President Alvi approves amendments to Companies Act 2017 to facilitate startups.

ISLAMABAD: President Dr Arif Alvi has approved amendments in Companies Act 2017 to provide an enabling regulatory framework to facilitate startups in Pakistan.

These amendments were proposed by the Securities and Exchange Commission of Pakistan (SECP) to help promoting and nurturing startups as well as attract local and international innovators.

The Companies Act, 2017, promulgated on May 31, 2017, was reviewed by the SECP in consultation with various external and internal stakeholders including PBC, ICAP, ICMAP, OICCI and PICG etc. On the basis of feedback received during the consultation process, various amendments were proposed by the SECP to promote ease of doing business, encourage startups, improve protection of minority shareholders and remove some anomalies noted in the provisions of the Act. These amendments have been enacted through Companies (Amendment) Ordinance, 2020 promulgated on April 30, 2020.

In order to encourage startups, besides adding definition of startup companies, employees stock options and buyback of shares has been allowed for all companies while earlier this was allowed for public and listed companies only. These amendments will help address the employee retention and reward issues particularly faced by startup companies. It would also facilitate startups in case, any founding member needs to exit the company.

Requirement relating to payment of subscription money within 30 days of incorporation by subscriber and filing of auditor certificate has been done away to facilitate small companies.

Now a listed company may hold extra ordinary general meeting at a shorter notice with the approval of the Commission. Further all companies are required to file annual return with the registrar irrespective of paid-up capital. CEO shall now be appointed by board of directors...