New bill introduces inactive company concept

Newly passed Companies Bill, 2016 has exempted small and single member companies from certain statutory requirements and introduced the concept of Inactive Company, which may be formed for a future project or to hold an asset and has no significant accounting transaction.
Sources toldBusiness Recorder here on Tuesday that a new concept of "Inactive Company" has been introduced in the Bill through which a company that is formed for a future project or to hold an asset or intellectual property and has no significant accounting transaction or a company which is not in operation or is not functional, can avail the status of an inactive company upon submitting an application to the registrar. An inactive company has been allowed certain exemptions and minimum requirements of filing.
A number of new concepts have been introduced in the Companies Bill, 2016 including companies' global register of beneficial ownership, acceptance of deposits by real estate companies and requirements for directors to hold national tax number (NTN), except where the requirement is relaxed by the Commission.
Other new concepts include exemptions to small and single member companies from certain statutory requirements; simple memorandum introduced allowing lawful businesses; poll through secret ballot allowed; unclaimed dividend to vest with the federal government; certification of Shariah compliant companies and Shariah compliant securities and security clearance of shareholder and director.
Other new concepts under Companies Bill, 2016 included mandatory arrangement of video-link facility by listed companies; manner of selection of independent directors and maintenance of databank of independent directors; conversion of shares into book-entry form; fresh election of directors in case of unlisted companies and mediation and conciliation panel for effective and swift dispute resolution.
The major focus of the new company law is the facilitation to the corporate sector, strengthening of the regulatory framework, maximum emphasis on the use of technology, abolishing unnecessary requirements, protection of the interest of shareholders, and a softer regime for the companies having no stake of the general public.
The measures for ease of business include ease in incorporation of new companies and less filing requirements. The companies with a paid-up capital up to three million rupees are not required to file return if there is no change in the particulars. The concept of inactive company has been introduced which will provide the flexibility to owners to keep the company alive with no compliance requirements during the inactive period. The companies with a paid-up capital up to Rs 1 million are not required to get the financial statements audited. The concept of decision by circular resolution has been introduced for ease of operation of companies. Alternate dispute resolution mechanism has been provided in the law, which will assist companies to use these forums without paying hefty legal fees in lesser time. Amalgamation or merger has been eased by allowing the amalgamation of wholly owned subsidiaries in holding company without formal approval.
The concept of global register of beneficial ownership for Pakistani nationals has been introduced. The concept of free zone company and Sharia-compliant company has been added. In order to ensure protection of depositors of real estate, the real estate companies soliciting advances shall be required to obtain appropriate approvals before soliciting advances, sources said.
The concept of registration of intermediary has been added in the company law. The companies would be required to maintain electronic record of meetings for ever; however, physical record for only 10 years will be maintained. The scale of penalties has been standardised and three levels of fines have been defined. Classification of companies has been outlined in the company law. In order to promote SME, several compliance requirements have been waived, sources said. The profit on funds available in unclaimed dividend will be utilised for investor education.