Business Law Final Project

Project OF Business Law
Corporate law:
The set of rules and regulations sections and subsections regarding the creation of the joint stock
company. The arrangement of annual General meetings, The issuance of new shares as well as
additional shares rights and powers of the board of directors as well as the members of the
company and the winding up of a company under the company ordinance 1984 of Pakistan.
History of company law in Pakistan
1. The concept of company was developed in the 2nd half of 19th century (1850 onwards).
2. Different laws were developed during this era
3. The first act was passed in the British India in 1850 for the registration of joint stock cos
4. Another act for the registration of joint stock co\s in the UK in 1884
5. A complete and basic act of 1913 was developed.
6. A company law commission was appointed by the Pakistani govt in 1959
7. The submitted their report to the govt in 1960.
8. Its contents was made publically available in 1972
9. The title of the report was the company law commission of Pakistan
10. At least in 1984 Pakistan has developed its own complete law for their cos in the form of
company ordinance 1984
Constituents of the company ordinance 1984:
It consist of 514 sections and 8 schedules
The 514 sections have been divided into 16 parts and are as follows.
1) Preliminary
2) Jurisdiction of the court
3) Corporate law authority
4) In corporation of the company and their matters
5) Prospectus. Allotments. Issue and transfer of shares and debentures
6) Share capital
7) Registration of mortgages etc
8) Management and administration
9) Arbitration. arrangements and constitutions
10) Prevention of mismanagement
11) Winding up
12) Application of ordinance of cos formed and registered under any previous act.
13) Winding up of unregistered cos
14) Companies established outside Pakistan
15) Registration offices and fees etc
16) General

Eight schedules:
1. Regulation of a Cos ltd by shares
Memorandum of association
Article of association
2. Matters to be specified by prospectus. rules and regulations
3. Form and context of annual return report.
4. Balance sheet and profit and lost account of listed cos
5. Balance sheet and profit and lost account of non-listed companies
6. Fees to be paid to the registrar. Authority. And federal Govt
7. The detail of enactment (to give a practical shape)
8. Amendments
PROCEDURE FOR FORMING A COMPANY
Promotion stage:
The idea of forming a company must be conceived by a person who is called promoter
He is expert in forming a company work
He is to prepare necessary documents in order to get incorporation certificate from the registrar
of joint stock cos
There are two types of promoters
1. Professional promoter
When starting a company so they contact with professional promote because they are
experts in company creation and charges fees/commission
2. General promoter
Minimum 7 members combine and want to start a business and submit their application
to the registrar called general promoter
Promoters duties or promoters characteristics:
Idea for business
Investigation (raw material. Demand)
Selection of first directors (90% of promoters are BODs)
Selection of legal advisor (lawyer) auditors and banks like investment bank

Three main function of investment bank is
1. Underwriting facility
The facilities extended by the investment bankers to the issue of securities, assuring them
that they will get an expected amount to be paid by the purchaser of the securities.
Two types of underwriting facilities we have. i.e.
a. Best offer
Here the underwriting firms take the commission they try their level best to flowed
the company shares and also advertise
Here Risk is beard by company
b. Firm commitment.
Here the underwriter makes full payments and purchase all the sharesRisk is totally
beard by underwriting i.e. investment bank
2. Investment advices:
It simply means to provide advices to banks, govt etc and also to the small businesses.
3. Mergers and acquisition:
The process in which one of the combining companies loses its separate identity and the
assets and liabilities of the loosing company become a part of the surviving company
mergers. Acquisition: cant lose its separate legal identity and take the liabilities and
assets of the company in their sharing amount.
Promote all the necessary documents (prospectus, memorandum)

Submition of the documents
To meet all the preliminary expenses
To collect the share capital
4. Incorporation stage:
To get the certificate of incorporation from the registrar of joint stock company. The
promoters must submit the following necessary documents to the registrar.
1.
2.
3.
4.
5.
6.
memorandum of association
articles of association
notice of the address of the head office
list of directors
consents in writing of directors
directors contract to purchase qualification shares(directors have to purchase)

7. statutory declaration of legal documents of incorporation
* Here are two more steps involve in case of public ltd company i.e.
5. Raising of share Capital (public)
After the incorporation of a public company, the director will file a copy of prospectus
with the registrar, to offer investors, that they shall submit their application along with the
application money with the company bankers.
6. Certificate of commencement of business (public)
This certificate will be issued by registrar, if the following documents are submitted to
him.
Declaration by the company that the minimum subscription as per prospectus has
been received in cash
Declaration by the company that all the directors have taken up their qualification
shares and paid for them.
Declaration by the company that all legal requirements to the commencement of
business have been fulfilled.
Private company
Public company
Members 2-10
7-
Cannot issue share to public
Raising of share capital
Cannot trade in stock exchange
Easily trade in stock exchange
Basic legal documents:

a) Memorandum of association (companys charter)
It is the basic document on which the whole superstructure of the company is based. It is
also called the constituents of the co. 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.
2.
3.
4.
5.
6.
Name clause
Situation clause
Object clause (objectives of company)
Liability clause (limited up to their investment)
Capital clause
Subscription clause (integral part of capital clause)
Let us know brief at types of capital.

Authorized capital: nominal or registered capital with which company is registered with
registrar.
Issued capital: amount of shares actually issued.
Subscribed capital: actually apply by public for shares.
Paid up capital: shares actually purchased (in accounting it is called as Realization of cash)
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.

Doctrine of ultra-vires:
An act performed but not authorized by the object clause of memorandum of association or by
statute is called ultra-vires (unlawful activities)
1. Ultra-vires the memorandum: the act which ultra-vires the memorandum, the memorandum
become void.
2. Ultra-vires the articles: the act which ultra-vires the articles , the article become void
3. Ultra-vires directors: the act which is beyond the capacity of board of directors, such acts
may be breach of articles so the Co in annual general meeting may ratify such an
unauthorized act of directors by passing an ordinary resolution.
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.
Article of association:
It is also known as supplementary or secondary document of the co. 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 shares
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).
Note: forfeiter- to possessed someone else assets.
Quorum- number of person for conducting meeting, its 1/3 of directors,
Memorandum of association
1. Memorandum is a fundamental document.

2. The memorandum lay down the objects of
the company.
3. Memorandum indicates the scope of affairs
of company.
4. Memorandum is the dominant instrument.
5. If memorandum is silent on a point.
6. If memorandum is clear on a point.
Article of association
1. Article is a supplementary document.

2. Article lay down the manner in which the
object is to be fulfilled.
3. Article indicates how the business is to be
carried out
4. If any part of article conflict with it, such part
of article is to be deemed as void.
5. Article explains that point.
6. Then there is no need that the article
supplements that memorandum.
Procedure for alteration of article of association

The following procedure must be followed while altering the articles.
A. Instruct the companys 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 atleast 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 companys article.

Note. EOGM- a meeting of shareholders in case of sudden change or emergency.
Draft-a legal written document must be prepared by companys legal adviser (lawyer)
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:
1) The contents of memorandum with the name, address, occupation and description of the
person whos names (there in memorandum), the nature and the extent of interests of the
shareholders in the profit and property of the Company.
2) Description of business to be undertaken
3) Description regarding remuneration of the directors or chief executive officer
4) The names, address, occupation and description of the important office bearers of the
company.
5) Where shares are offered to the public for subscription, information regarding minimum
subscription, preliminary expenses payable and underwriting commission payable etc.
6) The date and time of opening and closing subscription list
7) The names of the underwriters and directors opinion about them that their resources are
sufficient to fulfill their obligation
8) The names, addresses, description and occupation of the company vendors and the
amount paid or payable to them.
9) The estimated amount of preliminary expenses paid or payable by the company
10) Any amount paid to the promoters in previous two years.
11) The names and addresses of auditors and legal advisors.
12) The right of voting of meeting and dividend attached to shares.
13) The length of time during which the business of the company has been carried on.
14) A reasonable time and place for the inspection of balance sheet and income statement.
15) A summery in column from the earnings of the company for each 3 financial years.
16) Pending legal proceedings to which the Company is a party.

Liabilities arising from mis-statement in a prospectus
1. Civil liability
He who is the director at the time of issue of prospectus, he who has authorized the issue
of prospectus, he who is the promoters of the company, shall be liable to pay
compensation to all those person who has subscribed to the shares and suffered from misstatement.
2. Criminal liability
Where a prospectus includes any untrue statement, every person who signed or
authorized the issue of prospectus shall be punishable with imprisonment which may
extend to 2years or with a fine which may extend to RS 10000 or with both.
Statement in lieu (instead of) prospectus:
A company having a share-capital which does not issue a prospectus, so that has been delivered
to the registrar for registration a statement in lieu of prospectus signed by every person who s
name their in as a director at least 3days before the first allotment.
Jurisdiction of the company courts
It is provided that court having jurisdictions under the company ordinance 1984, shall be the high
court, having jurisdiction at a place at which the registered office of the company is situated , the
central Govt may empower any district court to exercise all or any of the jurisdictions.
Company Benches
There shall be benches in each high court , one or more benches , each to be known as company
bench , to be constituted by the chief justice of high court, to exercise the jurisdictions under the
company ordinance 1984.
Procedure of the company court:
I.
All matters coming before court under the company ordinance shall be disposed of
(solved) and the judgment pronounced as soon as possible but not later than 90days form
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.
Corporate Law Authority (SECP)
It is constituted under section 11 of the company ordinance 1984. The federal Govt is
empowered to constitute the CLA. The authority must consist such number of members not
being less than 3 to be appointed by the Govt, one of the member is to be appointed as chairman
of the authority by the federal Govt.

Power and functions of Authority (company law authority)
1. Issues orders and instructions to all persons and officers in the execution of ordinance.
2. Confirm alteration to memorandum
3. Extend time for filing documents with the registrar.
4. Grant license and allowing an association to enjoy all the rights of a limited company
without using the word limited
5. Allow a public company to convert itself into a private Company.
6. For special reasons allow a prospectus to be issued more than 30days before the
subscription list is due to open.
7. Specify the form of application for r subscription to shares or debentures.
8. Permit a company to withhold or delay payment of dividend in certain cases.
9. Allow extending of time for holding annual general meeting and filing a document by the
listed company up to 90days.
Share certificate:
It is a document issued under the common seal of the company and contains
1. Name and address of the holders
2. Name of shares held by them
3. Their distinctive numbers
4. Paid of amount.
Register of members:
It contains:
a) The name, father/husbands name, address, nationality and occupation
b) Statement of shares held by each member, their distinctive numbers, paid up amount.
c) The date at which any person was entered as a member of the CO.
d) The date at which any person was ceased to be a member and reasons of ceasing.
Rights of members:
1. Inspect register of members and debenture holders.
2. In case of public ltd company, they will receive a statutory report.
3. have copies of memorandum and articles on payment of fee
4. receive share certificate with in prescribed time
5. transfers of shares
6. Receive minutes of the proceedings of general meeting.
7. Remove directors.
8. Receive copies of annual accounts.
9. Appoint auditors at general meeting.
10. Inspect auditors report at general meeting.
11. Resolve by special resolution that the company may be wound up by the court.
12. Resolve by special resolution that the company may be wound up voluntarily.
13. Appoint and fix remuneration of liquidators.
14. attend meetings and vote at meeting

15. Approved dividend as recommended by the directors.
16. Have a share in the capital of a company.
Liabilities of shareholders:
Where a company is limited by shares, the liability of shareholders is limited to amount, if any
unpaid on shares held by him. This liability is continuous as long as anything remains unpaid on
shares.
Commission on issue of shares:
It shall be lawful for a company to pay commission to any person in consideration of his
subscribing either absolutely or unconditionally for any shares in the company if:
1. The payment of the commission is authorized by article of association.
2. The commission paid should not exceed the rate fixed by the authority.
3. The amount and rate must be disclosed in prospectus, if issued by the Co.
4. Where a prospectus is not issued, the amount and rate must be disclosed in a statement in
lien of a prospectus.
5. The number of shares for which the persons have agreed to subscribe absolutely for a
commission is disclosed in a specified manner.
Premium on issue of shares
Where a company issues shares on premium, the values of premiums shall be transferred to an
account called the share premium account. This account may be applied by the company as
under.
1. In writing-off the preliminary expenses of a Co.
2. In writing-off the expenses of commission and discount on issue of shares and
debentures.
3. To pay premium on redeemable preference shares or debentures.
4. In paying up un-issued shares of the company as fully bonus shares.
Issue of shares at a discount
It shall be lawful for a company to issue shares at discount if:
1. It must be authorized by a resolution passed at general meeting and sanctioned by the
authority.
2. The resolution must specify the maximum rate of discount not exceed than 10% or higher
rate fixed by the authority.
3. Not less than any year must at the date of issue have elapsed since that date on which the
company was entitled to commence its business.
4. The shares are to be issued at a discount must be issued within 60days after the date on
which the issue is sanctioned by the authority.
Capital structure

The combination of debt and equity financing in the capital of a company is called capital
structure.
While a particular amount of money with which the business is started is share capital.
Kinds of preference share
1. Simple preference share
They are usually entitled to receive fixed dividend before any dividend is pairs on the
ordinary shares. If there are no profits in the year then there is no dividend for the simple
preference shares
2. Cumulative preference share
If in any year the profits are not enough, their right to dividend does not lapse, but carried
so that when the company makes the profits in the subsequent year it must first pay off
the arrears of dividend before paying dividend to other kind of shareholders.
3. Cumulative participating preference share
These shareholders is not only entitled to receive arrears of dividend but are entitled to
share with the ordinary shareholders , the balance of profit in some proportions after the
right of ordinary shareholders have been met.
4. Redeemable preference shares
Normally shares of company are not redeemable they can be redeemed only when the
company goes into liquidation however, the law in section 85 of the ordinance 1984 has
provided for the redemption of redeemable preference shares during the lifetime of the
company.
5. Deferred/mgt share/founder shares
These shares are normally issued to the company promoters or founders of the company
or the underwriter of the share capital, these shares receive no dividend until the dividend
on all other classes of shares has paid in full.
Company directors:
Directors includes any person occupying a position of a director, the position of a director by
whatever name called every private company must not less than two directors and every public

company not less than 7 directors .
Directors having power to issue shares.
First directors are appointed by promoters
A company cant make loan to its directors.
Directors as an agent
The director may make contracts as agent of the company if the contract made by a director
ultra-vires his power made with a member is only voidable but if made with an outsider who had
no notice of the wants of his power, it is binding on the company.
Director as trusty
Directors are trustee regarding the power conferred on them by the articles and the capital under
their control. They are not persons in the employment of the company. They are trustee for the
company and not for the individual shareholders they are not trustee for third party who have
made contract with the company they are also trustee for the company in respect of their power
of approving transfer of shares, issuing and allotment of shares as well as making calls and
forfeiting of shares.
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
Power of directors
To make calls on shareholders in respect of money unpaid on their shares.
To issue shares.
To issue debentures.
To borrow money otherwise then on debentures.
To invest the funds of the company.
To make loans.
To approve annual, semiannual, or periodical accounts as are required to be circulated to
the members.
To incur capital expenditure exceeding Rupees 2 lac on any single item or dispose of a
fixed asset of value exceeding rupees 1 lac.

Companies Ordinance:
The Companies Ordinance 1984
Types of business organization
Sole Trader
Partnership
Company
WHAT IS A COMPANY?
DEFINITION:
A Company is an association of persons united for a common purpose. According to the
Companies Ordinance, 1984, Company means a company formed and registered under the
Companies Ordinance.
Kinds of Companies:
Companies formed under the Companies Ordinance, 1984 are of three kinds, namely:
a) Companies limited by Shares
b) Companies limited by Guarantee
c) Unlimited Companies
Company limited by Shares:
A Company in which the liability of the members is limited to the nominal value of the shares
(s.16). When the liability of the Company is limited by shares it means that no member can be
called upon to pay more than the nominal amount of his shares
Company limited by Guarantee:
A company in which the liability of the members is limited to the amount which each has
undertaken, by the Memorandum of Association, to contribute to the assets of the company in the
event of a winding-up (s.17)

Statutory Companies:
The Companies which are incorporated by a special act of legislative or under an ordinance are
named as statutory companies. For Instance, State Bank of Pakistan, National Bank of Pakistan,
PICIC (Pakistan Industrial & Credit Investment Corporation), and Pakistan Steel etc. l the
companies under the special act of legislative have been mostly invested with special powers. l
They also enjoy special rights and privileges which are not available to companies incorporated
under the companies ordinance 1984.
Registered Companies
A company which is formed and registered under the companys ordinance 1984 is known as a
registered company. The companys ordinance provides registration of following four (04) types
of companies.
Company limited by shares
Company limited by guarantee
An unlimited company
Association not for profit
Company Limited by shares
It is the company which keeps the liability of its members limited up to the value of the shares
purchased by them. It is essential for such companies to use the word Limited at the end their
names.
Functional Division of Companies
Private Companies
Public Companies
Company Limited by shares
Private Companies
A private company is an association of minimum two and maximum fifty shareholders. It
restricts the rights of its members to transfer their shares in the company. It also prohibits any
invitation to the public to subscribe to its share or debentures.
Public Companies
A public company must have at least seven shareholders, but there is no limit to the maximum
number. Public company issues a prospectus for inviting people to purchase its shares. The
shares of a public company are freely sold and purchased in the stock market.
Company Limited by guarantee:
It is the company in which the liability of its members is limited up to the amounts guaranteed by
each member at the time of winding up the company. This type of company is formed mostly for
taking non business operations such as clubs and charitable institutions, the examples are stock

exchanges, arts councils, ICAP or ICMA etc.
Unlimited Company:
Unlimited company is registered without any limit on the liability of their members. Every
member of the company is liable to the full extent of his personal asset for all the debt of a
company while he was a member. The unlimited company, due to great risk does not exist in
Pakistan.
Association Not for Profit:
It is registered under section 42 of the companys ordinance without the addition of the word
Limited to its name, it is registered with limited liability.
The association enjoys all the privileges and obligations of a limited company. It is formed for
promoting commerce, arts, science, religion, charity or any other object.
The Federal Government grants license to the association that is capable of being formed as a
company.
CLASSIFICATION ON THE BASIS OF OWNERSHIP:
Holding Company
Subsidiary Company
Holding Company
A company is said to be the holding company of the other, if it owns or holds more than 50% of
the share capital of the other company, or it has control of more than 50% of its directors.
Subsidiary Company:
A company is said to be the subsidiary of the other company when one of the following
conditions are fulfilled.
1. Formation of Board of Directors is controlled by another company.
2. The other company controls more than half of the voting rights of this company.
3. The other company owns more than 50% share capital of this company.
STEPS REQUIRED IN REGISTRATION OF A COMPANY:
Getting Promoters Together: Those who form the company are known as promoters who
must get together to work out the skeleton of the company.
Appointment of Advisor: Promoters appoint legal advisors who under the guidance and
instructions of promoters prepare memorandum and articles of association, prospectus,
and deal with the office of the registrar of the company.
Preparation of company documents: The companies ordnance requires preparation of following

documents before the company applies for registration
1. Memorandum of Association
2. Article of association
3. Prospectus
Submitting application with the registrar: An application for registration is submitted along with
the registration fee through the registrar of the company with attachment of following
documents.
1.
2.
3.
4.
5.
Memorandum of Association
Articles of association
Prospectus
List of names and addresses of directors
Signed statement of directors or the secretary that all the required legal formalities have
been completed.
Declaration of qualifying shares:

All the directors, have to submit a declaration certificate that they have taken up qualifying
shares and have paid up the money Issuance of Registration Certificate: On the issuance of
registration certificate by registrar, private company can start its business immediately, while
public company cannot until it gets another certificate known as Commencement Certificate
Publication of Prospectus:
On the receipt of the registration certificate the company issues prospectus which is an invitation
to the public to buy shares of the company.
Commencement Certificate:
After raising capital through prospectus, the company applies for the commencement certificate.
After obtaining this certificate the public can start its actual operation
BASIC LEGAL DOCUMENTATION:
Memorandum of Association
Articles of Association
Prospectus
Memorandum of Association:
It is a document issued by a company for the guidance of general public
It is known as the charter of the company which explains to the public name, address,
capital, objectives and liability of the company.
It defines its limitation and powers and guides shareholders and creditors of the company.
It is divided in to five clauses

CLAUSES OF MEMORANDUM:
Name Clause:
A company may adopt any name but it should not resemble the name of any other company and
should not contain the words like king, queen, govt. bodies, UNO etc. The name should not be
objectionable in the opinion of the government. The word limited must follow the name of the
company in case of Public company, while (private) limited must follow with the name of
company in case of Private company
Domicile (Situation) Clause
Every company must have a registered office, a memorandum must mention the name of the
province and exact address where the company has its registered office
Objective Clause:
A company must specifically, expressly and clearly mention its objectives for which it has been
formed.
Capital Clause:
This clause mention the authorize capital of the company; the companys subscribed, called up,
and paid up capital should not exceed it.
Liability Clause
This clause shows that the liability of the shareholders of the company is limited to the amount
invested by them.
CONTENTS OF ARTICLES
Amount of share capital issued, transmission of share

Rights of shareholder regarding voting, dividend, return of capital
Rules regarding issue of shares and debentures
Procedures as well as regulations in respect of making calls on shares
Manner of transfer of shares
Rules regarding appointment of directors, managing directors, agents, secretaries,
treasures
Number, qualification, remuneration, powers and liabilities of directors
Declaration of dividends
Convening and conduct of meetings with reference to notice, forum, polls, proxy,
resolutions etc
Rules regarding the forfeiture and surrender of shares
Matters relating account and audit

Rules regarding winding up of a company
Prospectus:
It is an invitation, advertisement or circular asking people to invest and subscribe in the
share capital or debenture of the company.
For a private company prospectus is not required, even for a public company it is not
compulsory.
If a public company does not want to issue prospectus, it must, then file a statement in
lieu of prospectus with the registrar.
The prospectus must be signed by at least two directors.
In prospectus the detail description regarding the establishment of the company.
STATEMENT IN LIEU OF PROSPECTUS:
According to company ordinance, if a public company is not issuing a prospectus on its
formation, it then must file a statement in lieu of prospectus with the registrar of the company
three days before the allotment of shares of debentures
Must be signed by each director and include all the information that should be given in the
prospectus.
MANAGEMENT OF THE COMPANY
Shareholders
Directors
Chief Executive
COMPANY MEETINGS:
A public company is required to call a meeting with shareholders with certain agenda to be
discussed there and to get their vote on important affairs. It is the first meeting of the members of
a public limited company. Statutory meeting must be held at least after three month and before
six months since the registration of the company.
Notice of the meeting:
A notice of the statutory meeting to the shareholders must be issued at least 21 days before the
meeting.
Issue of Report:
Statutory report must also be issued at last 21 days before the meeting is held, and it must be
signed by at least three directors, one being the chief executive.
Nature of proceedings of the Meeting:
In the meeting following proceedings take place: a. name, address, nationality, profession of all

members (shareholders). b. the member present at the meeting have the right to discuss any
matter relating to the formation of the company or arising out of the statutory report. Every
public company must hold a general meeting of its members within eighteen months from the
date of formation and within fifteen months every year after first meeting.
Labor Law Pakistan:
The Constitution of Pakistan contains a range of provisions with regards to labor rights found in
Part II: Fundamental Rights and Principles of Policy
Article 11 of the Constitution prohibits all forms of slavery, forced labor and child labor;
Article 17 provides for a fundamental right to exercise the freedom of association and the
right to form unions;
Article 18 proscribes the right of its citizens to enter upon any lawful profession or
occupation and to conduct any lawful trade or business;
Article 25 lays down the right to equality before the law and prohibition of discrimination
on the grounds of sex alone;
Article 37(e) makes provision for securing just and humane conditions of work, ensuring
that children and women are not employed in vocations unsuited to their age or sex, and
for maternity benefits for women in employment.
Labor Legislation:
Pakistans labor laws trace their origination to legislation inherited from India at the time of
partition of the Indo-Pak subcontinent. The laws have evolved through a continuous process of
trial to meet the socio-economic conditions, state of industrial development, population and labor
force explosion, growth of trade unions, level of literacy, Governments commitment to
development and social welfare. To meet the above named objectives, the government of the
Islamic Republic of Pakistan has introduced a number of labor policies, since its independence to
mirror the shifts in governance from martial law to democratic governance.
Under the Constitution labor is regarded as a concurrent subject, which means that it is the
responsibility of both the Federal and Provincial Governments. However, for the sake of
uniformity, laws are enacted by the Federal Government, stipulating that Provincial
Governments may make rules and regulations of their own according to the conditions prevailing
in or for the specific requirements of the Provinces. The total labor force of Pakistan is
comprised of approximately 37.15 million people, with 47% within the agriculture sector,
10.50% in the manufacturing & mining sector and remaining 42.50% in various other
professions.
Contract of Employment:
While Article 18 of the Constitution affords every citizen with the right to enter upon any lawful
profession or occupation, and to conduct any lawful trade or business, the Industrial and

Commercial Employment (Standing Orders) Ordinance was enacted in 1968 to address the
relationship between employer and employee and the contract of employment. The Ordinance
applies to all industrial and commercial establishments throughout the country employing 20 or
more workers and provides for security of employment. In the case of workers in other
establishments, domestic servants, farm workers or casual labor engaged by contractors, their
labor contracts are generally unwritten and can be enforced through the courts on the basis of
oral evidence or past practice.
Every employer in an industrial or commercial establishment is required to issue a formal
appointment letter at the time of employment of each worker. The obligatory contents of each
labor contract, if written, are confined to the main terms and conditions of employment, namely
nature and tenure of appointment, pay allowances and other fringe benefits admissible, terms and
conditions of appointment.
Termination of the Contract:
The services of a permanent worker cannot be terminated for any reason other than misconduct
unless one months notice or wages in lieu thereof has been furnished by the employer or by the
worker if he or she so chooses to leave his or her service. One months wages are calculated on
the basis of the average wage earned during the last three months of service. Other categories of
workers are not entitled to notice or pay in lieu of notice.
All terminations of service in any form must be documented in writing stating the reasons for
such an act. If a worker is aggrieved by an order of termination he or she may proceed under
Section 46 of the Industrial Relations Ordinance 2002, aimed at regulating the labor management
relations in the country, and bring his or her grievance to the attention of his or her employer, in
writing, either him or herself, through the shop steward or through his or her trade union within
three months of the occurrence of the cause of action. Forms of termination have been described
as removed, retrenched, discharged or dismissed from service. To safeguard against any colorful
exercise of power, victimization or unfair labor practices, the Labor Courts have been given
powers to examine and intervene to find out whether there has been a violation of the principles
of natural justice and whether any action by the employer was confide or unjust.
Working Time and Rest Time:
Working hours:
Under the Factories Act, 1934 no adult employee, defined as a worker who has completed his
or her 18th year of age, can be required or permitted to work in any establishment in excess
of nine hours a day and 48 hours a week. Similarly, no young person, under the age of 18,
can be required or permitted to work in excess of seven hours a day and 42 hours a week.
The Factories Act, which governs the conditions of work of industrial labor, applies to

factories, employing ten or more workers. The Provincial Governments are further
empowered to extend the provisions of the Act, to even five workers.
Where the factory is a seasonal one, an adult worker shall work no more than fifty hours in
any week and no more than ten hours in any day. A seasonal factory, per section 4 of the
Factories Act is that which is exclusively engaged in one or more of the following
manufacturing processes, namely, cotton ginning, cotton or cotton jute pressing, the
manufacture of coffee, indigo, rubber, sugar or tea. However, if such adult worker in a
factory is engaged in work, which for technical reasons must be continuous throughout the
day, the adult worker may work no more than fifty-six hours in any week.
Section 8 of the West Pakistan Shops and Establishments Ordinance, 1969 likewise, restricts
weekly work hours at 48 hours. The Shops and Establishments Ordinance regulates persons
employed in shops and commercial establishments, who are neither covered by the Factories
Act nor by the Mines Act. The Ordinance is exclusive in the whole of Pakistan except for the
Federally Administered Tribal Areas. Section 22-B of the Mines Act, 1923 also fixes weekly
hours of work for workers at 48 hours or 8 hours each day, with the limitation of spread-over
12 hours and interval for rest for one hour every six hours. Section 22-C further limits the
spread over to 8 hours for work done below ground level.
In factories, the periods and hours of work for all classes of workers in each shift must be
notified and posted in a prominent place in the principal language in the industrial or
commercial establishment. The law further provides that no worker shall be required to work
continuously for more than six hours, unless he or she has had an interval for rest or meals of
at least one hour. During Ramadan (fasting month), special reduced working hours are
observed in manufacturing, commercial and service organizations.
Paid Leave:
As provided in the Factories Act, 1934, every worker who has completed a period of twelve
months continuous service in a factory shall be allowed, during the subsequent period of
twelve months, holidays for a period of fourteen consecutive days. If a worker fails in any
one such period of twelve months to take the whole of the holidays allowed to him or her,
any holidays not taken by him or her shall be added to the holidays allotted to him or her in
the succeeding period of twelve months.
A worker shall be deemed to have completed a period of twelve months continuous service in
a factory notwithstanding any interruption in service during those twelve months brought
about by sickness, accident or authorized leave not exceeding ninety days in the aggregate
for all three, or by a lock-out, or by a strike which is not an illegal strike, or by intermittent
periods of involuntary unemployment not exceeding thirty days in the aggregate; and
authorized leave shall be deemed not to include any weekly holiday allowed under section 35
which occurs at beginning or end of an interruption brought about by the leave.
Maternity Leave and Maternity Protection:

While article 37 of the Constitution makes reference to maternity benefits for women in
employment, there are two central enactments, one federal and the other provincial providing
maternity benefits to women employed in certain occupations. The Maternity Benefit
Ordinance, 1958 stipulates that upon the completion of four months employment or
qualifying period, a worker may have up to six weeks prenatal and postnatal leave during
which she is paid a salary drawn on the basis of her last pay. The Ordinance is applicable to
all industrial and commercial establishments employing women excluding the tribal areas. It
also places restrictions on the dismissal of the woman during her maternity leave. Similarly,
the Mines Maternity Benefit Act, 1941 is applicable to women employed in the mines in
Pakistan.
Other Leave Entitlements

In addition to the 14 days of annual leave with pay, the Factories Act, 1934 provides that
every worker is entitled to 10 days casual leave with full pay and further 16 days sick or
medical leave on half pay. Casual leave is granted upon contingent situations such as sudden
illness or any other urgent purpose. It should be obtained on prior application unless the
urgency prevents the making of such application. As a customary practice, causal leave is
approved in most cases. Sick leave, on the other hand, may be availed of on support of a
medical certificate. Management should not refuse the leave asked for if it is supported by a
medical certificate.
In addition to the leave entitlements, workers enjoy festival holidays as declared by the
Federal Government. The Provincial Government under section 49 of the Factories Act,
1934, states all festival holidays, approximately 13 or as further declared, in the Official
Gazette. Additionally, every worker is entitled to enjoy all such holidays with pay on all days
declared and notified by the Provincial Government. If however, a worker is required to work
on any festival holiday, one day's additional compensatory holiday with full pay and a
substitute holiday shall be awarded. Under agreements made with the Collective Bargaining
Agent, employees who proceed on pilgrimage i.e., Hajj, Umra, Ziarat, are granted special
leave up to 60 days
.
Minimum Age and Protection of Young Workers
Article 11(3) of Pakistans Constitution expressly prohibits the employment of children below
the age of fourteen years in any factory, mine or other hazardous employment. In addition, the
Constitution makes it a Principle of Policy of the State of Pakistan to protect the child, to remove
illiteracy and provide free and compulsory education within the minimum possible period and to

make provision for securing just and human conditions of work, ensuring that children and
women are not employed in vocations unsuited to their age or sex.
The Factories Act, 1934 allows for the employment of children between the ages of 14 and 18
years provided that each adolescent obtains a certificate of fitness from a certifying surgeon. A
certifying surgeon, per section 52 of the Act, shall on the application of any child or adolescent
who wishes to work in a factory, or, of the parent or guardian of such person, or of the factory in
which such person wishes to work, examine such person and ascertain his or her fitness for such
work.
The Act further restricts the employment of a child in a factory to five hours in a day. The hours
of work of a child should thus be arranged in such a way that they are not spread over more than
seven-and-a-half hours in any day. In addition, no child or adolescent is allowed to work in a
factory between 7 p.m. and 6 a.m. The Provincial Government may, by notification in the
Official Gazette in respect of any class or classes of factories and for the whole year or any part
of it, vary these limits to any span of thirteen hours between 5 a.m. and 7.30 p.m. Moreover, no
child is permitted to work in any factory on any day on in which he or she has already been
working in another factory.
Factories are further required to display and correctly maintain in every factory a Notice of
Periods for Work for Children, indicating clearly the periods within which children may be
required to work. The manager of every factory in which children are employed is compelled to
maintain a Register of Child Workers identifying the name and age of each child worker in the
factory, the nature of his or her work, the group, if any, in which he or she is included, where his
or her group works on shifts, the relay to which he or she is allotted, the number of his or her
certificate of fitness granted under section 52, and any such other particulars as may be
prescribed.
The provisions of the Factories Act, 1934 are cited in addition to, and not in derogation of the
provisions of the Employment of Children Rules, 1995. The Employment of Children Rules
extends to the whole of Pakistan with the exception of the State of Azad Jammu and Kashmir
and delimits finite labor conditions afforded for the protection of minors. Rule 6 insists on
cleanliness in the place of work. No rubbish, filth or debris shall be allowed to accumulate or to
remain in any part of the establishment and proper arrangements shall be made for maintaining
in a reasonable clean and drained condition for the workers of the establishment.
Rule 7 further calls for proper ventilation in work places where injurious, poisonous or
asphyxiating gases, dust or other impurities are evolved from any process carried on, in such
establishment. As long as workers are present in an establishment, the latrines, passages, stairs,
hoists, ground and all other parts of the establishment in so far as the entrance of the said places

is not closed, must be lighted in such manner that safety is fully secured. In addition, in every
establishment an arrangement of drinking water for child and adolescent workers is to be
provided free of charge. All shafts, couplings, collars, clutches, toothed wheels, pulleys, driving
straps, chains projecting set screws, keys, nuts and belts on revolving parts, employed in the
establishment, shall be securely fenced if in motion and within reach of a child worker and
further may not be operated by a child worker.
Under the Employment of Children Rules, anyone who employs a child or permits a child to
work in contravention of the Constitution is punishable by imprisonment for a term extending up
to one year or may be fined up to Rs. 20,000 or subject to both. Repetition of the offense is
punishable by imprisonment for a term extending up to two years and shall not be less than six
months.
Equality:
Article 38 of the Constitution imparts the States obligations aimed at achieving equality in the
form of securing the well-being of the people, irrespective of sex, caste, creed or race, by raising
their standard of living, by preventing the concentration of wealth and means of production and
distribution in the hands of a few to the detriment of general interest and by ensuring equitable
adjustment of rights between employers and employees, and landlords and tenants. All citizens
are bestowed, within the available resources of the country, facilities for work and adequate
livelihood with reasonable rest and leisure and the basic necessities of life, such as food,
clothing, housing, education and medical relief, for all such citizens, irrespective again of their
sex, caste, creed or race, as are permanently or temporarily unable to earn their livelihood on
account of infirmity, sickness or unemployment.
Pay Issues:
Wages are construed as the total remuneration payable to an employed person on the fulfillment
of his or her contract of employment. It includes bonuses and any sum payable for want of a
proper notice of discharge, but excludes the value of accommodations i.e., supply of light, water,
medical attendance or other amenities excluded by the Provincial Government; the employers
contribution to a pension or provident fund, traveling allowance or concession or other special
expenses entailed by the nature of his or her employment; and any gratuity payable on discharge.
The Payment of Wages Act, 1936, regulates the payment of wages to certain classes of industrial
workers. It applies to those workers whose monthly wages do not exceed Rs. 3,000 (51.68 US$)
and are employed in factories, railways, plantations, workshops and establishments of
contractors. The main object is to regulate the payment of wages to certain classes of persons
employed in industry. The provisions of the Act can, however, be extended to other classes of
workers by the Provincial Governments after giving three months notice to the employers of
their intention to do so. The Act stipulates that wages to workers employed in factories and on
railways are to be paid within seven days of completion of the wages period, if the number of

workers employed therein is less than 1,000. In other cases, the time limit for payment of wages
to the workers is 10 days. No deduction can be made from the wages of the workers excepts as
specified in the Act, such as for fines, breach of contract and the cost of damage or loss incurred
to the factory in any way other than an accident.
The employer is responsible for the payment of all wages required to be paid to persons
employed by him or her. Similarly any contractor employing persons in an industry is
responsible for payment of wages to the persons he or she employs. The persons responsible for
payment of wages must fix wage periods not exceeding one month. Wages should be paid on a
working day within seven days of the end of the wage period, or within ten days if 1,000 or more
persons are employed. The wages of a person discharged should be paid not later than the second
working day after his or her discharge.
Workers' Representation in the Enterprise:
Until the adoption, on 29 October 2002, of the Industrial Relations Ordinance, 2002 (IRO 2002),
which repealed the Industrial Relations Ordinance, 1969, Pakistan had a three-pronged system of
participation in management (i.e., the Works Council, the Management Committee and the Joint
Management Board), independent of each other and each having its own sphere of activities.
The new text simplifies the system, introducing a single body in place of the three previous ones:
the Joint Works Council (Article 24 of the IRO 2002). A Joint Works Council must be set up in
any establishment employing fifty persons or more. It consists of no more than ten members,
forty per cent of which are workers representatives. In the previous system, the Management
Committee and the Works Council were composed of an equal number of representatives of the
employer and workers, whereas the Joint Management Board had a workers participation of 30
per cent. The Convener of the joint Works Council is from the management.
The Joint Works Council deals with matters, which were of the competency of the earlier Joint
Management Board, such as the improvement in production, productivity and efficiency,
provision of minimum facilities for those of the workers employed through contractors who are
not covered by the laws relating to welfare of workers. It has also taken up tasks of the previous
Works Council, i.e. promoting settlement of differences through bilateral negotiations, promoting
conditions of safety and health for the workers, encouraging vocational training within the
establishment, taking measures for facilitating good and harmonious working conditions in the
establishment, provision of educational facilities for children of workers.

Trade Union and Employers Association Regulation
Freedom of association:
The right to association is guaranteed by Article 17 of the Pakistani Constitution imparting on
every citizen the right to form associations or unions, subject to any reasonable restrictions
imposed by law in the interest of sovereignty or integrity of Pakistan, public order or morality.
Under Article 3 of the IRO 2002, workers as well as employers in any establishment or industry
have the right to establish and to join associations of their own choosing, subject to respect of the
law. Both workers and employers organizations have the right to establish and join federations
and confederations and any such organization, federation and confederation shall have the right
to affiliate with international organizations and confederations of workers' and employers'
organizations.
Registration of trade unions
Registration of a trade union is to be made under the Industrial Relations Ordinance. Workers
trade unions are registered with the Registrar Trade Unions in the Province, and if the industry or
establishment is nationwide with the National Industrial Relations Commission, after fulfilling a
number of requirements, listed in Article 6 of the IRO 2002. Through its registration, the trade
union obtains certain benefits: registration confers a legal existence as an entity separate from its
members. Trade unions in Pakistan generally function on plant-wide basis, with their
membership contingent on the size of the industry/trade to which they belong. Once established,
the trade unions and employers' associations have the right to draw up their constitutions and
rules, to elect their representatives in full freedom, to organize their administration and activities
and to formulate their programed.
Collective Bargaining and Agreements
To determine the representative character of the trade union in industrial disputes and to obtain
representation on committees, boards and commissions, the Industrial Relations Ordinance
makes provision for the appointment of a Collective Bargaining Agent (CBA). The CBA is a
registered trade union elected by secret ballot. The CBA is entitled to undertake collective
bargaining with the employer or employers on matters connected with employment, nonemployment, the terms of employment or any right guaranteed or secured to it or any worker by
or under any law, or any award or settlement .
Collective agreements are thus formulated by the CBA. The agreements may contain matters
such as the facilities in the establishment for trade union activities and procedures for settling
collective disputes including grievances and disciplinary procedures. Substantive provisions
settle terms and conditions of employment, wages and salaries, hours of work, holiday
entitlement and pay, level of performance, job grading, lay-offs, retrenchment, sick pay, and
pension and retirement schemes. Such agreements once duly executed by both parties become

the source of law. The agreements should invariably be in writing and should be drafted with
care, for they are meant to settle disputes rather than raise them.
In addition to statutory benefits under the labor laws, the adjustment of rights takes place through
collective bargaining including adjudication in Labor Courts. The IRO 2002 has changed the
appellate procedure on the provincial level, which used to be brought before a Labor Appellate
Tribunal. This institution was abolished by the IRO 2002. Appeals of Labor Court decisions now
lie directly with provincial High Courts. Office bearers of trade unions are given protection
against arbitrary transfer, discharge and dismissal. Any ill-intentioned action on the part of the
employer against an office-bearer of a trade union or against a worker for trade union activities,
is construed as an unfair practice and the National Industrial Relations Commission is entrusted
with the task of preventing such offenses. Security of service is ensured to the workers.
Similarly, unfair labor practices on the part of workers and trade unions is elaborated and
incorporated in law.
Collective Labor Disputes:
Commencement of a dispute
Under the IRO 2002, if an employer or a Collective Bargaining Agent finds that an
industrial dispute has arisen or is likely to arise, they may communicate their views in
writing to the other party. Upon receipt of the communication, the other party has fifteen
days (or more if agreed) to try and settle the dispute by bilateral negotiations.
*Conciliation
If the parties do not manage to reach a settlement, the employer or the CBA may, within
fifteen further days, serve a notice of conciliation on the other party, with a copy to the
Conciliator and to the Labor Court.
If the dispute is settled before the Conciliator, or a tripartite Board of Conciliators, a
report is sent to the Provincial or Federal Government, with the memorandum of
settlement.
Arbitration
If the conciliation fails, the Conciliator tries to persuade the parties to refer their dispute
to an arbitrator. If they agree, the parties make a join request in writing to the arbitrator
they have agreed upon.
The arbitrator gives his or her award within a period of 30 days or a period agreed upon
by the parties. The award of the arbitrator is final and valid for a period not exceeding
two years.
A copy of the award is sent to the provincial or Federal Government, for publication in
the official Gazette.
Proceedings of strikes and lock-outs

If dispute settlement proceedings before the Conciliator fail and no settlement is reached,
and if the parties have not agreed to refer their dispute to an arbitrator, the workers retain
the right under section 31 of the Industrial Relations Ordinance 2002, to go on strike
providing due notice to their employer within seven days, and the employer has the right
declare a lock-out after the delay of notice of conciliation has expired. The party raising a
dispute retains the option, at any time, either before or after the commencement of a
strike or lockout, to make an application to the Labor Court for adjudication of the
dispute.
Where a strike or lock-out lasts for more than fifteen days, if it relates to a dispute which
the Commission is competent to adjudicate and determine, the Federal and/or the
Provincial Government may, by order in writing, prohibit the strike or lock-out at any
time before the expiry of thirty days, provided that the continuance of such a strike or
lock-out causes serious hardship to the community or is prejudicial to the national
interest. In such case the Federal Government or the Provincial Government shall
forthwith refer the dispute to the Commission or the Labor Court. After hearing both
parties, the Commission, or the Labor Court shall make such award as it deems fit, as
expeditiously as possible but not exceeding thirty days from the date on which the dispute
was referred to it.
Under section 32 of the IRO 2002, if a strike or lockout occurs within the public utility
services sector the Federal Government and the Provincial Government may, by order in
writing, also prohibit its occurrence at any time before or after the commencement of the
strike or lockout. No party to an industrial dispute may go on strike or declare a lockout
during the course of conciliation or arbitration proceedings, or while proceedings are
pending before the Labor Court. In addition, the National Industrial Relations
Commission (the Commission), adjudicates and determines industrial disputes to which
an industry-wise trade union or federation of such trade unions is a party , as well as
disputes which are of national importance. The Commission also deals with cases of
unfair labor practices.
Illegal strikes and lock-outs
A strike or lockout is declared illegal if it is commenced without giving notice of
conciliation to the other party of the dispute, or if it is commenced or continued in a
manner other than that provided by the IRO 2002 or in contravention with this text.

In case of an illegal strike or lockout, an Officer from the Labor Department may make a
report to the Labor Court, and require the employer or CBA or the registered trade union
concerned, to appear before the Court. The Court may, within 10 days, order the strike or
lockout to be stopped.
In case of contravention of the order of the Court by the employer, and if the Court is
satisfied that the pursuance of the lock-out is causing serious hardship to the community
or is prejudicial to the national interest, it may order the attachment of the factory and the
appointment of an official receiver, who will exercise the powers of management and
may do all such acts as are necessary for conducting business.
In case of contravention of the order of the Court by the workers, the Labor Court may
pass orders of dismissal against the striking workers, or cancel the registration of the
trade union that committed such contravention.
Settlement of Individual Labor Disputes

Pursuant to Article 46 of the IRO 2002, a worker may bring his or her grievance in
respect of any right guaranteed or secured by or under any law or any award or settlement
to the notice of the employer in writing, either him or herself or through the shop steward
or Collective Bargaining Agent, within one month of the day on which cause of such
grievance arises. The IRO 2002 reduces the delay from three months to one month.
Where a worker brings his or her grievance to the notice of the employer, the employer
must within fifteen days of the grievance, communicate his or her decision in writing to
the worker.
If the employer fails to communicate a decision within the specified period or if the
worker is dissatisfied with such decision, the worker or shop steward may take the matter
to the Labor Court within a period of two months.
Labor Courts
Section 33 of the Industrial Relations Ordinance, 2002 permits any CBA or any employer
to apply to the Labor Court for the enforcement of any right guaranteed or secured by law
or any award or settlement. The Provincial Government derives its authority to establish
as many Labor Courts as it considers necessary under section 44 of the Ordinance. Each
Labor Court is subject to jurisdictional limitations derived by its geographical parameters
or with respect to the industry or the classes of cases allocated. Each Labor Court consists
of one Presiding Officer appointed by the Provincial Government.
The Labor Court adjudicates industrial disputes which have been referred to or brought
before it; inquiries into or adjudicates any matter relating to the implementation or

violation of a settlement which is referred to it by the Provincial Government; tries
offenses under the Industrial Relations Ordinance; and exercises and performs such other
powers and functions conferred upon or assigned to it. While deliberating offenses, the
Labor Court follows as nearly as possible procedure as prescribed under the Code of
Criminal Procedure, 1898. For purposes of adjudicating and determining any industrial
disputes, the Labor Court is deemed to be a Civil Court and retains the same powers as
are vested in such Court under the Code of Civil Procedure, 1908 (Act V of 1908)
including the enforcement of attendance and examination under oath, the production of
documents and material objects, and the issuance of commissions for the examination of
witnesses or documents.
An award or decision of a Labor Court is produced in writing and delivered in open Court
with two copies subsequently forwarded to the Provincial Government. Upon receipt, the
Provincial Government within a period of one month publishes the award or decision in
the Official Gazette.
The IRO 2002 abolished the Labor Appellate Tribunal. Any party aggrieved by an award
or a decision given or a sentence passed by the Labor Court may now submit an appeal to
the High Court (Article 48 of the IRO 2002). The High Court may vary or modify an
award or decision or decision sanctioned by the Labor Court. It may, on its own motion at
any time, call for the record of any case or proceedings in which a Labor Court within its
jurisdiction has passed an order, for the purpose of satisfying itself as to the correctness,
legality, or propriety of such order, and may pass such order, in relation thereto as it
thinks fit, provided that the order does not adversely affect any person without giving
such person a reasonable opportunity of being heard.
Official Gazette:
The Federal Laws of Pakistan are published by the Government in a document called the
Gazette of Pakistan. The Ministry of Justice, Law and Parliamentary Affairs in addition
publishes individual Acts through the Official Gazette.

INTRODUCTION TO UNILEVER
On any given day, two billion people use Unilever products to look good, feel good and get more
out of life.
LIFE PARTNERS
With more than 400 brands focused on health and wellbeing, no company touches so many
peoples lives in so many different ways.
Our portfolio ranges from nutritionally balanced foods to indulgent ice creams, affordable soaps,
luxurious shampoos and everyday household care products. We produce world-leading brands
including Lipton, Knorr, Dove, Axe, Hellmanns and Omo, alongside trusted local names such as
Blue Band, Pure it and Suave.
RESPONSIBLE BUSINESS
For us, sustainability is integral to how we do business. With 7 billion people on our planet, the
earths resources can be strained. This means sustainable growth is the only acceptable model of
growth for our business. The Unilever Sustainable Living Plan sets out to decouple our growth
from our environmental impact, while at the same time increasing our positive social impact. Our
Plan has three big goals that by 2020 will enable us to:
Help more than a billion people to improve their health and well-being.
Halve the environmental footprint of our products.
Source 100% of our agricultural raw materials sustainably and enhance the livelihoods of
people across our value chain.
To embed sustainability into every stage of the life cycle of our products, were working with our
suppliers to support responsible approaches to agriculture. Were also learning from NGOs and
other organizations, recognizing that building a truly sustainable business is not something we
can do without expert advice.
We believe that as a business we have a responsibility to our consumers and to the communities
in which we have a presence. Around the world we invest in local economies and develop
peoples skills inside and outside of Unilever. And through our business and brands, we run a
range of programed to promote hygiene, nutrition, empowerment and environmental awareness.
IMPACT & INNOVATION

We realize innovation is key to our progress, and through cutting-edge science were constantly
enhancing our brands, improving their nutritional properties, taste, fragrance, or functionality.
We invest around 1 billion every year in research and development, and have established
laboratories around the world where our scientists explore new thinking and techniques, applying
their expertise to our products.
Consumer research plays a vital role in this process. Our unrivalled global reach allows us to get
closer to consumers in local markets, ensuring we understand their diverse needs and priorities.
ABOUT OUR BRANDS
From long-established names like Lifebuoy, Sunlight and Ponds to new innovations such as the
Pure it affordable water purifier, our range of brands is as diverse as our worldwide consumer
base.
Unilever has more than 400 brands, 15 of which generate sales in excess of 1 billion a year.
Many of these brands have long-standing, strong social missions, including Lifebuoys drive to
promote hygiene through hand washing with soap, and Doves campaign for real beauty.
History of Unilever
Unilever NAME represents the entire North Africa and Middle East region. Unilever's corporate
mission is to add vitality to life everywhere. Unilever has been present in the North Africa and
Middle East region since 1933, a year which saw the appointment of the Binzagar family as the
companys agent within Saudi Arabia while in the same year Unilever also entered the Egyptian
market. In 1954 Unilever made its first foray in the Maghreb market with the launch of Omo in
Algeria, from France, through a local partner followed by an entry into Morocco in 1960 and
Tunisia in 1961.
In 1992 Unilever came on-shore in the Arabia Peninsula with the setting up of an office in Dubai
and in the same year Lever Egypt was formed as a Joint-Venture with the Fine Foods Company,
a member of the Rachid Group. In 1999 Lever Egypt and Fine Foods Group merged to form
Unilever Egypt.
Our Vision
Our Vision is to help people feel good, look good and get more out of life with brands and
services that are good for them and good for others. We will inspire people to take small
everyday actions that can add up to a big difference for the world. We will develop new ways of
doing business that will allow us to double the size of our company while reducing our
environmental impact.
SOPS
LABOR
Employees must not work more than the regular and overtime hours allowed by the laws of the
country where they are employed. All overtime work will be on a voluntary basis.Unilever
companies must not use, or permit to be used, forced or compulsory or trafficked labor. Unilever
companies must not use child labor. This is employees under the age of 15 or under the local
legal minimum working age or mandatory schooling age, whichever is the higher. Short term
work experience schemes and work that forms part of an educational programed are permitted.
All third parties, whether public or private, are included in this prohibition.
For example:
Actual or potential customers, distributors, agents.
Actual or potential suppliers or consultants.
Other actual or potential service providers such as banks.
Government or regulatory officials/employees, either local or regional.
Political representatives.
Use anyone (whether agents, distributors, consultants, suppliers, intermediaries or anyone else)
to give or receive bribes or gain improper advantages on behalf of Unilever by making payments
to government officials in their individual capacity for the legitimate services of any government
agencies, ministries, municipalities and other state bodies. Unilever companies must not employ
or enter into contracts with agents, distributors, consultants, intermediaries or anyone else to
represent Unilever or its interests externally, without undertaking appropriate checks to assess
the third partys integrity.
Safety
Unilever is committed to developing, producing, marketing and selling all its brands
responsibly.
We believe Unilever can and should conduct marketing activities in line with societal
expectations.
We are and will continue to be a responsible producer.
Unilevers reputation could suffer significant damage if any employee or business partner fails to
comply with these requirements. Additionally, we could be subject to fines and/or operational
impact resulting from noncompliance with local law

This Code Policy applies to all brand marketing activities in Unilever and sets out global
minimum standards that apply everywhere. It includes, but is not limited to: brand names and
packaging, consumer planning and market research, trade advertising, sales materials, consumer
advertising, brand websites and digital media, brand merchandising and sponsorship,
promotional activities and events
Production
Associate our brands with or feature within any Unilever marketing themes, figures
or images likely to be considered offensive, demeaning or disrespectful to any religion,
nationality, culture, gender, race, minority or people with disabilities.
Advertise in any media that are known for portraying violence, pornography or insulting
behavior.
Corporate Law
Comply with all applicable laws and regulations and industry codes in each country we
operate.
Our promotions must show respect for people who choose not to buy our products.
Describe our products and their effects truthfully and accurately, with appropriate factual
and nutritional information.
Ensure consumers and customers understand how to use our products.
Provide clear information on all our products about the presence of specific allergens, by
labelling or offering further information on request (see also the Allergen Standard).
Respond sensitively to promotions or advertising from different cultural, social, ethical
and religious groups.
Comply with our Principles of Food and Beverage
Marketing for advertising to children.

Ethics without discrimination on the grounds of race, age, role, gender, color, religion, country of
origin, sexual orientation, marital status, dependents, disability, social class or political views.
This includes consideration for recruitment, redundancy, promotion, reward and benefits,
training or retirement which must be based on merit and without discrimination on any of the
grounds above.
All work must be conducted on the basis of freely agreed and documented terms of employment,
clearly understood by and made available to the employee. All employees must respect the

dignity and human rights of colleagues and those they come into contact with as part of their
jobs.
Employees must be provided with a total remuneration package that meets or exceeds the legal
minimum standards or appropriate prevailing industry standards and remuneration terms
established by legally binding collective agreements must be implemented and adhered to. Other
than legally mandated deductions, all other deductions from wages must only be made with the
express and written consent of the employee.
All Unilever companies must respect employees rights to join or not to join a legally recognized
trade union, or any other body representing their collective interests. They must also establish
constructive dialogue and bargain in good faith with trade unions or representative bodies on
employment conditions, labor management relations and matters of mutual concern, to the extent
practicable taking national laws into consideration.
All Unilever companies must comply with legal requirements in relation to short term, casual or
agency employees. There must be a clear and transparent system of employee and management
communication that enables employees to consult and have an effective dialogue with
management
Set of standards
All third parties, whether public or private, are included in this prohibition. For example:
Actual or potential customers, distributors, agents.
Actual or potential suppliers or consultants.
Other actual or potential service providers, such as banks.
Government or regulatory officials/employees, either local or regional.
Political representatives.
Use anyone (whether agents, distributors, consultants, suppliers, intermediaries or anyone else)
to give or receive bribes or gain improper advantages on behalf of Unilever by making payments
to government officials in their individual capacity for the legitimate services of any government
agencies, ministries, municipalities and other state bodies. The outcome of such checks must be
considered carefully before deciding whether to appoint the third party. Various factors will
determine what checks are appropriate, such as the nature of the potential service and the
potential for corruption within the third party or the general environment/location.

TRADE REMEDIAL LAWS OF PAKISTAN:
AN IMPLICATION OF THE WTO REGIME
Since the establishment of WTO (World Trade Organization) in 1995, many of its member
countries have been active in complying with the multilateral trade agreements administered by
the Organization. It is this factor of compliance that has also led Pakistan to undergo legislations
to bring into effect the rules and regulations provided for in the WTO Agreements.
Pakistan was one of the founding members of GATT (General Agreement on Tariffs and Trade)
in 1947 that provided for international rules regarding trade in goods. This GATT 1947 was later
annexed to Marrakesh Agreement establishing the World Trade Organization as GATT 1994.
Despite being the founder member, Pakistan has been taking a long time to prepare for the
challenges posed by international trade regime.
GATT practice has always been to require that the cuts in tariffs agreed in multilateral trade
negotiations should be implemented in stages over an agreed number of years. The reason for it
was to give industries time to adjust gradually to the increased competition resulting from
reductions in tariffs and from the removal of other barriers to trade. Even with this phased
implementation of tariff reductions, certain industrial or agricultural sectors, at times, face
problems in adjusting to increased import competition. These problems flow chiefly from their
failure to rationalize production structures or to adopt the technological innovations necessary to
raise productivity. Yet, another menace of increased imports is attributable to unfair trade
practices like dumping and subsidies by foreign suppliers.
Pakistans domestic industry faces similar problems of increased imports and unfair practices
under the global trade regime. WTO Agreements have an in-built mechanism providing for
remedial measures to counteract the effect of these problems. Accordingly, Pakistan through
national legislation has given effect to trade remedial measures provided for under the
international trade laws. Pakistan has come up with Anti-Dumping and Countervailing Duties
Ordinances of 2000 against unfair trade practices and the Safeguard Measures Ordinance of 2002
against surge of imports in order to protect its domestic industry.
Safeguard Measures Ordinance of 2002
Safeguard measures are one of three types of contingent trade protection measures, along with
anti-dumping and countervailing measures, available to WTO Members.
Safeguard measures are defined as "emergency" actions with respect to increased imports of
particular products, where such imports have caused or threaten to cause serious injury to the
importing Member's domestic industry. Such measures, which in broad terms take the form of
suspension of concessions or obligations, can consist of quantitative import restrictions or of
duty increases to higher than bound rates. As an example, United States, at one time, had applied

safeguard measures to protect its local steel industry by increasing tariffs on steel imports.
However, those measures were later found to be unjustified by WTO and were removed by US.
The Agreement on Safeguards ("SG Agreement") sets forth the rules for application of safeguard
measures according to Article XIX of GATT 1994. This Article provides that where, as a result
of tariff reductions, a Member country finds that a product is being imported in such increased
quantities and under such conditions as to cause or threaten serious injury to domestic producers,
it can impose safeguard measures to restrict such imports for temporary periods.
Pakistan through Safeguard Measures Ordinance, 2002 has given effect to the provisions of
Article XIX of the General Agreement on Tariffs and Trade, 1994, and to the WTO Agreement
on Safeguards for the imposition of safeguard measures. This has been done by providing a
framework for investigation and determination of serious injury or threat of serious injury caused
by products imported into Pakistan.
Pakistan may apply a safeguard measure on an imported product if, it is determined by an
investigation conducted by one of its Authorities (National Tariff Commission) in accordance
with the provisions of the Ordinance that as a result of unforeseen developments and of the effect
of WTO obligations assumed by Pakistan, the product was being imported in such increased
quantities, absolute or relative to domestic production, and under such conditions as to cause
serious injury or threat of serious injury to domestic industry producing like or directly
competitive products.
The investigations for the imposition of such measures can be initiated either by the National
Tariff Commission itself or on the basis of a petition from the affected industry. In practice, the
investigations are generally initiated on the basis of petitions from the affected industry.
However, petitions can be submitted only when it is possible to establish that there is a casual
link between increased imports and the alleged serious injury to the industry.
The Safeguard Measures Ordinance, 2002 also lays down the criteria, which the investigating
authorities must consider in determining whether increased imports are causing serious injury to
the domestic industry. It even sets out basic procedural requirements for the conduct of
investigations. One aim of the procedural requirements is to provide foreign suppliers and
governments whose interests may be adversely affected by the proposed safeguard actions with
an adequate opportunity to give evidence and to defend their interests.
The overall primary objective of providing such temporary increased protection is to give the
affected industry time to prepare itself for the growing competition that it will have to face after
the safeguard measures are removed.
Anti-Dumping Duties Ordinance, 2000

GATT acknowledges that the rise in imports may also be due to the adoption of unfair trade
practices by foreign suppliers. Its rules therefore lay down the basis on which governments may
levy compensatory duties on imports of products benefiting from such unfair practices. The
GATT rules deal with two types of unfair trade practices, which distort conditions of
competition. First, the conditions of competition may be distorted if the exported goods are
dumped in foreign markets. Second, the competition may become unfair if the exported goods
benefit from specific subsidies.
A product is considered dumped if the export price is less than the price charged for the like
product in the exporting country. Dumping is, in general, a situation of international price
discrimination, where the price of a product when sold in the importing country is less than the
price of that product in the market of the exporting country. Thus, in the simplest of cases, one
identifies dumping simply by comparing prices in two markets. However, the situation is rarely,
if ever, that simple, and in most cases it is necessary to undertake a series of complex analytical
steps in order to determine the appropriate price in the market of the exporting country (known
as the "normal value") and the appropriate price in the market of the importing country (known
as the "export price") so as to be able to undertake an appropriate comparison.
The Agreement on the Implementation of Art. VI of GATT 1994, administered by WTO,
elaborates the basic GATT rules on dumping and authorizes countries to levy anti-dumping
duties on dumped products. Pakistan through Anti-dumping Ordinance, 2000 has repealed the
Import of Goods (Anti-Dumping and Countervailing Duties) Ordinance, 1983 and has given
effect to WTO provisions relating to imposition of anti-dumping duties in order to offset
dumping. This Ordinance has also provided a framework for investigation and determination of
dumping and injury in respect of goods imported into Pakistan.
The National Tariff Commission in Pakistan may impose anti-dumping measures on products
imported into Pakistan, in case it determines, after an investigation initiated and conducted in
accordance with the provisions of the Ordinance, that:
1. An investigated product is dumped in Pakistan, and
2. Injury is being caused to domestic industry of Pakistan.
Countervailing Duties Ordinances, 2000
The issue of grant of subsidies by developed countries to their agricultural sector was one of the
main reasons for the failure of Cancun Ministerial Conference of WTO.
The definition of subsidy contains three basic elements:
1. A financial contribution

2. By a government or any public body within territory of a WTO Member
3. Which confers a benefit
All three of these elements must be satisfied in order for a subsidy to exist.
The basic provisions of GATT on the use of subsidies have been elaborated by the Agreement on
Subsidies and Countervailing Measures (SCM). The basic aim of these provisions is either to
prohibit or to restrain the use of subsidies by a WTO Member that affects the interests of other
Members. However, where the use of permitted subsidies results in material injury to a domestic
industry in an importing country, the rules permit the importing country to take remedial
measures, which could take the form of countervailing duties on subsidized imports.
Pakistan through Countervailing Duties Ordinance, 2000 has given effect to WTO provisions
relating to imposition of countervailing duties to offset such subsidies. This has been done by
providing a framework for investigation and determination of such subsidies and injury in
respect of goods imported into Pakistan.
Where the National Tariff Commission in Pakistan determines in accordance with the provisions
of the Ordinance that any exporting country pays or bestows, directly or indirectly, any subsidy
upon the manufacture or production or the exportation of any investigated product including any
subsidy on transportation of such product and such subsidy causes injury then, upon the
importation of any such product into Pakistan, it is in a position to impose a countervailing duty
thereon.
Standard of injury
Similar principles apply when governments take safeguard measures to restrict imports in order
to assist a domestic industry that is being injured by a sudden and sharp increase in imports. The
standard of injury to the industry that must be established to justify safeguard actions is,
however, much higher than that required for the levy of anti-dumping or countervailing duties. In
the case of safeguard actions, injury to the industry must be serious whereas in the case of
countervailing and anti-dumping duties, a lower standard of proof of material injury is adequate.
The difference in standards is attributable to the fact that in taking safeguard measures, the
industrys problems do not arise from unfair competition, while taking anti-dumping or
countervailing measures, these are due to the unfair trade practices of foreign producers.
Conclusion
As a result of increased trade under the multilateral trade regime of WTO and the emergence of
different countries as exporters of their products to Pakistan, the threats arising from enhanced

imports are becoming imminent for the local industry. These days, one often comes across
sporadic complaints in Pakistan that certain products are being dumped by foreign producers or
are being subsidized to such an extent that it amounts to serious distortion of the market price to
the detriment of local producers. In view of this situation, it can be anticipated that Pakistani
industries would be availing the trade remedies, more aggressively, by making use of Safeguards,
Anti-dumping and Countervailing Ordinances, in order to protect themselves against foreign
suppliers.

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