January 13, 2017

What are Borrowing Powers and restrictions on the Company Registered in Pakistan

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Company registration in Pakistan and borrowing powers and restrictions on the company

As per the provisions of the companies ordinance, 1984 the applicable law for companies registered in Pakistan every company after registration has the implied power to borrow money irrespective of any provision mentioned in the memorandum or articles of the company.

The method by which and rules and regulations for borrowing by company are mentioned in the articles of association of the company. Further if it is mentioned in the articles of association of the company that borrowing powers for the company are exercised by the Board of Directors of the company then in that case the amount of capital that the company can borrow through directors shall also be mentioned in the articles of association of the company.

Directors also have the right to delegate the powers assigned to them for borrowing to any one or more officers of the company.

Another important point to know at this stage is that the loans obtained by the company shall not at any time exceed the paid up capital of the company without approval by the members in the general meeting of the company.

Similarly Public companies are not allowed to borrow money before they obtained certificate to commence business from the registrar of the companies.

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