(companies ordinance, 1984

5/27/2018 (Companies Ordinance, 1984

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From the notebook of Mr. Muhammad Ovais 13thMFC - Deloitte

1

SectionNumber

Title Reference to other Laws andSections

Short explanation

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

Name; covered geographical area,applicability.

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

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

4. Ordinance not to apply to certain corporations - Trading corp., co-operative society university.

5. Application of ordinance to non-tradingcompanies with purely financial objects

- -

6. Ordinance to override memorandum, articles,etc.

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

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

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

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

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

P/up cap.>1mn, if20memliable to be registered, otherwisepersonal liability. Exceptions noted

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

Subscribe to MOA & comply withrequirements. 3(PLC), 2(PVT), 1(SMMay be Limited by shares, guaranteunlimited.

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

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

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

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

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

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

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

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

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

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

24. Procedure on confirmation of the alteration - -Certified copy of order of commissaltered MOA to be filed with registrregistration w/in 90days of passing order by commission. The registrar certify the registration under his ha-Extension may be granted by thecommission.

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

for revival order may be filed w/in


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further 90days.

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

27.

Printing, signature, etc., of articles - Printed, divided, signed & dated.28. Alteration of articles - Through SR & Resolution passed by of affected class (if effect of alterasubstantive).

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

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

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

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

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

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

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

35. Copies of memorandum and articles to be givento members

- W/in 14days of request on paymentprescribed amount.

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

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

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

Circular 25/2003 (Word Bank of any ofits derivatives not allowed unlessapproved by SBP)

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

-Name is inappropriate, deceptive,designed to exploit the religioussusceptibilities of the people-Identical with the name of the comalready in existence.-Use of word The in the beginningthe name-Name containing a country name ujustified-Names that create misleading impabout the business activities undertby the company-Names of the company under liquid-Names that signifies patronage of Gdepartments

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

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

thereof- -Registrar shall issue a new certifica

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

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

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

- -

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

Circular 29/2009 (Conditions for grantof license)

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

Commission may waive req. to writLimited to a co. promoting of artcommerce, science, religion, charit

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


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44. Conversion of public company into privatecompany

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

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

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

directors, Conversion from Pvt. co toSMC)

With the approval of commission.

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

SMC Rules 2003 (Modalities &formalities for conversion)

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

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

- Cessation of privileges & exemptionavailed by a Pvt. Co. but may be reof the consequences of such noncompliance on an application madethe commission

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

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

48. Service of documents on company - To the company or officer at reg. oby post under certificate orby reg.orpersonal delivery angst. an

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

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

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

By reg. post, personal delivery angsacknowledgement.

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

(Using courier service for thepurpose is allowed).

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

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

then newspaper adv., published genwill accomplish the purpose. NoticeAGM to: member, legal representatmember & auditor.

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

By CEO, director or Co. Sec.

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

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

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

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

-Certification (by CEO & CFO),Subscription days (not less than 7 anot more than 30 days after the isprospectus)-Form of application to be accompawith the prospectus (exceptions no

-Non-applicability of this section isprescribed in certain situations.54. Expert to be unconnected with the formation or

management of company- Experts statement shall not be inc

in the prospectus unless he has givestatement purely in his professionalcapacity, i.e. he is not engaged in tpromotion, formation or managemethe company.

55. Experts consent to issue prospectus containingstatement by him

- A prospectus containing the stateman expert shall not be issued unlesshas given his written consent to the& has not withdrawn it, and thestatement to the fact that he has gthe consent and has not withdrawn appears in the prospectus.

56. Penalty and interpretation - Definition: Engineer, valuer, accouor any other person whose professio


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gives him the authority to a statememade by him.

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

-Approval of the commission to beobtained within 60 days preceding iissue, a copy of prospectus be delivto registrar with prescribed content(experts consent; copy/memoranof contracts; statement ofadjustments), facts to be disclosedthe face of it.-Refusal of registration by registrar consent of auditor, L.A, attorney, b

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

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

- Except approval or authority given

59. Civil liability for misstatements in prospectus - -Liable persons for untrue statemeDirector, proposed director inprospectus, promoter, (expert, audL.A, attorney, banker & broker: liabonly for untrue statement made by -Defenses are available to Directorsexperts u/s 55 & 57(5).

60. Criminal liability for misstatements in prospectus - -Person authorizing the issue ofprospectus shall be liable in respectany untrue statement. Imprisonmento 2 years or Rs. 2,000 fine or both proved blameless.

-Expertsu/s 55 & 57(5) are not liabunder this section.

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

- -Structure:Company>IssuingHouse>G.P.-Document shall be deemed to be aprospectus, company liable for its iallotment is valid if: issue to G.P. wyear after allotment or agreement tallot; no consideration received by company on date of offer for sale; omade in pursuant of the understandwhich company was directly or india party.-Additional disclosures in prospectNet amount to be received by thecompany & place and time of inspe

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

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

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

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

63. Interpretation of provisions relating toprospectus

- Untrue statement orOmission=Misleading in form & cont

64. Newspaper advertisement of prospectus - Newspaper publication of prospectuomit contents of MOA or signatoriesof shares subscribed by them.

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

- -Section of public includes existingmembers or debenture holders or c

of the person issuing the prospectus-No offer or invitation shall be treamade to public if renouncing right iavailable to the person to whom theor invitation is made or renouncing is made available if the favor of domconcern (person pre-identified by issuer).

66. Penalty for fraudulently inducing persons toinvest money

- -

67. Application for, and allotment of, shares anddebentures

- Allotment to be made only if made application form and of such minimamount prescribed by the commissiSuch application shall be irrevocabl

68. Restriction as to allotment - -Prospectus issued: Minimumsubscription in full received in cashseparate bank account until certific


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

69. Statement in lieu of prospectus - -File S.L.I.P with the registrar at ledays before allotment signed by evedirector and proposed director.-Criminal liability for untrue statemincludes imprisonment for 2 years o

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

section 68 or 69 is voidable at theinstance of the applicant w/in 30 dStatutory Meeting or allotment eventhe company is in the course of w/u-Proceedings to recover loss or damshall not be commenced after the eof 2 years from the date of allotme

71. Repayment of money received for shares notallotted

- -Decision of successful & unsuccessfapplications w/in 10days of closing subscription days & repay money ofunsuccessful applications w/in furth10days of decision.-If refund not made w/in 15days,directors (jointly & severally) liable

repay with surcharge unless provedguiltless.

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

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

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

-Any allotment made will be void ifapplication for listing is not appliedbefore 7days of issue of prospectus application not granted within21days+further 21days of closure ofsubscription list. Notify to the appliof the fact w/in prescribed further21days.-Repayment should be made withinof becoming liable to repay otherwdirectors will be personally responsrepay with surcharge unless provedblameless.

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

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

W/in 30days of allotment file with t

registrar a return of allotment statiprescribed particulars including thecontracts in writing if allotment maotherwise than in cash and resolutioauthorizing the issue in case of bonissue and issue at discount along wisanction order of the commission &of commission where discount exce10%. (Read with complete section)

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

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

75. Issue of duplicate certificates - -W/in 45days of application if originare proved to have been lost, destrdefaced, mutilated or torn and issurrendered to the company after mnecessary inquiry & may charge feeexceeding the prescribed amount oactual expenses of enquiry- Notify to the applicant w/in 30dayapplication in case of any impedime

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

Circular 16/2000 (Destruction of

physical share certificates [after

On an application made by transfertransferee on delivery of properlystamped transfer deed to the compIf the T.D. is lost or destroyed, tranmay be made upon the satisfaction directors and after demanding anindemnity.


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

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

78. Notice of refusal to transfer - W/in 30days along with the reasonsthereof so that he can re-lodge theapplication after removing defect.Appeal can also be made to thecommission against the refusal w/inmonths of the receipt of notice of rto transfer or w/in 2 months of the of 30days period referred above (Se78A).

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

80. Transfer to nominee of deceased member - -Member may deposit a nomination name of one or more successors (noother than spouse, mother, fathersister, son, daughter & step or ado

child)specifying the extent of inteeach nominee.-Nomination may be varied if at anysubstituted by other nomination. Obecome invalid on happening of acontingency or if the nomineepredeceases the member (Read witcomplete section)

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

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

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

shares sold through them)

-Lawful, where payment is authorizAOA, amount not > fixed by SECP,disclosed in prospectus, S.I.L.P ordeemed prospectus or other statemdelivered to registrar & disclosure o

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

83. Application of premium received on issue ofshares

- Writing off preliminary expenses; woff expenses, commission or discouallowed on issue of shares or debenpremium payable on redemption ofredeemable preference shares; fullybonus shares.

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

Allowed after 1 year of COB; Passedcompany in GM and sanctioned by tcommission, specifying maximum radiscount and issued w/in 60days ofsanction by the commission.

85. Redemption of preference shares - Only fully paid, out of reserves, sinfund, proceeds of fresh issue or saleproceeds of property. Where out ofthan proceeds of fresh issue, CRRF icreated & where out of proceeds ofissue, premium is paid out of profitshare premium a/c &not from s/ca

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

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


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

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

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

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

Public companies (Employee StockOption Scheme) Rules, 2001

-Deviation is acceptableif permittFG on the basis of SR, ESOS or wheroffer not accepted by the existingmembers.

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

- -Company may grant option to convthe 20% of the OS any loan, advancecredit as defined in BCO from ascheduled bank or a financial instithaving a term of not less than 3 yea-Such option be granted or exercisewhen in any 2 of the preceding 3 yeafter the expiry of 2 years from theof COB, the return on such balance fallen below the minimum rate as la

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

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

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

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

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

Classes & kinds provided in MOA & Awith their right & privileges prescrib

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

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

- -Increase, consolidate, and sub divicancellation of shares not taken u.-Where authorized capital is fullysubscribed or unsubscribed portion insufficient to issue shares to a bancompany or financial institution, it deemed increased to such extent.(Read with complete section)

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

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

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

- Exception to a subsidiary company wsubsidiary acts as a trustee and itsholding company is not the beneficunder the trust & where subsidiary in shares of its holding company in iordinary course of business under thbusiness of brokerage (voting rightsstand free zed).No direct or indirect financial assistby way of loan, guarantee or provissecurity for purchase of its own shaof its holding company except it is tpart of the contract of service ofemployees (salaried employees, CEOwas not the director before appointexcluding all other directors).


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

-Allowed for a listed company forcancellation or treasury stock.-Where retained as treasury stock, voting rights, no cash dividend and distribution in w/up. (Bonus shares redemption allowed)-Decision by BODMembers throug& communication to SECP on date omeeting.-Purchase shall be made in cash andof distributable profits or reservesmaintained for the purpose.

-Purchase shall be made through teoffer or through SE.-Maintenance of register of purchascompany.

96. Reduction of share capital - Allowed under the authority of S/R creditors consent after approval frBOD followed by confirmation of thcourt through order & its registratio

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

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

99. Objection by creditors and settlement of list ofobjecting creditors

- Entitled creditors: Entitled to any or claim on date fixed by the court date were the date of commencemew/up; date will be fixed by the cou

to be entered on the list of objectincreditors.

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

- Where the company agrees to securpayment of his debt or claim.Amount= Full amount or amount fixthe court (where the company doeadmit his debt or claim).

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

102. Registration of order and minute of reduction - -Order of the court + Minutes approby the court confirming the reductis/cap + description of altered s/capamount deemed to be paid on each

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

103. Minute to form part of memorandum - Registered minute to form part of ecopy of MOA issued after registratio

104. Liability of members in respect of reduced shares - -Liability of member after reductiRevised Face value or Face value amount paid or amount deemed to been paid.-The court may enforce the amountcall receivable from every person wwas a member at the date of reducthe event of claim by any creditor tsatisfaction of court whether thecompany has wound up or not.

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

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

- Same manner & conditions to whichcompany limited by shares is therebrequired abiding by.

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

-10% or more s/holders of affected may apply to court for cancellation resolution w/in 30days of it. Such aapplication may be made by 1 on beof all, if authorized by others in wr-Company shall w/in 15days of courorder forward it to registrar.

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


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

- May increase nominal amount of shacapital by increasing the nominal amof each share & such increased amoshall not be called up except in theof w/up.

111. Limited company may have directors withunlimited liability

- Permitted if provided in MOA.On the appointment of a director, tfact that his liability will be unlimitshall be disclosed in the proposal,furthermore the promoters & officeshall give him a notice before he tacharge of his office that his liability

be unlimited.112. Special resolution of unlimited company making

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

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

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

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

114. Debentures not to carry voting rights - No voting rights in General Meetingexcept convertible into ord. shares voting rights are determined w.r.t. of shares which will be issued uponconversion.

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

contingency or expiration of period116. Power to re-issue redeemed debentures in

certain cases- -Not allowed where: AOA does not

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

117. Specific performance of contract to subscribe fordebentures

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

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

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

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

Where receiver appointed u/s 137 opossession is taken of assets subjecfloating charge, firstly payment of

preferential debts u/s 405 and thenrepayment of loan.

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

120. Issue of securities and redeemable capital notbased on interest

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

Guidelines for issue of commercialpaperGuidelines for issue of TFCs toGeneral Public

-To scheduled banks, financialinstitutions, & others as specified b-Agreement for redeemable capital provide for the following:

Mode & basis of repaymen Creation of participation

reserve

Agreement for sharing of or loss

Right of holder to convertOS balance of capital intoordinary shares of the comin case of Net loss

121. Certain mortgages and charges to be void if notregistered

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

Prescribed particulars of mortgage charge along with the instrumentevidencing it w/in 21days after itscreation.Lender & Property outside Pakista21days from the date of receipt ofdocuments if dispatched with duediligence & care (otherwise from tdate of creation).Lender in & Property inside Pakist21days from the date of creation.Realization in favor of lender not m

than his interest in the property.


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

122. Registration of charges on properties subject tocharge

- Company acquiring charged propertshall file the prescribed particulars instrument of charge w/in 21days oacquisition or receipt of documentsthe case may be.

123. Particulars in case of series of debenturesentitling holderspari passu

- File with the registrar w/in 21daysexecution of deed or execution ofdebenture series:Amount; date of authorization throresolution; description of propertycharged; and names of trustees (if aIssue of debenture in series: Date amount of each issue.

124. Particulars in case of commission, etc. ondebentures

- -File prescribed particulars with tregistrar: Amount or % of commissi-Deposit of debentures as security odebt not to be construed as issue atdiscount.

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

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

127. Certificate of registration - Conclusive evidence of compliance procedures. Stating the amount sec

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

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

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

- -May be effected by interested persentitled to recover fee from thecompany.-In case of modification, prescribedparticulars of modification + instrumevidencing modification to be filed 21days.

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

- -

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

132. Registration of payment or satisfaction ofmortgages and charges

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

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

and release in absence of intimation from thecompany

- Where debt satisfied in whole or paproperty released from charge or thcharged property cease to form parthe co.s property.

135. Companys register of mortgages - Description of property, amount anname of mortgagees to be entered register.

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

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

137. Registration of appointment of receiver ormanager

- W/in 15days of appointment of a peappointed in compliance with courtor under powers contained in anyinstrument.

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

six months during his appointment areceiver-W/in 30 days of ceasing to act as areceiver-File a notice with the registrar of tfact of cessation of his office w/in 1days

139. Disqualification for appointment as receiver ormanager

- Minor; person of unsound mind; bodcorporate; director of the companyundischarged insolvent; or disqualifcourt for taking part in managemen

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

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

- Court may fix the remuneration ofreceiver of manager on an applicati

made by him.


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142. Registered office of company - -Have a registered office w/in 28daincorporation or from the day ofbeginning of the business, whicheveearlier.-Notice of the fact or change thereibe communicated to the registrar w28days of incorporation or changetherein.

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

notices and in other official publica144. Penalties for non-publication of name - Name not engraved on the seal or n

printed as above, personal liability one who authorizes the use of seal document.

145. Publication of authorized as well as paid-upcapital

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

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

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

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

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

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

150. Inspection of registers - By members at least 2 hours extracbe provided w/in 10 days (excludingworking days)

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

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

-By a notice of not less than 7day byof advertisement in a newspapers.-Closure not exceeding 30days at on

time and not exceeding 45days in a

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

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

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

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

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

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


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be presented by the directors whichbe open to inspection during themeeting.-Court may order holding of the meor to file statutory report rather thaorder for windup in case of noncompliance.-N/A to private company other thanprivate company converted to publicompany (except the one converted1 year of incorporation).(Read with complete section)

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

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

thereof.

Circular 01/2008Publication of noticein Urdu as well.

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

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

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

-W/in 18months from incorporationthereafter once in every calendar ywithin a period of not more than 4months from the closing of financia& not more than 15months from theholding of last AGM (Commission mgrant extension to listed companyholding of subsequent AGM for nomore than 30days but on specialreasons only) Circular 4/2000.

- In the town of reg. office + noticeevery member at least 21days befomeeting & published in newspaper case of listed company.

159. Calling of extraordinary general meeting Circulars as noted above. -Directors of the company ordirectthe request of members representinleast 10% voting power ormembersthemselves if directors fail to call ameeting (w/in 3months of deposit orequisition) w/in 21days of their req-Requisition shall be signed by themembers, state the objects of themeeting and deposited at the registoffice.-Notice of the meeting shall be sentleast 21days before the meeting, buregistrar may allow a shorter notice

period in case of an emergency affethe business.-Expenses of convening the meetin be reimbursed by the company to threquisitionists.

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

160A. Circumstances in which proceedings of a general

meeting may be declared invalid

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

filed by members having 10% or mo


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

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

-Not more than 1 person for 1 meetcan be appointed by a member,of company having share capital,entto vote and attend at a meeting.-Must be a member unless AOA provotherwise-Rights of proxy: Attend; vote; spedemand poll; abstain from voting; nexercise full voting rights.

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

162. Representations of corporations at meetings ofcompanies and of creditors

- -A company being a member byresolution of its directors authorizeof its officials or any person as a pr-A creditor may authorize any of itsofficials to represent it at the credimeeting

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

- Where FG or PG as a member appoiproxy, he shall be a deemed membe

shall also have the right to appoint 164. Notice of resolution - -Along with a draft resolution other

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

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

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

- The facts about the resolution entethe minutesbook with chairmansdeclaration are evidence of the fac

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

168. Time of taking poll - Purpose: At same time, for electiochairman or adjournment of meetinPurpose: w/in 14days of demand offor other purposes.

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

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

172. Filing of resolution, etc. - -Copy or SR authenticated by CEO osecretary to be filed with the registw/in 15days of passing thereof.-Copy of SR to be forwarded to meon his request on payment of a fee.

-Copy of every SR to be annexed toregistered AOA.

173. Minutes of proceedings of general meetings anddirectors

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

-Proceedings of the meetings along the names of the participants to beentered in properly maintained bookept at the registered office, whichbe open to inspection by members wcharge for not less than 2hrs duringbusiness hrs.-Minutes of the meeting of BOD shacirculated to every director w/in 14of the meeting.

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

SMC At least 1Other private At least 2PLC(other than listed)At least 3Listed PLC At least 7

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


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representative of a body corporate.

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

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

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

-Number of directors to be fixed byat least 35days before AGM, & shallchange w/out approval of GeneralMeeting.-Notice of the meeting shall state tnumber of elected directors & nameretiring directors.-Invitation to contest before 14 dayAGM, by retiring as well as new direwilling to contest. Their intention tforwarded to members at least 7dabefore the meeting- Available votes= Number of votes*per share*Number of elected direct

1788A. Fresh election of directors on request ofsubstantial acquirer

- In the forthcoming AGM on an applito the commission by a person hold12.5% voting shares of a listed compin his own name; s/holding not to bdisposed for at least 1year from the

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

be declared invalid- On the application of members with

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

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

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

3 years unless resigns earlier, becomdisqualified or cease to hold office.Casual vacancy may be filled up by directors for the remainder of the t

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

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

183. Certain provisions not to apply to directors

representing special interest

Section 178 (5) Provisions of Election; Term of Off

Removal N/A on following directors-Directors nominated by company ocorporation(by virtue of investmecredit facilities)owned or controlleFG or PG-Directors nominated by FG or PG-Directors nominated by foreign equholders-Votes not available to such directoMinimum # of votes sufficient to beelected as director.Term: As per the contractualarrangement or on the discretion ofnominator.

184. Consent to act as director to be filed withregistrar

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

the law, MOA, AOA & Listing Reg.

Consent given to the company; & w14days of appointment the companfile with the registrar a list of them

with their consent.


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

187. Ineligibility of certain persons to becomedirector

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

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

Minor; unsound mind; applicant ofadjudicated insolvent; undischargedinsolvent; convicted for moral turpidebarred under ordinance; betrayedof fiduciary behavior; not a membedefaulter of loan; engaged in brokebusiness or is a spouse of such perso

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

188. Vacation of office by directors Section 187 & 195. Becomes ineligible u/s 187; absent consecutive meetings of board or frmeetings in a continuous period of3months w/out leave of absence;accepts other office other than of Cbanker, legal or technical advisor wapproval in general meeting; acceploan or guarantee in contravention section 195.

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

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

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

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

Circular 12/2004 (Board meetings ofunlisted public companies may beheld through video conferencing)

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

194. Liabilities, etc., of directors and officers - -Provisions w.r.t. exemption or giviindemnity to director, C.E.O., or ofin respect of liability of the companwhich he may have incurred upon hby virtue of non compliance with anlaw, shall be void.-Exception:liability incurred by himrespect of defending any proceedinwhich judgment is given in his favoris found innocent.

195. Loans to directors, etc. -

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

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

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

employees; incur capital expenditu


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

197. Prohibition regarding making of politicalcontributions

- To any political party, individual orfor any political purpose.

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

No distribution of gifts to members meetings.

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

-Every company (other than a compmanaged by managing agent which appoint) shall have CEO appointed bdirectors w/in 15 days of incorporathe date from which in commencebusiness whichever is earlier, appoiCEO for up to 1stAGM or shorter pedetermined by directors.

199. Appointment of subsequent chief executive - Appointed by the directors w/in 14dof election of directors or occurrencasual vacancy, not for more than 3from the date of appointment. RetiCEO eligible for re-appointment.

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

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

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

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

202. Removal of chief executive - By 3/4thof total number of directorcompany by S/R.

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

- Whether directly or indirectly (carrby spouse or minor children).

204. Penalty - May be debarred from becoming diror C.E.O. of a company for not exce3years.

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

a director.

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

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

SMC Rules 2003 (Duties of a companysecretary).

-Listed company = Whole time secre& independent share registrar-SMC = as prescribed (not a whole tsecretary)Listed company: Member of recogn

body of professional accountants ORcorporate or chartered secretaries person holding a master degree inbusiness administration or commerclaw graduate from a universityrecognized by HEC & having at leasyears relevant experience

SMC: Person holding bachelor degrefrom a university recognized by HEC

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

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

- -No company whether incorporatedor outside Pakistan, except a compawholly owned of controlled by FG o

-No company incorporated in or outPakistan & carrying on business inPakistan shall appoint sole purchasesale or distribution agent except whcompany incorporated outside Pakissuch major portion of its business isconducted outside Pakistan.

207. Terms and conditions of appointment ofmanaging agent

- As the FG may deem fit to impose.


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208. Investment in associated companies andundertakings

SRO 819/2007(Exempt companies)

SRO 865/2000 (Contents of statementof material facts)

-Investment and change in the natuinvestment to be under the authoritS/R which shall indicate PANT (PeriAmount, Nature & Terms)-Return on investment > borrowing of the lending company.

209. Investment of company to be held in its ownname

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

minimum # of members-where principal business is sale anpurchase of securities-deposit of shares or securities forcollection of interest and dividend-deposit by way of security for repaof any loan advanced to the compan-transfer or register in the name of -transfer in the name of issuing hou

210. Form of contract - Contracts on behalf of the companybe:-May or may not be in writing; signea person acting under the authorityvaried or discharged.

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

company if made, drawn, endorsedaccepted on behalf of the companyany person acting under the author

212. Execution of deeds - Deeds signed by the attorney(empowered by company in writinunder its common seal)underhiscommon seal on behalf of the compshall bind the company as if it wereunder itscommon seal.

213. Power of company to have official seal for useabroad

- -If authorized by AOA, co. may haveseparate official seal for any territooutside Pakistan.-That seal shall be the exact copy ocommon seal with the addition of tname of territory where it is intendbe used.

-May appoint agent as in above sectauthorize him to affix the official seany deed or document to which thecompany is a party in that territory

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

-Whether directly or indirectly,concerned or interested, in any conor arrangement, entered or to be einto, by or on behalf of the compan-Disclosure to be made at BOD meewhere question for entering in to thcontract is considered, or at subseqBOD meeting where he becomessubsequently interested.-Notice of disclosure shall expire atof financial year, & renewed by a frnotice given before one month of e

215. Interest of other officers, etc. - No other officer shall enter into anycontract or arrangement with thecompany in which he is directly orindirectly concerned or interested, he makes a disclosure & obtains appof directors.

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

- Over the approval of matter where the interested director. Not to becounted for the purpose of quorum that matter.Exceptions:-Private company not being holdingsubsidiary of PLC.-Contract of indemnity for loss whicdirector may suffer as a result of besurety for the co.-Directorship by virtue of nominatio


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217. Declaring a director to be lacking fiduciarybehavior

- By the court if he contravenes secti214, 215(1) & 216.

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

- -Attach abstracts of terms ofappointment or contract or variatiothe Directors Report & nature of inof director.-Memorandum of terms of appointmor contract or variation of C.E.O., nature of interest of director to be to every member w/in 21days ofappointment or variation of contracappointment.

-Where subsequent interest is deveMemorandum of interest of the direw/in 21days of becoming interested

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

- Particulars: Date, Name of parties,Terms & conditions, Date of placemcontract with directors, Name ofdirectors voting for, against & remaneutral. (Where directors approvalrequired, w/in 7days of approval ofdirectors OR in any other case w/inof receipt of particulars of contractw/in 30days of contract whichever later).Exceptions: Value or cost of contra200,000 orcontracts by banking co.collection of bills in ord. course of

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

description & amount of shares ordebentures of the co. being thesubsidiary or holding co. or the subsof holding co. held by Director, CEOCFO, CS, auditor or 10% beneficial o(direct + indirect + owned by partnefirm + owned by PVT. co. in which hmember of partner).-Kept at reg. office & open for inspsubject to restrictions imposed by Ain GM for > 2hours each day. From 1before AMG & 3days of its conclusioopen for members & debenture holdFor person acting on behalf of SECP

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

- For the purpose of section 220, permentioned above shall give notice odisclosure w/in 15days of acquisitiochange of interest.

222. Submission of statements of beneficial owner oflisted securities

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

223. Prohibition of short selling -Short selling: Purchase and sale, oand purchase w/in a period of less 6months-By director, CEO, CFO, CS, MA, audand beneficial owner of listed comp

224. Trading by directors, officers and principalshareholders

Rule 16 of Companies (GeneralProvision and Form) Rules, 1985-Computation of amount to betendered to a listed co. = Highestprice of 6months (Sale Price) minusLowest price of 6months (purchaseprice)-Purchase and sales shall me matchedw.r.t purchase & sale of shares ofsame class and of same listed co.-Bonus shares & allotment of rightshares either on the basis of his ownentitlement or on account of purchaseof right allotment letters shall be notconstitute a purchase.-Losses arising in such transactionsshall not be offset against gaincomputed in above manner;

brokerage, stamp duty & other

-Gains made by persons mentioned section 220 by way of short selling smake a report & tender the amountgain computed in the prescribed mato the company, and intimate the fthe registrar & SECP. Exception ofpurchase may include security acquin good faith in satisfaction of previcontracted debt.-Such person shall tender the amougain to the co. w/in 6months of accor 60days of demand whichever is lafailure to which renders the amoungain to vest in the SECP. And unlessdeposited to SECP in prescribed accthe commission may direct recoverythe same as an arrear of land reven


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expenditures may be deducted subjectto documentary evidence of suchpayments.

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

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

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

-No company, officer of agent shallreceive or utilize the securities ordeposits except in accordance with contract in writing, & all moneysreceived shall be deposited in a sepbank account.-N/A to deposits received as advancpayment for goods to be delivered.

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

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

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

-Unfunded P.F.: Moneys or securitideposited by employees shall w/in of deposit be deposited in separatea/c or in NSS.-Funded P.F.: Moneys or securitiescontributed by employee & the empshall be paid to the trusteesa/c in15days of collection. From thereon,obligations of the co. shall pass to ttrustees.

-Such contribution shall be depositeNSS, separate bank a/c, or in a specaccount in itself where the companthe scheduled bank; or invested in gsecurities or bonds, redeemable caWAPDA securities or in listed securi

228. Right to see bank receipts for money orsecurities

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

Person depositing money or securityunder the above section shall have right to see bank receipts on requesthe company or trustee.

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

refining, Natural gas & Polyester fiber.

-At reg. office w.r.t: sale & purchasassets; liabilities; receipts & paymealong with matters in respect of recand payments; particulars relating t

utilization of material, labor or othinput costs.-Notice to registrar w/in 7days ofdecision of such other place with fuaddress where the directors decidekeep the aforesaid books of accounplace other than reg. office.-Summarized returns of transactioneffected at branch office should beat least quarterly.-Open to inspection by directors dubusiness hours. Inspection by membthe discretion of the directors.-Books of accounts of not less than10years to be kept.

231. Inspection of books of account by registrar, etc. - -By registrar or person authorized bSECP-Above persons may make copies & identification marks on books; repoSECP after inspection-Duty of director, officer or otheremployee to produce books for insp& provide necessary assistance Inconnection with inspection.

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

-Directors place the accounts befornot later than 18months afterincorporation and subsequently oncleast in every calendar year.-Period of 1staccounts= Period sinceincorporation date till the closing d-Period of accounts shall not exceed12months except after special permby registrar (SECP in case of listed c

and accounts be audited.

SHARES

OTHER THAN SHARES


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

234. Contents of balance sheet - -Listed co. & private and unlisted pco. which is a subsidiary of listed cosch. Other cases=5thsch.-N/A to insurance or banking co.-Such notified IASs be followed.-Listed co. shall annex S.O.C.I.E, Ca

Flow statement & accounting policiany changes therein.

234A. Special audit - -Commission may appoint an auditoconduction special audit, on its ownmotion or up on application made bmembers holding > 20% voting right-1/2of audit expenses shall be bornpaid in advance by members and otshall be payable by the co (co. liablreimburse the commission whereexpenses payable by the co. were sby the commission).-On receipt of special audit report,commission may issue directions forimmediate compliance, to the co. &management.

235. Treatment of surplus arising out of revaluation offixed assets

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

-Transferred to Surplus of RevaluaFixed Assets Account shown after c& reserves.-Shall not be set off unless realized disposal; may be applied in setting in diminution of any deficit arising frevaluation of any other fixed assetincremental depreciation may be chto surplus account.-May be amortized according to lifethe asset.

236. Directors report Section 218(1)Additional content (abstract of termsof appointment or contract or variation& nature of concern or interest of thedirector) w.r.t. appointment of CEO,

MA or CS where any director isinterested in the contract ofappointment.

-Report w.r.t state of companys afthe amount of recommended divideamount proposed to carry to reservor general reserves.-Additional for PLC or PVT co. bein

subsidiary of PLC is also prescribed-Shall be signed by Chairman of direor CEO on behalf of directors if soauthorized or CEO & such number odirectors as are reqd. to sign accouu/s 241 [1 director].-Prepare separate in the standpointholding co. to attach it with consoliF/S.

237. Consolidated financial statements - -Mandatory for every company whelisted or otherwise.-Shall be attached to F/S of holdingmade in accordance with the req. osch.-Where financial year end of subsidprecedes that of its holding co. by mthan 3months, the subsidiary shall man interim closing as on the date ofyearend of holding co. Such interimshall be reviewed by the auditors ofsubsidiary.

238. Financial year of holding company and subsidiary - -Directors of holding co. should ensthat F/Y of both the companies coinexcept where there are good reasonangst. it.-SECP may direct that submission ofaccounts & holding of AMG shall notrequired where it seems appropriatholding or subsidiary company to exits financial year in order to agree Fof both the companies.

239. Rights of holding companys representatives andmembers

- Inspection of subsidiarysbooks durbusiness hours by a representative o

holding co. authorized by the resolu


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

- -F/S as at the yearend of modarabawhere financial year of modarabacoincides with that of modaraba co- F/S as at the yearend of modarababefore that of modaraba company idoesnt coincides.

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

-Approved by directors; signed by Cat least 1 director or 2 directors onwhere CEO is out of Pakistan for thebeing.-Attach a statement to the accountexplaining reason for non-complian

242. Copy of balance sheet to be forwarded to theregistrar

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


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

debarred from becoming CEO or dirof the company and any other compfor 5years, 2years imprisonment + F1.0mn Rupees.-Exceptions to delay in payment ofdivided.

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

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

-First auditors: By directors w/in 6of incorporation till the conclusion AGM (Removed by SR in GM)OR ByGM (Removed in GM by resolution removal & appointment).-Subsequent auditors:By co. in eaAGM until conclusion of next AGM(Removed by SR in GM)-Casual vacancy may be filled bydirectors w/in 30days to hold such until conclusion of next AGM.-SECP may fill the casual vacancy ifauditors not appointed as aforesaiddirectors, in GM, Casual vacancy nofilled) or appointed directors areunwilling to act, upon the notice givthe company w/in 1week of occurreof above events.

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

- -Notice shall be required for a resolat AGM for appointing a person as aother than a retiring auditor, not lethan 14days before AGM which shal

sent to every member & retiring aunot less than 7days before AGM.-Fact of representation made by theretiring auditor shall be made in sucnotice & copy of such representatiosent with the notice.-Intimate the registrar w/in 14days appointment or removal together wthe consent of appointed auditor.

254. Qualification and disqualification of auditors Code of Corporate Governance:-Auditors should not at any time holdshares of listed co. or any of itsassociated co. or undertaking; if so,disclose the interest w/in 14days ofappointment and divest themselvesw/in 90days thereof.

-No listed co. shall appoint a firm ofauditors which has not been givensatisfactory rating under QCRprogram me of ICAP; if a firm orpartner is non-compliant with IFACCode of Ethics.-Listed companies shall change theirauditors every 5years, if impracticalthen rotate the partner in charge afterconsent of SECP.

-Qualification: CA for PLC or PVT cwhich is subsidiary of PLC or PVT cohaving paid up s/cap > 3mn Rupees-Disqualification: Director, other ofor employee during preceding 3yeaPartner or employee of director, ofor employee of co.; spouse of direc

indebted to co. (other than credit cdues of < 500,000 or utility bills of90days); body corporate; s/holder oor its associate co.-Also disqualified where disqualifiedappointment as auditor of subsidiarholding co.

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

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

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

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


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

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

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

-On the direction of FG by a CA or Chaving same powers, duties & liabilas an auditor of the co.

-For last 5 sectors mentioned in sec230, cost audit applicability is w.r.tcommencing from 01.07.2010