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The Companies Act, 2017
Part I - Preliminary
Sections 001 - 004
Section 004
Act to override.—Save as otherwise expressly provided herein— (a) the provisions of this Act shall have effect notwithstanding anything contained in any other law or the memorandum or articles of a company or in any contract or agreement executed by it or in any resolution passed by the company in general meeting or by its directors, whether the same be registered, executed or passed, as the case may be, before or after the coming into force of the said provisions; and
(b) any provision contained in the memorandum, articles, contract, agreement, arrangement or resolution aforesaid shall, to the extent to which it is repugnant to the aforesaid provisions of this Act, become, or be, void, as the case may be.
Part II - Jurisdiction Of Court
Sections 005 - 006
Section 005
Jurisdiction of the Court and creation of Benches. — (1) The Court having jurisdiction under this Act shall be the High Court having jurisdiction in the place at which the registered office of the company is situate.
(2) Notwithstanding anything contained in any other law no civil court as provided in the Code of Civil Procedure, 1908 (Act V of 1908) or any other court shall have jurisdiction to entertain any suit or proceeding in respect of any matter which the Court is empowered to determine by or under this Act.
(3) For the purposes of jurisdiction to wind up companies, the expression “registered office” means the place which has longest been the registered office of the company during the one hundred and eighty days immediately preceding the presentation of the petition for winding up.
(4) There shall be, in each High Court, one or more benches on permanent basis, each to be known as the Company Bench, to be constituted by the Chief Justice of the High Court to exercise the jurisdiction vested in the High Court under this Act:
Provided that Benches constituted under the Companies Ordinance, 1984 (XLVII of 1984), shall continue to function accordingly unless otherwise notified by the respective Chief Justice of the High Court:
Provided further those provisions of section 6 shall be effective from the date of notification by the Chief Justice of the respective High Court within one hundred and eighty days from the date of the commencement of this Act.
(5) There shall be a Registrar to be known as “Registrar of the Company Bench” duly notified by the Chief Justice of the respective High Court who shall be assisted by such other officers as may be assigned by the Chief Justice of the respective High Court.
(6) The Registrar of the Company Bench shall perform all the functions assigned to it under this Act including all ministerial and administrative business of the Company Bench such as the receipt of petitions, applications, written replies, issuance of notices, service of summons and such other functions or duties as may be prescribed under section 423.
(7) The Chief Justice of the respective High Court, if deemed appropriate, may also establish a secretariat in each Company Bench of the respective High Court in such form and manner to provide secretarial support and to perform such functions as may be prescribed under section 423.
section 001
Part III - Powers And Functions Of The Securities And Exchange Commission Of Pakistan
Sections 007 - 008
Section 007
Powers and functions of the Commission. — (1) The Commission shall exercise such powers and perform such functions as are conferred on it by or under this Act.
(2) The powers and functions of the Commission under this Act shall be in addition to and not in derogation to the powers and functions of the Commission under the Securities and Exchange Commission of Pakistan Act, 1997 (XLII of 1997).
Part IV - Incorporation Of Companies And Matters Incidental Thereto
Sections 009 - 056
Section 049
Conversion of a company limited by guarantee to a company limited by shares and vice-versa.—(1) A company limited by guarantee may be converted into a company limited by shares with prior approval of the Commission in writing by passing a special resolution in this behalf by the company limited by guarantee amending its memorandum and articles of association in such a manner that they include the provisions relating to a company limited by shares in the articles and complying with all the requirements as may be specified.
(2) On an application for change in status of a company under subsection (1), if the Commission is satisfied that the company is entitled to be so converted, such conversion shall be allowed by an order in writing.
(3) A copy of the order, confirming the conversion under sub-section (2) duly certified by an authorised officer of the Commission shall be forwarded to the company and to the registrar within seven days from the date of the order.
(4) A copy of the memorandum and articles of association as altered pursuant to the order under sub-section (2) shall within fifteen days from the date of the order be filed by the company with the registrar and he shall register the same and thenceforth the memorandum and articles so filed shall be the memorandum and articles of the newly converted company.
(5) If a company, being limited by shares, alters its memorandum and articles in such a manner that they include the provisions which constitute it a company limited by guarantee, the company shall—
(a) as on the date of the alteration, cease to be a company limited by shares; and
(b) file with the registrar a copy of the memorandum and articles of association as altered along with the special resolution.
(6) If default is made in complying with the provisions of any of the preceding sub-sections, the company and every officer of the company who is in default shall be liable to a penalty not exceeding of level 2 on the standard scale.
Part V - Prospectus, Allotment, Issue And Transfer Of Shares And Other Securities
Sections 057 - 099
Section 083A
[1][Employees' stock options:- Notwithstanding anything contained in section 83 or any other provision of this Act, a company may, under the authority of special resolution, issue shares in accordance with its articles under employees; stock option in accordance with such procedure end subject! to such conditions as may be specified.]
[1] Inserted through Companies Amendment Act, 2021 dated 03-12-2021
Part VI - Registration Of Mortgages, Charges, Etc.
Sections 100 - 117
Section 117
Power of Court to fix remuneration of receiver or manager.—(1) The Court may, on an application made to it by the receiver or manager of the property, by order fix the amount to be paid by way of remuneration to any person who, under the power contained in an instrument, has been appointed as receiver or manager of the company’s property:
Provided that the amount of remuneration shall not exceed such limits as may be specified.
(2) The power of the Court under sub-section (1) shall, where no previous order has been made with respect thereto—
(a) extend to fixing the remuneration for any period before the making of the order or the application therefore;
(b) be exercisable notwithstanding that the receiver or manager had died or ceased to act before the making of the order or the application therefore; and
(c) where the receiver or manager has been paid or has retained for his remuneration for any period before the making of the order any amount in excess of that so fixed for that period, extend to requiring him or his representative to account for the excess or such part thereof as may be specified in the order:
Provided that the power conferred by clause (c) shall not be exercised as respects any period before the making of the application or the order unless in the opinion of the Court there are special circumstances making it proper for the power to be so exercised.
(3) The Court may from time to time, on an application made either by the liquidator or by the receiver or manager, or by the registrar, vary or amend an order made under sub-section (1) and issue directions to the receiver respecting his duties and functions or any other matter as it may deem expedient:
Provided that an order made under sub-section (1) shall not be varied so as to increase the amount of remuneration payable to any person.
Part VII - Management And Administration
Sections 118 - 275
Section 275
Application of sections 254 to 274 to liquidators and foreign companies.—The provisions of sections 254 to 274 shall apply mutatis mutandis to companies in the course of winding up, their liquidators and foreign companies.
Part VIII - Mediation, Arbitration, Arrangements And Reconstruction
Sections 276 - 285
Section 276
Mediation and Conciliation Panel.— (1) Any of the parties to the proceedings may, by mutual consent, at any time during the proceedings before the Commission or the Appellate Bench, apply to the Commission or the Appellate Bench, as the case may be, in such form along-with such fees as may be specified, for referring the matter pertaining to such proceedings to the Mediation and Conciliation Panel and the Commission or the Appellate Bench, as the case may be, shall appoint one or more individuals from the panel referred to in sub-section (2).
(2) The Commission shall maintain a panel to be called as the Mediation and Conciliation Panel consisting of individuals having such qualifications as may be specified for mediation between the parties during the pendency of any proceedings before the Commission or the Appellate Bench under this Act.
(3) The fee and other terms and conditions of individuals of the Mediation and Conciliation Panel shall be such as may be specified.
(4) The Mediation and Conciliation Panel shall follow such procedure as and dispose of the matter referred to it within a period of ninety days from the date of such reference and forward its recommendations to the Commission or the Appellate Bench, as the case may be.
Part IX - Prevention Of Oppression And Mis-Management
Sections 286 - 292
Section 292
Rehabilitation of sick public sector companies.—(1) The provisions of this section shall apply to a public sector company which is facing financial or operational problems and is declared as a sick company by the concerned Minister-in-Charge of the Federal Government.
(2) After a company is declared as a sick company under sub-section (1), any institution, authority, committee or person authorised by the concerned Minister-in-Charge of the Federal Government in this behalf may draw up a plan for the rehabilitation, reconstruction and reorganisation of such company, hereafter in this section referred to as the rehabilitation plan.
(3) Without prejudice to the generality of the foregoing provision, the rehabilitation plan, may, in addition to any other matter, provide for all or any of the following—
(a) reduction of capital so as to provide for all or any of the matters referred to in section 89 or reconstruction, compromise, amalgamation and other arrangements so as to provide for all or any of the matters referred to in section 279 or section 282 or section 285;
(b) alteration of share capital and variation in the rights and obligations of shareholders or any class of shareholders;
(c) alteration of loan structure, debt rescheduling or conversion into shares carrying special rights or other relief and modification in the terms and conditions in respect of outstanding debts and liabilities of the company or any part of such loan, debts or liabilities or variation in the rights of the creditors or any class of them including any security pertaining thereto;
(d) acquisition or transfer of shares of the company on the specified terms and conditions;
(e) issue of further capital including shares carrying special rights and obligations relating to voting powers, dividend, redemption or treatment on winding up;
(f) removal and appointment of directors (including the chief executive) or other officers of the company;
(g) amendment, modification or cancellation of any existing contract; or
(h) alteration of the memorandum or articles or changes in the accounting policy and procedure.
(4) The rehabilitation plan shall be submitted for approval to the concerned Minister-in-Charge of the Federal Government which shall, unless it otherwise decides for reasons to be recorded, cause it to be published in the official Gazette for ascertaining the views of the shareholders, creditors and other persons concerned within a specified period.
(5) Before approving the rehabilitation plan, the concerned Minister-in-Charge of the Federal Government shall take into consideration the views relating thereto received from any quarter within the specified period.
(6) On the approval of the rehabilitation plan by the concerned Minister-in-Charge of the Federal Government, its provisions, with such modification as may be directed by the concerned Minister-in-Charge of the Federal Government, shall become final and take effect and be implemented and shall be valid, binding and enforceable in all respects notwithstanding anything in this Act or any other law or the memorandum or articles of the company or in any agreement or document executed by it or in any resolution passed by the company in general meeting or by its board, whether the same be registered, adopted, executed or passed, as the case may be, before or after the commencement of this Act.
(7) Any provision contained in the memorandum, articles, agreements, documents or resolutions as aforesaid shall, to the extent to which it is repugnant to the provisions of this Act or the rehabilitation plan, become void.
(8) No compensation or damages shall be payable to any one for any matter or arrangement provided for in, or action taken in pursuance of, the rehabilitation plan.
(9) The concerned Minister-in-Charge of the Federal Government may vary or rescind rehabilitation plan from time to time and issue such directions as to its implementation and matters ancillary thereto as it may deem expedient.
(10) The concerned Minister-in-Charge of the Federal Government or any authority or other person authorised by the concerned Minister-in-Charge of the Federal Government in this behalf shall supervise the implementation of the rehabilitation plan and may issue such directions to the parties concerned as may be deemed necessary by such Government, authority or person, as the case may be.
(11) Whosoever fails to give effect, to carry out or implement the rehabilitation plan or any matter provided for therein or any direction issued under sub-section (10), shall be liable to imprisonment of either description for a term which may extend to three years and fine not exceeding five million rupees and, in case of a continuing failure, to a further fine not exceeding ten thousand rupees for every day after the first during which the failure or default continues.
(12) Until a rehabilitation plan has been approved by the concerned Minister-in-Charge of the Federal Government and is in operation, the provisions of this section shall not prejudice or affect the power or rights of a company or its shareholders or creditors to enter into, arrive at or make any compromise, arrangement or settlement in any manner authorised by this Act or any other law for the time being in force.
(13) The rehabilitation plan approved by the concerned Minister-in-Charge of the Federal Government and any modification thereof shall, unless otherwise directed by it, be published in the official Gazette and a copy thereof shall be forwarded by the concerned Minister-in-Charge of the Federal Government to the registrar who shall register and keep the same with the documents of the company.
(14) The Federal Government may, by notification in the official Gazette, make rules to carry out the purposes of this section.
(15) This section is in addition to and not in derogation of any other law regarding rehabilitation of any entity.
Part X - Winding Up
Sections 293 - 426
Section 426
Easy exit of a defunct company.—(1) A company which ceases to operate and has no known assets and liabilities, may apply to the registrar in the specified manner, seeking to strike its name off the register of companies on payment of such fee mentioned in the Seventh Schedule.
(2) After examination of the application, the registrar on being satisfied, may publish a notice in terms of sub-section (3) of section 425 of this Act, in the Official Gazette stating that at the expiration of ninety days from the date of that notice, unless cause is shown to the contrary, the name of the applicant company will be struck off the register of companies and the company will be dissolved. Such notice shall also be posted on the Commission’s website.
(3) At the expiration of the time mentioned in the notice, the registrar may, unless any objection to the contrary is received by him, strike its name off the register, and shall publish a notice thereof in the official Gazette, and, on the publication of such notice, the company shall stand dissolved:
Provided that the liability criminal, civil or otherwise (if any) of every director, officer and member of the company shall continue and may be enforced as if the company had not been dissolved.
Part XI - Winding Up Of Unregistered Companies
Sections 427 - 433
Section 433
Provisions of this part cumulative.—The provisions of this Part with respect to unregistered companies shall be in addition to, and not in derogation of, any provisions hereinbefore, in this Act contained with respect to winding up of companies by the Court and the Court or official liquidator may exercise any powers or do any act in the cases of unregistered companies which might be exercised or done by it or him in winding up companies formed and registered under this Act; but an unregistered company shall not, except in the event of its being wound up, be deemed to be a company under this Act, and then only to the extent provided by this Part.
Part XII - Companies Established Outside Pakistan Provisions As To Establishment Of Places Of Business In Pakistan
Sections 434 - 450
Section 450
Notice of liquidation.—(1) If a foreign company having an established place of business in Pakistan goes into liquidation in the country of its incorporation, it shall–
(a) within thirty days give notice thereof to the registrar, and simultaneously publish a notice at least in two daily newspapers circulating in the Province or Provinces or the part of Pakistan not forming part of a Province, as the case may be, in which its place or places of business are situated and furnish to the registrar within thirty days of the conclusion of the liquidation proceedings all returns relating to the liquidation and the liquidation account in respect of such portion of the company’s affairs as relates to its business in Pakistan; and
(b) cause, in legible letters, a statement to appear, on every invoice, order, bill-head, letter paper, notice of other publication in Pakistan, to the effect that the company is being wound up in the country of its incorporation.
(2) Where a company to which this section applies has been dissolved, or has otherwise ceased to exist, no person shall, after the date of such dissolution or cessation, carry on, or purport to carry on, any business in Pakistan in the name or on behalf of such company.
(3) Nothing in this section shall be construed as preventing a company to which this section applies from being wound up in Pakistan in accordance with the provisions of this Act, notwithstanding that it has neither been dissolved nor otherwise ceased to exist in the country of its incorporation.
Part XIII - General
Sections 451 - 515
Section 452
Companies’ Global Register of Beneficial Ownership.: (1) Every substantial shareholder or officer of a company incorporated under the Company law, who is citizen of Pakistan within the meaning of the Citizenship Act, 1951 (II of 1951), including dual citizenship holder whether residing in Pakistan or not having shareholding in a foreign company or body corporate shall report to the company his shareholding or any other interest as may be notified by the Commission, on a specified form within thirty days of holding such position or interest.
Explanation.: For the purposes of this section the expression “foreign company” means a company or body corporate incorporated or registered in any form, outside Pakistan regardless of the fact that it has a place of business or conducts any business activity or has a liaison office in Pakistan or not.
(2) The company shall submit all the aforesaid information received by it during the year to the registrar along with the annual return.
(3) Any investment in securities or other interest as may be notified in sub-section (1) by a company incorporated under this Act, in a foreign company or body corporate or any other interest shall also be reported to the registrar along with the annual return.
(4) All the above information shall be reported to the registrar through a special return on a specified form within sixty days from the commencement of this Act and thereafter in accordance with the sub-section (2).
(5) Any contravention or default in complying with requirements of this section shall be an offence liable to a fine of [1][level 1] on the standard scale and the registrar shall make an order specifying time to provide information under sub-section (1) and (3).
(6) Any person who fails to comply with the direction given under subsection (5) by the registrar shall be punishable with imprisonment which may extend to three years and with fine up to five hundred thousand rupees or both.
(7) The Commission shall keep record of the information in the Companies’ Global Register of Beneficial Ownership.
(8) The Commission shall provide the information maintained under sub-section (7) to the Federal Board of Revenue or to any other agency, authority and court.
[1] Substituted through Companies (Second Amendment) Ordinance, 2020 dated 07-07-2020