Companies Amendment Ordinance 2020
| Section | Subject | Change and its effect |
| 2(33) | Definition of Financial Statements has been altered | Now all the statements required by IFRS are the requirements of the Companies Act as well. |
| 2(49) | Definition of Private company changed | Legal glitch removed, no practical effect |
| 2(66) | Definition of Special Resolution Updated | Now listed companies can hold a general meeting to pass a special resolution at a lesser than 21 days notice with SECP’s approval |
| 2(67)A new insertion | Definition of Start Up company added | a) Company shall remain a start up for maximum 10 years after incorporation b) If turnover in any of these 10 years exceed Rs. 500 M , it shall not be further considered as a start up. c) Should be working towards the innovation, development or improvement of products or processes or services or is a scalable business model with a high potential of employment generation or wealth creation |
| 17 | Subscription money payment requirement changed | a) Subscription Money not required to be paid within 30 days, time shall be specified in rules b) Membership wouldn’t be canceled in case of non payment mere fine shall be levied c) Requirement of CA certificate regarding subscription money done away with |
| 19 | Certificate of Commencement of Business | Changes made to explanation; wording corrected, no effect |
| 23 | Common Seal Not required any more | Common seal is not more a compulsory requirement, however companies might need to have one for affixing it on contracts entered in/with territories requiring a common seal to be affixed by the company on contracts |
| 26 | Principal line of business definition altered | It was required to be commensurate with the name now the law requires it to be not inconsistent with the name. |
| 32 | Alteration of MOA explanation changed | Wording corrected -No effect |
| 37 | Subscribers to MOA particulars requirement | Wording corrected -No effect |
| 38 | Alteration of articles | Information to the registrar Form 26 to be filed within 15 days instead of 30. |
| 43 | Association not for profit on winding up needed to donate surplus assets to another ANP registered under section 42 | Compulsory requirement of Donee being a 42 company done away with. Donee can be any association (trust, society etc. registered as NPO) now. |
| 48 | Conversion of an unlimited company to Limited | Requirement to file a fresh MOA and registration of same, No effect |
| 62 | Share certificate | Share certificate is no more required to have a common seal |
| 73 | Return for allotment of shares to Registrar Form 3 | a) required to be filed within 30 days instead of 45 days now b) requirement of auditors certificate regarding receipt of money done away with |
| 79 | Nominee of a shareholder for transmission in case of death of shareholder was required to be a designated relative | Amendment has given the right to make any other person as nominee of a shareholder in case shareholder has no designated relatives. |
| 83 | Further issue of shares- Right Shares | a) Subject to Rules, a private company may also issue further shares without issuing right shares now b) Requirement for valuer to be registered with commission has been lifted so now any valuer can give valuation of non-cash consideration for shares. c) Employee Stock option schemes have been deleted from 83 and a separate section inserted. |
| 83 A | Employee Stock Options | All companies including private companies can get approval for an employee share option scheme. Earlier it was only public companies. |
| 86 & 88 | Buy Back of shares | a) Earlier it was permitted only to listed companies to buyback their shares, now all companies can buy back with a condition that the private and public unlisted companies shall need to cancel shares immediately and cant keep them as treasury shares. Listed company b) Listed company shall always buy back through stock exchange and tender mode buy back no more allowed |
| 130 | Annual Return filing was not necessary in cases where there was no change in particulars during year | Now all companies are required to file Annual Return (Form A/B) with the Registrar irrespective of any change therein |
| 132 | AGM of a listed company was required to be held in the city of Registered office or any nearest city | Now companies have to hold the meeting in the city of registered office and facility of holding AGM nearest city has been withdrawn. However Commission is now empowered to allow the listed companies holding of AGM at any other place |
| 133 | Notice of 21 days for Extraordinary General Meeting | Parallel to special resolution procedure alteration, the Commission may allow the listed companies to hold a particular EGM at a shorter than 21 days notice. Further Notice of EGM shall also be sent to Commission and Published in Newspapers in case of listed company just like notice of AGM (technical Glitch removed) |
| 140 | Notice of resolution | Members having 5% voting power in the company can now give notice of a resolution to be discussed in any general meeting. Previously the requirement was 10% voting power |
| 149 | Resolution by circulation of members | Private and public unlisted companies can pass resolutions of members through circulation except for ordinary businesses of AGM. Previously the facility was not available for an unlisted company having more than fifty members, the same has been made available for all unlisted companies now |
| 153 | In-eligibility of directors | a) Requirement of NTN for foreigners done away with b) Reference to brokers and his spouse’s ineligibility reworded to include all stockbrokers including future market brokers. |
| 155 | Maximum Number of directorships | The section was poorly worded, due correction now made. No number of maximum directorships given in law, it will be specified in the Rules. |
| 161 | Term of office of directors | Wording inserted to accommodate the requirements of Trade Organizations Act 2013. Whereby tenure of office could be less than standard three years period as well |
| 166 | Independent Director | a) The directors appointed under 164 and 165 were not considered for the purpose of number of independent directors, proviso added suggesting that Director appointed by Government could be considered independent. b) Wording corrected so all companies required by law to appoint by law independent directors shall elect and appoint them just like regular election of directors and they shall be considered in the minimum number of directors required for that company. |
| 172 | Disqualification Orders | Commission cannot order disqualification of a director: a) for reason of company not being able to pay reasonable returns to members b) For reason of his plea bargain with NAB etc. c) On the pretext that it is expedient in opinion of SECP. |
| 179 | Resolution by circulation of directors | Wording corrected no affect on meanings |
| 181 | Protection to Independent and NE directors | Section Omitted. Independent and non- executive directors no at PAR with other directors in all obligations. |
| 182 | Loans to directors | CEO can be given a loan without passing of special resolution if there is already a scheme in place approved by the members of the company. |
| 183 | Powers of Board | a) BOD could exercise certain powers like sale of major assets etc. by authorization of member through general or special approval. Now the same has been made subject to Special resolution each time b) Now the BOD of a Listed company cannot sell operations if this endangers its going concern even if they have viable alternate plan. |
| 186 & 187 | Chief executive appointment by Government | Government no more empowered to appoint a chief executive of public sector company or a company where majority of directors are appointed by Government |
| 194 | Company secretary of a public company | Wording improved-No major changes |
| 199 | Investment in associated companies | Directors of investing company no more personally responsible for recovery of interest on investment if it cold not be received as per terms of agreement. |
| 203 | Official seal of a company to be used abroad | Wording changed to give effect of deletion of the requirement of having a common seal in Pakistan. |
| 211 | Non Cash transactions with directors | Requirement from a valuer to be REGISTERED valuer done away with. Any valuer can evaluate the properties so exchanged. |
| 223(5) | Audit of Financial Statements | Private company (having paid up capital of less than one million ) is required to get its financial statements audited if it is subsidiary of a Public Interest Company or if it is a subsidiary or holding of a public company. |
| 225(1) | Contents of Financial Statements | Wording improved to extend reference of IFRS to all standards so requirements of all standards to be adopted further penalties for default have been defined. Strict penalties in case of listed companies. |
| 227 | Directors’ Report-Contents | a) Separate disclosure for the remuneration package of all the directors now required. b) For listed company, the legitimate reason for not declaring dividends despite profits c) Penalties up to level 3 have been defined |
| 228 | Consolidated Financial Statements | a) Wording added to include those companies in ambit of this section as well who are otherwise required by applicable financial reporting framework to present consolidated financial statements. b) Half yearly review shall be restricted to figures of holding company and not to consolidate figures. |
| 243 | Withholding of dividends- approval from Commission | Such permission is required to be obtained within 15 days instead of 45 days. |
| 244 | Unpaid dividend Account | Significant Changes made a) Money no more required to be paid to Commissions account b) Company shall open its own account for unpaid dividends c) Money shall be transferred to this account within fifteen days of expiry of period of dividend. d) Time restrictions of 10 years done away with e) Company shall use the mark up of this account for CSR initiatives. |
| 245 | Investor education and awareness fund | Deleted. |
| 247 | Qualification of Auditors | Previously every private company (other than a subsidiary of a public company) having a paid up capital of 3 million or above needed to have a chartered accountant (or a firm thereof) as their auditors now this limit extended to ten million. (CMAs and firms thereof can audit the private companies having a paid up capital of up to 10 million) |
| 276 | Mediation and conciliation panel | Omitted altogether |
| 279 & 280 | Compromise with creditors | Powers were assumed by Commission in 2017 now given back to Court |
| 282 & 283 | Amalgamations, restructuring | Powers were assumed by Commission in 2017 now given back to Court |