SECP proposes amendments in Section 16 of Companies Act

ISLAMABAD: The Securities and Exchange Commission of Pakistan (SECP) has proposed amendments in the Companies Act with the objective of modernising, simplifying, and digitising the process of company incorporation in Pakistan.

In this regard, the SECP has proposed amendments in Section 16 of the Companies Act.

The amendments to Section 16 are introduced to ensure legal continuity for previously incorporated entities, as well.

(i) Omission of the Memorandum of Association: The requirement of a separate memorandum of association has been merged into the articles of association to create a single constitutive document governing the company’s objectives, internal management, and corporate powers. This change aligns Pakistan’s corporate framework with modern international practices where only articles of association serve as the foundational document. The reform eliminates duplication, simplifies incorporation, and enhances clarity for users.

(ii) Insertion of Sub-sections (11) to (13): Transitional and Saving Provisions; These provisions ensure that companies incorporated prior to the amendment remain legally protected. Their existing memoranda are deemed to form part of the articles, preserving the validity of incorporation, rights, and obligations under prior law. This avoids any retrospective disruption or uncertainty for ongoing corporate operations.

(iii) Inclusion of Clause e of sub section (1): The new clause facilitates dematerialization of shares at the incorporation stage by allowing subscribers to accept terms for holding shares in the Central Depository System (CDS). This enhances transparency, reduces fraud risks, and supports SECP’s digitalisation agenda in line with the Central Depositories Act, 1997.

Overall, these amendments are aimed at simplifying incorporation, integrating digital processes, and aligning Pakistan’s corporate law with global standards, while maintaining full protection for companies already incorporated under the previous regime, SECP added.

Copyright Business Recorder, 2026