The Securities and Exchange Commission of Pakistan (SECP) is the regulatory body responsible for overseeing the corporate sector of Pakistan. One of the many functions of the SECP is to oversee the process of business closure in the country. Business closure refers to the process of shutting down a business, either voluntarily or through legal mandate.
How to Close Business in Pakistan?
In order to close a business in Pakistan, there are certain legal requirements that must be met. These include filing the necessary paperwork with the SECP, settling any outstanding liabilities with creditors and employees, and complying with relevant tax and labor laws. Failure to comply with these requirements can result in penalties and legal action.
The SECP provides various resources and guidelines to assist businesses in the process of closure. These resources include step-by-step guides, online forms, and a helpline for businesses seeking guidance on the process. Overall, the SECP plays a crucial role in ensuring that businesses are able to close down in a transparent and legally compliant manner.
If you are planning to close a company in Pakistan, you need to follow the steps provided by the Securities and Exchange Commission of Pakistan (SECP) to ensure a smooth process. Here are the 10 steps you need to take to close a company from SECP:
- Hold a board meeting: The first step is to call a board meeting and pass a resolution to close the company.
- File notice of voluntary winding up: Within 14 days of the board meeting, you need to file a notice of voluntary winding up with the Registrar of Companies (ROC).
- Appointment of a liquidator: You need to appoint a liquidator who will be responsible for winding up the company’s affairs.
- Filing of statement of affairs: The liquidator needs to file a statement of affairs with the ROC within 21 days of appointment.
- Publication of notice: A notice of liquidation should be published in the official gazette and in a newspaper circulating in the company’s area of operation.
- Notice to creditors: The liquidator needs to give notice of liquidation to all known creditors of the company.
- Finalization of accounts: The liquidator should finalize the company’s accounts and prepare a final report.
- Filing of final report: The final report should be filed with the ROC, along with a copy of the liquidator’s accounts.
- Dissolution of the company: After the ROC is satisfied that the liquidation has been properly conducted, the company will be dissolved.
- Public notice of dissolution: The liquidator should publish a notice of dissolution in the official gazette and a newspaper circulating in the company’s area of operation.
By following these steps, you can ensure a smooth and legal process for closing your company from SECP.
Introductory Remarks:
Before we explain how to liquidate a company, let’s first understand what this term means – the process by which a company is liquidated (i.e., the life of a company comes to an end). ). Thus, liquidation is the process of terminating the existence of a company. Meanwhile, in this process, the company’s assets are liquidated, the company’s debts are paid off from the assets received or from partners, and if any surplus remains, it is distributed among the participants in proportion to their shareholdings.
The liquidation of a company is also known as the “liquidation” of a company. The liquidation process begins when the court orders liquidation or decides on voluntary liquidation. The company is liquidated after the completion of the liquidation process. Upon liquidation, the company ceases to exist. Hence, the legal procedure by which a registered company ceases to exist is called liquidation.
Who is the Liquidator?
The person who wishes to do the business close is called a liquidator. If the settlement of closing business is enforced by a court of law, the term used for that person is the plaintiff. The liquidator’s functions include accepting and returning the company’s assets, paying its debts, and distributing any surplus to the partners. Plaintiffs operate under judicial supervision through a recognized reporting system.
The Law of Pakistan gives the following general rights or powers to the liquidator(s):-
- Liquidator has the right to institute or defend any suit, action, prosecution, or other legal proceedings, civil or criminal on behalf of the company by his/them, legal counsel.
- The liquidator(s) right to carry on the business of the company so far as may be necessary for its beneficial to it as well till the final decision of the court.
- He may pay the creditors.
- The Liquidator can make any compromise or arrangement with creditors.
- He also use to compromise all calls and liabilities to calls, debts, and liabilities capable of resulting in debts.
- He can sell the movable and immovable property and things in an action of the company by public auction or private contract, with the power to transfer to any person(s) or to sell the same in parcels.
- He can do all acts and execute all deeds, receipts, and other documents in the name and on behalf of his company and for that purpose to use in the company’s seal when necessary.
- The liquidator(s) can prove, rank and claim in the bankruptcy, insolvency or sequestration of any contributory for any balance against his company estate and to receive dividends as a separate debt due from the bankrupt or insolvent in the bankruptcy as well.
- He also draws, accepts, makes, and endorses any bill of exchange or promissory note in the name and on behalf of his company.
- It is also the right of the liquidator(s) to raise any on the security of the assets of the company or any money.
What are the liquidation zones of the Company?
The Company can Liquidate by:
(i) The Court; or
(ii) Voluntary; or
(iii) Under the supervision of the Court.
Thus, liquidation is the process of ending the life of a Company. And also during the Company Closing Procedure, the assets of the Company are alienated, the debts of the Company paid off by the realized assets or contributors, and if any surplus remains, it become distributed among the participants in proportion to their stake in the Company.
Furthermore, the liquidation of a Company is also called the “liquidation” of the Company. In addition, the liquidation process begins after the court issues a liquidation order or a voluntary liquidation order. As well as the Company liquidated after the completion of the liquidation procedure. Upon dissolution, the Company ceases to exist. Thus, the legal procedure by which a registered Company terminated and known as liquidation.
Basic Process of Business Close:
- To initiate or defend any claim, legal action or other legal litigation, civil or criminal, on behalf of the Company Closing Procedure;
- To conduct the business of the Company as much as it may be necessary for beneficial to him.
- Pay creditors;
- Make a compromise or agreement with creditors;
- To compromise all the challenges and obligations of challenges, debts and obligations capable of leading to debt;
- Sell movable and immovable property and things under the management of the Company, at an open auction or under a private contract, with the right to transfer to any person or sell the same package;
- Take all actions and execute all documents, receipts and other documents on behalf of and on behalf of the Company and for this purpose use the Company’s seal if necessary;
- To prove, rank and claim in bankruptcy, insolvency or arrest any contribution to paying off the balance of his property and receiving dividends in the form of a separate debt due from a bankrupt or insolvent person bankruptcy;
- For the preparation, acceptance, production, and support of any bill of exchange or promissory note;
- Mark in the name and on behalf of the Company;
- Raise any money secured by the Company’s assets;
What are the Consequences of liquidation?
Some important consequences of the Company Closing Procedure or liquidation of the Company are as follows:
As for the Company itself, this does not mean that the Company has ceased to exist. The Company exists as a legal entity with all the rights of such an organization, with the only change that its management and administration must be carried out through the liquidator or liquidators prior to the final dissolution of the Company. As for the shareholders. A new statutory liability as contributors appears. Any transfer of shares or change in the status of a shareholder after liquidation has commenced by court order, unless approved by the liquidator, is void.