Limited Company” Under Companies Act 2017.

Companies remain the most favored form of business organizations in Pakistan especially for medium and large-scale business enterprises. Legal regime for establishment and regulation of companies in Pakistan is given in the Companies Ordinance, 1984. Whereas the function of administration of these companies is vested in the Securities and Exchange Commission of Pakistan and the Registrar of Companies appointed by the Securities and Exchange Commission of Pakistan for a Province of Pakistan where such company is to be registered.

Under the provisions of the Companies Act, 2017 a company is a corporate body with separate legal entity and a perpetual succession and a company may be formed by persons associating for any lawful purpose by subscribing their names to the Memorandum of Association and complying with other requirements for registration of a company under the provisions of the Ordinance.

The main reasons for Limited Company or Ltd. Company organization are lawsuit protection, credibility, tax savings, asset protection, anonymity, the ease of raising capital, creating a separate legal entity for personal protection, Forming an Ltd. Company has a broad range of powers beyond that of a sole proprietorship, small claims court benefits, separate liability for corporate debts, and perpetual duration. After Ltd. Company incorporation you create a separate legal person. You are a shareholder. You can control the corporation. However, when your business is sued you can be protected from being sued personally after forming a Ltd. Company.
When you are forming a Ltd. Company you create a separate person from the one or ones who own it. Therefore, when a Ltd. Company is sued, there are provisions in the law to protect the owners (members)  from personal liability. Once you do business with the public or have even one employee, you are wide open to legal liability. In addition, once after Ltd. Company is formed it is important that your business follows certain, relatively simple, formalities so that it looks and acts like a separate legal entity.

Further, under the Companies Ordinance, 1984 two types of limited liability companies are provided namely,

a) A Private Limited Company and
b) A Public Limited Company (which may be listed or unlisted).

Any one or more persons associated for any lawful purpose by subscribing their name(s) to the Memorandum of Association and complying with other registration specific requirements of the Companies Ordinance, 1984 may incorporate a private limited company. Provided that where a company has only one subscriber to the Memorandum of Association then such a company is called a Single Member Company, however, a Single Member Company remains a private limited company for all intents and purposes of the Ordinance. Whereas any three or more persons so associated may form a public limited company. A company limited by shares whether a private company or a public company is the most common vehicle for carrying out a business enterprise in Pakistan.

Private Limited Company

This is the most common type of companies in Pakistan, as per the provisions of companies’ ordinance, 1984 private limited companies are defined as:

“A private limited company is the company which restricts the right to the transfer the shares “

Private Limited company restricts the maximum number of members to be fifty.
Private Limited Company prohibits any kind of invitation to general public to subscribe for its any shares and pay any amount to the company in that respect.

Public Limited Company

A company other than a company registered as private limited company is called public limited company. Companies’ ordinance defined certain conditions for public limited companies which are as under:

“A company registered as public limited company does not impose any restrictions on the number of members that the company can have”.

A Public company is a company which does not impose any restriction on the right of transfer of its shares.
Public company does not impose any restriction on the invitation to general public to subscribe for its shares and pay any amount in respect of that subscription.

Listed Company

A public company can be further classified into two categories:
Listed company is the company which has its shares listed on any stock exchange. In Pakistan at the moment companies are listed on three stock exchanges of the country namely Karachi Stock Exchange, Lahore Stock Exchange and Islamabad Stock Exchange.

Unlisted Company

Unlisted Public companies are those companies whose shares are not listed on any stock exchange of the country and these type of companies are not allowed to trade their shares through stock exchange.