Bijinesh Laaaa

Forms of Doing Business in Pakistan 1
COURSE: Business Law

END TERM PROJECT
Forms of Business
Organizations and
Management
“NEXT CAPITAL LIMITED"
SUBMITTED TO:
PROF. SHARIQ MEHMOOD
SUBMITTED BY:
JOUN ALI
FAIZA RAUF
MOMIN TARIQ
MAHAM ZAHID
NADIA MEHMOOD
MATEEN HASHMAT
MUHAMMAD BUNYAD ALI
HASSAN MEHMOOD SHEIKH
Business Law Project

AKNOWLEDGEMENT
We have faced many daunting tasks and challenges in our life and
have come over many obstacles leaving us with something new learned
every time with success, the greater proportion of the thanks is solely to
the Allah Almighty, who has given us strength and ability to comprehend
and make vital use of resources provided to us in the process of
completing the challenges accepted by us with honor and respect. We
have also learned to accomplish any task with the complete success rate
and have followed a quote which suggested to us that failure is not an
option, which is as under;
“Great ability develops and reveals itself increasingly with every

new assignment” (Baltasar Gracian)
Provided with the divine help which played an important role in

guiding us, it would be highly unjust if the kind help and support provided
to us by our sincere and respectable instructor Prof. Sharik Mahmood is
left unacknowledged.
During the course of conducting the research and analyzing
different aspects of this project practically, we came across massive
volume of hindrances and confusions but it is safe to say that we would
not have been able to accomplish this term project and to achieve the
desired goals if we would not have been enlightened with the
extraordinary knowledge and experience of our esteemed instructor Prof.
Sharik Mahmood.
Getting information about the Business Law and the Company under
study NEXT CAPITAL LIMITED was a step by step process, firstly we went
to the company, the Secretary guided us to visit S.E.C.P for the copy of
documents and Visit the legal consultants at CORPORATE REET. It would
be highly unjust if we don’t acknowledge MR. RAJA TAHIR for his detailed
guidance regarding the legal procedures.
Other than the assistance provided to us by our instructor, there
was a major role played by our Teaching Assistant Miss. Rabia Suhail who
has provided us with all the guidelines required by us in order to get the
task completed and have most effectively and efficiently provided all the
information and details to us without any delay.
EXECUTIVE SUMMARY

This paper is being written keeping in view the objectives that we

have been expected to achieve after studying the basics and principles
that pertains to law, particularly business law, that pertains to the
operations of the business whatever the kind in which they exist. This
paper includes our understanding of the business law with respect to
different kinds and forms of businesses that operates in Pakistan under
different Acts or Ordinance. Under the law there is certain code of conduct
defined and explained in detail for carrying out business under the
boundaries defined by the law. The major advantage of these written rules
and regulations is that they conform compliance.
This term paper includes discussing different forms of Business

Organizations and their management in relation with the course content
and develops a clear understanding about how this business world is
controlled under the law.
The ultimate goal/objective of any entrepreneur is profit orientation

for which he/she takes an initiative, invests a certain sum of money, fulfills
many legal requirements and undergoes legal procedures defined by the
law and finally forms a legal business entity to carry out the operations to
serve his/her personal interests of profit orientation. Under the law there
are different forms of business organizations categorized according to the
objectives to be achieved and the scale on which the operations will be
conducted. These different forms of business give vast opportunities to
the entrepreneurs to select any such form that best fits their business
style.
The legal forms of businesses include Sole Proprietorship, Partnership,

Non Profit Organization And Corporation, each having certain advantages
and disadvantages respectively. Each of these is adapted by the
entrepreneurs according to their needs and wants.
Sole Proprietorship being the simplest form among the businesses is

easy to establish with no or minimum legal requirements. It is the most
flexible form of business because the owner has the sole authority to take
decisions. However the liability of the owner is unlimited (which means
his/her personal assets may be at risk), this form of the business has
limited life and terminates with the death of the owner. The smaller scale
entrepreneurs with limited amount of capital to carry out the business
normally adapt this form of business. In sole proprietorship the owner is
solely entitled to the profits.

Partnership remains a common mode of business enterprise in

Pakistan for small to medium business set-ups. Partnerships are normally
formed where there is a desire to have some structural flexibility along
with some formality of relationship between partners. There is no
compulsory requirement for registration of a partnership in Pakistan.
Nonetheless some litigation and tax related consequences and
advantages are linked to a registered partnership. Legal regime for
establishment and regulation of partnerships in Pakistan is stated in the
Partnership Act, 1932 which defines a partnership in the following terms:
"as the relation between persons who have agreed to share the profits of
a business carried on by all or any of them acting for all "Any twenty or
less persons desiring to carry out a lawful commercial activity or a
profession may form a partnership except in certain cases e.g. where
twenty or more persons may form partnership to undertake practice as
lawyers or accountants or any other practice which cannot be carried out
as a limited liability company under the provisions of law. A partnership
may be registered with the Registrar of Firms of an area where the office
of the firm is situated. Partnership agreement should spell out matters
such as division of profits or dissolution of the partnership. Since a
partnership is a voluntary association, you or any partner can end it at any
time. Partners can simply say they no longer wish to be a partner. The
death of a partner also automatically ends a partnership. Therefore, a
partnership agreement should include provisions for dissolution. The
agreement also covers the payment or performance of partnership
obligations, division of assets, and continued use of the name and
ownership of intellectual property rights, good will and trade mark.
A Nonprofit Organization (abbreviated as NPO, also known as

a not-for-profit organization is an organization that does not distribute
its surplus funds to owners or shareholders, but instead uses them to help
pursue its goals. Ownership is the quantitative difference between for- and
not-for-profit organizations. The classification as a nonprofit does not
mean that the business does not make a profit nor does it mean that it
tried but failed to make a profit. It simply means that the Internal Revenue
Service has determined that it has filed for and meets the requirements as
an organization that provides a service to the community for certain
purposes. These purposes may be religious, charitable, scientific, testing
for public safety, literacy, educational, fostering a national or international
amateur sports competition, or the prevention of cruelty to children or
animals.
Nonprofits are prohibited from distributing Net Income to owners,
members, directors, or officers but they may pay fair compensation to
their employees. Contributions to nonprofits are tax deductible by the

donor, which is a great advantage in raising funds.

Nonprofits are controlled just as other corporations by a board of
directors, but they have no stockholders. A nonprofit does not pay income
tax, but it does file informational returns. Just as with profit corporations,
the nonprofit offers insulation from liability to its board, officers, and
employees.
A Corporation is an Artificial Person Created by Law, endowed with a

perpetual succession and an entity apart from its members, it signifies
assent by the means of common seal. It is capable of holding property,
incurring debts, and suing and being sued, in the same manner as an
individual. It has a separate legal entity, apart from the persons operating
it. The corporations make all contracts by its own name, and are
responsible for all the obligations.
A Corporation can manage its own affairs, hold property, borrow

money, and legally does nearly anything an individual can do.
Stockholders may be, but need not be, employees, officers, and/or
directors of the corporation as well.
An advantage of corporations is that they protect stockholders from

unlimited-liability. If the corporation operates according to laws and
regulations, creditors only have access to the corporate assets for
business debts. The personal assets are not at risk. The law requires
corporations to operate separately from the owner. Corporations have a
larger amount of capital, its shareholders are the owners of their part of
investment, and are only liable for their part in case of insolvency. The
liability of the shareholders is limited.
There are different types of Companies which includes Company

Limited by Guarantee (A guarantee company does not usually have a
share capital or shareholders, but instead has members who act as
guarantors. The guarantors give an undertaking to contribute a nominal
amount (typically very small) in the event of the winding up of the
company), Company Limited by Shares ("Company Limited by Shares"
means that the company has shareholders, and that the liability of the
shareholders to creditors of the company is limited to the capital originally
invested, i.e. the nominal value of the shares and any premium paid in
return for the issue of the shares by the company) and Limited Liability
Company (A limited liability company (LLC) is a flexible form of
enterprise that blends elements of partnership and corporate structures
Limited Liability Company (LLC) is a business structure allowed by state
statute. LLCs are popular because, similar to a corporation, owners have

limited personal liability for the debts and actions of the LLC. Owners of an
LLC are called members. There is no maximum number of members).
Public companies are companies whose shares can be publicly
traded, often (although not always) on a regulated stock exchange.
Private companies do not have publicly traded shares, and often contain
restrictions on transfers of shares.
Company Registration (formation/incorporation) in Pakistan is
administered under a single umbrella of Securities Exchange Commission
of Pakistan, which acts as the prime regulatory authority for the
companies in most cases.
Securities Exchange Commission of Pakistan works for company

registration (formation/incorporation), periodic monitoring, compliance
issues of corporate laws and legislation, before and after company
registration for companies of all sizes in Pakistan.
The record of companies maintained by the Company Registration

Offices is public record/data covered under Freedom to Information
Ordinance, 2002 of Pakistan, therefore, the investors, shareholders,
creditors and general public, may inspect the record of any company
(whether it be private company or a Public company) whenever they need
and they may also obtain certified copy of any specific document forthwith
on payment of an amount of fee. There are certain types of companies
which require Prior Approval before Company Formation/Registration in
Pakistan.
The main focus of this Term Project is to analyze the Corporation in

accordance with the Companies Ordinance 1984, to understand the legal
procedures through which the companies go through before they can start
their operations, and the conduct of Business in a Corporation. To achieve
this objective, NEXT CAPITAL LIMITED was approached. Following were
the documents provided by the SECP (Securities and Exchange
Commission of Pakistan) after charging a fee, which includes
Memorandum of Association, and Articles of Association, Certificate of
Incorporation and Certificate of Commencement, along with the
application for the availability of Name and the Fee Chillan for
Registration. These documents are under study with reference to
Companies Ordinance 1984, and many other Clauses regarding the
provisions for Prospectus, Directors; their appointments along with their
rights and duties, Accounts, Audit, Appointment of the Chief Executive,
General meetings, Extra-Ordinary Meetings and Votes of the Members.
This paper includes, every day to day operation of a Company (NEXT

CAPITAL LIMITED) from the day of Commencement and onwards including

the Nature of the Business which is Brokerage in Stocks, Shares,

Securities, Mutual Funds, Commodities, Commercial Papers, Modaraba
Certificates, Bonds, Obligations, Debentures, Treasury Bills etc. We have
disused Articles of associations in detail, with respect to NEXT CAPITAL
LIMITED that how being a public listed company, the number of shares,
company has issued, the boundaries which they have fixed to make the
first allotment of shares. The time period that it requires to register or
transfer the share. Furthermore, how and when the general meetings, the
notices and proceedings of general meetings, Rights and duties has been
described beginning from Voters till the Chief Executive, not only this, the
powers and duties of directors are mentioned in the Articles. All the
provisions regarding the dividends and reserved have been discussed,
management of the accounts, the audit committee notice, provisions for
the secrecy of the business including a separate section for winding up
and indemnity and arbitration as are stated in the articles of the
association. The paper includes the main contents of the memorandum of
Associations, Memorandum of Associations and its clauses, Procedure for
the alteration of the objects, Procedure for the change of name, contents
of the Articles of Associations, Procedure for alteration of the article of
Association, Prospectus and its contents, Procedure of the of the Company
Court, Registration of the Change of the Name, Civil Liability for the
misstatement in the Prospectus, Criminal Liability for the misstatement in
prospectus, Notice for the refusal of Transfer of Shares, Publication for the
non publication of Name, Penalties for non publication of Name, Statutory
Meeting of the Company, the annual general meeting, Calling of Extra-
Ordinary General Meeting, Minimum number of Directors, Procedure for
the Election of Directors, Retirement of Directors, The term of the office of
the Director, Powers and Duties of the Directors, Appointment of the
subsequent Chief Executive, Removal of the Chief Executive, Provisions
regarding Accounts, Books of Accounts to be kept by the Company,
Appointment and Remuneration of the Directors, Provisions as to
resolutions relating to the appointment of the Auditors, Qualification and
disqualification of the Auditors, Powers and Duties of the Auditors,
inspection of the Auditors Report, General Meetings and Notice and the
Proceedings of the General Meeting and the Votes of the Members.

FORMS OF DOING BUSINESS IN PAKISTAN
When identifying an appropriate legal form of business, most often

entrepreneurs consider these factors: control, taxes, liability,
transferability of ownership, longevity of the business, and raising capital.
The key is to identify the legal structure that best meets one’s needs and
the needs of one’s business. In an ideal world, one would select a legal
form of business, understanding every legal requirement and tax
implication. The reality is that one must rely on the advice of attorneys
and accountants to help make this decision. They can anticipate one’s
concerns based on their experience and on information provided. Still, the
legal structure of the business is one’s own decision to make and live with.
Legal forms of doing business are:
• Sole Proprietorship
• Partnership
• Corporation
• Non-Profit Organizations
Legal Forms of Doing Business and their characteristics, advantages,

and disadvantages are individually under the study, which constitutes the
legal forms and the scope and boundaries defined by the Law pertaining
to these Legal Forms. Limitations under which the operations can be
conducted and defined by the Law in detail. Analyzing the situation,
relating to the form of Business that best suits to one’s Business Goals.
SOLE PROPRIETORSHIP
A Sole Proprietorship is a business owned by only one person and

operated for his or her profit. It is the easiest legal entity to form and
maintain, requiring little to no paperwork or approvals to begin, hence, the
most easily to form and operate.
In a sole proprietorship, the owner alone controls the entire business.

The Owner can either manage it or hire managers to conduct the day to
day operations. All the profits and losses belong to the owner. The Owner
him/herself is the business.
In a sole proprietorship, the owner is liable for any debts of the

business. Because the business and the business owner are the same, no
separate legal entity exists, the owner’s personal assets are available to
pay the debts of the business and business assets may satisfy your

personal obligations. Hence, leading to the Unlimited Liability for the

Owner to finance its debts.
IN PRACTICAL TERMS:
Suppose that an individual starts a business as a Sole Proprietor,

invests rupees ten million (10 M) to carry out the operations, the profit or
loss that occurs from the operations of the business is solely entitled to
the owner and no other individual can claim. The owner might have a
management team butt the team is only entitled to the salaries for their
part of the service.
The same owner takes a loan of RS 3 Million for raising the capital by
submitting the collaterals belonging to his personal assets. In case he
suffers a loss in the business and at the time of repayment of the loan he
is unable to finance the amount of debt, his further personal assets will
now be sold to finance the amount of debt, because he is the only one
responsible for the repayment and no other individual from the
management is responsible for his part of debt.
The owner can sell a sole proprietorship as a business or close its

doors and sell its assets. The business ends upon the death of the owner
and may end upon the owner’s permanent disability or prolonged
absence, or in case of Insanity or any other abnormal circumstances.
The ability of a sole proprietorship to raise capital is limited. Since,

the Owner is the
Only individual to finance or raise capital to conduct the business
operations and have limited Credibility or Collaterals to obtain Loan for
which he is alone liable. The Owner cannot sell shares of the business to
raise the Capital. Generally, these entities obtain loans after fully
collateralizing them with personal assets, and taking the whole
responsibility of the repayment.
Advantages of forming a sole Proprietorship in Pakistan:
The main advantages of a sole proprietorship (sole ownership) are that:
• Sole Proprietorships are easy to start up. (minimum or no legal

requirements)
• Sole Proprietorship is subject to fewer regulations relative to other types
of businesses.
• The Sole Proprietorship owner has full autonomy with regard to business
decisions.

• Sole Proprietorship is easy to discontinue as well.

• Another significant advantage is that one takes all the profits of the
business.
A sole proprietor usually has a quick decision process and doesn’t have
any opposition when making a decision as he / she has total control of his
or her business. All profits and losses accrue to the owner.
The owner does not have the tension regarding conflicts among other
partners, as there are no partners. Also it’s easy to set up, with having
little paper work to fill in and little money spent on setting up, this is one
of the easiest types of business to start.
PARTNERSHIP
A Partnership is formed when two or more entities join together for a
common business purpose. Partnership means a formal agreement
between two or more parties that have agreed to work together in the
pursuit of common goals. A partnership can be general or limited.
Although no written document is required to form a partnership, for all
partners’ sakes a partnership agreement should be written. This document
should spell out matters such as division of profits or dissolution of the
partnership.
A partnership business operates under the rules and regulations

defined in the PARTNERSHIP ACT 1932.
The partners control a partnership according to their agreement.

They have a great deal of flexibility. If they have no other agreement, the
law assumes that partners share control equally. In a limited partnership,
the general partner controls the operations and the limited partner is
simply an investor.
Some experts recommend avoiding a partnership, corporation, or LLC

that splits ownership 50/50. What happens if the owners do not agree? A
majority cannot be achieved. Instead of a 50/50 ownership, a third party in
which the partners have complete trust, could have a very small
percentage of ownership or a written agreement to resolve tie votes. If the
partners agree, that person never hears from them. If the partners cannot
agree, this third party votes so the business can act.
Partnerships have a fairly simple tax structure. Income and loss

earned by the partnership passes through to the partners, and they report
it on their respective tax returns. The partners then pay the tax on their
share of the profits. The partnership itself does not pay any tax on profits.
Some authorities strongly advise against using the general

partnership form of organization for most types of businesses because
liabilities are personal and unlimited. Moreover, each partner is fully
personally liable for the actions of any other partner. In a limited
partnership, only the general partner is personally liable. The limited
partner’s liability is limited to the amount of investment.
Since a partnership is a voluntary association, you or any partner can

end it at any time. Partners can simply say they no longer wish to be a
partner. The death of a partner also automatically ends a partnership.
Therefore, a partnership agreement should include provisions for
dissolution. The agreement also covers the payment or performance of
partnership obligations, division of assets, continued use of the name and
ownership of intellectual property rights, good will and trade mark.
When land development costs exceeded the initial estimates and the
partners needed to make additional contributions, only one of them had
the funds to do so. Since the partnership was contractually bound to
complete the buildings, everything would be lost if they did not perform.
The partner with the funds purchased the interests of the other two
partners for far less than their initial investment and made all the profit
himself when the land was eventually sold. The partnership structure
wasn’t right for the two partners who had to sell at a loss. Under a
different structure they might have been able to maintain their share in
the company and then had the entity raise the needed funds.
A partnership is primarily dependent upon the individual assets of the

partners to raise additional capital. Adding investors requires converting
from a general to a limited partnership. It would create a new entity.
Lenders will look for a fully collateralized loan to be personally guaranteed
by the partners. Since limited partners are generally investors whose
liability is limited to their investment, it is unlikely that they would be

willing to personally guarantee a loan.
Partnership remains a common mode of business enterprise in

Pakistan for small to medium business set-ups. Partnerships are normally
formed where there is a desire to have some structural flexibility along
with some formality of relationship between partners. There is no
compulsory requirement for registration of a partnership in Pakistan.
Nonetheless some litigation and tax related consequences and
advantages are linked to a registered partnership. Legal regime for
establishment and regulation of partnerships in Pakistan is stated in the
Partnership Act, 1932 which defines a partnership in the following terms:
"as the relation between persons who have agreed to share the profits of
a business carried on by all or any of them acting for all "Any twenty or
less persons desiring to carry out a lawful commercial activity or a
profession may form a partnership except in certain cases e.g. where
twenty or more persons may form partnership to undertake practice as
lawyers or accountants or any other practice which cannot be carried out
as a limited liability company under the provisions of law. In all other
cases where the number of intended partners increases beyond the figure
of twenty a company should be incorporated. A partnership may be
registered with the Registrar of Firms of an area where the office of the
firm is situated. A statement in prescribed form must be delivered to the
relevant Registrar stating:
• Firm name
• Place or principal place of business of the firm
• Names of any other places where the firm carries on business
• Date when each partner joined the firm
• Names in full and permanent addresses of the partners
• Duration of the firm
Major Characteristics of Partnership:
• A partnership is not a distinct legal person, but is made of the persons

composing it.
• Creation of Partnership is purely a matter of agreement between the
parties such an agreement need not even be in writing.
• In a firm partner cannot transfer his interest with the consent of the
other partners.
• Each partner is prima facie the agent of others, and can bind them by
his contract made in the course of business of the partnership.
• Each partner is liable in full for the debts of the firm.

• A partner cannot contract with his firm.

• Partners may make any private arrangements among themselves.
• For instance a partner may buy his partners share.
• The Maximum number of partners can be twenty. But in banking
business it is ten.
• The death or retirement of a partner dissolves a firm.
• Property may be the common property of partners.
• Restrictions contained in a partnership deed will not affect third
parties, who are not aware of such restrictions.
• A firm cannot sue and be sued in its own name.
• Decree against a firm can be executed against the partners.
• Registration is optional.
• A firm having no separate legal existence cannot be shareholder of
company.
• Persons who enter into partnership are collectively called a firm.

NONPROFIT
A Nonprofit Organization (abbreviated as NPO, also known as

a not-for-profit organization is an organization that does not distribute
its surplus funds to owners or shareholders, but instead uses them to help
pursue its goals. Ownership is the quantitative difference between for and
not for profit organizations. For profit organizations can be privately
owned and may re-distribute taxable wealth to employees. By contrast,
not for profit organizations do not have private owners. They have
controlling members or boards, but these people cannot sell their shares
to others or personally benefit in any taxable way.
While they are able to earn a profit, more accurately called a surplus;
such earnings must be retained by the organization for its self
preservation, expansion and future plans. Earnings may not benefit
individuals or stake holders. While some nonprofit organizations put
substantial funds into hiring and rewarding their internal corporate
leadership, middle-management personnel and workers, others employ
unpaid volunteers and even executives may work for no compensation.
There is a wide diversity of structures and purposes in the NPO framework.
For legal classification and eventual inspection, there are, nevertheless,
some structural elements of prime legal importance:
 Economic activity
 Supervision and management provisions
 Representation
 Accountability and Auditing provisions
 Provisions for the amendment of the statutes or articles of incorporation
 Provisions for the dissolution of the entity
 Tax status of corporate and private donors
 Tax status of the foundation
Some of the above must be, in most jurisdictions, expressed in the
document of establishment. Others may be provided by the supervising
authority at each particular jurisdiction. While affiliations will not affect a
legal status, they may be taken into consideration in legal proceedings as
an indication of purpose.

The classification as a nonprofit does not mean that the business

does not make a profit nor does it mean that it tried but failed to make a
profit. It simply means that the Internal Revenue Service has determined
that it has filed for and meets the requirements as an organization that
provides a service to the community for certain purposes. These purposes
may be religious, charitable, scientific, testing for public safety, literacy,
educational, fostering a national or international amateur sports
competition, or the prevention of cruelty to children or animals.
Nonprofits are prohibited from distributing Net Income to owners,

members, directors, or officers but they may pay fair compensation to
their employees. Contributions to nonprofits are tax deductible by the
donor, which is a great advantage in raising funds.
Nonprofits are controlled just as other corporations by a board of

directors, but they have no stockholders. A nonprofit does not pay income
tax, but it does file informational returns. Just as with profit corporations,
the nonprofit offers insulation from liability to its board, officers, and
employees.
In Pakistan, there are at least seven laws that are of principal

relevance to the registration and operation of nonprofit organizations
either singly or are applicable alongside others. There is only one law
which requires that all nonprofit organizations engaged in providing for
the welfare of a specified list of disadvantaged people or for specifically
identified purposes must be mandatorily registered. Some of the laws
confer the status of an “artificial juridical person” (namely it can be sued
or sue under its own name and property and assets can be held under its
own name) upon the NPOs. Registration under the incorporating
Act/Ordinance and subsequently under the Income Tax Ordinance,
however, bestows certain advantages, which may include one or all of the
following:
• The assets are held in perpetuity.

• Exemptions from tax on income and profits.
• Exemptions to donors on the donations they make, thereby improving the
financial sustainability of the recipient organization.
• Recognition.
All NPOs registered as nonprofit companies can use their name

without the suffix ‘Limited’, ‘(Private) Limited’ or ‘(Guarantee) Limited’.
Each nonprofit company must, however, clearly indicate on all bills,
receipts and correspondence that it is a Company with limited liability

under section 42 of the Companies Ordinance, 1984. Its members are not
entitled to any share in the profits of the company, nor do they allow to be
remunerated for services rendered. Their liability is limited by the
Memorandum to such amounts as each member may undertake to
contribute to the assets of the Company in the event of its winding up.
A Nonprofit Company may be wound up in a number of specified

ways. There is, however, one over-riding principle - no assets may be
distributed among the Members. They must be given to any other
organization with a charitable purpose by the liquidator with the approval
of the court. The ways in which a nonprofit company may be wound up,
dissolved or liquidated are:
Voluntarily: A Company may be wound up voluntarily on the following

grounds:
When the period, if any, fixed for the duration of the Company by the
Articles expires, and the company in a general meeting resolves that the
Company be wound up voluntarily if the company resolves in a special
meeting that the Company be wound up voluntarily.
Subject to the Supervision of the Court: Where a Company has

passed a resolution for winding up on a voluntary basis, the court, may of
its own motion or on application by any person entitled to apply to the
court for the winding up of the company, may make an order that the
voluntary winding up will continue under supervision of the court.
Through a Court: A Company may be wound up through a court for a

number of reasons, some of which are as follows:
• If a Company, by special resolution, has resolved that it be wound up

through court.
• If the number of its members is reduced to less than the minimum
requirements
COMPANY
A Corporation is an Artificial Person Created by Law, endowed with a

perpetual succession and an entity apart from its members, it signifies
assent by the means of common seal. It is capable of holding property,
incurring debts, and suing and being sued, in the same manner as an
individual. It has a separate legal entity, apart from the persons operating
it.

A Corporation is a legal entity created under state law. A corporation

can manage its own affairs, hold property, borrow money, and legally does
nearly anything an individual can do. Stockholders may be, but need not
be, employees, officers, and/or directors of the corporation as well.
An advantage of corporations is that they protect stockholders from

unlimited-liability. If the corporation operates according to laws and
regulations, creditors only have access to the corporate assets for
business debts. The personal assets are not at risk. The law requires
corporations to operate separately from the owner and to file all
governmentally required reports and taxes.
Corporations have a three-tiered control system. Stockholders elect

the directors of the corporation. In turn, directors elect the officers. Other
than electing directors and expecting dividends, stockholders generally
have no other function. The directors make primary decisions for the
corporation, and the officers direct day to day operations.
Some states permit one person to fill the roles of stockholder, director,
and officer. Others permit only one owner but require two officers
minimum. All states’ requirements are based on the concept that the
corporation is a separate legal entity from those individuals who own and
operate it.
Shares of a corporation represent ownership of the corporation. While

you may restrict shares through the laws of the corporation, one may
transfer ownership of all or part of the corporation relatively easily. A
corporation can exist forever apart from its founders. When you want to
sell your business, the corporation provides a much more salable package
than a sole proprietorship or partnership.
The corporation is the only entity that can deduct as business

expenses many benefits such as health care and retirement plans. These
expenses reduce the taxable profits of the corporation and give
employees valuable benefits, which are not taxed as income.
Incorporating a business carries many advantages. One of the most

significant advantages is tremendous financial flexibility in raising capital.
A corporation has the ability to provide the capital structure that is needed
to accomplish the business goals.
TYPES OF COMPANIES:
There are various types of companies that can be

formed/registered/incorporated in Pakistan under the companies

Ordinance, 1984, but the most common forms of company (generally
formed by registration) are:
1) A Company Limited by Guarantee:
A private company limited by guarantee is an alternative type

of corporation used primarily for non-profit organizations that require legal
personality. A guarantee company does not usually have a
share capital or shareholders, but instead has members who act as
guarantors. The guarantors give an undertaking to contribute a nominal
amount (typically very small) in the event of the winding up of the
company. It is often believed that it cannot distribute its profits to its
members but (depending on the provisions of the articles) this is not
actually true. However a company limited by guarantee that distributes its
profits to members would not be eligible for charitable status. Commonly
used where companies are formed for non-commercial purposes, such as
clubs or charities. The members guarantee the payment of certain
(usually nominal) amounts if the company goes into insolvent liquidation,
but otherwise they have no economic rights in relation to the company.
2) A Company Limited by Shares:
"Company Limited by Shares" means that the company has

shareholders, and that the liability of the shareholders to creditors of the
company is limited to the capital originally invested, i.e. the nominal
value of the shares and any premium paid in return for the issue of the
shares by the company. A shareholder's personal assets are thereby
protected in the event of the company's insolvency, but money invested in
the company will be lost. The most common form of company used for
business ventures. Specifically, a limited company is a “company in which
the liability of each shareholder is limited to the amount individually
invested” with corporations being “the most common example of a limited
company. This type of company is the most common in Pakistan to be
registered under the Companies Ordinance 1984.
3) A Limited-Liability Company.
A limited liability company (LLC) is a flexible form of enterprise

that blends elements of partnership and corporate structures. It is a legal
form of company that provides limited liability to its members. LLCs do not
need to be organized for profit.

A Limited Liability Company (LLC) is a business structure allowed by

state statute. LLCs are popular because, similar to a corporation, owners
have limited personal liability for the debts and actions of the LLC. Other
features of LLCs are more like a partnership, providing management
flexibility and the benefit of pass-through taxation. Owners of an LLC are
called members. There is no maximum number of members. A few types
of businesses generally cannot be LLCs, such as banks and insurance
companies.
Public Companies and Private Companies:
Companies are also sometimes distinguished for legal and

regulatory purposes between public companies and private companies.
Public companies are companies whose shares can be publicly traded,
often (although not always) on a regulated stock exchange. Private
companies do not have publicly traded shares, and often contain
restrictions on transfers of shares.
Company Taxation in Pakistan
Pakistan’s taxation system for companies is based upon two bases

i.e. Direct Taxation and Indirect Taxation. Effective rate of tax may differ
for company’s depending upon their size, allowances and exemption to
particular company/industry, location, exports and so forth. As a general
guide companies are taxed as follows on their net income directly:
Corporate Tax Rates — Tax Year 2010(running from 1st of July, 2009 to
30th of June, 2010)
Public Companies 35%
Private Ltd. Companies 35%
Banking Companies 35%
Small company 20% up to 35%
Indirect Taxation includes deduction at source, which may be

payment on supplies, services, imports, exports, dividends and so forth.
Rates of deduction may vary from as low as 1% up to as high as 30%.
Company Incorporation / Registration Offices in Pakistan

Company Registration (formation/incorporation) in Pakistan is

administered under a single umbrella of Securities Exchange Commission
of Pakistan, which acts as the prime regulatory authority for the
companies in most cases.
Securities Exchange Commission of Pakistan works for company

registration (formation/incorporation), periodic monitoring, compliance
issues of corporate laws and legislation, before and after company
registration for companies of all sizes in Pakistan.
Company Registration Offices are established in Lahore, Karachi,

Islamabad, Peshawar and other major cities of Pakistan. Functions of these
Company Registration Offices include providing services and guidance,
while also ensuring that the companies, their directors, legal
representatives, employees and other related parties comply with the
statutory requirements as provided under the Companies Ordinance, 1984
(Pakistan).
The record of companies maintained by the Company Registration

Offices is public record/data covered under Freedom to Information
Ordinance, 2002 of Pakistan, therefore, the investors, shareholders,
creditors and general public, may inspect the record of any company
(whether it be private company or a Public company) whenever they need
and they may also obtain certified copy of any specific document forthwith
on payment of an amount of fee.
Public Company Formation/Registration:
Any three or more persons associated for any lawful purpose may,
by subscribing their names to the Memorandum of Association and
complying with the requirements of the Companies Ordinance of Pakistan
can form a public company.
Private Limited Company Formation/Registration:
Any one or more persons so associated may, in like manner, form a

private company. If only one member forms a private company, it is called
a single member company and if more than one member forms it, it is
termed as a private company.
Types of Companies in Pakistan and Prior Approval

before Company Formation/Registration in Pakistan:
Prior approval of the Ministries/Departments etc. may be needed

due to law/legislation before commencing on formation/incorporation of a
company in Pakistan which includes the following:
(a) A banking company has to seek permission and complete the legal
requirements of the State Bank of Pakistan and Ministry of Finance in
Pakistan before commencing with company incorporation/registration.
(b) A Non-Banking Finance company (NBFC) has to seek permission and

complete the legal requirements of the State Bank of Pakistan and
Ministry of Finance in Pakistan before commencing with company
incorporation/registration with Securities and Exchange Commission of
Pakistan
(c) A Security Service Company has to appoint people from the Army of
prominent rank and seek permission and complete the legal requirements
of the Ministry of Interior before commencing with company
incorporation/registration with Securities and Exchange Commission of
Pakistan.
(d) A Corporate Brokerage House has to seek approval of the concerned

stock exchange before commencement of Business.
(e) A Money Exchange Company as required for Banking Company

requires the prior approval of the State Bank of Pakistan to proceed with
company registration.
(f) An Association not for profit, such association may need to apply
directly to SECP (Security and Exchange Commission of Pakistan) for a
License.
(g) A trade organization would require a License from the Ministry of

Commerce before it can work as a trade organization.
NEXT CAPITAL LIMITED IN ACCORDANCE WITH THE

COMPANIES ORDINANCE 1984
Companies Ordinance 1984 may be defined as An Ordinance to

consolidate and amend the law relating to companies and certain other
associations. WHEREAS it is convenient to consolidate and amend the law
relating to the companies and certain other associations for the purpose of

healthy growth of the corporate enterprises, the industrial economy for the
protection of investors and creditors, promotion of investment and
development of economy and matters arising out of or connected
therewith, and the amendments are made with the Satisfaction of the
President necessary to take immediate actions. It extends to the whole of
Pakistan.
The Companies Ordinance 1984 is under study with reference to the

Practical Working of the company according to the rules and regulations
stated in the Companies Ordinance. This study has been made extensively
in order to firstly understand the course content and then apply it to the
company chosen which is NEXT CAPITAL LIMITED, this is a Public Listed
Company which is trading its share at the Lahore Stock Exchange, and
fully complies with the regulations of the Companies Ordinance,
Registered at SECP (Securities Exchange Commission of Pakistan).
Beginning with the Registration of the Company under the Law:
REGISTRATION:
Registration of a Company and Commencement of Business in

Pakistan:
The first step toward incorporation of a company in Pakistan is to file
an application before the Registrar of Companies for availability of name.
If the proposed name of the company is available and it is not in
contravention to the provisions of the Companies Ordinance, 1984 and the
Rules formed there under, then the Registrar shall issue a certificate
stating that the proposed name is available to be adopted.
The next step is to file the Memorandum of Association and Articles

of Association, which in effect is the constitution of any company, with the
Registrar of Companies in the Province where proposed company is to be
incorporated, along with other necessary forms prescribed under the
Companies Ordinance, 1984. When the company has been registered, the
Registrar issues a Certificate of Incorporation. Once such a certificate has
been issued by the Registrar a private limited company may commence
its business immediately. Nonetheless, a public limited company cannot
commence its business or exercise its borrowing powers yet unless the
Registrar has issued a Certificate for Commencement of Business. The
Registrar issues the Certificate for Commencement of Business only if the
following requirements have been fulfilled:

• Shares held subject to the payment of the whole amount thereof in cash
have been allotted to an amount not less in the whole than the minimum
subscription
• Every director of the company has paid to the company the full amount on
each of the shares taken or contracted to be taken by him and for which
he is liable to pay in cash
• No money is or may become liable to be repaid to applicants for any
shares or debentures which have been offered for public subscription by
reason of any failure to apply for or to obtain permission for the shares or
debentures to be dealt in on any stock exchange
• There has been filed with the Registrar of Companies a duly verified
declaration by the chief executive or one of the directors and the
secretary in the prescribed form that the aforesaid conditions have been
complied with and the Registrar of Companies has issued a Certificate of
Commencement of Business
INCORPORATION STAGE
To get the certificate of incorporation from the registrar of joint
stock company. The promoters of NEXT CAPITAL LIMITED have submitted
the following necessary documents to the registrar.
1. Application for the Availability of the Company Name
2. Memorandum of association
2. Articles of association
3. Form 1 (Declaration of Applicants for Incorporation)
4. Form 21 (notice of situation of registered office)
5. Form 27 (List of persons consenting to act as directors)
6. Form 28 (Consent to act as DIRECTORS / CHIEF )
7. Form 29 (Particulars of directors and officers, including the Chief
executive, managing agent, secretary, chief accountant, auditors
and legal advisors)
3. Notice of the address of the head office
4. List of directors
5. Consents in writing of directors
6. Directors contract to purchase qualification shares(directors have to

purchase)
7. Statutory declaration of legal documents of incorporation
After these documents have been submitted to and approved,
THE SECURITIES AND EXCHANGE COMISSION OF PAKISTAN had issued
certificate of incorporation with identification number 0071068 with the
company title of NEXT CAPITAL LTD on the 14th day of December 2009.
After receiving a fee of Rs. 639,500.
CERTIFICATE OF COMMENCEMENT OF BUSINESS:
The NEXT CAPITAL LTD has been issued the certificate of commencement
after the submission of following documents
I. Declaration by the company that the minimum subscription as per
prospectus has been received in cash
II. Declaration by the company that all the directors have taken up their
qualification shares and paid for them.
III. Declaration by the company that all legal requirements to the
commencement of business have been fulfilled.
BASIC LEGAL DOCUMENTS

a) Memorandum of association (company’s charter)

It is the basic document on which the whole superstructure of the

company is based. It is also called the constituents of the company, it is
primary document it the company formation. It is for the external
management of the company.
Contents of memorandum of association.
1 In case of public ltd co the names of the co with the word
“limited” as the last word of the name while the private ltd with
the name of the “private ltd co” as the last word of the name.
2 The province where the registered office of the co is to be
situated.
3 The objects of the co and their extensions
4 The liabilities of the members is limited
5 The amount of the shares capital and the no of shares with which
the company is to be registered.
Form of memorandum of association

1 It must be printed
2 Must be divided into paragraphs and consecutively numbered
3 Signed by each subscriber (who must give his full address and
occupation) in the presence of at least one witness who must
attest the signature.
Memorandum of association consist of 6 clauses

1. Name clause
2. Situation clause
3. Object clause (objectives of company)
4. Liability clause (limited up to their investment)
5. Capital clause
6. Subscription clause (integral part of capital clause)

PROCEDURE FOR ALTERATION OF OBJECTS

The following procedure must be followed otherwise alteration become
void.
1 A special resolution is passed by giving a notice to all persons who
are interested in alteration.
2 An application is filled with the SECP for confirmation of change.
3 The SECP must check the objections of creditors and be satisfied
that their consent is obtained.
4 After that the SECP will confirm the change if it deems fit.
5 Within 90 days from the date of order of SECP , a certified copy of
the order of the court along with the printed copy of memorandum
must be submitted with the registrar of SECP
6 Registrar will then issue a certificate of registration, which will be a
proof of alteration in objects.
PROCEDURE FOR CHANGE OF NAME.

A company at many times during the course of its business may
change its name by fulfilling the following conditions.
1 A special resolution is passed
2 Approval of registrar is obtained in witting with respect to change in
name.
3 The registrar enters the new name in register and shall issue a
certificate of incorporation in the changed name.
4 Where the co has unintentionally registered a name similar to that
of an existing name, it can be changed only with the sanction of the
registrar.

B) ARTICLE OF ASSOCIATION
It is also known as supplementary or secondary document of the
company. It is used for the internal matters/management of the company.
Articles of association must be signed by each subscriber.
Contents of articles of association
1. Amount of share capital issued and transmission of shares
2. Rights of shareholders regarding voting, dividend and return of
capital
3. Rules regarding issue of shares and debentures.
4. Procedures as well as regulations on “making calls” on shares
5. Manners of transfers of shares
6. Rules regarding appointment of directors, managing agent,
secretary and treasurers etc
7. Number , qualification, power and liabilities of directors
8. Convening and conduct of meetings with respect to quorum , poll,
proxy , resolution etc
9. Rules regarding the forfeiture of share.
10.Rules regarding the winding up of shares
11.Matters relating the winding up of the Co.
12.Declaration of dividend. (Responsibility of Board of directors)
Difference b/w Transfer of shares and transmission of

shares
Transfer of share: when the person is mentally sound and sale out
his shares (dispose off).Transmission of shares: it is the process of transfer
of shares to legal successor (next to kin) or representative of the
deceased person (shareholder) by the operation of law in case of death,
insolvency or lunacy (unsound mind).

Procedure for alteration of article of association

The following procedure must be followed while altering the articles.
A. Instruct the company’s legal advisor to draft the alterations together with
a notice to the members of Extra Ordinary General Meeting (EOGM).
B. When the company is listed on the stock exchange the draft of alteration
must be sent to the stock exchange for approval.
C. After the approval of stock exchange, call a members of directors for the
approval of alterations and the fix a date for (EOGM)
D. Notice of alteration must be sent together with alteration of articles at
least 21days before the meetings to the members.
E. Within 15days of EOGM, file with the registrar a copy of special resolution
passed in the meeting.
F. Send a copy of special resolution together with amended copy of articles
of association for approval to stock exchange.
G. Amend all unissued copies of the company’s article.
C) PROSPECTUS (PUBLIC LTD COMPANY ONLY)

Prospectus is a document that includes notice or advertisement
inviting public for subscription or purchasing and shares or debentures of

a company or inviting deposits from the public.

Contents of prospectus
I. The contents of memorandum with the name, address, occupation and
description of the person who’s names (there in memorandum), the
nature and the extent of interests of the shareholders in the profit and
property of the Company.
II.Description of business to be undertaken
III.Description regarding remuneration of the directors or chief executive
officer
IV.The names, address, occupation and description of the important office
bearers of the company.
V.Where shares are offered to the public for subscription, information
regarding minimum subscription, preliminary expenses payable and
underwriting commission payable etc.
VI.The date and time of opening and closing subscription list.
VII.The names of the underwriters and directors opinion about them that
their resources are sufficient to fulfill their obligation.
VIII.The names, addresses, description and occupation of the company
vendors and the amount paid or payable to them.
IX.The estimated amount of preliminary expenses paid or payable by the
company
X.Any amount paid to the promoters in previous two years.
XI.The names and addresses of auditors and legal advisors.
XII.The right of voting of meeting and dividend attached to shares.
XIII.The length of time during which the business of the company has been
carried on.
XIV.A reasonable time and place for the inspection of balance sheet and
income statement.
XV.A summery in column from the earnings of the company for each 3
financial years.

XVI.Pending legal proceedings to which the Company is a party.
PROCEDURE OF THE COMPANY COURT

i. All matters coming before court under the company ordinance shall
be disposed off (solved) and the judgment pronounced as soon as possible
but not later than 90 days from the date of the presentation of the petition
to the court except in extra ordinary circumstances, the court shall hear
the case from day to day.
ii. The hearing of the matters shall not be adjourned except for
sufficient cause or for more than 14days at one time or for 30days at all.
GENERAL PROVISIONS WITH RESPECT TO REGISTRATION

OF MEMORANDUM AND ARTICLES
Registration of Memorandum and Articles:
The Memorandum and the Articles of Association, if any, shall be

filed with the registrar in the Province or the part of Pakistan not forming
part of a Province, as the case may be, in which the registered office of the
company is stated by the memorandum to be situated.
PROVISIONS WITH RESPECT TO NAMES OF COMPANIES
Registration of change of name:

When a company changes its name, the registrar shall enter the new
name on the register in place.
When a company changes its name it shall, for a period of one year
from the date of issue of a certificate by the registrar, continue to mention
its former name along with its new name on the outside of every office or
place in which its business is carried on and in every document or notice.

The change of name shall not affect any rights or obligations of the
company, or render defective any legal proceedings by or against the
company; and any legal proceedings that might have been continued or
commenced against the company by its former name may be continued by
or commenced against the company by its new name.
Civil Liability for Mis-Statements in Prospectus.
Subject to the provisions, where a prospectus invites persons to

subscribe for shares or debentures of a company, the following persons
shall be liable to pay compensation to every person who subscribes for or
purchases any share or debentures on the faith of the prospectus for any
loss or damage he may have sustained by reason of any untrue statement
included therein namely.
Every person who is a director of the company at the time of the

issue of the prospectus. Every person who has authorized himself to be
named and is named in the prospectus either as a director, or as having
agreed to become a director, either immediately or after an interval of
time. Every person who is a promoter of the company. Every person who
has given consent to the issue of the prospectus.
No such person shall be liable, if he proves this under any

circumstances. That, having consented to become a director of the
company, he withdrew his consent before the issue of the prospectus, and
that it was issued without his authority or consent. That the prospectus
was issued without his knowledge or consent, and that on becoming aware
of its issue, he forthwith gave reasonable public notice that it was issued
without his knowledge or consent.
Criminal liability for mis-statements in prospectus.
Where a prospectus includes any untrue statement, every person

who signed or authorized the issue of the prospectus shall be punishable
with imprisonment for a term which may extend to two years, or with fine
which may extend to ten thousand rupees, or with both, unless he proves
either that the statement was immaterial or that he had reasonable ground

to believe, and did up to the time of the issue of the prospectus believe,
that the statement was true.
Directors not to refuse transfer of shares.
The directors of a company shall not refuse to transfer any fully paid
shares or debentures unless the transfer deed is, for any reason, defective
or invalid:
Notice of refusal to transfer.
If a company refuses to register a transfer of any shares or

debentures, the company shall, within thirty days after the date on which
the instrument of transfer was lodged with the company, send to the
transferee notice of the refusal indicating the reasons for such refusal.
Limited company may have directors with unlimited

liability.
In a limited company, the liability of the directors or of any director

may, if so provided by the memorandum, be unlimited. In a limited
company in which the liability of any director is unlimited, the directors of
the company, if any, and the member who proposes a person for election
or appointment to the office of director, shall add to that proposal a
statement that the liability of the person holding that office will be
unlimited and the promoters and officers of the company, or one of them
shall, before that person accepts the office or acts therein, give him notice
in writing that his liability will be unlimited.
If any director or proposer makes default in adding such a statement,

or if any promoter or officer of the company makes default in giving such a
notice, he shall be liable to a fine which may extend to two thousand
rupees and shall also be liable for any damage which the person so elected
or appointed may sustain from the default, but the liability of the person
elected or appointed shall not be affected by the default.
MANAGEMENT AND ADMINISTRATION REGISTERED

OFFICE, PUBLICATION OF NAME, ETC.

Registered office of company.
A company shall as from the day on which it begins to carry on

business, or as from the twenty-eighth day after the date of its
incorporation, whichever is the earlier, have a registered office to which all
communications and notices may be addressed.
Notice of the situation of the registered office and of any change

therein shall be given within twenty-eight days after the date of the
incorporation of the company or of the change, as the case may be, to the
registrar who shall record the same.
Publication of name by a limited company
Every limited Company, shall paint or affix, and keep painted or

affixed, its name on the outside of every office or place in which its
business is carried on, in a conspicuous position, in letters easily legible
and in English or Urdu characters, and also, if the registered office is
situate in a place beyond the local limits of the ordinary original civil
jurisdiction of a High Court, in the characters of one of the vernacular
languages used in that place; shall have its name engrave in legible
English or Urdu characters on its seal; shall have its name mentioned in
legible English or Urdu characters, in all ill-heads and letter papers and in
all documents, notices and other official publications of the company, and
in all bills of exchange, hundis, promissory notes, endorsements, cheques
and orders for money or goods purporting to be signed by or on behalf of
the company, and in all bills of parcels, invoices, receipts and letters of
credit of the company.
Penalties for Non-Publication of Name:
If a limited company does not paint or affix, and keep painted or

affixed, its name in manner directed by this Ordinance, it shall be liable to
a fine which may extend to two hundred rupees for every day during which
its name is not so kept painted or affixed, and every officer of the company
who knowingly and willfully authorizes or permits the default shall be liable
to the like penalty.
If any officer of a limited company, or any person on its behalf, uses

or authorizes the use of any seal purporting to be a seal of the company
wherein its name is not so engrave as aforesaid, or issues or authorizes the

issue of any bill-head, letter paper, document, notice or other official

publication of the company, or signs or authorizes to be signed on behalf of
the company any bill of exchange, hundi, promissory note, endorsement,
cheque or order for money or goods, or issues or authorizes to be issued
any bill of parcels, invoice, receipt or letter of credit of the company,
wherein its name is not mentioned in manner aforesaid, he shall be liable
to a fine which may extend to two thousand rupees, and shall further be
personally liable to the holder of any such bill of exchange, hundi,
promissory note, cheque or order for money or goods, for the amount
thereof unless the same is duly paid by the company.
REGISTER OF MEMBERS AND DEBENTURE-HOLDERS
Register of members and index.
Every company shall keep in one or more books a register of its

members and enter therein the following particulars, mainly:
(1) The name in full, father's name (in the case of a married woman or
widow, the name of her husband or deceased husband), nationality,
address, and the occupation, if any, of each member, and, in the case of a
company having a share capital, a statement of the shares held by each
member, distinguishing each share by its number, and of the amount paid
or agreed to be considered as paid on the shares of each member;
(2) The date at which each person was entered in the register as a
member.
(3) The date at which any person ceased to be a member and the
reason for ceasing to be a member.
(4) Every company having more than fifty members shall, unless the
register of members is in such a form as to constitute in itself an index,
keep an index of the names of the members of the company and shall,
within fourteen days after the date at which any alteration is made in the
register of members, make the necessary alteration in the index.
MEETINGS AND PROCEEDINGS

STATUTORY MEETING OF COMPANY:
Every company limited by shares and every company limited by

guarantee and having a share capital shall, within a period of not less than
three months, nor more than six months, from the date at which the
company is entitled to commence business, hold a general meeting of the
members of the company, which shall be called "the statutory meeting".
The directors shall, at least twenty-one days before the date on

which the meeting is held, forward a report, in this Ordinance referred as
"the statutory report" to every member.
The statutory report shall be certified by not less than three

directors, one of whom shall be the chief executive of the company, and
shall state.
(a) The total number of shares allotted, distinguishing shares allotted

otherwise than in cash, and stating the consideration for which they have
been allotted;
(b) The total amount of cash received by the company in respect of all the
shares allotted;
(c) An abstract of the receipts of the company and of the payments made
there out up to a date within seven days of the date of the report,
exhibiting under distinctive headings the receipts of the company from
shares and debentures and other sources, the payments made there out,
and particulars concerning the balance remaining in hand, and an account
or estimate of the preliminary expenses of the company showing
separately any commission or discount paid or to be paid on the issue or
sale of shares or debentures;
(d) The names, addresses and occupations of the directors, chief

executive, secretary, auditors and legal advisers of the company and the
changes, if any, which have occurred since the date of the incorporation;
(e) The particulars of any contract the modification of which is to be

submitted to the meeting for its approval, together with the particulars of
the modification or proposed modification;
(f) The extent to which underwriting contracts, if any, have been carried
out and the extent to which such contracts have not been carried out,
together with the reasons for their not having been carried out; and

(g) The particulars of any commission or brokerage paid or to be paid in

connection with the issue or sale of shares to any director, chief executive,
secretary or officer or to a private company of which he is a director.
(h) The statutory report shall also contain a brief account of the state of
the company's affairs since its incorporation and the business plan,
including any change or proposed change affecting the interest of
shareholders and business prospects of the company.
(I) the statutory report shall, so far as it relates to the shares allotted by
the company, the cash received in respect of such shares and to the
receipts and payments of the company, be accompanied by a certificate of
the auditors of the company as to the correctness of such allotment,
receipts of cash, receipts and payments.
(j) The directors shall cause at least five copies of the statutory report,
certified as aforesaid, to be delivered to the registrar for registration
forthwith after sending the report to the members of the company.
(k) The directors shall cause a list showing the names, occupations,
nationality and addresses of the members of the company, and the
number of shares held by them respectively, to be produced at the
commencement of the meeting and to remain open and accessible to any
member of the company during the continuance of the meeting.
(l) The members of the company present at the meeting shall be at

liberty to discuss any matter relating to the formation of the company or
arising out of the statutory report, whether previous notice has been given
or not, but no resolution of which notice has not been given in accordance
with the articles may be passed.
(m) The meeting may adjourn from time to time, and at any adjourned
meeting any resolution of which notice has been given in accordance with
the articles, either before or after the original meeting, may be passed,
and an adjourned meeting shall have the same powers as an original
meeting.
ANNUAL GENERAL MEETING
Every company shall hold, in addition to any other meeting, a

general meeting, as its annual general meeting, within eighteen months
from the date of its incorporation and thereafter once at least in every
calendar year within a period of four months following the close of its
financial year and not more than fifteen months after the holding of its last

preceding annual general meeting:
Provided that, in the case of a listed company, the Commission, and,

in any other case, the registrar, may for any special reason extend the
time within which any annual general meeting, not being the first such
meeting, shall be held by a period not exceeding sixty days.
An annual general meeting shall, in the case of a listed company, be

held in the town in which the registered office of the company is situated,
Provided that the Commission, for any special reason, may, on the
application of such company, allow the company to hold a particular
meeting at any other place.
The notice of an annual general meeting shall be sent to the
shareholders at least twenty-one days before the date fixed for the
meeting and, in the case of a listed company, such notice, in addition to its
being dispatched in the normal course, shall also be published at least in
one issue each of a daily newspaper in English language and a daily
newspaper in Urdu language having circulation in the Province in which the
stock exchange on which the company is listed is situated.
CALLING OF EXTRAORDINARY GENERAL MEETING
All general meetings of a company, other than the annual general

meeting shall be called extraordinary general meetings.
The directors may at any time call an extraordinary general meeting

of the company to consider any matter which requires the approval of the
company in a general meeting, and shall, on the requisition of members
representing not less than one-tenth of the voting powers on the date of
the deposit of the requisition, forthwith proceed to call an extraordinary
general meeting.
The requisition shall state the objects of the meeting, be signed by

the requisitionists and deposited at the registered office of the company,
and may consist of several documents in like form, each signed by one or
more requisitionists.
If the directors do not proceed within twenty-one days from the date
of the requisition being so deposited to cause a meeting to be called, the
requisitionists, or a majority of them in value, may themselves call the
meeting, but in either case any meeting so called shall be held within three
months from the date of the deposit of the requisition.
Any meeting called under sub-section by the requisitionists shall be

called in the same manner, as nearly as possible, as that in which

meetings are to be called by directors.
Any reasonable expense incurred by the requisitionists by reason of

the failure of the directors duly to convene a meeting shall be repaid to the
requisitionists by the company, and any sum so repaid shall be retained by
the company out of any sum due or to become due from the company by
way of fees or other remuneration for their services to such of the directors
as were in default.
Notice of an extraordinary general meeting shall be sent to the

members at least twenty-one days before the date of the meeting.
Provided that, in the case of an emergency affecting the business of

the company, the registrar may, on the application of the directors,
authorize such meeting to be held at such shorter notice as he may
specify.
Every officer of the company who knowingly or willfully fails to

comply with any of the provisions of this section shall be liable if:
• The default relates to a listed company, to a fine not less than
ten thousand rupees and not exceeding twenty thousand rupees and
in the case of a continuing default to a further fine which may extend
to two thousand rupees for every day after the first during which the
default continues.
• The default relates to any other company, to a fine which may
extend to two thousand rupees and in the case of a continuing
default to a further fine which may extend to two hundred rupees for
every day after the first during which the default continues.
DIRECTORS
Minimum Number of Directors
(a) Every single member company shall have at least one director.
(b) Every other private company shall have not less than two directors.
(c) Every public company other than a listed company shall have not less
than three directors.
(d) Every listed company shall have not less than seven directors to be
elected in a general meeting.

(e) Only a natural person shall be a director and no director shall be the
variable representative of a body corporate.
FIRST DIRECTORS AND THEIR TERM
The number of directors and the names of the first directors shall be
determined in writing by a majority of the subscribers of the memorandum
and until so determined, all the subscribers of the memorandum who are
natural persons shall be deemed to be the directors of the company.
The first directors shall hold office until the election of directors in
the first annual general meeting.
Retirement of Directors
On the date of the first annual general meeting of a company all

directors of the company for the time being who are subject to election
shall stand retired from office and thereafter all such director shall retire
on the expiry of the term laid down, provided that the directors so retiring
shall continue to perform their functions until their successors are elected.
Provided further that the directors so continuing to perform their functions
shall take immediate step to hold the election of directors and in case of
any obstacle report the circumstances of the case to the registrar within
fifteen days of the expiry of the term laid.
Procedure for Election Of Directors
Any person who seeks to contest an election to the office of director

shall, whether he is a retiring director or otherwise, file with the company,
not later than fourteen days before the date of the meeting at which
elections are to be held, a notice of his intention to offer himself for
election as a director.
All notices received by the company shall be transmitted to the

members not later than seven days before the date of the meeting, in the
manner provided for sending of a notice of general meeting in the normal
manner or in the case of a listed company by publication at least in one
issue each of a daily newspaper in English language and a daily newspaper
in Urdu language having circulation in the Province in which the stock
exchange on which its securities are listed is situate.
Term of Office of Directors

A director elected holding office for a period of three years unless he

earlier resigns becomes disqualified from being a director or otherwise
ceases to hold office. Any casual vacancy occurring among the directors
may be filled up by the directors and the person so appointed shall hold
office for the remainder of the term of the director in whose place he is
appointed.
Eligibility of a Person to Become a Director
A person is appointed as a director if he:

• is a major share holder
• is of sound minded
• is a member of a company
• has not been convicted by court of law
• is a solvent person
• is a natural person
Powers of Directors
The business of a company shall be managed by the directors, who
may pay all expenses incurred in promoting and registering the company,
and may exercise all such powers of the company as are not by this
Ordinance, or by the articles, or by a special resolution, required to be
exercised by the company in general meeting. The directors of a company
can exercise the following powers on behalf of the company, and shall do
so by means of a resolution passed at their meeting.
a. To make calls on shareholders in respect of moneys unpaid on their
shares.
b. To issue shares
c. To issue debentures
d. To borrow moneys.
e. To invest the funds of the company.
f. To make loans.
g. To approve bonus to employees.
h. To incur capital expenditure
i. To undertake obligations under leasing contracts exceeding one
million Rupees.
j. To write off bad debts, advances and receivables;

CHIEF EXECUTIVE
The directors of every company shall as from the date from which it
commences business or as from a date not later than the fifteenth day
after the date of its incorporation, whichever is earlier, appoint any
individual to be the chief executive of the company. The chief executive
appointed as aforesaid shall, unless he earlier resigns or otherwise ceases
to hold office, hold office up to the first annual general meeting of the
company or, if a shorter period is fixed by the directors as the time of his
appointment, for such period.
Appointment of Subsequent Chief Executive
Within fourteen days from the date of election of directors, the office
of the chief executive falling vacant, as the case may be, the directors of a
company shall appoint any person, including an elected director, to be the
chief executive, but such appointment shall Not be for a period exceeding
three years from the date of appointment. On the expiry of his term of a
chief executive shall be eligible for reappointment.
The chief executive retiring shall continue to perform his functions

until his successor is appointed unless non-appointment of his successor is
due to any fault on his part or his office is expressly terminated.
Removal Of Chief Executive

The directors of a company by resolution passed by not less than
three-fourths of the total number of directors for the time being, or the
company by a special resolution, may remove a chief executive before the
expiration of his term of office notwithstanding anything contained in the
articles or in any agreement between the company and such chief
executive.
Chief Executive Not to Engage In Business Competing

With Company's Business.
A chief executive of a public company shall not directly or indirectly
engage in any business which is of the same nature as and directly
competes with the business carried on by the company of which he is the
chief executive or by a subsidiary of such company.
Certain Companies to Have Secretaries

A listed company shall have a whole time secretary and a single
member company shall have a secretary.

Register of directors, officers, etc.

Every company shall keep at its registered office a register of its
directors and officers, including the chief executive, managing agent,
secretary, chief accountant, auditors and legal adviser.
The register to be kept during business hours, subject
to such reasonable restrictions as the company may by its articles or in
general meeting impose so that not less than two hours in each day be
allowed for inspection, be open to the inspection of any member of the
company without charge and of any other person on payment of the
prescribed fee or such lesser sum as the company may specify for each
inspection.
If any inspection required under this section is refused or if default is
made in the company and every officer of the company or other person
who is knowingly and willfully in default shall be liable to a fine which may
extend to five hundred rupees and to a further fine which may extend to
fifty rupees for every day after the first during which the default continues.
Register Of Contracts, Arrangements And Appointments

In Which Directors, Etc., Are Interested.
Every company shall keep a register in which shall be entered

separately particulars of all contracts, including the following particulars.
a. The date of the contract, arrangement or appointment.

b. The names of the parties.
c. The principal terms and conditions.
d. The date on which it was placed before the directors.
e. The names of the directors voting for and against the contract,
arrangement or appointment and the names of those remaining
neutral.
f. The name of the director or officer concerned or interested in the
contract, arrangement or appointment and the extent or nature of
his interest.
ACCOUNTS
Books of Account to Be Kept By Company
Every company shall keep at its registered office proper books of

account with respect to:
(a) All sums of money received and expended by the company and the
matters in respect of which the receipt and expenditure takes place.

(b) All sales and purchases of goods by the company.

(c) All assets of the company.
(d) All liabilities of the company.
(e) In the case of a company engaged in production, manufacturing or
mining activities, such particulars relating to utilization of material or
labor or the other inputs or items of cost as may be prescribed, if
such class of companies is required by the Commission by a general
or special order to include such particulars in the books of accounts.
(f) Provided that all or any of the books of account aforesaid may be
kept at such other place in Pakistan as the directors may decide, and
when the directors so decide, the company shall, within seven days
of the decision, file with the registrar a notice in writing giving the
full address of the other place.
Inspection of Books of Account by Registrar

The books of account and books and papers of every company shall
be open to inspection by the registrar or by any officer authorized by the
Commission in this behalf. It shall be the duty of every director, officer or
other employee of the company to produce to the person making all such
books of account and books and papers of the company in his custody or
under his control, and to furnish him with any such statement, information
or explanation relating to the affairs of the company, as the said person
may require of him within such time and at such place as he may specify.
Any officer authorized to make an inspection shall have all the powers that
the registrar has in relation to the making of inquiries.
AUDIT
Appointment and Remuneration of Auditors
The first auditor or auditors of a company shall be appointed by the

directors within sixty days of the date of incorporation of the company; and
the auditor or auditors so appointed shall hold office until the conclusion of
the first annual general meeting.
Provided that:
• The company in a general meeting may remove any such auditor or

auditors and appoint in his or their place any other person or persons
who have been nominated for appointment by any member of the
company and of whose nomination notice has been given to the
members of the company not less than fourteen days before the
date of the meeting.

• Any auditor appointed to fill in any casual vacancy shall hold office
until the conclusion of the next annual general meeting.
• The remuneration of the auditors of a company shall be fixed, in the

case of an auditor appointed by the directors or by the Commission,
as the case may be; and in all other cases, by the company in
general meeting or in such manner as the general meeting may
determine.
Provisions as to Resolutions Relating To Appointment

and Removal of Auditors
A notice shall be required for a resolution at a company’s annual

general meeting appointing as auditor a person other than a retiring
auditor.
The notice referred shall be given by a member of the company to

the company not less than fourteen days before the annual general
meeting, and the company shall forthwith send a copy of such notice to
the retiring auditor and shall also give notice thereof to its members not
less than seven days before the date fixed for the annual general meeting
and, if the company is a listed company, shall also publish it at least in one
issue each of a daily newspaper in English language and a daily newspaper
in Urdu language having circulation in the Province in which the stock
exchange on which the company is listed is situate.
Every company shall, within fourteen days from the date of any
appointment of an auditor, send to the registrar intimation thereof,
together with the consent in writing of the auditor concerned.
Every company shall, within fourteen days from the date of

retirement, removal or otherwise ceasing to hold office of an auditor, send
intimation thereof to the registrar.
Qualification and Disqualification of Auditors
A person shall not be qualified for appointment as an auditor IF:

• In the case of a public company or a private company which is
subsidiary of a public company unless he is a Chartered Accountant.
• In the case of a private company having paid up capital of three
million rupees or more unless he is a Chartered Accountant.

None of the following persons shall be appointed as auditor of a

company, mainly:
(a) A person who is, or at any time during the preceding three years
was, a director, other officer or employee of the company.
(b) A person who is a partner of, or in the employment of, a director,

officer or employee of the company.
(c) The spouse of a director of the company.
(d) A person who is indebted to the company.
(e) A body corporate.
(f) A person or his spouse or minor children, or in case of a firm, all

partners of such firm who holds any shares of an audit client or any
of its associated companies.
Powers and Duties of Auditors

Every auditor of a company shall have a right of access at all times
to the books, papers, accounts and vouchers of the company, whether
kept at the registered office of the company or elsewhere, and shall be
entitled to require from the company and the directors and other officers
of the company such information and explanation as he thinks necessary
for the performance of the duties of the auditors.
In the case of a company having a branch office outside Pakistan, it

shall be sufficient if the auditor is allowed access to such copies of, and
extracts from, the books and papers of the branch as have been
transmitted to the principal office of the company in Pakistan.
The auditor shall make a report to the members of the company on

the accounts and books of accounts of the company and on every balance-
sheet and profit and loss account or income and expenditure account and
on every other document forming part of the balance-sheet and profit and
loss account or income and expenditure account, including notes,
statements or schedules appended thereto, which are laid before the
company in general meeting during his tenure of office, and the report
shall state:
➢ Whether or not they have obtained all the information and

explanations which to the best of their knowledge and belief were
necessary for the purposes of the audit.

➢ Whether or not in their opinion proper books of accounts as required

by this Ordinance have been kept by the company.
➢ Whether or not in their opinion the balance-sheet and profit and loss
account or in the income and expenditure account have been drawn
up in conformity with the
➢ Ordinance and are in agreement with the books of accounts.
➢ Whether or not in their opinion and to the best of their information

and according to the explanations given to them, they said accounts
give the information required by this Ordinance in the manner so
required and give a true and fair view.
➢ The auditor of a company shall be entitled to attend any general

meeting of the company, and to receive all notices of, and any
communications relating to, any general meeting which any member
of the company is entitled to receive, and to be heard at any general
meeting which he attends on any part of the business which
concerns him as auditor.
➢ Provided that, in the case of a listed company, the auditor or a

person authorized by him in writing shall be present in the general
meeting in which the balance-sheet and profit and loss account and
the auditor’s report are to be considered.
Reading and Inspection of Auditor’s Report
The auditor’s report shall be read before the company in general

meeting and shall be open to inspection by any member of the company.
GENERAL MEETINGS
A general meeting, to be called annual general meeting, shall be
held, within eighteen months from the date of incorporation of the
company and thereafter once at least in every year within a period of six
months following the close of its financial year and not more than fifteen
months after the holding of its last preceding annual general meeting as
may be determined by the directors.
All general meeting of a company other than the statutory meeting

or an annual general respectively shall be called extraordinary general
meetings.

The directors may, whenever they think fit, call an extraordinary

general meeting, and extraordinary general meetings shall also be called
on such requisition, or in default, may be called by such requisition. If at
any time there are not within Pakistan sufficient directors capable of acting
to form a quorum, any director of the company may call an extraordinary
general meeting in the same manner as nearly as possible as that in which
meeting may be called by the directors.
NOTICE AND PROCEEDINGS OF GENERAL MEETINGS
Twenty-one days notice at the least (exclusive of the day on which

the notice is served or deemed to be served, but inclusive of the day for
which notice is given) specifying the place, the day and the hour of
meeting and, in case of special business, the general meeting, to such
persons as are, under the Ordinance or the regulations of the company,
entitled to receive such notices from the company; but the accidental
omission to give notice to, or the non-receipt of notice by, any member
shall not invalidate the proceedings at any general meeting.
No business shall be transacted at any general meeting unless a

quorum of members is present at that time when the meeting proceeds to
business; save as herein otherwise provided, members having twenty five
percent of the voting power present in person or through proxy and In the
case of private company, two members personally present. In case of a
public company, three members personally present; shall be a quorum.
If within half an hour from the time appointed for the meeting a
quorum is not present, the meeting, if called upon the requisition of
members, shall be dissolved; in any other case, it shall stand adjourned to
the same day in the next week at the same time and place, and, it at the
adjourned meeting a quorum is not present within half an hour from the
time appointed for the meeting, the members being not less than two,
shall be a quorum.
The chairman of the board of directors, if any, shall preside as

chairman at every general meeting of the company but if there is no such
chairman, or if at any meeting he is not present within fifteen minutes
after the time appointed for the meeting. or is unwilling to act as chairman,
any one of the directors present may be elected to be chairman and if
none of the directors is present, or willing to act as chairman, the members
present shall choose one of their number to be chairman.

VOTES OF MEMBERS
Subject to any rights or restrictions for the time being attached to
any class or classes of shares, every member present in person shall have
one vote except for election of directors.
DIRECTORS
The number of the directors and the names of the first directors shall
be determined in writing by a majority of the subscribers of the
memorandum of association.
The remuneration of the directors shall from time to time be

determined by the company in general meeting subject to the provisions of
the Ordinance.
No person shall be appointed as a director unless he is a member of the

company.
DISQUALIFICATION OF DIRECTORS
No person shall become the director of a company if he suffers from
any the disabilities or disqualifications, if already a director, shall cease to
hold such office from the date he so becomes disqualified or disabled:
Provided, however, that no director shall vacate his office by reason

only of his being a member of any company which has entered into
contracts with, or done any work
for the company of which he is director, but such director shall not vote in
respect of any such contract or work, and if he does so vote, his vote shall
not be counted.
ACCOUNTS
The books of accounts shall be kept at the registered office of the
company or at such other place as the directors shall think fit and shall be
open to inspection by the directors during business hours.
The directors shall from time to time determine whether and to what
extent and at what time and places and under what conditions or
regulations the accounts and books or papers of the company or any of
them shall be open to the inspection of members.
A balance-sheet, profit and loss account, income and expenditure

account and other reports shall be made out in every year and laid before
the company in the annual general meeting made up to a date not more
than six months before the meeting. The balance sheet and profit and loss

account or income and expenditure account shall be accompanied by a

report of the auditors of the company and the report of directors.
A copy of the balance sheet and profit and loss account or income
and expenditure account and reports of directors and auditors shall, at
least twenty one days preceding the meeting, be sent to the persons
entitled to receive notice of general-meetings.
CONCLUSION
This Term Project was of prime importance in understanding the Business

Law and its implications in the Business World. Beginning with different
forms of businesses, understanding their structure and to conduct
operations for Business Firms and Companies. Undoubtedly, there are
many advantages and disadvantages of law, with reference to the their
structure and limitations imposed by Law, the first Disadvantage that has
been analyzed is that the Business Law is IMPERATIVE in nature, meaning
that the Business Organizations in their self and people operating them
are bound to follow them by hook or by crook, they cannot escape laws
and legal procedure in order to conduct a respectful business activity. The
other disadvantage is that Law in itself is very RIGID, meaning that it’s
not flexible in any case under any circumstances. Its sticks to what has
been framed in the practice of Law. Law in itself is very conservative,
leading to the very traditional way of Rules and Regulations with no room
for change for good. It has been analyzed that Law is Very Formal in
nature; this was analyzed while reviewing the legal documents and
written rules and regulations of the Company NEXT CAPITAL LIMITED that
was under study. Every single thing needs to be in black and white with
very complex terms. Law is complex in a way that there are certain
Financial transactions and legal procedures for filing of documents with
the concerned authorities, here in this case is S.E.C.P (Securities and
Exchange Commission of Pakistan). To fulfill the requirements of this
government body the firms and the business organizations need to hire

professional solicitation firms or the services of solicitors to guide them

through these legal procedures and prepare certain documents under the
certain code of conduct defined in the Law. Here, in this case of our study
is CORPOTATE REET, which has assisted NEXT CAPITAL LIMITED to
prepare all legal documents and procedures by charging them service fee
for professional assistance under the requirements defined by Law.
Services include filing documents with the registrar for the preparation of
Memorandum and Articles and the Application for the availability of
names and certain other documents that were under the study. The
Solicitor has taken the sole responsibility in preparing and registering the
documents with S.E.C.P (Securities and Exchange Commission of
Pakistan). It is complex to such an extent that their remains a doubt that
the services offered has fulfilled the legal procedures or the objective is
being achieved through improper channel.
The Rigidity and conservatism can be better explained by the current
example of I.C.C (International Cricket Council), that the rules and
regulations for the match have been defined. Both the teams are allowed
to challenge the decision of the umpire 4 times in total i.e. 2 times for
each team, however, this seems to be a big advantage of the written
rules the team can challenge or appeal for any unjust decision b y the
governing body, here in this case is the Umpire. But, apart from this it has
a major disadvantage that if the Rules of I.C.C has allowed 2 reviews for
each team than what if the Umpire makes an unjust decision for the third
time, why should the team bear the cost/loss of the unjust decision made
by the Umpire.
Well, there is the other side as well, which here are the advantages of the
Business Law. The biggest advantage of Law is that it defines every single
thing even the minor details in black and white as a result of which
nothing is vague in law, the Laws might seems to be un-favorable to the
parties at some point in time but it assures compliance and equality for
every single citizen.
During our course of study regarding the Business Law for different
business structures under different circumstances, it has been analyzed
that Law promises and ensures Uniformity meaning that its fixed and
constant under all circumstances and consistent and ensures evenness,
homogeneity, equality and most importantly harmony. What is applicable
to one firm is equally applicable to other with no room for injustice,
hence, avoiding the danger of Arbitrary, Biased and Dishonest decisions.
The other main advantage of Law analyzed is that it has fixed principles
that protects the administration of Justice from the errors of individual
judgment.

Practical analyses of our study proves that Business law ensures

compliance in a way that the Legal Documents of NEXT CAPITAL LIMITED,
which includes, Memorandum of Association and Article of Association
along with certain other Legal requirements regarding the Capital
structure and most importantly the management.
Since it has already been discussed that the biggest advantage of Law is
to ensure Compliance and stability in the business environment. It would
be highly unjust, if we don’t analyze the role of the Audit Committee in
ensuring compliance, the audit committee may check the book of
accounts and all other documents to check if they are in accordance with
the legal requirements, the visit of the Audit Committee may conducted
at any time or it may be decided, this pattern varies from company to
company, the Audit committee keeps a complete check and balance on
all activities and operations of the business and can even panelize if there
is any malpractice in the operations or anything thing that is not in
accordance with what is written in black and white.
The Consultancy Firm CORPORATE REET visited for discussion is situated

at 7-Egerton Road, Lahore under the Ownership of Mr. Raja Tahir Javaid
(the Managing Director), he provided us with step by step information
from registration till the winding up procedure for the company, because
this firm gave all the legal services to the Company under study Next
Capital Limited. Working on the ground/field with Corporate Reet (A
professional Firm of Accounting, Corporate Laws and tax consultants) was
an extra-ordinary experience of our lives.
Every single thing, even the minor details has been listed in these
documents which are obligatory by the law, the information listed
includes the objectives of the Business and the type of Business in which
the Company is engaged, the financial terms and conditions, information
regarding the stocks of the firm, to pay for acquisition of shares,
securities and properties, the authorized capital of the company, the
structure of liability for the members, complete information of the
persons who are running the business, including their complete database.
Complete legal procedures for the transfer of shares, from transferor to
transferee, Information for the general meetings when to be held and by
whom, Notices and proceedings of the general meetings, Votes of the
members, Complete information regarding the rules and the duties of the
directors, Chairman, Chief Executive, Elections and removal of the
Director, Procedures for the determination of Dividends and Reserves,
Accounts and Audits.
All above stated analysis of the company understudy proves that NEXT

CAPITAL LIMITED, is a Listed Company and all of its documents are

completely in accordance with the Companies Ordinance 1984. Hence,
Leading to a promising future, and as told us by the Company Secretary;
that the company is enjoying highest level of returns based on these
principles defined in the Business Law, and all the matters are solved
under the light of Law.

Bijinesh Laaaa

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Forms of Doing Business in Pakistan 1

COURSE: Business Law

Business Law Project

“Great ability develops and reveals itself increasingly with every

Provided with the divine help which played an important role in

Business Law Project

This paper is being written keeping in view the objectives that we

This term paper includes discussing different forms of Business

The ultimate goal/objective of any entrepreneur is profit orientation

The legal forms of businesses include Sole Proprietorship, Partnership,

Sole Proprietorship being the simplest form among the businesses is

Business Law Project

Partnership remains a common mode of business enterprise in

A Nonprofit Organization (abbreviated as NPO, also known as

Business Law Project

donor, which is a great advantage in raising funds.

A Corporation is an Artificial Person Created by Law, endowed with a

A Corporation can manage its own affairs, hold property, borrow

An advantage of corporations is that they protect stockholders from

There are different types of Companies which includes Company

Business Law Project

Securities Exchange Commission of Pakistan works for company

The record of companies maintained by the Company Registration

The main focus of this Term Project is to analyze the Corporation in

This paper includes, every day to day operation of a Company (NEXT

Business Law Project

the Nature of the Business which is Brokerage in Stocks, Shares,

Business Law Project

FORMS OF DOING BUSINESS IN PAKISTAN

When identifying an appropriate legal form of business, most often

Legal forms of doing business are:

Legal Forms of Doing Business and their characteristics, advantages,

A Sole Proprietorship is a business owned by only one person and

In a sole proprietorship, the owner alone controls the entire business.

In a sole proprietorship, the owner is liable for any debts of the

Business Law Project

personal obligations. Hence, leading to the Unlimited Liability for the

Suppose that an individual starts a business as a Sole Proprietor,

The owner can sell a sole proprietorship as a business or close its

The ability of a sole proprietorship to raise capital is limited. Since,

Advantages of forming a sole Proprietorship in Pakistan:

The main advantages of a sole proprietorship (sole ownership) are that:

• Sole Proprietorships are easy to start up. (minimum or no legal

Business Law Project

• Sole Proprietorship is easy to discontinue as well.

A partnership business operates under the rules and regulations

The partners control a partnership according to their agreement.

Some experts recommend avoiding a partnership, corporation, or LLC

Business Law Project

Partnerships have a fairly simple tax structure. Income and loss

Some authorities strongly advise against using the general

Since a partnership is a voluntary association, you or any partner can

A partnership is primarily dependent upon the individual assets of the

Business Law Project

willing to personally guarantee a loan.

Partnership remains a common mode of business enterprise in

Major Characteristics of Partnership:

• A partnership is not a distinct legal person, but is made of the persons

Business Law Project

• A partner cannot contract with his firm.

Business Law Project

A Nonprofit Organization (abbreviated as NPO, also known as