Lecture 05:

Formation Of Company-I
Registration & Incorporation

MUHAMAMD ZUBAIR TARIQ

 Introduction
 Every type of activity requires certain preliminary work so is the
case in respect of formation of a company
 The idea of forming a limited company is conceived by a number
of persons who get together and decide certain basic matters e.g.
(a) Type of business
(b) Province in which business to be established
(c) Formation of a Private or a Public company
(d) Capital of the company
 After deciding these matters necessary actions are taken to
complete the formalities and formation of a company
 Stages Of Formation Of A Company
 There are a number of stages in the formation of a company from
conceiving the idea of forming a company up to the issue of a
commencement of business certificate
 These stages in the formation of a company are

1. Promotion Stage
2. Registration and Incorporation Stage
3. Commencement of Business Stage
 1. Promotion Stage
 Promotion is the first stage in the formation of a company
 Promotion means the various steps taken by the persons
desirous of forming a company from the time of conceiving
the idea up to the moment of actual coming into existence of
a company
 The persons who initiate the work of forming a company are
called Company Promoters
 2. Registration and Incorporation Stage
 Registration of a company is the second stage in the formation
cycle
 Following steps are involved in the registration cycle
(1) Approval of a proposed name
(2) Preparation of registration documents
(3) Payment of stamp duty and filing fee
(4) Submission of registration application
 Certain documents for registering a company must be prepared by
the promoters and are to be filed with the Registrar in the province
or the part of Pakistan not forming part of the province, as the case
may be
 The Registrar is an Official of the Corporate Law Commission and
has been defined in section 2(31) of the Ordinance
 2. Registration and Incorporation Stage
Registration Of Documents By Public Company
A) Documents Filed Before Inorporation
1. Memorandum Of Association (MOA)
Must be signed by at least three members, Section 15(1) and
submitted in case of company limited by shares, company limited by
guarantee and unlimited company, Section 15(2)
2. Articles Of Association (AOA)
In case of company limited by shares must be signed by at least
three subscribers to MOA, Section 30 and 26(1)
3. Endorsement on Articles
Of the fact of adopting Table A in its entirety and in such a case the
company need not file any special articles, Section 26(2)
 2. Registration and Incorporation Stage
4. Articles Of Association (AOA)
Must be signed by a company limited by guarantee or an unlimited
company and must be signed by at least three members, Section 30(2)
5. Statuary Declaration:
File a statuary declaration that requirements of law for registration
have been duly complied with
6. Original Copies Of Receipted Challans
Submit in respect of the payment of duty on share capital and the
prescribed filing fee
 2. Registration and Incorporation Stage
B) Documents Filed After Incorporation
1. Consent to Become Directors
List of persons who have consented to act as directors of the
company along with their consent to do so, within seven days of
issue of Certificate of Incorporation, Section 184(2)
2. Notice of Situation:
Of company's registered office within 28 days after the date of
incorporation, Section 142(2)
3. Prospectus:
On or before the date of its publication
 2. Registration and Incorporation Stage
Registration Documents By Private Company
1. Memorandum of Association (MOA)
2. Articles of Association (AOA)
3. Statuary Declaration
4. Notice of Registered Office

Documents Must Not Be Filed By The Private Company

1. List of persons consenting to act as directors
2. Prospectus
 2. Registration and Incorporation Stage
Effect of Registration:
Under Section 32(2), the effect of registration of a company is,
therefore, as under
(a) Subscribers form a body corporate
(b) Body corporate can exercise all the functions of an
incorporated company
(c) Body corporate acquires a perpetual succession
(d) Body corporate possesses a common seal
(e) Above all the body corporate becomes legal person separate
and distinct from it members
 2. Registration and Incorporation Stage
Certificate of Incorporation-Section 32
It is a legal document to which the promoters of the proposed
company become entitled on the registration of its MOA
It is a birth certificate of a company
It bears the date of issue, name of the company, name of province
and he seal of the registrar
The date mentioned in the certificate is the first day of company
incorporation
Generally, the original certificate of incorporation is framed and
displayed at the registered office and printed copies thereof are
included in the MOA
 2. Registration and Incorporation Stage
Who Issues Certificate of Incorporation:
 The certificate of incorporation is issued only by the registrar of
the joint stock companies
(a) Of the province in which the registered office of the company is
stated by the MAO to be situated
(b) Of the part of Pakistan not forming a part of providence where
the registered office is to be situated
When Can Be Issued:
(a) On the registration of the companies
(b) An amended certificate of incorporation is issued on the change of
name of the company
(c) When any person makes a request under section 466(6) on
payment of prescribed fee
 2. Registration and Incorporation Stage
Legal Effects of Certificate of Incorporation
The legal effects of the certificate of incorporation are the effects
from the date mentioned in the certificate, these are as under
(a) Company becomes a body corporate
(b) Capable of exercising all functions of an incorporated
company
(c) Having perpetual succession and a common seal
(d) With such liability on the part of the members to contribute to
the assets of the company in the event of its being wound up
and as is mentioned in MOA
 2. Registration and Incorporation Stage
Conclusiveness of Certificate of Incorporation
Certificate of Incorporation is the conclusive evidence that
requirements of the Ordinance as regards registration have been
fulfilled and company is entitled to be registered
It is also a conclusive evidence that each subscriber to MOA did
write opposite his name the specified shares and subscribers can not
be allowed to disapprove it
It is also a conclusive evidence that the registration and
incorporation were duly effected on the date mentioned in the
certificate
It is also a conclusive evidence only as regards the fact of and
matter connected with the incorporation of the company, and not any
other matter
 2. Registration and Incorporation Stage
 The certificate only prohibits from going beyond the certificate
or from alleging that the association is not a corporate body
with the status and capacity conferred by the Ordinance
Copy of Certificate of Incorporation-Section 566(6)
 Any person, whether the member of the company or not, may

(a) Inspect the certificate of incorporation kept by the registrar

(b) Require a certificate of incorporation or a certificate of
commencement of business of any company
 The above discusses inquiries can only be made on payment of
the fees specified in the 6th Schedule of the Companies
Ordinance
 3. Commencement of Business Stage
Section 146
1. Commencement of Business by Private Company-
Section 146(6)
A Private Company can commence business, exercise borrowing
powers and make binding contracts after receiving Certificate of
Incorporation, Section 146(6)
2. Commencement of Business By a Public Company
A Public Company immediately after incorporation cannot
commence the business and exercise borrowing powers
It has to obtain a further certificate, called Certificate to Commence
Business and such certificate
(a) Is not necessary for a Public Company having no share capital
(b) Must be obtained by a Public Company having share capital
 3. Commencement of Business Stage
Section 146
Further Formalities To Be Fulfilled For Obtaining Certificate Of
Commencement Of Business
(a) Shares payable in cash have been allotted to the amount of
minimum subscription
(b) Every director must have paid full amount on his shares
payable in cash
(c) Application
(d) A statuary declaration signed by the CEO, or one of the
directors and the secretary stating that all the above
requirements have been complied with must have been filed with
the registrar, and the registrar has issued the prescribed certificate
 3. Commencement of Business Stage
Section 146
In Case A Public Company Does Not Issue Prospectus
A Public Company which does not issue prospectus inviting the
public to subscribe or its share
(a) A Statement in Lieu of Prospectus must have been filed with
the registrar
(b) Every director must have paid full amount on his shares
payable in cash
(c) A statuary declaration signed by the CEO, or one of the
directors and the secretary stating that all the above
requirements have been complied with must have been filed with
the registrar
 3. Commencement of Business Stage
Section 146
Conclusive Evidence As Regards To Certificate Of
Commencement Of Business
The Certificate Of Commencement Of Business is a conclusive
evidence that the Public Company is entitles to commence business
Any contract made before issuance of certificate of commencement
of business is only provisional and is not binding until such certificate
is obtained