companies act 2017 chapter VII section 220 - 227

1. Part VII: Accounts of Companies
Companies Act 2017
Section 220/221/222/223/224/225/226/227
Presented By
Hareem Siddiqui
1224-31-0005
Gul Israr Khan
1224-1-0011
Presented to:
Sir Amjad Ali
Course: Business Law

2. 220. Books of account, to be kept by the
company.
• Every company shall prepare and keep at its registered office books of account and other relevant books and
papers and financial statements for every financial year which give a true and fair view of the state of the
affairs of the company.
• Where a company has a branch office in Pakistan or outside Pakistan, it shall be deemed to have complied
with the provisions of sub-section (1), if proper books of account relating to the transactions effected at the
branch office are kept at that office and proper summarized returns are sent periodically by the branch office
to the company at its registered office or the other place referred to in sub-section (1).
• The books of account and other books and papers maintained by the company within Pakistan shall be open
for inspection at the registered office of the company or such other place in Pakistan by any director during
business hours, and in the case of financial information, if any, maintained outside the country, copies of
such financial information shall be maintained and produced for inspection by any director.
• Where an inspection is made under sub-section (3), the officers and other employees of the company shall
give to the director making such inspection all assistance in connection with the inspection which the
company is reasonably expected to give.

3. • 5. The books of account of every company relating to a period of not less than ten financial years immediately
preceding a financial year, or where the company had been in existence for a period less than ten years, in respect
of all the preceding years together with the vouchers relevant to any entry in such books of account shall be kept in
good order.
• 6. If a company fails to comply with any of the requirements of this section, every director, including the chief
executive and chief financial officer, of the company who has by his act or omission been the cause of such
default, shall—
• (a) in respect of a listed company, be punishable with imprisonment for a term which may extend to two
years and with a fine which shall not be less than five hundred thousand rupees nor more than five
million rupees, and with a further fine which may extend to ten thousand rupees for every day after the first
during which the default continues; and
• (b) in respect of any other company, be punishable with imprisonment for a term which may extend to
one year and with a fine which may extend to one hundred thousand rupees.
• 7. The provisions of this section except those of sub-section (5), shall apply mutatis mutandis to the books of
account which a liquidator is required to maintain and keep.

4. 221. Inspection of books of account by the Commission.
• This section typically empowers a regulatory body, often referred to as the Commission, to inspect and scrutinize the books
of accounts maintained by companies. Here's a simplified explanation:
• Authority to Inspect: The section grants the regulatory body (in this case, the Commission) the legal authority to examine
and review the financial records, transactions, and books of accounts of companies.
• Ensuring Compliance: The purpose of this inspection is to ensure that companies are following the rules and regulations
related to maintaining accurate and proper financial records as outlined in the Companies Act.
• Verification of Accuracy: The Commission can check whether the entries in the books of accounts are accurate and
whether they provide a true and fair view of the company's financial position.
• Investigative Powers: This authority allows the Commission to investigate any concerns or suspicions regarding a
company's financial practices. It helps in maintaining transparency and integrity in corporate financial reporting.
• Protection of Stakeholders: By having the power to inspect books of accounts, the Commission works to protect the
interests of various stakeholders, including shareholders, creditors, and the general public.
• Enforcement of Compliance: If the Commission identifies any discrepancies, violations, or non-compliance with
accounting standards or legal requirements, it may take appropriate actions, which could include penalties, fines, or other
regulatory measures.

5. 222.Default in compliance with provisions of section 221.:
• (1) If default is made in complying with the provisions of section 221, every person who
is in default shall be punishable with imprisonment for a term which may extend to one
hundred and eighty days and with fine which may extend to one hundred thousand rupees.
• (2) Where a director or any other officer of a company has been convicted of an offence
under this section, he shall, on and from the date on which he is so convicted, be deemed
to have vacated his office as such and, on such vacation of office, shall be disqualified for
holding such office in any company, for a period of three years

6. Statement of Changes in Equity: This shows the changes in equity over a specific period,
including common stock, retained earnings, and other comprehensive income.​
• These financial statements are crucial for various stakeholders, including investors,
creditors, management, and regulatory bodies, as they provide insights into the financial health
and performance of an entity.​
223. Financial Statements.—
Balance Sheet (Statement of Financial Position): This provides a snapshot of a company's financial
condition at a specific point in time, showing assets, liabilities, and equity.
Income Statement (Profit and Loss Statement): This details the revenues and expenses over a
specific period, indicating the company's profitability.
Cash Flow Statement: This tracks the inflow and outflow of cash and cash equivalents over a
specific period, helping to assess liquidity and solvency.

7. 225. Contents of Financial Statements.—
THE FINANCIAL STATEMENTS SHALL GIVE A
TRUE AND FAIR VIEW OF THE STATE OF
AFFAIRS OF THE COMPANY, COMPLY WITH THE
FINANCIAL REPORTING STANDARDS NOTIFIED
BY THE COMMISSION
THE COMMISSION SHALL HAVE POWER FROM
TIME TO TIME TO GRANT EXEMPTION TO ANY
COMPANY OR ANY CLASS OF COMPANIES IF IT
IS IN THE PUBLIC INTEREST SO TO DO, FROM
COMPLIANCE WITH ALL OR ANY OF THE
REQUIREMENTS OF THE RELEVANT SCHEDULE.
NOTWITHSTANDING ANYTHING IN THIS ACT
ANY COMPANY THAT INTENDS TO MAKE
UNRESERVED COMPLIANCE OF IFRS ISSUED BY
THE IASB SHALL BE PERMITTED TO DO SO

8. 226. Duty to prepare directors’ report and statement of compliance
• Directors' Report:
• The directors' report is a document prepared by the board of directors of a company, providing
information on the company's performance, financial position, and future prospects.
• It often includes a review of the business, analysis of financial performance, discussion of risks and
uncertainties, and other relevant information.
• The content and format of the directors' report are usually governed by local company laws and
regulations.
• Statement of Compliance:
• The statement of compliance is a declaration by the company's management or directors confirming
that the company has complied with relevant laws, regulations, and standards during a specific period.
• This statement may cover various aspects, including financial reporting, corporate governance, and
legal compliance.

9. 227. Contents of directors’ report and statement of compliance.—
Directors' Report:
• Business Review:
• Overview of the company's activities and business environment.
• Discussion of key achievements, challenges, and future plans.
• Financial Performance:
• Summary of financial results, including revenue, profits, and any significant financial events.
• Discussion of financial trends and factors influencing performance.
• Risk Management:
• Identification and assessment of key risks facing the company.
• Strategies for managing and mitigating these risks.
• Corporate Governance:
• Overview of the company's corporate governance structure.
• Information on board composition, committees, and adherence to governance principles.
• Compliance with Laws and Regulations:
• Confirmation of compliance with relevant laws, regulations, and industry standards.
• Disclosure of any legal or regulatory issues.

10. Statement of Compliance:​
• Affirmation of Compliance:​
• A statement confirming that the company has complied with applicable laws,
regulations, and standards during the reporting period.​
• Specific Compliance Areas:​
• Identification of specific areas of compliance, such as financial reporting,
corporate governance practices, and legal requirements.​
• Non-Compliance Disclosures:​
• Disclosure of any instances of non-compliance, along with explanations and
remedial actions taken.​
•
• Sustainability and Social Responsibility:
• Information on the company's commitment to sustainability and social responsibility.​
• Environmental and social impact assessments.​
• Employee Matters:
• Workforce information, including the number of employees, training programs, and employee engagement
initiatives.​
• Dividends and Reserves:
• Details on dividends paid and the allocation of profits to reserves.