How To Close Or Dissolve a Registered Company In Pakistan?

 Closing or dissolving a registered company in Pakistan is a formal legal process governed by the Companies Act, 2017 and regulated by the Securities and Exchange Commission of Pakistan (SECP). Whether the Company Registration In Pakistan is being closed due to inactivity, financial issues, or a business decision, it is crucial to follow proper procedures to avoid legal complications in the future. The process is known as winding up, and it can be done voluntarily or through a court order, depending on the circumstances.

Types of Company Winding Up in Pakistan

There are three main ways a company can be dissolved in Pakistan:

  1. Voluntary Winding Up by Members or Creditors

  2. Winding Up by the Court (Compulsory Winding Up)

  3. Striking Off by SECP (Simplified Dissolution for Dormant Companies)

Each method has its own process and legal requirements.

1. Voluntary Winding Up

This is the most common method and can be initiated by the shareholders or creditors of a solvent company.

Steps for Voluntary Winding Up:

a. Board Resolution:
The Board of Directors passes a resolution recommending that the company be wound up voluntarily.

b. Declaration of Solvency (if applicable):
In case of a members’ voluntary winding up, the directors must declare that the company can pay its debts within 12 months.

c. Special Resolution by Shareholders:
A special resolution is passed in a general meeting to approve the winding up of the company. This must be filed with the SECP within 15 days.

d. Appointment of Liquidator:
A liquidator is appointed to settle the company’s affairs. The liquidator takes control of assets, pays liabilities, and distributes any remaining assets to shareholders.

e. Notice to Registrar and Public:
The company must publish a notice of the resolution in newspapers and notify the SECP.

f. Final Meeting and Dissolution:
After settling all affairs, the liquidator calls a final meeting. A report is filed with SECP, and the company is dissolved officially.

2. Compulsory Winding Up by Court

This occurs when a company is unable to pay its debts, has committed legal violations, or it is deemed just and equitable to wind it up.

Key Triggers:

  • Failure to commence business within one year

  • Inability to pay debts

  • Legal violations or fraud

  • Court order upon petition by creditors, shareholders, or SECP



Process:

  • A petition is filed in the High Court by an eligible party (creditor, company, shareholder, or SECP).

  • The court may appoint a provisional manager or official liquidator.

  • After reviewing the case, the court may order the company’s dissolution.

  • The liquidator manages the sale of assets and settles liabilities under court supervision.

Company Registration In Pakistan is more complex, time-consuming, and typically involves legal counsel.

3. Striking Off by SECP (Simplified Closure)

SECP may strike off a company’s name from its register if the company is no longer in operation.

When Can This Be Used?

  • The company is inactive and not carrying on business for one or more years.

  • The company applies voluntarily for striking off.

Process:

  • A formal application is submitted to SECP with a declaration of inactivity and no liabilities.

  • SECP issues a notice to the company and provides time for objections.

  • If no objections arise, SECP strikes the name off the register and publishes a notice in the Official Gazette.

This method is suitable for small, inactive, or dormant companies that want a cost-effective exit.

Post-Dissolution Considerations

After dissolution:

  • The company’s legal existence ends.

  • It cannot enter into contracts or initiate legal actions.

  • All bank accounts must be closed, and tax authorities informed.

  • Any remaining assets are distributed as per legal priority.



Conclusion

Closing or dissolving a registered company in Pakistan requires careful legal compliance, depending on whether the company is solvent, insolvent, or inactive. Voluntary winding up is straightforward for solvent companies, while court-ordered winding up is suitable for insolvent firms. Dormant companies may opt for SECP’s striking off procedure. Regardless of the method, hiring professional legal like Hamza & Hamza Law Associates or accounting help ensures the process is completed correctly and efficiently.

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