Companies Act 2017 Commentary
22 June 2017
The Companies Act, 2017 (Act) has been promulgated on 30th May, 2017. This Act has repealed the Companies Ordinance, 1984 (Ordinance), except for Part VIIIA of the Ordinance consisting of sections 282A to 282 N along with all related or connected provisions of the repealed Ordinance, which are applicable to Non-banking Finance Companies.
The major focus of the new Act is the facilitation to the corporate sector and other stakeholders as well as strengthening of the regulatory framework, abolishing unnecessary requirements, maximum emphasis on the use of technology, a softer regime for companies without public stakes and protection of the interest of shareholders.
The Act also facilitates regulation of public sector companies and protection of interest of creditors. Other features include the introduction of use of technological advancements by allowing communication between company and its members and the company and Securities & Exchange Commission of Pakistan (SECP and the Registrar) through electronic means, passing of resolution by members through circulation, minimum regulatory requirements for single member companies, ineligibility of persons not holding a National Tax Number as per the provisions of Income Tax Ordinance 2001 to become a director, added responsibilities for the directors and auditors, additional safeguards for the creditors and investors, improved regime for winding up proceedings, prevention of offenses relating to fraud, money laundering and terrorist financing and incorporation of Free Zone company and agricultural promotion company.
In a positive development, a lot of filing, registration and winding up requirements have been simplified with a proactive thrust towards automation, i.e. e-filing and a simple one-page memorandum having principal line of business and prohibitory clauses has been introduced. Keeping in view the importance of Islamic Finance, the concepts of "Shariah-compliant Company" and "Shariah-compliant security" have also been introduced.
In this commentary, we have highlighted key changes made by the Act, either by amendments to the previous ordinance or by introduction of new provisions.
This commentary does not impart any legal opinion and is not an exhaustive account of all amendments made. We have attempted to highlight substantive amendments in order to facilitate an easy understanding of the new Act.
We hope that this report will help you to understand the new requirements of the Act.