Constitution & Corporate Law

Constitution of Pakistan

The Constitution of Pakistan is the supreme law of the country, establishing the framework for the government and outlining the rights and duties of citizens. Key aspects include:

  1. Preamble: States the objectives of the Constitution, emphasizing sovereignty, democracy, freedom, equality, tolerance, and social justice.

  2. Fundamental Rights: Guarantees basic human rights such as freedom of speech, freedom of religion, equality before the law, and the right to a fair trial.

  3. Structure of Government:

    • Executive: The President is the ceremonial head of state, while the Prime Minister is the head of government.
    • Legislature: A bicameral parliament consisting of the Senate (upper house) and the National Assembly (lower house).
    • Judiciary: An independent judiciary with the Supreme Court at the apex, followed by High Courts and lower courts.
  4. Provincial Governments: Each province has its own government with a Governor, Chief Minister, and Provincial Assemblies.

  5. Islamic Provisions: The Constitution includes provisions ensuring that all laws are consistent with Islamic principles. The Federal Shariat Court reviews laws to ensure they comply with Islamic injunctions.

  6. Amendments: The Constitution can be amended by a two-thirds majority in both houses of Parliament.

Corporate Law in Pakistan

Corporate law in Pakistan is governed by several statutes, regulations, and authorities. The primary legislation includes:

  1. The Companies Act, 2017: This is the principal law governing the incorporation, regulation, and winding up of companies in Pakistan. Key aspects include:

    • Incorporation: Procedures for registering different types of companies, including private, public, and not-for-profit companies.
    • Corporate Governance: Regulations on the roles and responsibilities of directors, shareholders, and company secretaries.
    • Financial Reporting: Requirements for financial statements, audits, and disclosures to ensure transparency and accountability.
    • Winding Up: Procedures for the dissolution of companies, including voluntary and compulsory winding up.
  2. Securities and Exchange Commission of Pakistan (SECP): The regulatory authority responsible for overseeing corporate sector activities, including securities markets, insurance companies, and non-banking financial companies. The SECP enforces corporate governance standards and ensures compliance with corporate laws.

  3. Pakistan Stock Exchange (PSX): The main stock exchange in Pakistan, where public companies are listed and traded. The PSX operates under the regulatory oversight of the SECP.

  4. Listing Regulations: Rules and regulations governing the listing and trading of securities on the PSX. These regulations ensure fair trading practices, transparency, and investor protection.

  5. Code of Corporate Governance: Issued by the SECP, this code outlines best practices for corporate governance, including board composition, audit committees, and internal controls.

  6. Foreign Investment: Governed by the Foreign Private Investment (Promotion and Protection) Act, 1976, and the Investment Policy of Pakistan. These laws provide a framework for foreign investors, offering incentives and protections to encourage investment in Pakistan.

Key Corporate Law Concepts

  1. Corporate Personality: Recognizes companies as separate legal entities distinct from their shareholders, allowing them to own property, enter contracts, and sue or be sued in their own name.

  2. Limited Liability: Protects shareholders by limiting their liability to the amount of their investment in the company. They are not personally liable for the company’s debts beyond their shareholding.

  3. Share Capital: Represents the equity investment in the company. Companies can issue various types of shares, including ordinary and preference shares, with different rights and privileges.

  4. Directors and Officers: Individuals responsible for the management and oversight of the company. Directors owe fiduciary duties to the company, including duties of care, loyalty, and good faith.

  5. Mergers and Acquisitions: Legal processes through which companies can combine or acquire other businesses. These transactions are subject to regulatory approvals and compliance with relevant laws.

  6. Corporate Restructuring: Includes processes such as mergers, demergers, and corporate reorganizations to improve business efficiency and financial health.

Understanding the Constitution and corporate law in Pakistan is essential for operating within the legal framework, ensuring compliance, and protecting rights and interests in various legal and business contexts. 

 


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