Introduction
Modifying a company’s Memorandum of Association (MoA) is a significant corporate event with legal, strategic, and regulatory implications. In Pakistan, this process is governed by the Companies Act, 2017 and regulated by the Securities and Exchange Commission of Pakistan (SECP). Whether prompted by business diversification, regulatory compliance, or corporate restructuring, any amendment to the MoA must be executed with precision and transparency.
This guide provides a step-by-step overview of how companies in Pakistan can lawfully amend their memorandum, along with key legal and procedural considerations.
Understanding the Memorandum of Association
The Memorandum of Association is the company’s foundational charter, laying out:
-
The company’s name
-
The registered office location
-
The main and ancillary objects
-
The capital structure
-
The liability of members
It governs the company’s external relationships and is publicly available on SECP’s record. Any change in the MoA must reflect genuine business needs and be backed by a special resolution.
Why Amend the Memorandum?
Changing Business Objectives
Companies may diversify or pivot their operations. Updating the object clause enables legal expansion into new sectors or geographies.
Legal and Regulatory Compliance
Legislative changes, SECP directives, or sector-specific licensing requirements may necessitate alignment of the MoA with new rules.
Corporate Restructuring
Events such as mergers, acquisitions, or rebranding often require amending the name, structure, or capital clauses in the memorandum.
Legal Framework and Requirements in Pakistan
Governing Law
Amendments are governed under Sections 32 to 36 of the Companies Act, 2017. The SECP’s guidelines and eServices Portal facilitate the submission and review process.
Shareholder Approval
A special resolution is mandatory, requiring at least 75% of votes cast in a general meeting to approve the proposed amendment.
Regulatory Approvals
Depending on the nature of the amendment, approval may also be required from:
-
SECP (for change in object clause or capital structure)
-
Other regulators (e.g., SBP, PTA, OGRA, for sectoral compliance)
Step-by-Step Process to Amend the Memorandum
1. Drafting the Proposal
The board of directors must propose the specific changes to the MoA. The proposed amendment must be carefully drafted by the company’s legal advisor.
2. Calling the General Meeting
The company must issue a 21-day notice to all shareholders, attaching the explanatory statement and draft resolution for approval.
3. Passing the Special Resolution
At the Extraordinary General Meeting (EOGM), shareholders must vote on the proposed amendment. A three-fourths majority of members present and voting is required.
4. Filing with SECP
Post-approval, the following must be filed via SECP’s eServices Portal:
-
Special resolution (Form 26)
-
Amended Memorandum of Association
-
Board resolution
-
Prescribed filing fee
SECP will review the application and may request clarifications before accepting the changes.
5. Issuance of Certified Copy
Once approved, the SECP updates the company’s public record and issues a certified copy of the amended MoA, which becomes legally binding.
Post-Amendment Compliance
After the SECP approval:
-
Update all statutory registers
-
Notify banks, regulatory bodies, and business partners
-
Publish changes on the company’s website
-
Reflect changes in official documents and contracts
Key Considerations
Strategic Fit
Ensure that the amendment supports the long-term vision and business roadmap of the company.
Legal Expertise
Engage a qualified corporate law firm or SECP-certified advisor to draft, file, and track the amendment process.
Stakeholder Communication
Notify and consult all relevant stakeholders to avoid resistance and ensure full transparency.
Risk and Impact Assessment
Evaluate any regulatory, reputational, or operational risks associated with the change, especially when altering the object clause.
Common Challenges
Shareholder Opposition
Not all shareholders may support the change—especially if they perceive dilution of control or deviation from the original business model.
Regulatory Delays
Amendments that require approvals from multiple regulators (e.g., for NBFCs, insurers, banks) may face longer review cycles.
Administrative Costs
The process includes legal drafting, regulatory fees, meeting logistics, and SECP processing charges, which may add up.
Conclusion
Amending a company’s Memorandum of Association is a vital corporate action that should be approached with strategic clarity, legal compliance, and transparent governance. When carried out correctly, it equips the business to evolve, expand, and stay compliant in a changing legal and commercial landscape.
At Sterling.pk, we assist companies with:
-
Drafting amended clauses
-
Preparing resolutions and notices
-
SECP filings and follow-ups
-
Regulatory consultation and stakeholder management
