NATURE & MEANING

 An association of like-minded persons formed for

the purpose of carrying on some business or
undertaking.
 Itdenotes a joint stock enterprise in which the
capital is contributed by a large number of people.
A company owes its existence either to a special
Act of Parliament or to Company Legislation.
A company is a legal person separate from and
capable of surviving beyond the lives of its
members.
 CHARACTERISTICS
 Corporate Personality
Corporate personality is the fact stated by the law that a company is
recognized as a legal entity distinct from its members.
A company with such personality is an independent legal existence
separate from its shareholders, directors, officers and creators. This
is famously known as the veil of incorporation.
 Limited Liability
The basis of limited liability is that all debts incurred by a
company are the company's liabilities and are not directly the legal
liabilities of the shareholders or of the directors of the company.
The company is a separate legal person from its shareholders and
the directors.
 Perpetual Succession
In company law, perpetual succession is the continuation of a
corporation's or other organization's existence despite the death,
bankruptcy, insanity, change in membership or an exit from the
business of any owner or member, or any transfer of stock ,etc.
 Separate Property
As a company is a legal person distinct from its members, it is
capable of owning, enjoying and disposing of property in its
own name. Although its capital and assets are contributed by
its shareholders, they are not the private and joint owners of
its property
 Transferability of Shares
shares are presumed to be capable of transfer, even in a
private company, unless the company has restricted the right
to transfer them by a provision in its articles, or the
shareholder has entered into a contract, such as a shareholders'
agreement, not to transfer the shares.
 Common Seal
Common Seal is the official signature of the company and each
company shall have only one seal, on its incorporation. It is to
be used in the manner prescribed in the Articles of Association
and the Companies Act
 Contractual capacity'
Contractual capacity' refers to a company's legal ability to
engage in an agreement with another party and be held
liable to the terms of the contract. It is known that a
company has a separate legal personality and is therefore
capable of entering contracts with other parties for
consideration.
 Capacity to sue and be sued
A person must have the requisite legal capacity to be a party
to a lawsuit. Some people are considered non sui juris: they
do not possess full civil and social rights under the law.
 Termination of its Existence

A company can be dissolved either through liquidation or

through the strike-off process.
 Partnership
A type of business organization in which two or more individuals pool
money, skills, and other resources, and share profit and loss in
accordance with terms of the partnership agreement.
 Partnership at Will

Partnership at will means a partnership in which the partners have not

agreed to remain partners until the expiration of a definite term or
the completion of a particular undertaking. In other words, it is
a partnership that can be dissolved by any partner at any time
without any liability.
 Joint Ventures

A joint venture (JV) is a business entity created by two or more

parties, generally characterized by shared ownership, shared returns
and risks, and shared governance.
TYPES OF BUSINESS ORGANISATIONS
Corporate
 Reg. Companies
A company whose name is on the official records of
the Registrar of Companies. law, stock market,
workplace , a company whose name is on the official
records of the Securities and Exchange Commission,
and that is allowed to offer shares for sale.
 Unlimited Companies
An unlimited company is very much like a regular
private company limited by shares. It must be
registered with Companies House and have a
memorandum and articles of association. There's a
director that manages the day-to-day running of the
company on behalf of the shareholders. Persons of
significant control and an annual confirmation
statement must still be submitted to Companies House.
 Pvt. Ltd. Companies
A private limited company is a company which is privately held for
small businesses. The liability of the members of a Private Limited
Company is limited to the amount of shares respectively held by
them. Shares of Private Limited Company cannot be publically
traded.
 Public. Ltd. Companies
A public limited company (PLC) is the legal designation of
a limited liability company which has offered shares to the
general public and has limited liability.
 Govt. Companies
A “Government company” is defined under Section 2(45) of
the Companies Act, 2013 as “any company in which not less than
51% of the paid-up share capital is held by the Central Government,
or by any State Government or Governments, or partly by the
Central Government and partly by one or more State Governments,
and includes a company which is a subsidiary company of such a
Government company”.
 Corporation Statutory
Statutory corporations are public enterprises brought into
existence by a Special Act of the Parliament. The Act defines
its powers and functions, rules and regulations governing its
employees and its relationship with government departments.
It is a corporate person and has the capacity of acting in its
own name.
 Co-operative

A cooperative is "an autonomous association of persons

united voluntarily to meet their common economic, social,
and cultural needs and aspirations through a jointly-owned
and democratically-controlled enterprise". Cooperatives may
include: non-profit community organizations.
 Trust
 A trust company is a legal entity that acts as a fiduciary,
agent or trustee on behalf of a person or business entity
for the purpose of administration, management and the
eventual transfer of assets to a beneficial party.
 Society

A society is a non-commercial organization, form for the

promotion of the object like art, culture, science, religion
etc.
CLASSIFICATION OF
COMPANIES
ON THE BASIS OF INCORPORATION

 Chartered Companies

 Statutory Companies

 Registered Companies
ON THE BASIS OF LIABILITY

 Unlimited Companies
 Companies limited by Guarantee
 Companies limited by shares
 Companies limited by shares and Guarantee
ON THE BASIS OF MEMBERSHIP

 Private Company
 Public Company
 Holding Company
 Subsidiary Company
 NAME CLAUSE
 A company not to be registered under a name which is
undesirable, identical or too nearly resembles another
company. [Section 20]
 It must not be misleading or intended to deceive with
reference to its object.A mere similarity of name does
not give right to injunction, there should be likelihood
of deception or confusion.
 The name and address must be printed or affixed
outside every office in English and local language.
 Inadvertent mistake in name can be changed by passing
an ordinary resolution and by obtaining written
approval of Central Government.
SITUATION CLAUSE

 Only the state in which the Registered Office is

situated is mentioned.
 Exact address can be filled with RoC separately
in Form 18 within 30 days of incorporation.
WINDING UP OF A COMPANY

 The winding up or liquidation of a company is the

process by which a company's assets are collected and
sold in order to pay its debts. Any monies remaining
after all debts, expenses and costs have been paid off are
distributed amongst the shareholders of the company.
LIQUIDATOR
A person appointed to carry out the winding up of a
company is called liquidator. If the winding up is through
Court, the term used for such person is official
liquidator .
The duties of liquidator include to get in and realise the
property of the company, to pay its debts, and to
distribute the surplus (if any) among the members. The
official liquidator acts under the supervision of the Court,
through a recognized reporting system.
The following are the general powers of
liquidator(s):-
 To institute or defend any suit, action, prosecution or
other legal proceeding, civil or criminal on behalf of the
company.
 To carry on the business of the company so far as may be
necessary for the beneficial to it.
 To pay to the creditors.

 To make any compromise or arrangement with creditors.

 To compromise all calls and liabilities to calls, debts and

liabilities capable of resulting in debts.
 To sell the movable and immovable property and things in
action of the company by public auction or private contract,
with power to transfer to any person or to sell the same in
parcels.
 To do all acts and to execute all deeds, receipts and other
documents in the name and on behalf of the company and for
that purpose to use in the company’s seal when necessary.
 To prove, rank and claim in the bankruptcy, insolvency or
sequestration of any contributory for any balance against his
estate and to receive dividends as a separate debt due from the
bankrupt or insolvent in the bankruptcy.
 To draw, accept, make and endorse any bill of exchange or
promissory note in the name and on behalf of the company.
 To raise on the security of the assets of the company any
money.
MODES OF WINDING UP

The winding up of a company may be either-

 by the Court; or

 voluntary; or

 subject to the supervision of the Court.

 WINDING UP OF THE COMPANY BY THE
COURT:
The winding up of a company by an order of the Court is
called the compulsory winding up.
Section 305 of the Ordinance envisages the following
circumstances, under which a company may be wound
up by the Court on the petition submitted to it:-
a) if the company has, by special resolution, resolved that the company be
wound up by the Court;
b) if default is made in delivering the statutory report to the registrar or in
holding the statutory meeting or any two consecutive annual general meetings;
c) if the company does not commence its business within a year from its
incorporation, or suspends its business for a whole year;
d) if the number of members is reduced, in the case of private company, below
two or, below three in case of public company and below seven in case of
listed company.;
e) if the company is unable to pay its debts;
WINDING UP OF THE COMPANY BY THE
COURT:
f) if the company is-
i. conceived or brought forth for, or is or has been carrying on,
unlawful or fraudulent activities;
ii. carrying on business not authorized by the memorandum;
iii. conducting its business in a manner oppressive to any of its
members or persons concerned with the formation or promotion of
the company or the minority shareholders;
iv. run and managed by persons who fail to maintain proper and true
accounts, or commit fraud, misfeasance or malfeasance in relation
to the company; or
v. managed by persons who refuse to act according to the
requirements of the memorandum or articles or the provisions of
this Ordinance or fail to carry out the directions or decisions of the
Court or the registrar or the Commission given in the exercise of
powers under this Ordinance;
WINDING UP OF THE COMPANY BY THE
COURT:

g) if the Court is of opinion that it is just and equitable that the

company should be wound up; or
I. Complete deadlock in the management of the company.
II. Failure of company’s main object.
III. Recurring losses.
IV. Aggressive or oppressive policy of majority shareholders.
V. Incorporation of company for fraudulent or illegal purpose.
VI. Public interest.

h) if the company ceases to have a member.

PROCEDURE FOR WINDING UP OF COMPANY
AND FILING OF PETITION BEFORE RESPECTIVE
HIGH COURT:
1. To pass Special Resolution by 3/4th majority of the
members of the company that the company be wound up
by the Court in case if the company itself intend to file a
petition and to file the Special Resolution on Form 26
with the registrar.
2. To prepare a list of the assets to ascertain that the
company is unable to pay its debts.
3. To prepare a list of the creditors
4. In case of defaults in payments the creditor or creditors
to make a decision for the filing of the winding up
petition.
PROCEDURE FOR WINDING UP OF COMPANY
AND FILING OF PETITION BEFORE RESPECTIVE
HIGH COURT:
5. In case if the Commission or Registrar or a person authorized
by the Commission intend to file a petition, they should not
file a petition, for winding up of the company, unless an
investigation into the affairs of the company has revealed
that it was formed for any fraudulent or unlawful purpose or
that it is carrying on a business not authorized by its
memorandum or that its business is being conducted in a
manner oppressive to any of its management has been guilty
of fraud, misfeasance or other misconduct towards the
company or towards any of its members.
6. To engage advocates for the preparation and filing of the
petition.
WHO IS COMPETENT TO FILE PETITION FOR
WINDING UP IN THE COURT?

Petition may be presented by any one of the following:

1. The company may itself by passing a special resolution

2. Creditor or Creditors.
3. Any contributory or contributories
4. Registrar of Companies
5. Securities and Exchange Commission of Pakistan or by
a person authorized by the Commission
CHECK LIST FILING OF PETITION BEFORE
RESPECTIVE HIGH COURT :.

1 Have you gone through “General Heading” Rule 4 of

provided under rules the Rules

2 Whether the petition is prepared / drafted on and Rule 75 of

in accordance with the rules the Rules
3 Have the Petitions/ written statements/ affidavits Rule 5 of
and other proceedings are being presented to the the Rules
court is fairly and legibly written, cyclostyled
etc, and in accordance with the format described
under the rules.
4 Have the language of the said documents stated Rule 6 of
at column 3 are in language of the court? the Rules
DOCUMENTS TO BE ANNEXED WITH THE
PETITION
1. Petition for winding up to be filed on form prescribed
under the Rule 75 read with Companies Rules, (On
Form 24 (General Form) (Form 25 –rule 4 of the
Rules (petition by creditor) Form 26 (petition by
company)
2. Affidavit verifying the petition on Form 1 Rule 16
read with rule 4 of the Rules
3. Copy of special resolution in case if the company
itself intend to Section 172 of the file petition
Ordinance
4. Copies of the agreements and other documents on the
basis of which creditors intend to file a winding up
petition will be annexed with the petition
5. All other supporting documents on the basis of which
the petitioner rely as an evidence
VOLUNTARY WINDING UP OF MEMBERS OF THE
COMPANY
A company can be wound up voluntary

a) On expiration of the period fixed for the duration of the

company by its Articles of Association or on occurrence of
event leading to dissolution of the company as provided in the
Memorandum and Articles of Association and company has to
pass a special resolution in general meeting for its wound up
voluntarily within five weeks of filing of declaration of
solvency, and
b) On passing of the special resolution that the company be
wound up voluntarily. A voluntary winding up is deemed to
commence at the time of passing of the resolution for
voluntary winding up.
The company ceases to carry out business just on commencement
of winding up. However, it can carry on its activities and
business for beneficial winding up of the company.
PROCEDURE FOR VOLUNTARY WINDING
UP
The following steps are to be taken for Member’s voluntary
winding up under the Provisions of the Ordinance, and the
Companies Rules.

 Step 1. Where it is proposed to wind up a company voluntarily,

its directors make a declaration of solvency on Form 107
prescribed under Rule 269 of the Rules duly supported by an
auditors report and make a decision in their meeting that the
proposal to this effect may be submitted to the shareholders.
They, then, call a general meeting (Annual or Extra Ordinary) of
the members (Section 362 of the Ordinance)
 Step 2. The company, on the recommendations of directors,
decides that the company be wound up voluntarily and passes a
Special Resolution, in general meeting (Annual or Extra
Ordinary) appoints a liquidator and fixes his remuneration. On
the appointment of liquidator, the Board of directors ceases to
exist. (Sections 358 and 364 of the Ordinance)
PROCEDURE FOR VOLUNTARY WINDING
UP
 Step3. Notice of resolution shall be notified in official
Gazette within 10 days and also published in the
newspapers simultaneously. A copy of it is to be filed with
registrar also. (Section 361 of the Ordinance)

 Step4. Notice of appointment or change of liquidator is to

be given to registrar by the company along with his consent
within 10 days of the event.
(Section 366 of the Ordinance)

 Step 5. Every liquidator shall, within fourteen days of his

appointment, publish in the official Gazette, and deliver to
the registrar for registration, a notice of his appointment
under section 389 of the Ordinance on Form 110 prescribed
under Rule 271 of the Rules.
PROCEDURE FOR VOLUNTARY WINDING
UP
 Step6 . If liquidator feels that full claims of the creditors
cannot be met, he must call a meeting of creditors and place
before them a statement of assets and liabilities. (Section
368 of the Ordinance)

 Step7 . A return of convening the creditors meeting

together with the notice of meeting etc. shall be filed by the
liquidator with the registrar, within 10 days of the date of
meeting. (Section 368 of the Ordinance)

 Step8 . If the winding up continues beyond one year, the

liquidator should summon a general meeting at the end of
each year and make an application to the Court seeking
extension of time. (Section 387(5) of the Ordinance)
PROCEDURE FOR VOLUNTARY WINDING
UP
 Step 9 . A return of convening of each general meeting
together with a copy of the notice, accounts statement
and minutes of meeting should be filed with the
registrar within 10 days of the date of meeting.
(Section 369 of the Ordinance)
 Step 10. As soon as affairs of the company are fully
wound up, the liquidator shall make a report and
account of winding up, call a final meeting of
members, notice of convening of final meeting on
Form 111 prescribed under Rule 279 of the Rules
before which the report / accounts shall be placed.
(Section 370 of the Ordinance)
PROCEDURE FOR VOLUNTARY WINDING
UP
 Step 11. A notice of such meeting shall be
published in the Gazette and newspapers at least10
days before the date of meeting. (Section 370 of
the Ordinance).
 Step 12. Within a week after the meeting, the liquidator
shall send to the registrar a copy of the report and
accounts on Form 112 prescribed under Rule 279 of the
Rules. (Section 370 of the Ordinance)
VOLUNTARILY WINDING UP BY
MEMBERS
 Special Resolution on Form-26 (prescribed under the
Companies (General Provisions and Forms) Rules, 1985 for
voluntary winding up.
 Declaration of Solvency on Form 107 under the Rules.

 Affidavit by Directors of the company including Chief

Executive verifying the attached auditor’s report, profit and loss
account, balance sheet, statement of assets and liabilities
prepared from the date of closing of last accounts till the latest
practicable date, immediately before the making of declaration.
 Consent of liquidator.

 A copy of Notice of resolution passed for winding up the

company voluntarily and published in the Official Gazette.
VOLUNTARILY WINDING UP BY
MEMBERS

 A copy of Notice for appointment of liquidator and published

in the Official Gazette.
 A copy of Preliminary report prepared by the liquidator.

 Final report and accounts of the company prepared by

liquidator presented in General meeting of shareholders after
finalization of winding up.
 Notice of final meeting.

 Return containing final report and accounts along with minutes

of meeting to be filed with the concerned Company Registration
Office.