Companies Act, 2017

Measures on Ease of Doing

Business

Securities and Exchange

Commission of Pakistan
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Companies Act, 2017- Reform Objectives

 Softer regime for the companies having no stake of the
general public
 Ensuring ease of doing business for corporate sector
 Strengthen regulatory framework
 Introduce maximum use of technology
 Protection of the interests of shareholders
 Abolish unnecessary requirements
 Introduce appropriate terminologies
 Remove the defects in the existing law
 Introduce new concepts adopted by different jurisdictions
 Protection of interest of creditors
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Simpler and Softer regime for

small companies
Objective: Relaxation of regulatory burden and
reduction in cost of doing business
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Relaxation from filing of annual return: 10/1/2018

 Filing of annual return not required unless there is a

change in particulars from the last year

 However, companies other than SMCs and private

companies having paid-up capital of not more than three
million rupees shall inform the registrar in a specified
manner that there is no change in particulars

Impact: Facilitation and reduction in cost of doing

business
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Relaxation from audit of financial 10/1/2018

statements:
 Private companies having paid up capital of
Rupees one million or less or any other amount as
may be notified are exempted from the audit
requirements.

◦ However, such companies shall have to file the financial

statements duly approved and signed by all the
directors.

Impact: Improvement of audit quality

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Relaxation from requirement to file

Directors’ report:

Directors report not compulsory for private

companies, not being subsidiary of public
company, having paid up capital less than
rupees three million.

Impact: Facilitation and reduction in cost

of doing business
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Relaxation to SMCs from certain
statutory requirements:

 Single member companies have been

exempted from the requirements to appoint
company secretary, hold general and board
meetings as well as election of director.

Impact: Ease of regulatory burden aimed at

encouraging formalization and
corporatisation of business entities
Transfer of shares: 10/1/2018 8

Single member companies are now

required to nominate a person who in the
event of death of the sole member shall be
responsible for transfer of shares to the
legal heirs of the deceased in accordance
with the applicable inheritance law.

Impact: Facilitate continuity of the single

member companies
Other exemptions to small companies:
10/1/2018 9

Private companies having paid up capital

of Rupees one million or less exempted
from the requirement to prepare
consolidated financial statements.
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Ease of Doing Business for all

the classes of companies

Objective: Relaxation of regulatory burden and

reduction in cost of doing business
Simplification of procedure for 10/1/2018 11

alteration in memorandum:

 Alteration would take effect by special resolution

 Only information of change of registered office from one

province to other and principal line of business is
required to be filed with the Commission

 In case of adoption of any business activity which is

subject to license requires approval of the Commission

 Impact: Ease in alteration of memorandum

Maximum use of technology: 10/1/2018 12

 Service of documents/notices to the members,

registrar and the Commission through
electronic means;

 Participation in the meetings by members and

directors through video links;

 Voting through electronic means;

Impact: Ease in conducting affairs of the

company
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Regulation of Services of Intermediaries:

 To ensure quality, intermediaries providing

services shall be registered.

 Only authorized intermediaries are eligible to

provide services to the corporate sector

Impact: Facilitate companies and improve

quality of services offered by the
intermediaries
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Registration of charges:
 Time frame for registration of charge has been increased
from 21 to 30 days

 Pledge also registerable

◦ Impact: Disclosure for, and protection of the rights of, prospective

creditors/investors

 The procedure for satisfaction of charge simplified. If the

mortgagee confirms repayment of loan and issues NOC to
that effect, condonation of delay through a petition shall not
be required

◦ Impact: Reduction in cost of doing business

Meetings: 10/1/2018 15

 Passing of members’ resolution through

circulation in case of unlisted companies

Impact: convenience in case of emergency

 Requirement of seeking approval from

Registrar for holding EOGM by unlisted
companies at a shorter notice abolished

Impact: convenience and reduction in cost

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Appointment of Additional Director in mid-term

 Before first AGM – through general meeting

 After the election – the person holding

sufficient shares to get him elected may require
the fresh election.

Impact: Rights of strategic investor safeguarded.

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Mediation
 Option to resolve disputes through mediation provided.

 The Commission has been empowered to maintain a panel

of experts to be called the “mediation and conciliation
panel”.

 Interested parties may before or after entering into a formal

dispute resolution process either pending before the
Commission; the Appellate Bench may approach the
Mediation and Conciliation Panel.

Impact: Facilitating alternative dispute resolution for reducing

cost of the companies.
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Acceptance of documents
presented after prescribed time
 New regime introduced to avoid the harassment of
the companies. As a result of this provision the late
fee paid shall be full and final liability with respect to
delay in filing up to 2 years and no adjudication
process shall be required

 Provided that this shall not be applicable to public

interest companies

Impact: Companies shall be able to rectify overdue

filings without any cumbersome process.
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Inactive companies
 A company formed for a future project or to hold an
asset or intellectual property; and has no significant
accounting transaction, or
 an inactive company

may apply for obtaining the status of an inactive

company.

Impact: Minimum requirements for inactive companies

reducing cost.
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Amalgamation of companies:
 Board of Directors empowered to approve the amalgamation of:

◦ subsidiaries of a holding company,

◦ wholly owned subsidiaries into its holding company

 No approval of the Commission or the court would be required.

 Jurisdiction to allow merger, amalgamation and reconstruction of

companies has been shifted from the Court to the Commission

 Impact: Early disposal, cost reduction

Easy exit of a defunct company 10/1/2018 21

 Enabling provision added to provide a soft regime for

the easy exit of a company which has ceased to
operate and having no known assets and liabilities

 Such a company may apply to the registrar in the

specified manner to seek striking off the name of the
company off the register
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THANK YOU