Numbering of Shares (Section 60)

o Every share in a company with share capital must have a unique number to
distinguish it from others.
o This rule also applies to shares held by a person whose name is listed as the holder
of a beneficial interest in the records of a central depository system.

Nature of shares or other securities. Sec 61

o The shares or securities owned by a member of a company are considered movable

property and can be transferable in the manner as outlined in the company's articles.
Shares certificate to be evidence. Sec 62

A share certificate:

o issued in physical form with the company's seal or official seal, or

o also be issued in the form of book-entry, showing the shares a person owns or the
shares held in a central depository system.
( Issued in digital form through a central depository system )

Share certificate serves as proof that the person named owns the shares mentioned.

Transfer of Shares and Securities (Sec 74)

• To transfer shares or securities, either the transferor (current owner) or the transferee (new
owner) can apply to the company.
• The application must include:
o A proper transfer document.
o The document must be stamped and signed by both the transferor and transferee.
• Once the company receives the application, it has 15 days to:
o Complete the transfer and send the share certificates to the transferee at their
registered address.
o Update its records to add the transferee's name as the new owner.
• If the shares or securities are being transferred to a central depository, the company must
register the transfer in the central depository's name within 10 days.

Transfer deed lost, destroyed or mutilated

If a transfer deed (the document used to transfer shares or securities) is lost, destroyed, or damaged
before being submitted to the company, the company can still approve the transfer if:

1. The transferee can apply to the company for the transfer of shares.
2. The application must include the proper stamp and meet the legal requirements for
transfer.
 3. The transferee must show proof to the company’s board that the document was completed
but got lost, destroyed, or damaged.

The company may ask for a guarantee (indemnity) to protect itself from any problems before
approving the transfer.

Register of Transfers

1. Every company must keep a record (register) of all share and securities transfers at its
registered office.
2. Members of the company have the right to view this register and get copies as per the rules
in section 124.
3. A company can record someone as a shareholder or securities holder if their right to the
shares or securities has been transferred to them by law (e.g., inheritance or court order).
4. If a company does not follow this rule, it will be liable to a penalty of level 2 on the standard
penalty scale.

Board Not to Refuse Transfer of Shares

1. The board cannot refuse to transfer shares or securities unless the transfer deed is defective
or invalid.
2. If there is an issue with the transfer document, the company must inform the person
receiving the shares (the transferee) within 15 days (or 5 days if the transferee is a central
depository).
3. Once the problem with the document is fixed, the transferee can submit the transfer
document again to complete the process.

Notice of refusal to transfer. Sec 77

If a company refuses to register the transfer of shares or securities, it must inform the
transferee within 15 days, explaining why the transfer was refused.
If the company doesn’t send this notice within the 15 days, it will be considered as automatically
refusing the transfer.

If the company doesn’t follow these rules, it could face a penalty.

Appeal against refusal for registration of transfer Sec 80

 • If the transferor (the person giving the shares), transferee (the person receiving the
shares), or someone who has transferred shares by law is aggrieved by the company's
refusal to register the transfer, they can appeal to the Commission within 60 days from the
refusal date.
• The Commission will give both parties a chance to explain their sides.
• After hearing the case, the Commission can order the company to register the transfer.
• The company must follow the Commission's order within 15 days.
• The Commission can also order the company to pay costs if needed.
• If the company doesn’t follow the Commission’s order, all directors and officers of the
company will be fined.

Restriction on transfer of shares by the members of a private company. Sec 76

If a member of a private company wants to sell their shares, they must notify the board of
their intention.
Once the board receives this notice, they have 10 days to offer the shares to the other members,
in proportion to their current shareholding.
The board will send a letter offering the shares to the other members. This letter will be sent
by:

• Registered post,
• Courier, or
• Email.

The offer letter will include:

• How many shares are available,

• The price of each share, and
• A time limit for accepting the offer, after which the offer will be considered declined if not
accepted.

If any member refuses or doesn’t take the shares, the board can offer those shares to the other
members based on their shareholding.
If all members refuse, or if any shares are left unsold, the member selling the shares can sell
them to someone outside the company.
The price of the shares will be determined by a method specified by the company.
When selling shares to someone outside, the member must ensure that the total number of
company members doesn’t exceed the legal limit.
A private company can sell its shares according to its articles of association and any
agreements made between shareholders before the Companies Act 2017 began.

Any such agreement is only valid if it is filed with the registrar within 90 days of the start of
the Act.

Transfer to successor-in-interest. Sec 78

When a member dies, their shares can be transferred to their heirs. The heirs must provide proof
of inheritance, like a succession certificate, and then their names will be added to the register of
members.

Transfer to nominee of a deceased member. Sec 79

The person who subscribes to the memorandum must nominate someone to act as a trustee
in the event of their death. This trustee will help transfer the shares to the deceased person's legal
heirs, following Islamic law or the law for non-Muslim members.

The nominee must be a close relative of the member, such as a spouse, father, mother, brother,
sister, or child.

After the member's death, the nominee will be treated as a member of the company until the
shares are transferred to the legal heirs.

If the deceased was a director (except in a listed company), the nominee will also act as the
director to protect the legal heirs' interests.

The nomination does not limit the member's right to transfer, sell, or deal with their shares
while they are alive. The nomination only applies to the shares owned at the time of death.

Power to Issue Shares at a Discount (Sec 82)

Power to Issue Shares at a Discount (Sec 82)

A company can issue discounted shares under these conditions:

1. Approval Required:
o A special resolution must be passed, including the number of shares, discount rate,
and price per share.
2. Commission Approval:
o The Commission must approve the discount.
o For listed companies, the price must be at least 90% of the average closing price
over the last 90 days.
o For non-listed companies, the price must be based on asset value or discounted cash
flow.
3. Conditions for Issuing Discounted Shares:
o The company must be operating for at least three years.
o For listed companies, the discount cannot be below 90% of the par value.
o Directors and sponsors must buy shares at the discounted price.
4. Application to Commission:
o The company must apply for Commission approval after passing the resolution.
5. Not a Capital Reduction:
 o Issuing discounted shares does not reduce the company’s capital.
6. Disclosure:
o The discount must be mentioned in any prospectus or financial statements.
7. Penalties:
o Violations result in a level 3 penalty.
8. Special Conditions for Listed Companies:
o Discounted shares can only be issued if the market price has been below par value
for the last 90 days.

Application of Premium Received on Issue of Shares (Sec 81)

When a company issues shares at a premium (for cash or otherwise), the amount received as
premium must be transferred to a special account called the "share premium account."

This money in the share premium account can be used for:

1. Covering the company’s initial expenses.

2. Paying expenses, commission, or discount on any share issue.
3. Paying premiums when redeeming redeemable preference shares.
4. Issuing bonus shares to shareholders.

Further Issue of Capital (Sec 83)

When a company decides to increase its share capital by issuing more shares, the following steps
must be followed:

1. Offer to Existing Members:

o Shares are offered to current members in proportion to their holdings.
o The offer must be made between 15 to 30 days, and if not accepted, it's considered
declined.
o A signed offer letter must be sent to members and a copy to the registrar.
2. Renouncement in Listed Companies:
o Members in listed companies can transfer shares to others before the offer expires.
3. Government Loan Conversion:
o The government can convert loans to shares in a public sector company on agreed
terms, even if not stated in the loan agreement.
o If the company’s capital is fully subscribed, it will be increased to accommodate
government shares.
4. Filing Requirement:
o The company must file a notice of capital increase with the registrar, or the
government or financial institution can file it for them.
5. Penalty for Violations:
o Non-compliance can lead to a level 2 penalty.