Reforms for businesses through amendments to Companies Act

ISLAMABAD: The Companies Amendment Bill 2021 would promote improvement in the business climate of the country, a statement said on Tuesday.

The recent amendments in the Bill would significantly promote start-ups, business innovation, entrepreneurship, and improve general business, it added.

The Securities Exchange Commission of Pakistan in a statement said that the significant amendments include the addition of a new definition for “startup company” and the removal of the requirements of filing unaudited financial statements for private companies.

The amendments also include the removal of the common seal, besides the elimination of the requirement of filing the subscription form to provide ease in doing business.

The newly introduced definition refers to a startup, as a company incorporated within 10 years, with an annual turnover of up to Rs500 million in any financial year, and working towards the innovation, development, or improvement of products or processes with a high potential of employment generation or wealth creation.

The inclusion of the definition will allow special privileges to startup companies to attract investment, acquire credit, and innovative business products.

To allow private companies to issue shares to new investors against properties and to their employees under employee’s stock option schemes, private companies have also been allowed to buy back their shares.

Other important amendments include empowering minority shareholders, holding five percent shares to give notice for calling a members’ meeting, which has been revised down from 10 percent, in order to protect the rights of minority shareholders.

Furthermore, the board resolution through circulation was earlier required to be signed by all directors, which now can be deemed passed if approved by a majority of directors.

To promote gender equality, requirements to mention a husband’s name for registration of a company have been abolished bringing company registration requirements at par for men and women.