2014

Types of Companies
SUBMITTED TO: MR AWAIS KHALID
SUBMITTED BY: YASSER ANWAR
INTRODUCTION:
Company:
A company can be defined as an artificial person, with a discrete legal entity, perpetual
succession and a common seal. It is not affected by the death, insanity or insolvency of an
individual member.
WHAT ARE THE TYPES OF COMPANIES?
There are various types of company 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 INCORPORATED AS LIMITED BY GUARANTEE
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. This type of company is common in England.
2) A COMPANY INCORPORATED AS LIMITED BY SHARES
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.
3) A COMPANY INCORPORATED AS LIMITED BY GUARANTEE WITH A
SHARE CAPITAL.
A hybrid entity, usually used where the company is formed for non-commercial purposes,
but the activities of the company are partly funded by investors who expect a return. This
type of company may no longer be formed in the UK, although provisions still exist in law for
them to exist.
4) A LIMITED-LIABILITY COMPANY.
A companystatutorily authorized that is characterized by limited liability, management by
members or managers, and limitations on ownership transfer
5) AN UNLIMITED COMPANY WITH OR WITHOUT A SHARE CAPITAL.
A hybrid entity, a company where the liability of members or shareholders for the debts (if
any) of the company are not limited.
Less commonly seen types of companies are:
6) COMPANIES REGISTERED FORMED BY LETTERS PATENT.
Most corporations by letters patent are corporations sole and not companies as the term is
commonly understood today.
7) COMPANIES REGISTERED AS CHARTER CORPORATIONS.
Before the passing of modern companys legislation, these were the only types of
companies. Now they are relatively rare, except r very old companies that still survive (of
which there are still many, particularly many British banks), or modern societies that fulfil a
quasi regulatory function (for example, the Bank of England is a corporation formed by a
modern charter).
*Note that Ltd after the companys name signifies limited company, and PLC (public
limited company) indicates that its shares are widely held.
In legal parlance, the owners of a company are normally referred to as the members. In a
company limited or unlimited by shares (formed/ registered/ incorporated with a share
capital), this will be the shareholders.
In a company limited by guarantee, this will be the guarantors. Some offshore jurisdictions
have created special forms of offshore company in a bid to attract business for their
jurisdictions. Examples include segregated portfolio companies and restricted purpose
companies.
There are however, many, many sub-categories of types of company that can be formed in
various jurisdictions in the world.

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. In some jurisdictions, private companies have maximum numbers of shareholders.
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 and in Lahore, Karachi, Islamabad, Peshawar
and 4 other cities in 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 it is
formed by more than one member, 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 include 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 a Banking Company requires the prior
approval of the State Bank of Pakistan to proceed with company registration.
f) An Association not for profit u/section 42, such association may need to apply
directly to SECP for a License.
g) A trade organization u/s 42 would require a License from the Ministry of Commerce
before it can work as a trade organization.

STEPS / PROCESS OF COMPANY REGISTRATION/INCORPORATION IN
PAKISTAN
The Steps to formation/incorporation of a company in Pakistan are as follows;
Seek Approval from the concerned ministry if special permission before
incorporation/formation of a company in Pakistan is required
Seek approval for the availability of the proposed name.
File a range of documents to the Registrar which varies from company to company
depending on whether it is a single member company, private limited company,
public listed company, and public unlisted company, banking company, small
company, foreign company and so forth.
Apply for the attested copies of the documents filed
Receive Certificate of Incorporation or Certificate of Commencement of Business
Proceed with other registrations if required which may include local chamber of
commerce, State Bank of Pakistan, Income Tax registrations, Sales Tax registration
and so forth.

A Memorandum of Association, stating the object clause of the entity, along with an Articles
of Association, setting out the regulations of the same, is required to be filed with the
Registrar of Companies in the Province in which the entity is to be incorporated.
Following the registration of the Memorandum of Association of an organization with the
Registrar of Companies, the said Registrar issues a Certificate of Incorporation under Section
32.
In the case of a public company, however, further requirements have to be fulfilled under
the Ordinance. Under Section 146, such an entity cannot commence any business or
exercise any borrowing powers unless:
a) Shares held subject to the payment of the whole amount thereof in cash have been
allotted to an amount equivalent or more than the minimum subscription;
b) Every director of the company has paid 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;
c) 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;
d) A duly verified declaration has been filed, with the Registrar, 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 has issued a Certificate of
Commencement of Business; and
e) In the case of an organization which has not issued a prospectus inviting the public
to subscribe for its shares, in lieu of the prospectus, a statement has been filed with
the above mentioned Registrar.