Section 2 of the companies’ ordinance 1984 has laid down the definition of associated companies. The article below is written within the guidelines of companies’ ordinance 1984 which is the applicable law for companies registered in Pakistan only. Therefore these rules are regulations are only applicable for companies registered in Pakistan.
Company Registered in Pakistan and Section 2 of companies’ ordinance 1984 that define associated companies and associated undertakings for purpose of companies’ ordinance, 1984.
As per the companies ordinance 1984 any two companies that are connected to each other in any of the following manner shall be deemed as associated companies registered in Pakistan.
If a person is connected to the company as owner, partner, and director or is currently holding or controlling 20% or more shares or controlling interest and also holds the similar interest in another company, then such two companies are considered associated companies within the meaning of companies’ ordinance 1984.
Another important point to mention here is that even if the shares are owned by the spouse or children they are considered for the purpose of this section be owned by the person.
Furthermore if there are two companies that are under common management they are also considered as associated companies for the purposes of companies registered in Pakistan.
Another important condition for companies to be considered as associated companies is that one company is subsidiary of another company.
There are certain exceptions with regard to companies registered in Pakistan to be considered as associated companies which are mentioned below:
If the person is appointed as director of various companies by any Government then that companies are not considered as associated companies registered in Pakistan for the purpose of companies’ ordinance 1984.
Similarly National Investment Trust and Investment Corporation of Pakistan holds shares in various companies in Pakistan. These companies are not considered as associated companies for the purposes of companies registered in Pakistan.
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