Companies (Appointment of Legal Advisers) Rules 1975

5. Who cannot appoint legal counsel? (1) A corporation may not designate a lawyer or law firm registered as legal counsel if, in the case of such an appointment, the number of companies to which the lawyer or law firm is legal adviser exceeds, 7. Penalty and procedure. (1) If a corporation violates or fails to comply with any provision of this Act or the rules made under this Act, the chief executive officer or other officer responsible for the conduct of its affairs shall, unless the director proves that the management of its affairs does so, unless he proves that the violation or omission took place without his knowledge, or that he has exercised all due diligence to prevent such a violation or omission, that he is guilty of such a violation or omission, and that he may be punished by a simple term of imprisonment for a term of imprisonment of up to months, or a fine, or both. Sub-rule (1) of Rule 4 of the Companies (Appointment of Legal Counsel) Regulations, 1975 states that every corporation must, within 15 days after the appointment of legal counsel, submit the name (names of partners in the case of a corporation) in duplicate to the Registrar of the region in which its head office is situated, the address and remuneration of the legal counsel. Accordingly, section 7 of the Act empowered the SECP to impose sanctions for violations of the provisions of the Act or the rules and regulations set out therein. Regular meetings with the bar associations, the tax bars of all the major cities under the territorial jurisdiction of the CROs have taken place. In addition, regular consultation meetings were held with management consultants who highlighted their role in ensuring the company`s compliance with the law, and a vigorous decision-making campaign was launched by sending non-compliant companies notices of claim requesting them to appoint legal advisors within the allotted time. Subsequently, evidentiary opinions were issued and, finally, the proceedings were concluded by the opening of criminal proceedings against non-compliant companies. In 2017, 63% of companies were compliant and 37% were non-compliant when it came to the appointment of legal counsel. SECP has taken various initiatives to strengthen the compliant corporate culture and ensure that companies are better positioned to manage their business in accordance with the law. These effective initiatives included the organization of seminars on company registrars (CROs) in collaboration with ICAP, ICMAP and the Federation of Chambers of Commerce and Industry with the aim of training their members to appoint legal counsel.

As a result, business compliance increased to 82% in November 2017 and further improved to 85% as of June 30, 2018. To this end, many measures have been taken and a mechanism has been developed to identify defunct and non-operational companies among the remaining 15% of non-compliant companies. In addition, decision-making powers have recently been delegated to the relevant CROs to ensure better compliance of the company. 6. Exemption power. -The Federal Government may, by means of a notice published in the Official Gazette, exempt any company or type of company from operating the provisions of paragraph 3, paragraph 1, under the conditions specified in the notification and for the period specified in the notification. CONSIDERING that provision should be made for the appointment of legal advisers for companies and related matters, it is published as follows: The Companies (Appointment of Legal Advisers) Rules 1975 were issued by the Federal Government in the exercise of the powers conferred by section 8 of the Companies (Appointment of Legal Advisers) Act 1974. The term „legal adviser“ means a person designated as such under section 3 of the Companies (Appointment of Legal Advisers) Act 1974.

Article 3 provides: (a) Each company shall appoint at least one legal adviser to advise the company in the performance of its duties and functions in accordance with the law. provided that a partnership existing immediately before the coming into force of this Act is deemed to comply with the provisions of this paragraph if it appoints an advocate before the expiry of a period of three months after its entry into force; and (b) no person other than a lawyer or registered firm may be appointed as legal counsel.