Faculty: Mr.

Zeeshan Ul Haq

20th January 2022

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 Introduction
Definition of Law
Law means:
 a set of rules or a system of rules of conduct;
 designed and enforced by the state;
 to control and regulate the conduct of people;

- The word law may have different meaning for different situations. It is
often preceded by an adjective to give it a more clear meaning e.g. Civil
Law, Criminal Law, Business Law, Corporate Law etc.

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 Introduction
Sources of law in Pakistan
 The law consists of rules that regulate the conduct of individuals,
businesses, and other organizations within society.
 The legal system is derived from English common law (Equity) and is
based on the constitution of Pakistan 1973 as well as Islamic law
(sharia). Thus we can say that in Pakistan the main sources of law are
the following:
1. Legislation
2. Precedent
3. Custom
4. Agreement

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 Introduction
Sources of law in Pakistan
1. Legislation:
It is the law created by the Parliament of a country and other
bodies to whom it has delegated authority.
2. Precedent:
Precedent is a judgment or decision of a court which are binding
on the subordinate courts.
3. Customs:
With the passage of time as the society develops this source of law
diminished its tendency as a source of law. In Pakistan, the
customary law has been replaced by the Shariat Law.
4. Agreement:
Parties in their agreement stipulate terms for themselves which
constitute law for the contracting parties.
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 Introduction
Criminal law and Civil law
Two major branches of the law are:
 Criminal law:
Criminal law establishes conduct that the State considers
unacceptable, and which it wishes to prevent. Individuals or
organisations that act contrary to the criminal law are threatened with
punishment by the State, in the form of imprisonment and/or fines.
Legal action may be brought by the State against individuals who are
accused of being in breach of the criminal law.
With criminal law, the State establishes acceptable standards of
behaviour, and represents the interests of the society.
The legal basis of the criminal justice system of Pakistan includes the
Criminal Procedure Act of 1898 (popularly known as the CrPC) and
Pakistan Penal Code 1860
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 Introduction
Criminal law and Civil law
Two major branches of the law are:
 Civil law:
The civil law is a branch of the law that primarily deals with disputes
between individuals and organisations and it regulates relationships
between them regarding their rights and obligations.
Example: Civil law
 property disputes (Transfer of property act)
 work-related disputes (employment law)
 copyright disputes
 Family disputes

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 Introduction
Process of Legislation
The Constitution of Pakistan 1973 sets out the procedure to be followed
for promulgating a statute. Broadly, this requires a Bill to be passed by
both Houses of Parliament – the National Assembly and the Senate.
Upon a Bill’s passage through both Houses, it is presented to the
President of Pakistan for assent and becomes an Act of Parliament upon
receiving such assent.

In the absence of the National Assembly, statutes are promulgated by the

President pursuant to Article 89(1) of the Constitution. Under this Article,
the President may, if satisfied that circumstances exist which render it
necessary to take immediate action, make and promulgate an Ordinance.

Such Ordinances have the same force and effect as an Act of Parliament.

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Introduction

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Various forms of doing business:
A sole trader is an individual who owns and runs his or her own
business. The law does not recognize the business: the law recognizes
only the individual who runs it. The individual is liable for the debts of
the business and is also personally liable for any breaches of the law by
the business.

A partnership is a group of individuals who own and run their own

business. Each partner contributes capital to the business. A
partnership business is not recognised as a ‘person’ by the law.
Individual partners are personally liable, jointly with the other
partners, for the debts of the business.

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Characteristics of Business Corporation
 Legal personality;
 Limited liability;
 Transferable shares;
 Delegated management under a board structure; and
 Investor ownership

- A principal function of corporate law is to provide business

enterprises with a legal form that possesses these five core
attributes.
- Corporate law enables entrepreneurs to transact easily through the
medium of the corporate entity.

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 Legal personality:
The law regards a company as a person, separate from its owners. For example,
suppose that Mr X sets up a limited company, New Company with ten shares
of Rs. 10 each which he owns. Mr X the individual and New Company, for the
purpose of the law, would be two separate persons - both would have separate
legal existence. A company is an ‘artificial person’, whereas individual people
are ‘natural persons’.

 Limited liability:
The concept of limited liability applies to the owners (shareholders) of a
company. The liability of the owners of a company for the debts of the company
is limited to the amount of their investment in the company.
If a company is unable to pay its debts, it may be forced into liquidation. The
assets of the company will then be used to pay some of its unpaid liabilities.
However, the shareholders of the company will not be required personally to pay
the remaining unpaid debts of the company. The shareholders will lose what they
have invested, but will not be required to pay any more.
In this respect, limited companies are very different from partnerships. Limited
liability applies to all limited companies.

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 WHAT IS A COMPANY?
- A Company is an association persons formed for
the purpose of doing business, having a distinct
name and limited liability.

- They can be incorporated under the Companies

Act, 2017 (it may be any type of company)

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 Types of Company
 BY VIRTUE OF LEGAL FORM
By virtue of their legal form, companies can be classified in the following types:

STATUTORY COMPANY:

The companies which are formed under special statutes are termed as statutory
companies. These are governed by the Acts or Ordinances through which these
are created. Example of such type of companies are the State Bank of Pakistan,
Small Business Finance Corporation, Investment Corporation of Pakistan, etc.

CHARTERED COMPANY:

Chartered companies are formed by means of a special charter granted by the

Head of State, or King or Queen of the Crown. Normally these enjoy certain
exclusive rights and privileges on other associations of persons. The East India
Company and The Chartered Bank of England are examples of such type of
companies.
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 Types of Company
GOVERNMENT COMPANY:
A Government company is a company of which not less than 51 (fifty-one per
cent) of the paid up capital is held by the Government. A company which is a
subsidiary of a Government company automatically becomes a Government
company.
REGISTERED COMPANY:
Registered companies are those companies which are registered in Pakistan
under the Companies Act 2017. These companies are further classified into the
following three broad classifications:
 Company Limited by Shares [2(19)]
The Limited liability of its owners is restricted in law to the face value of the
shares they own.

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 Types of Company
 Company Limited by Guarantee[2(20)]
The owners may or may not have shares. Their liability to the company is
limited to an amount that the member guarantees to contribute in the event
that the company goes into liquidation for a company not having share capital
and for a company having share capital this shall also include the amount of
share capital he subscribed to the company. A company limited by guarantee is
a form often used by charities, trade associations and private members’ sports
clubs, where the club is owned by the members.
 Unlimited Company
It is a company which is registered without limiting the liability of its members
to the extent of the value of the shares held by them. Now-a-days such type of
companies are not found in Pakistan.

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 Types of Company
Companies can further be divided into the following categories:

 PRIVATE COMPANY Section 2 (49)

Such type of a company can be registered by at least two members and it
restricts:
a) the right to transfer its shares, if any;
b) the maximum number of its members to fifty; and
c) any invitation to the public to subscribe for the shares or debentures of the
company.

SINGLE MEMBER COMPANY

A single member company is a class of private company, limited by shares
which is incorporated with one member, or whose membership is reduced to
one person.
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 Types of Company
 PUBLIC COMPANY
It is a company which is not a private company. It is a company which does not:
a) limit the maximum number of its members;
b) restrict the right to transfer its shares, if any; and;
c) prohibit from inviting public to subscribe for the shares and debentures of the
company.
A public limited company can be formed with at least three (3) members.
Public limited companies may further be classified in the following two
categories.
 Public Listed Company[2(52)]
The companies whose securities are allowed to be traded on a stock exchange
are called public listed companies.
 Public Unlisted Company
Public unlisted companies have not made an offer of their shares to general
public, hence their shares are not traded on a stock exchange.
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 Types of Company
HOLDING COMPANY & SUBSIDIARY COMPANY [SECTION-2 (68), 37]

 HOLDING COMPANY
It means a company or a body corporate which holds (directly or indirectly) more than
fifty percent (50) in the voting securities of a company, or controls the composition of the
board of such other company.

SUBSIDIARY COMPANY
It means a company or a body corporate whose more than fifty percent (50) voting
securities are held or controlled (directly or indirectly), by some other company or such
other company controls the composition of the board of such company.

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Thank You

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