How TO FORM A COMPANY

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Assignment
How TO FORM A COMPANY

Submitted To:

Prof. Sajid Mehmood

GROUP MEMBERS
GOHAR EJAZ USMAN NADEEM SHOAIB ARSHAD BILAL AHMED M. WAQAS 11014220-027 11014220-018 11014220-126 11014220-033 11014220-019

FORM A PUBLIC LIMITED COMPANY
COMPANY
Company is a legal entity formed under the Companies Ordinance, 1984. It can have share capital or can be formed without share capital. A company means certain persons registered under the Companies Ordinance, 1984. Companies remain the most favored form of business organizations in Pakistan especially for medium and large-scale business enterprises. Legal regime for establishment and regulation of companies in Pakistan is given in the Companies Ordinance, 1984. Whereas the function of administration of these companies is vested in the Securities and Exchange Commission of Pakistan and the Registrar of Companies appointed by the Securities and Exchange Commission of Pakistan for a Province of Pakistan where such company is to be registered. Under the provisions of the Companies Ordinance, 1984 a company is a corporate body with separate legal entity and a perpetual succession and a company may be formed by persons associating for any lawful purpose by subscribing their names to the Memorandum of Association and complying with other requirements for registration of a company under the provisions of the Ordinance. The Companies Ordinance, 1984 provides three different types of companies:
  

A company limited by shares A company limited by guarantee An unlimited liability company

Further, under the Companies Ordinance, 1984 two types of limited liability companies are provided namely, a) a private limited company and b) a public limited company (which may be listed or unlisted). Any one or more persons

associated for any lawful purpose by subscribing their name(s) to the Memorandum of Association and complying with other registration specific requirements of the Companies Ordinance, 1984 may incorporate a private limited company. Provided that where a company has only one subscriber to the Memorandum of Association then such a company is called a Single Member Company, however, a Single Member Company remains a private limited company for all intents and purposes of the Ordinance. Whereas any three or more persons so associated may form a public limited company. A company limited by shares whether a private company or a public company is the most common vehicle for carrying out a business enterprise in Pakistan. Prior approval of the relevant Ministries/Departments is required to be obtained before incorporation of the following companies:
    

A banking company A non-banking finance company A security service providing company A corporate brokerage house A money exchange company

Public Limited Company:
A public unlisted company must have at least three members/directors whereas the company listed at stock exchange must have at least seven members/directors. Public Limited Companies in Pakistan can be formed by at least three persons by subscribing their names to the „Memorandum and Articles of Association of the company. The word „Limited' is used as the last word of its name. The public company can offer shares to the general public.

Securities and Exchange Commission of Pakistan (SECP)
SECP established under the Securities and Exchange Commission of Pakistan Act 1997 was operational as a body Corporate on 1st January 1999.One of the

important functions of the SEC is incorporation/registration of companies. This task has been entrusted to the Registration Department, Company Law Division which has its field offices known as Company Registration Offices (CROs) for the purpose of incorporation / registration of different type of companies. Since inception of the SECP, a number of operational changes have been introduced and a friendly environment has been created at the head office and the CROs. It has total eight regional offices around Pakistan. Four at provincial level and three major offices in Multan, Faisalabad and Sukkur. SECP has following Division: Securities Market Division; Specialized Companies Division; Insurance Division Finance & Admin Division; Information System & Technology Division HR& Training Division

Company Registration Offices:
Incorporation of companies made easier as completion process within three days other legal formalities were completed within one day like certified copies, name of company etc. SECP introduced eservices in Sep, 2008 which facilitate online to the promoters. It saves time and wealth. There was no need to visit CRO (company registration offices). The record of the companies maintained by the given CROs‟ is public record, and investors, shareholders and other concerned, may inspect the record of any company whenever needed by them and, they may also obtain certified copies of any specific document in accordance with the prescribed procedure.

INCORPORATION OF COMPANY
Relevant laws are Companies Ordinance, 1984, Companies (General Provisions and Forms) Rules, 1985, Single Member Companies Rules, 2003 and Code of Corporate Governance for limited companies. Companies Ordinance, 1984 mentions three types of companies i.e. company limited by shares, company limited by guarantee and unlimited company. Companies which may be registered in the mentioned categories in Pakistan are a single member company, a private limited company, a public limited company; which may be listed or unlisted and a foreign company. Following steps are involved in incorporation process UNDER THE Companies Ordinance, 1984:

Availability of name:
The promoters were going to register a company so first step was to prescribe a name of company and application submitted to the concerned registrar to check the availability of name. A fee of Rs200/= for office processing and Rs500/= for online processing of application. The name of company as proposed by the promoters should not be inappropriate, oppress the religious propensity of people. The name should not be identical and closely resembles the existing company. The SECP has provided the list of inappropriate words on their website. After selection of name, make sure this name is valid according to criteria laid down by the SECP. On failure of the promoters to get the company registered within 30 days from the receipt of such certificate, the Registrar may allocate such name to any other applicant seeking the same name.

Number of Directors

The number of Directors is to be not less than six nor more than: 1. 12; or 2. Any lesser number than 12 determined by the Directors (but the number must not be less than the number of Directors in office at the time the determination takes effect).

Appointment
The Directors may appoint or the Company in general meeting may elect a person as a Director either to fill a casual vacancy or as an additional Director provided that the person is a Member at the time of their appointment and throughout their term of office as a Director. A person is ineligible to be appointed as a Director if he or she is an employee of the Company or any of its subsidiaries.

Change of number of Directors
The Company in general meeting may by resolution increases or reduce the number of Directors, and may also determines the rotation by which the increased or reduced number is to retire from office.

Documents for registration of a limited company:

Documents required for registration of a private limited company in Pakistan The following documents are required to be filed with the registrar concerned for registration of a private limited company in Pakistan:
 

Copy of national identity card or passport, in case of foreigner, of each subscriber and witness to the memorandum and article of association. Memorandum and articles of association - Four printed copes of Memorandum and Articles of Association duly signed by each subscriber in the presence of one witness.







Form 1 - Declaration of compliance with the pre-requisites for formation of the company. Registration/filing fee - A copy of the original paid Challan in the authorized branches of Habib Bank Limited or a Bank Draft/ Pay Order drawn in favor of the Securities and Exchange Commission of Pakistan of the prescribed amount. Authorization by sponsors - The authorization of sponsors in favor of a person to make good the deficiencies, if any, in memorandum and articles of association as may be pointed out by the registrar concerned and to collect the certificate of incorporation

National Identity Card
Copy of national identity card or passport, in case of foreigner, of each subscriber and witness to the memorandum and article of association.

Memorandum of Association And Articles of association:
The promoters of the company prepare the memorandum of association. Memorandum of association is the most important document of the company. It is the charter of the company and defines its powers and states its objectives. The Articles provide a description of the regulations and by-laws with which the company intends to conduct and regulate its daily working on various issues e.g. transfer of shares, general meetings, voting, notices, etc In case of offline submission, the four copies of memorandum and Articles of association required and only one copy of memorandum and articles of association for online submission of documents. The above copies are necessary to be signed by the subscribers in the presence of one witness.

Forms
i. FORM -1

Declaration regarding compliance with the requirements of the companies Ordinance, 1984 signed by one of proposed Directors or an Advocate or Chartered Accountant or Cost and Management

Accountant (on Form 1).
ii. FORM-21

Address of the registered office of the company (on Form 21).
iii. FORM-29

Details of the Chief Executive, officers/executives (on Form 29).
iv. FORM-27

Directors

and

other

List of persons consenting to act as director
v. FORM-28

Consent of Directors

Registration Fee:
Original paid challan evidencing payment of fee in any of authorized branches of MCB bank limited. The payment may be as bank draft or pay order. According to Sixth Schedule of the Companies Ordinance, 1984.

Authorization by sponsors
The sponsors authorize the subscribers if any deficiencies were found in memorandum and articles of association by the concerned registrar and collect the certificate of incorporation.

Additional Requirements for the Incorporation of a public Company

In addition to the requirements for incorporation of a private limited company as stated above, the public companies are required to file the following documents at the time of incorporation: i. Form 27 (List of persons consenting to act as director)

ii. Form 28 (Consent of Directors) Submit required documents to SECP and the will take 7-14 days to scrutinize documents. If the find any mistake/omission they will inform the promoters and re-submit after correcting the mistake pointed out by the commission. At end, the commission will issue incorporation certificate.

STEP WISE PROCEDURE FOR ONLINE SUBMISSION Log on to eServices:
The client will connect to https://eservices.secp.gov.pk/eServices, to log on to His/her account or signup, in case of a new user. User will receive an e-mail containing the user activation link. By clicking on the link, user account will be activated.

Enter Information:
A successful logon to eServices by entering user ID and password, will display a list of available and unavailable processes. If the Company name has been reserved successfully, the Company Incorporation facility will be available at this stage. User will click on the company incorporation process. An input page is displayed, wherein the following information will be entered by the user.

(i) Application Details:
Fill in the details of the proposed company in terms of its complete name, kind, and designated bank branch to be selected, in the first section.

(ii) Declarant:
In this section, enter the compulsory information about the declarant/company representative. A declarant can be any person authorized to represent the proposed company by the Owners/Board of Directors. Any employee or even the director could be chosen for this responsibility.

(iii) Director/ Subscriber:
Enter detailed data regarding the Board of Directors and Subscribers in this section. “Add” and “Delete” buttons will create and remove rows for data entry.

(iv) Company information:
Enter company information e.g., classification, share capital, objects, in this section. registered office address, sector-wise

(v) Signatory:
Enter details of a signatory in this section.

(vi) Press Continue Link:
By pressing Continue Link, Process Document Listing Page will be displayed, containing the following links:

a. Update Form(s) Data:
Click link if you want to update the data. After updating data, press Continue link again. Process Document Listing Page will be displayed again.

b. View Forms:
System automatically fills out the required forms using the data entered by you. You can view these forms by clicking on the given link.

c. View Company Profile Form:
To see company profile, click this link.

d. Fill New Attachment Form:
In this link, you can attach the required documents in PDF format e.g., copy of CNIC, power of attorney, etc. Press Save Form button after attaching the required documents.

e. Fill New Attachment Form Articles of Association:
Click this link and attach the Articles of Association in PDF format. Press Save Form button after attaching the said file.

f. Fill New Attachment Form Memorandum of Association:
Click this link and attach the Memorandum of Association in PDF format. Attachment size should be less than 2 MB. Press Save Form button after attaching the said file.

g. Fill New Bank Challan:
Click link and bank challan will be displayed. Bank Challan is automatically populated with prescribed fee and other information by the eServices application. Press print form button and then save form. Four copies will automatically be printed as original copy, bank copy, SECP copy and depositor copy. The fee shall be deposited in the Bank branch selected by the applicant from the

designated branches of MCB Bank Limited. The bank shall retain the SECP and bank copies and return remaining two copies (original and depositor copy) to the client.

h. Sign Forms:
Sign Forms will be enabled. Click on Sign Forms link. Forms are signed using the digital certificates. Digital Certificates are obtained from the NIFT. Select all the eForms available Under “Select for Signature” Column. Now, select the correct Digital Signature from the drop down menu. Press “Sign” button. After you press Sign button, “Submit to SECP” button will become active. Click this button. All the documents will be submitted to the SECP and a process reference number will be displayed. The process will be initiated as soon as the SECP receives the verification of deposit of fee from the Bank. User will receive response from the SECP via email, with any of the response, acceptance (Incorporation Certificate Dispatched through Courier), rejection or issue resolution.

REQUIREMENTS AFTER INCORPORATION STAGE:

 A public company commences its business after obtaining commencement of business certificate from the concerned registrar.  The listed companies also required submitting the list of members on floppy diskette to the Commission and the associations are required to be submitted to the concerned registrar a annual return on FORM-B.  Company is required to submit a list of directors and consent of directors and chief executive within seven days of the incorporation.

 The first audited accounts are required to be shown in the first annual general meeting  to be held within 18 months from the date of incorporation. Five duly attested copies of  the accounts and an Annual Return in form “A” it to the registrar within 30 days of the date of the AGM.  A listed company is also required to appoint a company secretary.  Company is a statutory meeting is required to be held within a period of not less than 3 months and not more than six months from the date at which it becomes entitled to commence Business. Statutory report is required to be forwarded to the members at least 21 days before this meeting. Five duly certified copies of the statutory report shall be delivered to the registrar immediately after sending the report to the members.  First Annual General Meeting (AGM) of the company is required to be held within eighteen months from the date of incorporation and subsequent Annual General Meetings are required to be held once at least in every calendar year, within a period of four months following the close of its financial year and not more than fifteen months after holding of its last preceding AGM.

 The first election of directors is to be conducted at the first annual general meeting. Re-election should take place every three years.  In the case of increase in paid-up capital, the company is required to offer new  shares to its members. A circular (under section 86(3)) shall be issued to all the  members. A copy of this will also be filed with the registrar concerned, and  thereafter Form-3 to be filed within 30 days of the allotment of shares.  Any appointment or change in the Directors, Chief Executive, Auditors, Chief Accountant is required to be notified to the concerned registrar by filing Form-29. This is being done within 14 working days for any appointment or change.

 The first auditors of the company must be appointed within 60 days of the date of incorporation. Subsequent auditors must then be appointed only at the annual general meeting.  An annual return prescribed on Form-A is required to be filed with the registrar at the end of each year  The company is required to inform about the registered office of the company on FORM-21 within 28 days from the date of its incorporation. This submitted with the registration documents for communication. In case of any change in the registered office should be informed to the concerned registrar.  The company was required to issue certificates to the shareholders within 90 days from the date of allotment and within 45 days after the date of filling of application for registering of transfer of shares.  Every mortgage or charge created by the company on its property should be registered with the concerned registrar. Any changes thereafter in this should also be registered.  Three copies of audited balance sheet and profit and loss accounts submitted to the SECP, registrar, and stock exchange at the time issuing notices for Annual General Meeting to the members within 30 days of AGM. Necessary condition for listed company s above described.

FORM 1
THE COMPANIES ORDINANCE, 1984 (Section 30(2) and rule 4) DECLARATION OF APPLICANT FOR INCORPORATION Please complete in typescript or in bold block capitals. 1. Name of the Company

2. 3.

Presented by Fee Paid (Rs.) Name & Branch of the Bank Day Month Year

4.

Receipt No.

Date (Bank Challan to be attached in original)

5. 6.

Declarant’s Name & Designation Declarant’s Father Name

7.

Profession/ Designation (delete the portion not applicable)

Advocate entitled to appear before a High Court/ Supreme Court/ Chartered Accountant/ Cost & Management Accountant practicing in Pakistan engaged in the formation of this company/ a person named in the articles as Director/ Officer of the proposed company. I do hereby solemnly and sincerely declare that: a) I am the above named declarant; b) all the requirements of the Companies Ordinance, 1984, and the rules made there under in respect of matters precedent to the registration of the said Company and incidental thereto have been complied with and c) I make this solemn declaration conscientiously believing the same to be true.

8.

Declaration

9. Signature of Declarant

10. N.I.C No. of Declarant

11. Signature of Witness 12. Name and Father’s Name of the witness 13. N.I.C No. of the witness

14. Address of the witness

Day 15. Date

Month

Year

FORM 21
THE COMPANIES ORDINANCE, 1984 [Section 142]

NOTICE OF SITUATION OF REGISTERED OFFICE OR ANY CHANGE THEREIN
Please complete in bold block capitals.

1. Name of the Company

2. Presented by

3. Fee Paid

(Rs.)

Name of Bank

 

Standard Chartered Bank Limited MCB Bank Limited

Branch of the Bank

Day

Month

Year

4.

Receipt No.
(Bank Challan to be attached in original)

Date

5. The situation of registered office of the company was changed from (state previous address):

6. The registered office of the Company is now situated at

(State full address with identifiable number / name of the premises or building and street, road and locality besides the name of the town and postal area, where applicable).

6.1 Telephone No(s)

6.1 Fax No., if any

6.3. E-mail address

Day
7. With effect from (date)

Month

Year

8. Signature of Chief Executive/ Secretary

9. Name of CEO/Secretary

10. Designation

11. CNIC No. of Signatory

12. Date

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