CORPORATE LAW

BY
OMER ZUBERI

Company Ordinance 1984

Need of Joint Stock Company

The Limitations of sole-proprietorship and partnership forms of

business organizations gave birth to joint stock company. The
Industrial Revolution coupled with the revolution in the fields of
Transport and Communication brought about radical changes in the
field of production and communication brought about radical
changes in the field of production and distribution, thereby
necessitating large capital investments, better managerial skills and
further, increased risks.
Sole proprietorship and partnership having the disadvantages of
limited resources, unlimited liability, limited managerial skills, etc
were not suitable for large scale business.

COMPANY ITS MEANING and DEFINITION

It denotes joint stock enterprise in which the capital is contributed by a large

number of people. In popular parlance, company denotes an association of

like minded people formed for the purpose of carrying of same business.
Definition

By a company is meant an association of many persons who contribute

money or moneys worth to the common stock and employ it for a
common purpose. The common stock so contributed is denoted in
money and is capital of the company. The persons who contribute it or
to whom it belongs are members. The proportion of each member is
entitled is his share. Shares are always transferable, although the right
to transfer them is often restricted. Lord Justice Lindley

CHARACTERISTICS OF A COMPANY
Association of Persons:

A company is an association of persons and comes into existence only after its registration under
the companys ordinance 1984.

Separate Legal Entity:

Artificial Person:

A company can be said to be an artificial person as it is created by law and law only can dissolve it.

Common Seal:
Perpetual Succession: Members may come and members may go but

the company goes on forever.

Separation of Ownership and Management:
Limited Liability:
Transferability of Shares:
Separate Property
Power to Sue and to be Sued:

LIMITATIONS OF COMPANY
Formalities and Expenses
Divorce Between Ownership and Management:
Excessive Government Regulations:

Delay in Decision Making and Action

Greater Social Responsibility

OBJECTIVES
The objectives of Companies Ordinance, 1984 are
given as under:
Healthy growth of the corporate enterprises,
Protection of Investors and Creditors,
Promotion of Investment and,
Development of Economy

COMPANY LAW HISTORY IN PAKISTAN

Company Act, 1913: Consolidated Act for companies was

issued in 1913 which was adopted in Pakistan after

independence.
Companies Ordinance 1984: Companies Ordinance was
promulgated on 8 October, 1984 that repealed previous
Companies Act, 1913.
Before Partition the Following Joint Stock Companies Acts
were passed and implemented:
Bubble Act, 1720
Bubble Companies etc Act 1825
Chartered Companies Act, 1844

COMPANY LAW HISTORY IN PAKISTAN

Limited Liability Act, 1855:
Joint Stock Companies Act, 1856:
Companies Act, 1862:
Companies Act, 1867:

Directors Liability Act, 1890:

Companies Act, 1900:
Companies Act, 1907:

DEFINITIONS AND CONCEPT IN

COMPANIES ORDINANCE 1984
Articles means the articles of association which are by-

laws or regulations meant for internal affairs of a company.

Associated Companies: Two or more companies or
undertakings which are interconnected with each other will
be termed as associated companies or undertakings.
Associated person: A person who is the owner or a partner
or director in a company and holds shares carrying not less
than 10 % of the voting power in a company.

DEFINITIONS IN COMPANIES
ORDINANCE 1984
Book and Paper: Book and paper, or books of account

include accounts, deeds, vouchers, writings and documents,

maintained on paper or CD-Rom, or any other computer
readable media.
COMMISSION: Commission means the Security and
Exchange Commission of Pakistan constituted under
section 3 Security and Exchange Commission of Pakistan
Act, 1997.
Company: It means a company formed and registered
under the Companies Ordinance, 1984 or existing
company.

ORDINANCE 1984 DEFINITIONS IN

COMPANIES
Debenture: Debenture means any securities (excluding the

shares) issued by the company against the amount received

by it.
Existing Company: Existing Company means a company
formed and registered under any previous Companies Act.
Document: It includes summons, notice, requisition, order,
other legal process, and register.
Financial Institution: It comprises of banks, NBFCs and
Modarbas and also microfinance institutions.

DEFINITIONS IN COMPANIES
ORDINANCE 1984
Listed: Listed, in relation to securities, means securities

which have been allowed to be traded on a stock exchange.

Member: Member of a company, having share capital,
means a subscriber to the memorandum and has a voting
right.
Officer: Includes any director, chief executive, managing
agent, secretary or other executive of a company except
auditor.
Participatory Redeemable Capital: It means such capital is
entitled to participate in the profit and loss of a company.

DEFINITIONS IN COMPANIES
ORDINANCE 1984
Secretary: An individual appointed to perform the

secretarial, administrative or other duties performed by the

company secretary.
Stock Exchange: It means a stock exchange registered
under the Securities and Exchange Ordinance 1969.
Fiduciary: This term is used to refer to a person having
duties involving good faith, trust, special confidence, and
candor towards other.

DEFINITIONS IN COMPANIES
ORDINANCE 1984
Irredeemable Share Capital: This capital is not refundable

except in the case of winding up and reduction of capital.

Par Value/ Stated Value: The face or stated value of a share
or stock or bond is called par value.
Prima Facie: It means: At first sight, On the first
appearance or presumably.
PROVISO: A condition, stipulation, limitation, or provision
which is inserted in a deed, lease, mortgage, or contract. It
starts with the word Provided.

DEFINITIONS IN COMPANIES
ORDINANCE 1984
Share Transferability:
Team of Management: The team of Management

gets constituted as: a) Chairman, b) Chief Executive,

c) Board of Directors, d) Shareholders, e) Secretary,
f) Chief Accountant, g) Managers, and h) Other
Functionaries.
Ultra Virus: It means, an act performed without any
authority to act on subject.

DEFINITIONS IN COMPANIES
ORDINANCE 1984
Subsidiary Company: A company is subsidiary of

another company if later company controls more

than 50% voting securities or otherwise has power to
elect and appoint more than 50 of its directors.
Holding Company: A company is Holding Company
of a subsidiary company if it controls majority of
directors or has more than 50% shares in a
subsidiary company.