Company Law: Companies Act 2017 - Formation, Governance and Meetings
Companies Act 2017
Know the company types: public, private, single member company, plus the separate limited liability partnership regime. Incorporation requires name reservation, memorandum and articles, a registered office and prescribed filings with the registrar (SECP). Distinguish authorised capital from issued and paid-up capital; only issued capital appears in the balance sheet as share capital.
Governance
Memorandum and articles bind the company and its members. Directors owe duties of care and skill and must disclose any interest in a contract, abstaining from the vote. Know the rules on board meetings and general meetings, the difference between ordinary and special resolutions, appointment and removal of auditors, dividend rules, preparation and filing of financial statements, and winding up.
Traps
- Authorised capital is a ceiling, not an asset or a liability.
- A dividend may only be paid out of available profits, not out of capital.
- A special resolution needs the higher statutory majority; an ordinary resolution a simple majority.
- A director's interest must be disclosed even where the transaction is at arm's length.
- Private company thresholds and exemptions are frequently tested: never apply public company rules to a private company.
Rule of thumb
For any company-law question, identify three things in order: the type of company (it determines most thresholds), who holds the power (board or members), and which formality the Act requires (filing, resolution, notice or consent). Getting the company type wrong cascades into every later step.