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How to dissolve a company in Pakistan


Dissolving a company in Pakistan is a complex process that involves several legal and procedural steps. Whether due to financial difficulties, strategic changes, or any other reason, understanding the dissolution process is crucial for business owners.



Dissolution refers to the legal process of winding up and terminating a company’s existence. It involves liquidating assets, settling debts, and distributing remaining assets to shareholders.

Voluntary Dissolution:

Voluntary dissolution occurs when the company’s directors and shareholders decide to dissolve the company willingly, typically through a shareholders’ resolution.

Compulsory Dissolution:

Compulsory dissolution is initiated by a court order due to various reasons, such as failure to comply with legal requirements, non-payment of debts, or other serious legal violations.


To illustrate the dissolution process in Pakistan, let’s consider two hypothetical case examples:

Case Study 1: Voluntary Dissolution

ABC Industries Pvt. Ltd., a manufacturing company, decides to dissolve due to persistent losses and lack of profitability. The directors and shareholders hold a meeting and pass a resolution to initiate voluntary dissolution. They appoint a liquidator to oversee the process and distribute assets to creditors and shareholders in accordance with the law.

Case Study 2: Compulsory Dissolution

XYZ Trading Company Pvt. Ltd. fails to submit its annual financial statements for three consecutive years and neglects other statutory obligations. As a result, the Securities and Exchange Commission of Pakistan (SECP) initiates legal proceedings and obtains a court order for the company’s compulsory dissolution. The court appoints a liquidator to sell the company’s assets and settle its outstanding liabilities.

Dissolution Procedure:

Voluntary Dissolution:

Board Resolution:

The directors convene a board meeting to propose voluntary dissolution. A majority vote is required to pass a resolution for dissolution.

Shareholder Approval:

Shareholders must convene a general meeting to approve the dissolution resolution. A special resolution, passed by a 75% majority, is usually required.

Appointment of Liquidator:

The company appoints a liquidator, either from within the company or an external professional, to oversee the dissolution process.

Public Notice:

The company publishes a public notice in a widely circulated newspaper, announcing the decision to dissolve. Creditors and stakeholders are provided an opportunity to submit their claims within a specified timeframe.

Asset Liquidation:

The liquidator sells the company’s assets and uses the proceeds to settle outstanding liabilities. Any remaining funds are distributed among shareholders in proportion to their ownership.

Compulsory Dissolution:

Legal Proceedings:

The SECP or other concerned authorities initiate legal proceedings against the company for non-compliance or serious violations.

Court Order:

If the court finds the company guilty or non-compliant, it issues a dissolution order, appointing a liquidator to wind up the affairs of the company.

Liquidation Process:

The liquidator sells the company’s assets, settles debts and liabilities, and distributes any remaining assets to the creditors and shareholders as per the court’s directions.


Dissolving a company in Pakistan involves a well-defined legal and procedural framework. While voluntary dissolution allows directors and shareholders to initiate the process willingly, compulsory dissolution is imposed by a court due to non-compliance or serious legal violations. Understanding the steps involved, such as passing resolutions, appointing a liquidator, liquidating assets, and settling debts, is vital for a smooth dissolution process. By following the proper procedures, businesses can dissolve in compliance with Pakistani laws, ensuring a fair distribution of assets and liabilities.