Recently, the Federal government has amended the Companies Act, 2017 that is directed primarily at the progression of startups, the efficiency of conducting business, and improving the common business environment.
Following the approval from the National Assembly Finance and Revenue Committee, the Ministry of Finance introduced the Companies (amendments) Bill, 2020 in the Lower House of the Parliament, which was supported by the majority of votes.
The SECP had suggested the idea of ‘Startup Companies’ to encourage modernization and technological advancements by Section 2(1)(67).
Likewise, by amending Sections 83 and 83A, the state has permitted private corporations to issue shares other than right and cash. As per the details, the government has exempted private companies having paid-up capital up to Rs. 1 million from the filing of unaudited monetary records.
Ease of Doing Business
The government has amended the Companies Act, 2017 to fit the benchmarks of the World Bank’s Ease of Doing Business Report. Officials said that the government has abolished the requirement of the common seal by the amended Sections 18, 23, 62, 137, 20, 203, and 337. Meantime, the minority shareholders can also preserve their rights for the development of any records from the defendant during court procedures, the threshold for member resolution decreased from 10 percent to 5 percent.
While, at the request of the SECP, the government has eliminated added requirements for a wedded woman or a widow to mention her husband’s name for the listing of a business to meet the standards of the World Bank’s Women, Business, and Law report. The Cost and Management analysts will be qualified for appointments as auditors of a private firm having paid-up capital up to Rs. 10 million instead of Rs. 3 million.
Changes to Improve the Business Climate
Moreover, the government has blocked the SECP from mediation affairs pending in order to enhance the business environment. Meantime, the SECP has revised the system for the handling of unclaimed dividends. Additionally, the firms can trade and dispose of sizable portions of assets on specific resolutions instead of ordinary resolutions.
The government has further approved the suggestions of civil penalty for the provision of false reports to the SECP. The government has also approved the elimination of Section 456 as the law of real estate business as a provincial subject.
The Companies (2nd Amendment) Ordinance
In addition, the government has also approved the proposal of the SECP concerning incompetence on the grounds of a plea bargain with the National Accountability Bureau (NAB). The SECP had further proposed for the security of independent and non-executive administrators, for the omission or commission transpired without their awareness, which was also supported.
Executives declared that the government can now nominate the CEO of a public sector organization, while the 10 percent threshold for the reporting of any international shareholding to the firm by its officer shareholders has also been abolished.
Source: Pro Pakistani