Summary of Various Sections

Return of Allotment (S-73):

Return of allotment is filed by every company having a share capital within 30 days of allotment. Registrar has
power to extend the time limit for filing return of allotment. It contains following particulars:

Normal Allotment – Allotment – Otherwise Bonus issue Issue of shares at

Cash Cash Discount
No. & nominal amount of No. & nominal amount of No. & nominal amount of No. & nominal amount of
shares shares shares shares
Prescribed particulars of Not applicable Prescribed particulars of Prescribed particulars of
allottee allottee allottee
Amount paid on each Amount treated to be paid Amount paid on each
share on each share share
Contract in writing for:
o the title
of the allottee to the
allotment,
o contract
of sale, or for
services or other
consideration
Consideration for
allotment
Copy of resolution for Copy of resolution for
bonus shares issue of shares at discount
Copy of the order of SECP
for sanctioning the issue

Where default is made by a company in filing a return of allotment in respect of the shares which were allotted to
Schedule Bank or financial institution in pursuance of an obligation of the company to issue such shares (convertible
loan as discussed in S-87 & 92), the scheduled bank or the financial institution may file a return of allotment in
respect of such shares with the registrar. The scheduled bank or the financial institution shall be entitled to recover
from the company the fees paid to the registrar in respect of the return.

Limitation of time for issue of certificates (S-74):

Every company shall complete and have ready certificates within 90 days of allotment and within 45 days in case of
transfer and the company shall
• Send the certificate by post;
• Deliver the certificate to the person entitled thereto; and
• Give notice to the person that the certificates are ready.

In case transferee is CDC, the company is require to register the transfer within 5 days of application.

Issue of duplicate certificates (S-75):

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A duplicate certificate is issued by the company within forty-five days from the date of application if the original is:

• Lost or destroyed, or
• Defaced or mutilated or torn is surrendered to the company.

The company after necessary inquiry and subject to such terms and conditions as it may consider necessary, issue
the duplicate. The company cannot charge fee exceeding the sum prescribed and the actual expenses incurred on
such inquiry.

If the company is unable to issue duplicate certificate, it shall notify alongwith reason within 30 days of the
application.

Power to pay certain commissions, and prohibition of payment of other commissions, discounts, etc. (S-82):

A company is allowed to pay commission to any person in consideration of his subscribing or procuring or agreeing
to subscribe or procuring for any shares in or debentures of the company if—
• Payment of commission is authorized by the articles;
• Commission shall not exceed such % as fixed by SECP;
• The amount or % of commission and number of shares which person have agreed to subscribe for commission:
o in the case of shares or debentures offered to the public, disclosed in the prospectus; or
o in the case of shares or debentures not offered to the public, disclosed in the statement in lieu of
prospectus or where a circular or notice is issued, also disclosed in that circular or notice.

A company is allowed to pay brokerage but:

• It shall not exceed one per cent of the price of shares or debentures; or
• Such rate per cent as may be specified by the SECP.

A vendor, promoter, or other person who receives payment in shares, debentures or money from a company shall
have power to apply any part of the shares, debentures or money so received in payment of any commission, if that
payment made directly by the company, would have been legal under this section.

Application of premium received on issue of shares (S-83):

Any premium received on issue of shares can be applied as follows:

• In writing off preliminary expenses;
• In writing off expenses or commission or discount on issue of shares / debentures;
• Payment of premium on redemption of preference shares / debentures; and
• Issue of bonus shares.

Power to issue shares at discount (S-84):

A company is authorized to issue shares at discount, if:

• Authorized by the resolution and sanctioned by SECP;
• Resolution specify maximum rate of discount;

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• One year must elapsed since the date of commencement of business;
• Shares at discount must be issued within 60 days after the sanction by SECP or such extended time as allowed
by SECP

Prospectus and balance-sheet shall contain particulars of the discount or unamortized discount at the date of the
issue of the prospectus or balance-sheet.

Redemption of Preference Shares (S-85):

A company may redeem its fully paid preference shares in the following manner:
• Out of profits available for dividend;
• Out of sinking fund;
• Out of sales proceeds of property; and
• Out of proceeds of fresh issue of shares;

In first three cases, a sum equal to an amount applied in redeeming the shares shall be transferred from profits
available for dividend to a reserve fund namely “the capital redemption reserve fund”

Where pref. shares are redeemed out of the proceeds of a fresh issue, the premium on redemption must be provided
out of the profits of the company or out of the share premium account.

The redemption of preference shares shall not be taken as reducing the amount of authorised share capital.

The redemption may be effected on such terms and manner as may be provided by the articles of the company.

Further issue of capital (S-85):

Where directors decide to increase the capital by the issue of further shares, such shares shall be offered to the
members in proportion to their existing shares, irrespective of the class, and such offer shall be made by notice
specifying the number of shares to which the member is entitled, and limiting a time for acceptance of offer.

Exception to Right Shares:

• With the approval of Federal Government a public company on the basis of a special resolution, raise its further
capital without issue of right shares; and
• A public company may reserve a certain percentage of further issue for its employees under “Employees Stock
Option Scheme” approved by SECP.

Fractional Shares: Fractional shares are not offered to members. All fractions less than a share are consolidated
and disposed of by the company. However, the proceeds are paid to such of the entitled shareholders.

Circular for Offer: The offer of shares accompanied by a circular signed by the Directors or an Officer authorized
by them with following contents. The signed copy of circular is also filed with registrar.
• Material information about affairs of the company;
• Latest statement of accounts;
• Necessity for issue of further shares,
• Date within which the offer not accepted, will be deemed to be declined.

If the whole or any part of the shares offered is declined or not subscribed, the Directors may allot and issue these
shares in such manner as they may deem fit.

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Issue of shares in lieu of outstanding balance of loan (S-87):
A company may issue ordinary shares or grant option to convert the outstanding loan, credit, non-interest bearing
securities from Scheduled Bank or financial institution having a term of not less than 3 years to the extent of 20% of
such balance.

This section is not applicable for a company within 2 years of the commencement of commercial production.
Thereafter, this section is applicable subject to the condition that rate of return on such loan, credit, or non-interest
securities in any 2 of the 3 years fallen below the rate of return laid down by the SBP.

Restrictions on commencement of business (S-146)

A company shall not commence any business or exercise any borrowing powers unless-
• Minimum subscription received in cash;
• Every director has paid to the company full amount of the shares taken by him;
• No amount is liable to be repaid to applicants by reason of failure to apply for or to obtain permission for the
shares or debentures to be dealt in on any stock exchange;
• Duly verified declaration by the chief executive or one of the directors and the secretary filed with Registrar that
aforesaid conditions have been complied with and the registrar has issued a certificate of commencement of
business; and
• If company has not issued prospectus, statement in lieu of prospectus is filed with registrar.

Any contract made by a company before the date at which it is entitled to commence business shall be provisional
only, and shall not be binding on the company until that date.

Nothing in this section shall apply to a private company, or to a company limited by guarantee and not having a
share capital.

Power of registrar to call for information or explanation (S-261)

Where on review of any document, any notice, advertisement or other communication, or otherwise, the registrar is
of opinion that any information or explanation is necessary with respect to any matter, he may call upon the
company and any of its present or past directors, officers or auditors to furnish such information within such time
not less than fourteen days.

Director, officer or auditor ceased to hold office more than six years shall not be compelled to furnish information.

If no information or explanation is furnished or if information is inadequate, the registrar may, by written order, call
on the company and any such person to produce before him for his inspection such books and papers as he considers
necessary.

If information or explanation or book or paper is not furnished or if information or explanation is inadequate or

books or papers discloses an unsatisfactory state of affairs, the registrar report in writing to SECP.

Seizure of documents by registrar (S-262)

Where registrar believe that books and papers of any company or chief executive or officer of company or any
associate may be destroyed, mutilated, altered, falsified or secreted, the registrar may, after obtaining permission of
the Magistrate of the first class or the Court, search and seize such books and papers.

The registrar may authorize any officer subordinate to him,

(a) to enter, the place where such books and papers are kept;
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(b) to search that place in the manner specified in the order; and
(c) to seize such books and papers as he considers necessary.

The registrar shall return the books and papers seized within thirty days. SECP may allow the registrar to retain any
books and papers for a further period not exceeding thirty days.

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