ACC311 – Aundamentals of Auditing PDF
PART I
PRELIMINARY
1. Short title, extent and commencement.—(1) This Act may be
called the Companies Act, 2017.
(2) It extends to the whole of Pakistan.
(3) This Act shall come into force at once, except section 456 which
shall come into force on such date as the Federal Government or an authority or
person authorized by it may, by notification in the official Gazette, appoint.
2. Definitions.—(1) In this Act, unless there is anything repugnant in
the subject or context,—
(1) ―advocate‖ shall have the same meaning as assigned to it in section 2 of
the Legal Practitioners and Bar Councils Act, 1973 (XXXV of 1973);
(2) ―alter‖ or ―alteration‖ includes making of additions or omissions
without substituting or destroying main scheme of the document;
(3) ―articles‖ mean the articles of association of a company framed in
accordance with the company law or this Act;
(4) ―associated companies‖ and ―associated undertakings‖ mean any
two or more companies or undertakings, or a company and an
undertaking, interconnected with each other in the following
manner, namely:—
(a) if a person who is owner or a partner or director of a company
or undertaking, or who, directly or indirectly, holds or
controls shares carrying not less than twenty percent of the
voting power in such company or undertaking, is also the
owner or partner or director of another company or
undertaking, or directly or indirectly, holds or controls shares
carrying not less than twenty percent of the voting power in
that company or undertaking; or
(b) if the companies or undertakings are under common
management or control or one is the subsidiary of another; or
(c) if the undertaking is a modaraba managed by the company;
and a person who is the owner of or a partner or director in a
company or undertaking or, who so holds or controls shares
carrying not less than ten percent of the voting power in a company
or undertaking, shall be deemed to be an ―associated person‖ of
every such other person and of the person who is the owner of or a
partner or director in such other company or undertaking, or who so
holds or controls such shares in such company or undertaking:
Provided that—
(i) shares shall be deemed to be owned, held or controlled by a
person if they are owned, held or controlled by that person or
by the spouse or minor children of the person;
(ii) directorship of a person or persons by virtue of nomination by
concerned Minister-in-Charge of the Federal Government or
as the case may be, a Provincial Government or a financial
institution directly or indirectly owned or controlled by such
Government or National Investment Trust; or
(iii) directorship of a person appointed as an ―independent
director‖; or
(iv) shares owned by the National Investment Trust or a financial
institution directly or indirectly owned or controlled by the
Federal Government or a Provincial Government; or shares
registered in the name of a central depository, where such
shares are not beneficially owned by the central depository;
shall not be taken into account for determining the status of a
company, undertaking or person as an associated company,
associated undertaking or associated person;
(5) ―authorised capital‖ or ―nominal capital‖ means such capital as is
authorised by the memorandum of a company to be the maximum
amount of share capital of the company;
(6) ―banking company‖ means a banking company as defined in
clause (c) of section 5 of the Banking Companies Ordinance, 1962
(LVII of 1962);
(7) “beneficial ownership of shareholders or officer of a company”
means ownership of securities beneficially owned, held or
controlled by any officer or substantial shareholder directly or
indirectly, either by—
(a) him or her;
(b) the wife or husband of an officer of a company, not being
herself or himself an officer of the company;
(c) the minor son or daughter of an officer where ―son‖ includes
step-son and ―daughter‖ includes step-daughter; and ―minor‖
means a person under the age of eighteen years;
(d) in case of a company, where such officer or substantial
shareholder is a shareholder, but to the extent of his
proportionate shareholding in the company:
Provided that ―control‖ in relation to securities means
the power to exercise a controlling influence over the voting
power attached there to:
Provided further that in case the substantial shareholder
is a non-natural person, only those securities will be treated
beneficially owned by it, which are held in its name.
Explanation.—For the purpose of this Act “substantial
shareholder”, in relation to a company, means a person who
has an interest in shares of a company-
(a) the nominal value of which is equal to or more than ten
per cent of the issued share capital of the company; or
(b) which enables the person to exercise or control the
exercise of ten per cent or more of the voting power at a
general meeting of the company;
(8) ―board‖, in relation to a company, means board of directors of the
company;
(9) ―body corporate‖ or ―corporation‖ includes—
(a) a company incorporated under this Act or company law; or
(b) a company incorporated outside Pakistan, or
(c) a statutory body declared as body corporate in the relevant
statute, but does not include—
(i) a co-operative society registered under any law relating
to cooperative societies; or
(ii) any other entity, not being a company as defined in this
Act or any other law for the time being which the
concerned Minister-in-Charge of the Federal
Government may, by notification, specify in this behalf;
(10) ―book and paper” and “book or paper‖ includes books of
account, cost accounting records, deeds, vouchers, writings,
documents, minutes and registers maintained on paper or in
electronic form;
(11) ―books of account‖ include records maintained in respect of—
(a) all sums of money received and expended by a company and
matters in relation to which the receipts and expenditure take
place;
(b) all sales and purchases of goods and services by the company;
(c) all assets and liabilities of the company; and
(d) items of cost in respect of production, processing, manufacturing
or mining activities;
(12) ―central depository‖ shall have the same meaning as assigned to it
under the Securities Act, 2015 (III of 2015);
(13) ―chartered accountant‖ shall have the same meaning as assigned
to it under the Chartered Accountants Ordinance, 1961 (X of 1961);
(14) ―chief executive‖, in relation to a company means an individual
who, subject to control and directions of the board, is entrusted with
whole, or substantially whole, of the powers of management of
affairs of the company and includes a director or any other person
occupying the position of a chief executive, by whatever name
called, and whether under a contract of service or otherwise;
(15) ―chief financial officer‖ means an individual appointed to perform
such functions and duties as are customarily performed by a chief
financial officer;
(16) ―Commission‖ shall have the same meaning as assigned to it under
the Securities and Exchange Commission of Pakistan Act, 1997
(XLII of 1997);
(17) ―company‖ means a company formed and registered under this Act
or the company law;
(18) ―company law‖ means the repealed Companies Act, 1913 (VII of
1913), Companies Ordinance, 1984(XLVII of 1984), Companies
Ordinance, 2016 (VI of 2016) and also includes this Act unless
the context provides otherwise;
(19) ―company limited by guarantee‖ means a company having the
liability of its members limited by the memorandum to such
