In Pakistan, it is indeed possible for a company to be a partner or a shareholder in another company or a registered partnership. The specific legal framework governing such arrangements can be found in the Companies Act, 2017, and the Partnership Act, 1932.A partnership agreement or memorandum in the case of the latter, will be beneficial to protect the company’s interests in that capacity.
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Under the Companies Act 2017 , a company can acquire shares in another company, either through direct subscription to the shares issued by the company or through the purchase of existing shares from existing shareholders. This allows the acquiring company to become a shareholder in the target company, entitling it to certain rights and benefits associated with shareholding.
Similarly, under the Partnership Act, a company can also become a partner in a registered partnership. A partnership is a form of business association where two or more persons agree to carry on a business together and share the profits and losses. While partnerships are typically formed between individuals, there is no legal restriction on a company being a partner in a registered partnership.
However, it’s important to note that specific legal and regulatory requirements must be followed when a company becomes a partner or a shareholder in another entity. These requirements may include compliance with regulatory filings, disclosure of shareholding/partnership interests, and adherence to corporate governance standards.
To ensure compliance and to understand the specific legal implications of such arrangements, it is recommended to consult with legal professionals or experts familiar with Pakistani company and partnership laws. They can provide guidance tailored to your specific situation and ensure that all legal requirements are met.To contact our team send us an email at [email protected]
Under the Companies Act, 2017 of Pakistan, a company can indeed act as a partner or a shareholder in another company or registered partnership. This is supported by the provisions related to associated companies and undertakings, as well as the regulations concerning investments and shareholding.
- Associated Companies and Undertakings: The Act recognises interconnected companies or undertakings, where an individual who is a partner or shareholder in one company may also hold a similar position in another, thus establishing an association between the entities. This is detailed in the definitions section, where ownership or control of a significant portion of shares (not less than twenty percent of voting power) in multiple entities creates an association between them .
- Investment and Shareholding: The Act stipulates that a company can hold shares in its subsidiary in its own name or in the name of a nominee if necessary. This ensures compliance with statutory requirements regarding the number of members in a subsidiary company. Moreover, a company may appoint directors in other companies and hold shares necessary for such appointments jointly or solely in the name of the nominee .
- Legal Formation and Obligations: Companies can be formed for any lawful purpose by subscribing to a memorandum of association, and these companies can either be with limited or unlimited liability. This legal framework supports the structure where companies can invest in or become partners in other companies or partnerships .
Hence, the Companies Act, 2017, clearly provides the legal basis for a company to be involved as a partner or shareholder in another company or partnership, fostering a flexible and integrated corporate structure within Pakistan.
