CITY CAMPUS; KARACHI

CORPORATE LAWS
Name: ____________________
Q:

Date: _____________________

In relation to the Companies Ordinance, 1984 define (b) Companies limited by

guarantee?

Proposed Solution:
(b) Companies whose members undertake and guarantee to contribute, to the assets of the
company, a certain sum of money upon its winding up are termed as companies limited
by guarantee as per s.2(1)(9) of the Ordinance. The superior courts of Pakistan have
observed, in Sindh Industrial Trading Estate Limited v Central Board of Revenue, PLD
1975 Karachi 128, that such kinds of companies, as a common practice, are used as
vehicles for non-profit making associations, its members act as guarantors of the
companys debts up to guaranteed amounts and the working capital comes from sources
such as endowments, grants, fees and subscription.
As per s.43 of the Ordinance, every provision in the memorandum or articles of
association of a company limited by guarantee (and not having a share capital) or any of
its resolutions purporting to give any person a right to participate in the divisible profits
of the company otherwise than as a member shall be void.

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