To approve financial statements.
1. becomes disqualified. equal/exceed: involve in conflict of interest. 4. To declare interim dividend.
2. absents from 3 consecutive board least votes by an elected director in last Don’t obtain undue gain. 5. To approve bonus for employees Quorum: Resolution through circulation:
meetings without leave. election (in case of elected director). 6. To incur capital expenditure, lease obligations. For Listed Company: 1/3rd of total Circulated to all directors with necessary
Don’t assign his office.
3. accepts loan or office of profit without Total shares * directors appointed/ 7. To approve transactions having a directors’ interest. number or 4 whichever is higher. papers.
relevant approvals. current directors (in case of other 8. To write-off assets. For Other companies: As per Articles. To be signed in writing.
Additional grounds by Commission. director) 9. To settle material litigations. If Casual vacancy + remaining directors Once signed, cannot be revoked.
10. To acquire another company. less than minimum: Remaining directors To be noted in minutes of subsequent
11. To fill casual vacancy of director. shall be quorum for to fill casual vacancy. meeting.
12. To appoint and remove chief executive.

Powers with approval of members: Records:

Frequency:
1. sell or dispose a subsidiary of the company. Minutes to be signed by Chairman (of current
Once in each quarter (for Public Company).
2. sell or dispose sizeable part (i.e. 25%) of an undertaking. or next meeting).
3. Remit or extend a debt payment against specified persons. Copy sent to each director within 14 days.
Record to be kept at Registered Office in
physical (for 10 years), and in electronic
(permanently).
 CAF 07: Company Law
Outlines:
Chapter 3: Directors
Directors: Eligibility & Ineligibility, Appointment & Tenure, Election, Premium Content
Secret Sheet for Quick Revision
Vacation & Removal, Powers, Meetings, Protection, Restrictions, (For Spring 2024)
(For students of Muhammad Asif, FCA)
Disclosure of Interest

LO 8 & LO 9: Indemnification/Protection
LO 10: Independent Director in Listed
Company
Indemnification: Protection:
Agreement to indemnify in case Non-executive/independent directors not
of negligence, is void. liable for any act of company, unless act Criteria Manner of Appointment
occurred with his knowledge/consent, or he
acted with negligence.
Eligibility/Qualification Criteria: Ineligibility/Disqualification Criteria: 1. Databank on website of Institute.
1. A graduate or member of a professional body 1. Chief Executive of the company or its associated company (in 2. Individuals may apply for inclusion.
Non-executive director is one who is not in
+ 5 years’ experience, OR A person with 15 last 3 years) 3. Companies can also register to access databank.
executive management, not managing affairs,
years’ experience. 2. Employee of the company or its subsidiary (in last 3 years). 4. Due diligence is the responsibility of company.
does not take any remuneration (except
2. Person confirms to devote reasonable time. 3. A person having material business relationships with
meeting fee), is not beneficial owner.
3. Completes Directors’ Training Program company (in last 3 years)
(within 12 months). 4. Nominee director.
5. Director in associated company.
6. A director who served for 3 consecutive terms.
7. A close relative of company‘s promoters, directors or major
shareholders.

LO 11: Restrictions

Loan to directors: Assignment of Office of Director: Remuneration to directors:

Loan to director allowed if approved Director cannot assign his office. For board meetings: shall not exceed scale
Important Concepts for Case Studies:
by members Director can appoint alternate/ approved by board or company as per
1. Broker and defaulter are disqualified for director
and Commission, if listed company. substitute director if absent from articles.
of listed company.
Pakistan for 90 days, and approved by For extra services: shall be determined by 2. Remember minimum number of directors (i.e. 1, 2,
directors. board or company as per articles. 3, 7).
Gifts/Contribution:
3. Calculation of number of votes on removal of a
A company shall NOT distribute gifts to
Non-Cash Transaction with Director: Cash transactions with directors: director.
members or donate amounts to political
Allowed with prior approval of general 4. Impact of defect in appointment/absence of board
parties. Through banking channel only.
meeting. meeting/ loan to director.
Notice shall state particulars with
valuation.
 CAF 07: Company Law
Outlines:
Chapter 4: Chief Executive and Other Officers
Chief Executive: Eligibility & Ineligibility, Appointment & Tenure, Premium Content
Secret Sheet for Quick Revision
Removal and Restrictions. (For Spring 2024)
(For students of Muhammad Asif, FCA)
Chairman: Appointment & Tenure, Terms & Conditions.

LO 1: Chief Executive

Eligibility Criteria: Appointment and Tenure of Chief Executive: Power of Federal Govt.
Chief Executive need NOT be a director, shareholder or ฀ First chief executive appointed by subscribers, till first AGM (or shorter period).
employee. Subsequent chief executive appointed by directors within 14 days of election, for
When appointed, deemed director. 3 years (or shorter period). Federal Govt. can:
Casual vacancy filled by directors within 14 days till new chief executive appoint Chief Executive (if majority directors appointed by it).
Ineligibility Criteria: appointed by next appointed directors. remove Chief Executive (if 75% voting rights held by it)
As of directors. Board shall determine roles and responsibilities. determine terms and conditions of chief executive (appointed
by it)

Restriction: Removal of Chief Executive:

Chief Executive (spouse + minor child) By 3/4th majority of directors, or
Not to engage in competing business. (For By special resolution.
Public Company) (irrespective of articles/agreement)

Right of Retiring Chief Executive:

Eligible for reappointment.
Continues functions unless removed or cause of non-
appointment.

Important Concepts for Case Studies:

1. Removal of Chief Executive
2. Restriction on competing business.
LO 2: Other Officials

Chairman Others

Chairman of a listed company: Sole agent:

Appointed within 14 days of election of director, among non-executive directors. Approval of Commission required. (except for company
For 3 years. incorporated & major business out of Pakistan)
Board shall determine roles and responsibilities.
Chairman review report on performance of board shall be included in annual Company Secretary:
financial statements. Required for public company.
Ensure compliance with law and maintains records.

Share Registrar:
Required for listed company.
Handles transfer of shares of company.
 CAF 07: Company Laws
Chapter 5: Share Capital Outlines:
Secret Sheet for Quick Revision Share Capital: Types, Characteristics, Kinds and Classes, Rights and Premium Content
(For students of Muhammad Asif, FCA) Liabilities, Alteration in Share Capital, Variation in rights. (For Spring 2024)

SHARE CAPITAL

LO 1: Share Capital and its Types LO 2: Share and its Types

Types of Share Capital Process of Issue Characteristics of Shares Kinds and Classes of Shares

1. Authorized/Nominal: maximum amount of share capital 1. Company prepares prospectus, and obtains 1. A movable property. Kinds of Shares:
which can be issued. approval from Commission. 2. Has rights and liabilities. 1. Ordinary Shares (or Equity shares), and
2. Issued and Paid-up Share Capital: Share capital which is 2. Company issues prospectus to general public. 3. Transferable. 2. Preference Shares
issued, and paid by public. Only fully paid shares to issue. 3. People subscribe for shares. 4. Fully paid. Ordinary and Preference shares differ because of Voting
Share capital is expressed as: 100,000 shares of Rs. 50 4. Company allots/issues shares. 5. Evidence of ownership is Share Certificate. rights, Dividend Rights, Repayment on winding up, Basis of
each (face value) = 5,000,000 (Share Capital) different classes.

Classes of Shares:
Class A, Class B etc. possible in each kind.
LO 5: Variation in Rights of Shareholders
LO 4: Alteration in Capital Clause
LO 3: Rights and Liabilities of Shareholders
How to vary the rights of shareholders:
1. Special resolution. Procedure to alter the authorized share capital:
Rights of shareholders: 2. Approval from 3/4th majority of the affected class (if 1. If authorized by its articles.
1. Voting rights. alteration affects a certain class) 2. Special Resolution.
2. To receive dividend. 3. File altered articles with Registrar within 30 days. 3. File notice with Registrar within 15 days.
3. To Right issue and bonus issue.
4. To receive notice, and attend general meeting. Appeal against resolution: Ways in which authorized share capital may be altered:
5. Right to redeem or convert shares 1. Atleast 10% shareholders of affected class ฀ Increase.
2. Apply to Court Cancel.
Liability of shareholders: 3. within 30 days of resolution. Sub-divide (into smaller value, or in Ordinary +
Upto unpaid amount (if any). Preference)
Cancellation of variation by Court: Consolidate and divide shares into amounts larger
If it is proved that: than existing shares.
1. material facts withheld, or
2. Variation will unfairly prejudice.
File copy of order with Registrar within 15 days. Important Concepts for Case Studies:
Share Capital : Variation in Shareholders’
Rights.
 CAF 07: Company Laws
Chapter 6: Prospectus Outlines:
Secret Sheet for Quick Revision Prospectus: Types, Approval, Publication, Availability, Use of Expert, Premium Content
(For students of Muhammad Asif, FCA) Misstatement in prospectus, Certificate of Commencement of business. (For Spring 2024)

PROSPECTUS

LO 3: Publication and Availability

LO 1: Definition and Types LO 2: Approval

Publication of Prospectus:
In 1 English and 1 Urdu daily newspaper.

Prospectus: document inviting general public Who can approve: Uploading of Prospectus:
to subscribe for shares or debentures. Applies to Commission atleast 21 days before proposed date of On website of company (from date of publication till
Shelf-Prospectus: used to make multiple publication. closing of subscription).
offerings within a prescribed time.
Supplement to prospectus: used to provide Validity of Approval:
updated disclosures on subsequent issue, if 60 days from date of approval (extendable by Commission). Availability of Prospectus:
shelf-prospectus is issued. Longer period may be approved in case of Shelf-registration. At following places:
1. At registered office of company.
Exceptions for Approval: 2. At Stock Exchanges of the Pakistan.
Approval of prospectus is NOT required in following cases: 3. With all bankers to the issue.
฀ Private placement. 4. With concerned share registrar.
Offered to members or their family members. 5. With concerned ballotter.
Offered to employees or their family members. 6. With concerned credit rating agency.
Bonus issue. (from date of publication till closing of subscription)
Issued as dividend.
Offered by State Bank of Pakistan. Commencement of Public Subscription:
Subscription shall start after 7 days but within 30 days of
issuance of prospectus.

LO 4: Expert LO 5: Misstatement LO 6: Certificate of Commencement of Business

Conditions to include Expert Statement: Offence/Criminal Liability: Required for:

1. Expert to be Independent from company: If a person makes error or omission in prospectus. Every public company having share capital.
2. Expert has given his written consent.
3. Prospectus mentions that expert gave consent and did Compensation for Offence/Misstatement in Prospectus: Requirements to obtain certificate:
not withdraw it. To Whom: 1. Shares allotted to minimum subscription.
A person who relied on prospectus, acquired 2. Director paid for shares taken.
securities, and suffered loss. 3. No money payable to applicants (if public subscription
made)
By Whom: 4. Company filed statement in lieu of prospectus (if public
Every offeror/issuer, or Every director of company, or subscription not made).
other person who signed prospectus. 5. Company Secretary and Chief Executive (or a Director)
Commission not liable for any loss. file declaration.

Important Concepts for Case Studies: Liability of SECP: Legal status of contracts before certificate:
Prospectus: Validity period, Publication. Commission shall not be liable for any misstatement in Borrowing agreements are void. Other agreements are
prospectus approved by it. provisional.
 Outlines:
CAF 07: Company Laws
This chapter discusses:
Chapter 7: Mortgages and Charges
฀ Forms of Borrowings Premium Content
Secret Sheet for Quick Revision
Types of Charges (i.e. security against borrowings) (For Spring 2024)
(For students of Muhammad Asif, FCA)
Procedure for Registration of Charges
Procedure for Satisfaction of Charges.

Part A: Types of Borrowing and Security

LO 1: Borrowing Powers LO 2: Forms of Borrowing LO 3: Types of Securities Types of Charges

For borrowing: 1. Issuing Debentures (to public). 1. Pledge: Fixed Charge Floating Charge
A public company has to obtain 2. Loan from financial institutions (e.g. banks). On movable property. 1. On specific identifiable present assets. 1. On entire class of assets (present or future) which
certificate of commencement of business. 3. Loan from other sources (e.g. shareholders/directors) Goods physically transferred to bank/lender as security. 2. Property can NOT be disposed without bank’s approval. changes over time.
Directors can borrow and create These can be secured (through Pledge, Mortgage or 3. On default, holder has Priority right. 2. Property can be disposed without bank’s approval.
charge on property. Members can restrict. Charge) or unsecured. 2. Mortgage: 3. On default, holder has Subordinate right.
On immovable property.
Title documents transferred to bank/lender.
Bank takes possession on default.

3. Charge:
On movable and immovable property.
No transfer of title documents/possession.

Part B: Registration of Charges etc.

LO 9: Record of Mortgages

LO 4: Pledge, Mortgage or Charge Required to be registered LO 5: Procedure for Registration Consequences of Non-Registration Other Concepts
Company's Register of Mortgages:
At Registered Office:
1. Copies of instruments .
1. On movable property. Duty of Company: 1. Charge is be void. Property situated outside Pakistan: 2. Register of mortgages and charges.
2. On immovable property. 1. Company applies to Registrar 2. Company still liable to pay debt. Charge in Pakistan on property outside Pakistan:
3. On intangible property (e.g. goodwill). 2. within 30 days. Instruments to be filed to Registrar. Who can inspect Register of Mortgages:
4. On book debts. 3. Submits loan agreement and other information. Registration in that other country. Creditors or members without fee.
5. On stock-in-trade. 4. Registrar issues certificate. Other person on payment of fee.
6. On ship or aircraft. Charge outside Pakistan property outside Pakistan:
7. For issuance of debentures/redeemable capital. Right of Lender: Register within 30 days. Refusal of Inspection:
8. On conditional sale agreements. 1. Lender can also apply to Registrar. Period starts when documents should reach in Pakistan. It will be an offence with penalty of Level 1.
2. Charges borne by company.
Registrar may issue order for inspection.
Previous rights not to be affected:
Previous rights of charge-holders shall not be affected.

Constructive notice of registration:

Buyer is assumed to have notice of mortgage/charge.
Property acquired with charge, is also registered.

Part B: Modification, Rectification and Satisfaction of Charge

Procedure for Modification LO 6 & LO 7: Procedure for Rectification LO 8: Procedure for Registration of payment/satisfaction

1. Modification in charge is also registered. If error/omission in charge, or company failed to Procedure for Registration of payment/satisfaction:
2. Same procedure as of Registration of original charge. register within time: Duty of Company:
1. Apply to Commission. Inform Registrar
2. Commission allows relief if effort/omission was within 30 days of payment.
accidental, does not harm creditors, or is just. alongwith particulars.
3. Commission issues order that error be corrected or Penalty for delay.
time extended.
4. Copy of order to Registrar within 7 days. Duty of Registrar:
1. Notify lender.
If time extended, previous rights of holders, not affected. 2. Give 14 days to file objection.
3. Notice not required if NOC by lender is given.
4. If objection filed, Registrar informs company.
5. If objection not filed, Registrar registers satisfaction.

Registration without intimation from Company:

If satisfactory evidence given to him
That debt is paid, or property released from charge, or property disposed.
 CAF 07: Company Law Outlines:
Chapter 8: Meetings and Resolutions Types and Calling of General Meetings: 1. Calling of General Meeting, 2. Statutory Premium Content
Secret Sheet for Quick Revision Meeting, 3.Annual General Meeting (AGM), 4. Extraordinary General Meeting (EGM) (For Spring 2024)
(For students of Muhammad Asif, FCA) Voting and Proceedings at General Meetings: 1. Voting System, 2. Proxy and
Representative, 3. Quorum, 4. Resolution, 5. Minutes, 6. Declared Void

LO 3 & 4: Notice of General Meeting PART 1: COMPANY MEETINGS

Annual General Meeting
Notice of General Meeting: Notice of Resolution:
What shall notice contain: q Members with 5% voting powers LO 1 & LO 2: Statutory Meeting
1. Date, Hour and Place of meeting can give notice of resolution atleast When Required: Ordinary Business:
2. Business to be transacted. 10 days before meeting. q First AGM: within 16 months 1. Financial statements.
from incorporation. 2. Directors’ Report.
3. In case of Special Business: (Material facts, interest of directors, Required for: (similar to Statutory Report:
q Subsequent AGM: within 120 3. Auditor’s Report.
Availability of document to be approved). certificate of commencement of Matters included:
4. Draft of special resolution (if any). Place: (for listed co.) days after close of financial year 4. Dividend.
business) 1. Total shares allotted.
5. Video-link option. q In the town where registered AND once in each calendar year. 5. Appointment of Auditors.
q A public company having 2. Total cash received against shares allotted.
6. Proxy (right to appoint proxy, rights of proxy, Proxy Form). office is situated, or in nearest city. Extension allowed upto 30 days 6. Election of Directors.
share capital. 3. Summary of receipts and payments.
7. In case of AGM: F/S, directors’ report, auditor’s report, matters by Commission (listed co.) or
q A private company which is 4. Particulars of management (directors, chief
regarding election of directors. Registrar (unlisted co.). Any business other than above is
converted into public company executive etc.).
8. In case of Statutory Meeting: Statutory Report. How to attend: Special Business (e.g. Removal of
within one year of 5. Overview of company's affairs. LO 1 & LO 2: Extraordinary General
q Personally, or through proxy, or Chief Executive, Investment in
incorporation. 6. Contracts to be modified. Meeting
How and whom to send notice: q Through video-link (if members Associated Company, Alteration in
7. Underwriting contracts.
q 21 days before meeting. (shorter notice allowed for EGM of holding 10% shares request 07 days MOA/AOA) .
8. Commission paid against shares issued to
unlisted company if all members agree) before meeting) When Conducted: management (directors, chief executive etc.) Who can call?
q To members, directors, auditor, legal representative, official q Within 09 months from q Directors on their own, or on
receiver, incorporation or within 180 days Certified by: Chief Executive and atleast one requisition of members with 10%
Who shall chair Meetings: Important Concepts for Exam:
q If listed company: To SECP, and Publish in one Urdu and one from commencement of business, director, and also by CFO (if listed co.) voting power.
q Chairman of board 1. Time period to conduct different
English daily newspaper. whichever is earlier. Auditor’s report: on above matters # 1, 2 & 3 shall q Members, if directors do not proceed
q Any elected director (if chairman is not types of general meetings.
q Not required if first AGM is be attached. within 21 days of requisition. Meeting to
present in 15 minutes, or unwilling) 2. Matters in notice of AGM.
held earlier. Filing: with Registrar on sending to members be conducted within 90 days, and
Service of Notice or Documents: q Any elected member (if directors are 3. Quorum of General Meeting
not is present, or unwilling) expenses recovered from guilty 4. Proxy requirements
q How to Serve Notice: directors.
– To Company: at registered office ) 5. Meeting declared void.
–To Member: at registered or communication address
q Manner of Serving Notice:
– against acknowledgment, by post , electronically means, or
other manner.
q When notice by post deemed effective:
– if properly addressed, prepaid, posted with letter.
– when delivered in ordinary course of post.
q To Joint-Shareholders:
– who is named first in register of members.
q To Legal Representative:
– To address supplied by legal representative.
PART 2: CONDUCT OF MEETINGS

LO 5: Voting System LO 6: Proxy and Representative LO 7: Quorum LO 9: Resolution LO 10: Minutes of General Meeting LO 8: Declared Void

Show of Hands: Poll/Secret Ballot: (only for Requirements for Proxy: Representation at General Quorum Requirements: (articles may Resolution through circulation: q Authenticated by the Chairman (of q Same as in Election of
1. Used at first company having share capital) 1. Proxy will be a member (unless Meetings: specify larger number) q Allowed for unlisted company current or next meeting). Directors void &
instance. 1. Used by Chairman or articles allow otherwise). q Who can represent a q For Listed Companies: 10 members (having upto 50 members) for Special q Kept at registered office Variation in
2. Each member has demanded by members with 2. If more than one proxies, all void. company: any individual (present) with 25% voting power Business. q In physical form (for 20 years), and in shareholders’ rights (i.e.
one vote; Proxy 10% voting power. 3. Proxy Form lodged atleast 48 (through Board Resolution). (present + proxy) q Circulated to all members, and electronic form (permanently) 10%, 30 days, Court,
cannot vote. 2. Each member has votes hours before meeting (excluding q Who can represent a q For Unlisted Companies: 02 members signed by them. q Any member can inspect without Prove)
proportionate to its holidays). Open for inspection. government: Govt. may (present) with 25% voting power q No revocation. charges.
shareholding; proxy can also authorize any individual (present + proxy) q Noted in minutes of subsequent q Copy to member (on fee) within 07 days
vote. meeting. of request.
Rights of Proxy:
1. counted for quorum. If Quorum not present within 30 min.
Time of Taking Poll: 2. to attend, speak and vote. q Meeting called by Members = Filing of Special Resolution:
q within 14 days, 3. to demand a Poll. Dissolved q Authenticated by Director or
q immediately for election of a q Meeting called by Directors = Company Secretary.
chairman or adjournment of Adjourned to next week. At adjourned q Filed with Registrar within 15
meeting. meeting quorum will be 02 members days.
present.

Resolution passed at adjourned

meeting will be effective from
adjourned meeting.
 CAF 07: Company Laws
Chapter 9: Distribution of profits
Outlines: Premium Content
Secret Sheet for Quick Revision
Dividend: Types, Restriction, Payment (For Spring 2024)
(For students of Muhammad Asif, FCA)

DIVIDEND

Types Restrictions Manner of Payment Timing of Payment

1. Interim Dividend: 1. Not from profits of immovable property or assets of Manner of Payment: Timing of Payment:
฀ Paid during the year. capital nature (unless it is ordinary business, and set-off ) Listed Company: In Cash (electronically), or in Kind (in Within specified period (i.e. 10 working days) after its declaration.
Approved/declared by Directors. 2. Not from unrealized gain on investment property. shares). Final dividend declared on the date of AGM.
3. Members cannot increase (but can decrease). Unlisted Company: In cash (in cheque, warrant, or Interim dividend declared on start of book closure, or on board
2. Final Dividend: electronically) only. meeting.
Paid after the year.
Recommended by Directors Whom to Pay: Consequences of Delay in Payment:
Approved/declared by Directors. To registered shareholders or to their order. Chief executive:
1. fined upto 5 million rupees, and
2. imprisonment upto 2 years, and
Book Closure 3. Ineligible to become director upto 5 years.

Withholding of Dividends:
Chief Executive allowed to withhold dividend if:
Definition:
1. dispute.
It means period during which a company does not
2. lawfully set-off.
transfer shares.
3. Instructions of shareholder cannot be followed.
4. Operation of law.
Important Concepts for Case Studies: Requirements:
5. Not a default of company.
Dividend: Date of Declaration, Restrictions on A company can close books.
6. Complete information not given by member to company.
Period:
declaration, Payment
For any period (maximum 30 days in a year,
extendable for further 15 days).
Notice:
Alteast 7 days’ prior notice to members. Newspaper
publication required for listed company.
 CAF 07: Company Law
Outlines:
Chapter 10: Investments and Disclosure of Interest
Investments: Associated Company, Investment in Associated Company, Premium Content
Secret Sheet for Quick Revision
Investment in own Name (For Spring 2024)
(For students of Muhammad Asif, FCA)
Related Parties: Definition, Requirements and Disclsoure of Directors' Interest

Investments

Definitions Conditions for Investment in Associated Co. Investment in own Name

(for a Public Company)

Investment: Associated Company: Investments in own Name – Exceptions:

q Investment includes equity, loans/advances, and guarantees. q If a director or 20% shareholder is also the director or (1) Special resolution (indicating T & C). 1. To ensure minimum number of members.
q Normal trade credit is not investment. 20% shareholder in other company. (2) If it is loan or advance (written agreement indicating T & C, Rate of 2. To nominee director (qualification shares)
(Shares by spouse or minor child shall be considered). Return not below borrowing cost, return to be recovered regularly, 3. To central depository company.
q If companies are under common management or Certificate by directors on due diligence).
control, or one is the subsidiary of another. (3). Any change in T & C also through Special Resolution.
Register for “investments not in own name”:
Exceptions: q Register shall contain nature, value and
1. Independent director. other particulars.
2. Director nominated by Govt. q Inspection by members (free of cost), by
3. Shares by National Investment Trust, or other financial others (on fee). Apply to Registrar if
institution owned by Government. inspection refused.
4. Shares by central depository. q Copy to member (on fee within 7 days)

Related Parties, and Transactions

Definition of Related Party: Types of Related Party Transactions: Disclosure of Director's Interest
1. Associated company. q Sale or purchase of goods or services.
2. A Director or Key Manager or their relative. q Sale, purchase or lease of property.
Responsibility:
3. A firm, or company in which director/key manager/Relative is q Appointment as sales/purchase agent or to an office of profit. ฀ Disclose if directly or indirectly (spouse, child,
partner or member or director. parents) interested in a contract.
4. Company whose chief executive acts on instructions of director/key Office of profit means position for which remuneration or benefits are
Timing of Disclosure:
manager (& vice-versa). received (except board fee). at meeting where contract is first time considered.
At next meeting, if director became interested after
Relative means spouse, siblings, ascendants. descendants. first time consideration.
Status of Contract with Related parties without Approval:
q Voidable at option of Board if not ratified within 90 days of Prohibitions:
For that matter:
Requirements regarding Related Party Transactions: transactions. 1. No participation in discussion.
1. To be approved as per Board Policy (except transaction in ordinary q If a relative is involved, concerned directors shall indemnify company 2. Not counted for quorum.
course of business and on arm’s length basis). against loss. 3. Not to vote.
4. Not to present in meeting (if listed company)
2. Special resolution required if majority directors are interested.
3. Records to be maintained. Exceptions of Prohibition:
4. Transactions in directors’ report with justification. Penalty in case of violation: private company,
q in case of listed company, imprisonment upto 3 years or fine of alteast contract of indemnity.
5 million rupees or both.
General Notice:
q in case of any other company, penalty of level 2. expires at end of financial year,
fresh notice given in the last month.

Case Study Tips:

1. Definition of Associated Company (particularly exceptions).
2. Investment in Associated Company (particularly Loan).
3. Directors’ interest.
 CAF 07: Company Laws Outlines:
Chapter 11: Accounts and Annual Return Accounts: Books of Accounts, Period, Place, Inspection Premium Content
Secret Sheet for Quick Revision Financial Statements: Period, Approval, Filing, Quarterly F/S, Group F/S (For Spring 2024)
(For students of Muhammad Asif, FCA) Directors' Report and Annual Return: Contents, Authentication

ACCOUNTS

Financial Statements

Basic Concepts Annual F/S Quarterly F/S Group Financial Statements Approval of F/S

Financial Statements: Filing of F/S: (alongwith auditor’s report, directors’ report and chairman’s Who is required: Who is required to prepare Consolidated F/S: Approval:
F/S include: review report if applicable) Every listed company. q Holding Company (attached with single F/S). q Approved by Board of Directors.
1. Statement of financial position. Exception: A private company with paid-up capital upto 1 million.
2. Statement of profit or loss, and other comprehensive income. q Before AGM: When: Sign:
3. Statement of changes in equity. ¨ dispatch to members 21 days before AGM. q First quarter, within 30 days. Financial Year of Holding and Subsidiary: q Signed by Chief Executive, and atleast one
4. Statement of cash flows. ¨ A listed co. shall file F/S with SECP, Registrar and Stock Exchange, and q Second quarter, within 60 days. (for 6 months, to be reviewed by q Financial year of both to be same, unless valid reason. Director*, and CFO (for listed co.).
5. Notes. upload on website. auditor as per T&C of ICAP & Commission) q If financial years do not coincide: *Atleast 2 directors if CEO is not in Pakistan.
6. Comparative information of previous period. q Third quarter, within 30 days. 1. If gap is for 90 days or less: Extend financial year. Commission shall
q After AGM: Extension of 30 days in first quarter by Commission allowed, if facilitate.
Financial Year: ¨ To Registrar within 30 days (if listed co.), or 15 days (if unlisted). annual F/S were also extended. 2. If gap is for more than 90 days: Subsidiary makes interim closing on
q Period for which F/S are prepared. It may or may not be one year. ¨ Not required for a private company with capital 10 million or less. year-end of holding.
¨ If not adopted at AGM, this fact + reason shall be annexed to F/S. Filing:
Period of F/S: q A listed co. shall file F/S with SECP, Registrar and Stock Exchange, Who shall audit Consolidated F/S:
q of First F/S = from date of incorporation till the close of financial year. Copy at Registered Office: and upload on website. q Auditor of holding company.
q of Subsequent F/S = from date of last F/S till close of financial year. If it ¨ For inspection by members. q Also dispatch to members (if requested).
exceeds one year, permission of Registrar is required. Disclosure Requirements of Consolidated F/S:
Audit of Financial Statements: q Comply financial reporting standards and relevant Schedule.
When to present Financial Statements:
Required for every company, except a private company with capital 1 q Include material information (related to a subsidiary) which is not
q Same rule as of AGM in F/S of holding company.
million or less which will submit affidavit to Registrar that board approved
F/S.
Penalty:
q Penalty of Level 2.

Books of Accounts Directors' Report

Annual Return
Books and Paper includes books of accounts, cost Period of Retention: Required for: Contents:
accounting records, and vouchers etc. q At least ten financial years (in physical or 1. Public Company. Contents of directors’ report for Every Company:
electronic form) 2. Private Company which is subsidiary of 1. State of affairs of company, and a fair review of its business. What is included in Annual Return: Date of Annual Return:
Books of Accounts includes: public company 2. Dividend (if any). General information about company at a q Date of AGM, or
(a) money received and expended and matters, Place of Keeping: 3. Private company with paid up capital of 3. Transferred to reserve (if any). specific date e.g. about management, q Last day of calendar year (if AGM not
(b) sales and purchases, q At Registered officer more than 3 million. address. held or not concluded).
(c) assets and liabilities q At Other place (if resolved by director and Additional contents in case of public company (or private company
(d) items of cost accounts (e.g. utilization of which is subsidiary of public company):
notified to Registrar in 7 days) Approval of “Directors’ Report” and
material, labor and other inputs) q Names of directors. Forms to file Annual Return: When to file Annual Return:
q At Branch Office (if summarized returns are “Statement of Compliance”: q Principal activities. q Form A (for company having share capital) q Within 30 days (of AGM or last day of
sent to registered office) q approved by board, and q Form B (for company not having share capital) calendar year).
Who is required to maintain: q Principal risks and uncertainties.
Every company, and Liquidator is required to q signed by the chief executive and a q Material changes affecting business. q Form C (if there is no change in particulars since last return). q 15 days’ extension for listed company
Inspection: director. Form C not required for SMC or Private company with paid up by Registrar.
maintain books of accounts. q Major Subsequent events.
q Only directors, not members (unless q Explanation of modified opinion. capital upto 3 million.
authorized). q Pattern of shareholding.
q Holding company Penalty:
q Earnings per share, Reasons for loss (if any), and future prospects. q Level 2 for listed company.
q Defaults in payment of debts (if any) q Level 1 for any other company.
q Comments on adequacy of internal controls.

Additional contents in case of listed company:

Business review section also includes:
q trends and factors likely to affect business; 1. Approval and Filing of Financial
q impact on environment; Statements.
q activities relating corporate social responsibility; and 4. Contents of Directors’ Report.
q adequacy of internal financial controls.
 CAF 07: Company Laws Outlines:
Chapter 12: Winding up of a Company This chapter discusses: Premium Content
Secret Sheet for Quick Revision q Various Mode of Winding up of a company. (For Spring 2024)
(For students of Muhammad Asif, FCA) q Appointment, Rights and Duties of Official Liquidator.

Part A – Winding up by Court

LO 2: Circumstances for Winding up by Court LO 3 & 4: Who can apply to Court for Winding up LO 8 – Other Modes of Winding up

Circumstances in which company may be wound up by Court. Company: Voluntary Winding Up:
1. By Special Resolution. q File particulars of assets and liabilities and suits. Circumstances:
2. Default in Statutory Meeting/Statutory Report. 1. By passing a resolution:
3. Default in 2 consecutive AGM/Financial Statements/Annual Return. Creditors: q If period specified in Articles expires.
4. Members below minimum no. q Establish prima-facia case. q If event specified in Articles occurs.
5. Unable to pay debts. q Give security for cost. 2. By passing a special resolution:
6. Listed company is de-listed, or suspends business for whole year.
7. License of sole activity is revoked. Contributories:
8. License of ANFP is revoked. q If members below minimum no., and Commencement:
9. Business is unlawful/fraudulent, Not authorized, or oppressive to minority q Shares allotted to applicant for atleast 180 days during last 18 months. On passing resolution.
shareholders.
10. Management does not maintain accounts, commits fraud, refuses to act as Registrar: Winding Up Subject to Supervision of Court:
per regulations. q Sanction of SECP obtained. q In voluntary winding up, Court may order (on its own or on
11. Court thinks just and equitable. q Opportunity of hearing given to company by SECP. application) to supervise winding up.
q Powers of Court = Powers in winding up by Court.
Company when deemed “Unable to pay debts”: Commission:
1. If a creditor of 100,000 or more, serves a notice, at registered office, and is not q If an investigation is made and it reveals that: Conversion of Mode of Winding Up:
paid within 30 days, or ¨ business is unlawful/fraudulent, not authorized, or oppressive to Any Winding up can be converted into winding up by Court if:
2. If execution of a Court Order in favour of creditor remains unsatisfied, or minority shareholders. q entitled persons apply.
3. If it is proved to court that co. is unable to pay debt. ¨ management is guilty of fraud or misconduct. q Court is satisfied that due regard not given to interest of
q Opportunity of hearing given to company by SECP. creditors, contributories or to public interest.
What is deemed to be “Unlawful Activity”:
1. Receiving deposit from public, and return is determined by chance or lottery Commencement of Winding up
etc. At time of presentation of petition for winding up.
2. Receiving deposit from public through Referral Marking, Multi-Level
Marketing, Pyramid and Ponzi Schemes.
3. Any other business notified by Commission.

Part B – Official Liquidator

LO 5: Appointment of Official Liquidator LO 6: Statement of Affairs to Official Liquidator LO 7: Report by Official Liquidator

Appointment and Power: Who shall submit Statement of Affairs: When to submit Report:
q On receiving petition, Court may appoint Provisional Manager (PM) or Official q Directors, chief executive, chief financial officer and secretary of company q As soon as possible, but within 60 days from Winding-Up Order.
Liquidator (OL).
q Powers of PM = Powers of OL (unless limited by Court) When shall Statement be submitted: Whom to submit Report:
q within 15 days from relevant date (i.e. date of appointment or date of q To Court and Registrar.
Panel of Provisional Managers/Official Liquidators: winding up order)
q Commission maintains a panel of persons having atleast 10 years’: q Extension upto 45 days (by PM, OL or Court). What particulars Report shall contain:
a. experience in accounting, finance or law, or 1. Assets of the company, and their values.
b. professional experience. What particulars Statement shall contain: 2. Details of trademarks and intellectual properties of company (if
q Commission may also remove name, after hearing. 1. Assets and liabilities. any).
2. Cash and bank balance. 3. Cash and bank balance.
Eligibility for Provisional Manager/Official Liquidator: 3. List of Creditors (secured, unsecured). 4. Authorized and Paid-up Capital.
q Court appoints one or more PM/OL from panel. 4. List of Receivables (+ realizable amount) 5. Creditors (secured, unsecured) and contingent liabilities.
q A person can be PM/OL for max. 03 companies at a time. 4. Persons in possession of company’s property. 6. Details of legal cases filed by or against the company (if any).
5. Places where company conducted its business in last 180 days. 7. List of Receivables (+ realizable amount)
Exception: Creditors of 60% issued capital can appoint a person outside panel, by 6. List of pending cases. 8. Receivables from contributories.
notifying Registrar. 7. Other particulars, if required. 9. Details of ongoing contracts and joint-ventures (if any).
10. Details of holding and subsidiary companies (if any).
Requirements for Official Liquidator on Appointment: Other Statements from Other Officials: 11. Any other information considered necessary.
q Deposit of security if determined by Court. Statements/Information may also be required from persons who were,
q File declaration of “conflict of interest” or “lack of independence” within 07 days. within one year before relevant date,: Official Liquidator shall also report on:
q Follow code of conduct + other requirements by Commission. q Directors, Chief Executive, CFO, Secretary etc. q Manner of formation, promotion or management of company.
q part in formation of company. q viability of business.
If more than one liquidators are appointed: q in employment of company. q Other matters, if directed by Court.
q Court shall declare which acts will be done by any one or more or all of them.
q Any dispute shall be referred to Court. Reimbursement of Expenses:
q By PM/OL to persons making statement.
Casual Vacancy:
q Resignation not allowed, except on personal disability. If so resigned, he will Who can get copy of Statement:
continue till successor is appointed. q A creditor or contributory.
q Casual Vacancy filled by Court. q Offence if a person untruthfully represented himself a creditor or
contributory.