Uzair A.K. Ghouri

FORMATION OF A COMPANY

• Memorandum of Association• Article of Association• Registration of Memorandum and Article•Effect of Registration• Prohibition of Certain Names

Uzair A.K. Ghouri

COMPANIES

Company

Private

Single Member

Company

Other Private Company

Public

Listed Company

Unlisted Company

Uzair A.K. Ghouri

MEMBERS LIMIT Private Company

Single Member Company (SMC) only one member is required.

Other Private Companies require minimum two (2) members

Public CompanyListed Companies require minimum 7

membersUnlisted Companies require minimum 3

members

Uzair A.K. Ghouri

PRIVATE COMPANY u/s 2(1) (28) a company which by its

articles Restrict the right to transfer sharesSet limit of maximum numbers of member

to 50Prohibit any invitation to the public to

subscribe for the shares, if any, or debentures of the company

Uzair A.K. Ghouri

PUBLIC COMPANY u/s 2 (1) (30) a company which is not a

private companyRight to transfer sharesNo Upper limit for members Invitation is allowable for public to

subscribe the shares, if any, or debentures of the company

Uzair A.K. Ghouri

PRINCIPAL CHARACTERISTICS OF A COMPANY Separate legal entity Perpetual Succession: it never dies Capacity to sue and being sued Common seal

Uzair A.K. Ghouri

STAGES OF FORMATION Promotion Stage Name Registration Memorandum of Association Article of Association Other Documents

Uzair A.K. Ghouri

PROMOTION STAGE Discovery of a business opportunity and

arrangement of funds, property, etc. Persons who initiate the work of forming

a company are called promoters

Uzair A.K. Ghouri

NAME OF A COMPANY This is the First Step of Incorporation Application to be made to SECP Prescribed Fees

200 for online500 for Physical Submission

Uzair A.K. Ghouri

RESTRICTION AS TO NAMES Should not be inappropriate, deceptive

or design to exploit religion susceptibilities of people

Should not have close resemblance or identical to name of existing companies

Uzair A.K. Ghouri

MEMORANDUM OF ASSOCIATION It is the constitution and fundamental law

of the company on the basis of which the company regulates its external affairs

It containsName of the CompanyProvince of registered office or part of

Pakistan not forming part of ProvinceObject of the Company (Company cannot go

beyond the objects so mentioned in memorandum)

Liabilities of membersAuthorized Share Capital

Uzair A.K. Ghouri

REQUIREMENTS FOR MEMORANDUM Shall be printed Divided into paragraph Signed by each subscriber

Uzair A.K. Ghouri

ARTICLE OF ASSOCIATION Rules, Regulation and By-Laws for

internal management of a Company Subordinate to memorandum Contains:

Minutes of the MeetingVoting rightsDirectorsAuditorsDividends and Reserves etc.

Uzair A.K. Ghouri

REQUIREMENTS FOR ARTICLES In case of company limited by shares

Can adopt Table APrepare its own articlesPrepare a combination of the above

Uzair A.K. Ghouri

DIFFERENCE BETWEEN MEMORANDUM AND ARTICLE Memorandum is the charter of the

Company whereas articles contain rules for internal management

Articles are subordinate to Memorandum

Its mandatory to have memorandum but not articles

Memorandum defines external relationships whereas articles reflects internal management

Uzair A.K. Ghouri

CERTIFICATE OF INCORPORATION If the registrar is satisfied:

from all legal formalities, and formed for Lawful purpose

He will issue a certificate of incorporation

Uzair A.K. Ghouri

INCORPORATION SIGNIFIES Separate Legal Entity Perpetual Succession Common Seal