Thinking of starting a company in Pakistan? Incorporating a company in Pakistan is an easy task now owing to the provision of e-services by the Securities and Exchange Commission of Pakistan (SECP). This government body handles all the company registration processes in Pakistan.
First things first, figure out the kind of company you want. Before discussing how to register a company in Pakistan, we will look at the three different types of company structures you can choose from. Here are the three types of companies.
Types of Companies:
Under the Companies Act 2017, three types of legal companies can be registered:
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Single Member Company
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Private Limited Company
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Public Limited Company
1. Single Member Company
According to Section 2(65) of the Companies Act 2017, a single-member company is defined as a company with only one member. A single-member company is a private company with only members.
Complete guidelines and requirements for managing a single-member company are laid out in the First Schedule, Part II of the Companies Act, 2017.
Regulation 4 of the first schedule, Part II, provides explicitly that:
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The SMC shall not invite the public to subscribe to any shares in the company
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The SMC shall not register any share(s) in the name of two or more persons to hold one or more shares jointly; and
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The number of members of the company shall be limited to one
2. Private Limited Company
Section 2(49) of the Companies Act 2017 defines a Private Company as:
A company which, by its articles-
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Restricts the right to transfer its shares
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Limits the number of its members to fifty, not including persons who are in the employment by the company
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Prohibits any invitation to the public to subscribe for the shares, if any, or debentures or redeemable capital of the company
According to Section 14 of the Companies Act 2017, the minimum number of people required to form a private company is two.
A foreign national may also set up a private limited company in Pakistan. However, an Israeli national cannot set up a company in Pakistan.
3. Public Limited Company
Section 14 of the Companies Act 2017 provides that three or more persons in Pakistan can set up a public limited company. The members will have to subscribe their names to a Memorandum of Association.
A public company is set up for the general public, and its shares are offered to the public for subscription with limited liability.
There are two types of public limited companies registered in Pakistan: listed and unlisted. The difference between these is that the shares of the former are listed on a securities exchange, and anyone can acquire them.
On the other hand, an unlisted company does not offer its shares via securities exchange to the general public.
Amount of Capital Needed to Register a Company in Pakistan
This table shows the capital required to register a company in Pakistan.
| Company | Min. No. of Shareholders | Min. Capital Needed | Time for Incorporation |
| Single Member Company | 1 | 100,000 | 4 Weeks |
| Private Limited Company | 2 | 100,000 | 6 Weeks |
| Public Listed Company | 7 | 200 Million | 6 Weeks |
| Public Listed Company (unlisted) | 3 | 100,000 | |
| Branch Office | No Shareholders | N/A | 7 Weeks |
| Liaison Office / Representative Office | No Shareholders | N/A | 7 Weeks |
Process of Registering a Company in Pakistan
Pick a type of company that best fits your business in terms of shareholders, capital, and how much risk you're willing to take. Once you've got that sorted, it's time to register your company. Let's break down the process of registering a company in easy-to-follow steps.
1- Pick a Business Structure
Think about how you want to run your business – is it just you, or do you have a partner? Depending on that and how much money you have, you can choose the type of company that fits best. If you're a solo business owner and plan to stay that way, a single-member company might be your go-to.
If you've got a partner who's not active in the day-to-day, you could team up to register a private limited company. The great thing about it is that you can start small and upgrade later. So, even if you begin with a single-member company, there's always an option to switch to private limited or even go big and make your company public.
2- Have Your Company Name Approved
Once you have decided on the type of company, the second step is to have the company name registered. The SECP (Securities and Exchange Commission of Pakistan) makes registering your company very easy by providing the option to do so online. You can register your company name online on SECP’s eServices portal. Simply:
- Log In: Head to the SECP website and log in to their e-services.
- Documentation: If you're Pakistani, have your CNIC ready; for foreigners, make sure you've got a valid passport.
- Fast Track Registration: Opt for 'Fast Track Registration Services (FTRS)' if you want your registration done on the same day.
- Online Form: Fill in the necessary details on the online form and hit submit.
- Security Code: Expect a security code on your phone or email – as chosen by you.
- PIN Generation: Once the security code has been verified, a PIN will be generated.
- Challan Form A challan form will appear; deposit the fee at MCB or UBL branches or pay online using your credit or debit card.
- Confirmation: If your chosen company name is free of restrictions, you'll get a confirmation within a day that it's reserved under your name.
In case you do not want to use the online name registration application system, you can also apply offline. You can visit the registrar's office and submit an application with three name options for your company. The offline route takes a bit longer, around 3 to 5 days, but once it's done, you'll get the green light to use the approved name on all your official company documents.
Note: For the online name application, the fee is PKR 200, whereas the offline name application fee is PKR 500.
3- Registration of Company
Once the company name has been approved, the next step is company registration. Getting your company registered in Pakistan involves a bit of paperwork. Here's the checklist:
- CNIC Copies: Make copies of the Computerized National Identity Cards (CNIC) of all your founding members available.
- Office Address Proof: Show evidence of your registered office address.
- Memorandum of Association (MoA): This is like the company's ID card, declaring what type it is and who its members are.
- Articles of Association (AoA): Think of Articles of Association as the rulebook. It defines what your company is all about and how it operates.
- Bank Statement: Your bank statement should confirm that you've got the necessary capital covered.
- Directors' Details: If you're setting up a foreign company, share details about your directors, including their nationality.
- Registration Fee Slip: Don't forget to attach the slip that shows you've paid the registration fee.
Also, if you're incorporating your company online, and your capital is under PKR 100,000, the fee is PKR 1800. But if you prefer the offline registration method, the fee will be PKR 3500. Pick the way that suits you best!
Once you've fulfilled the documentation requirements, the SECP evaluates them to make sure they're all good.
4- Obtain Digital Signature Certificates (DSC)
Gather all the necessary documents and request digital signature certificates for members, directors, or shareholders. This accelerates the process by enabling individuals to electronically sign company registration documents. It eliminates the need for them to physically visit the registrar's office solely for the purpose of providing their signature.
5- Secure a Certificate of Incorporation
Once you've gathered the necessary documents and obtained signatures from members, it's time to submit them to the SECP office. If you've already approved the company name, the process should go smoother. The Commission will examine your application, along with the provided documents and details, to grant a Certificate of Incorporation.
This certificate serves as your license to legally commence business operations. At the same time, the National Institution of Facilitation Centre (NIFC) will generate and provide an official seal to the company.
6- Have Your Company Registered for Income Tax
Having a National Tax Number NTN is essential. To manage your business and fulfill income tax obligations, it's essential to register with the Federal Board of Revenue (FBR) to obtain a National Tax Number (NTN).
The presentation of the NTN is typically a requirement in many business agreements and transactions. Following registration, you'll need to file annual tax returns to ensure that your company meets its tax responsibilities and complies with relevant tax laws.
Below are the documents required to obtain an NTN (National Tax Number):
- Completed NTN form
- Proof of registration
- Memorandum and Articles of Association
- Valid bank account number
- Copies of valid CNICs (Computerized National Identity Cards) of directors
- Business address
7- Establish a Corporate Bank Account
Using a personal account for company operations lacks reliability and authenticity. Hence, it's crucial to open a corporate bank account to ensure the legality of transactions. Typically, banks require documentation such as certification of incorporation, NTN, and additional details to facilitate the opening of a company account.
8- Contribute Capital
Every member or shareholder is required to deposit the designated capital amount for their respective shares into the company's bank account.
9- Sales Tax Registration
If your business deals with locally produced or imported products, it may be liable for sales tax. As per the Sales Tax Act of 1990, businesses dealing in exempted items like medicines, computer software, poultry feed, and unprocessed agricultural produce are not subject to sales tax.
If your business is exempt, you can bypass this step; otherwise, you need to seek sales tax registration. Upon registration, you will be issued a Sales Tax Registration Number (STRN), which must be indicated on every receipt.
Need help with company registration services in Pakistan? Turn to Musheer.com for expert guidance. We specialize in making the registration process seamless and stress-free for entrepreneurs like you.
Advantages of Registering Your Company in Pakistan
For individuals and businesses looking to engage in legal and professional activities in Pakistan, registering a company offers numerous benefits and serves as a crucial initial step.
Whether you’re registering a software house or some other type of business, here are some top benefits of establishing a business in Pakistan.
Legal Recognition
Registering your corporation provides it with legal recognition. This separation of legal identity shields personal assets from business obligations, offering protection in legal disputes or financial matters.
Business Credibility
A registered business is often viewed as more reputable and trustworthy by customers, suppliers, and partners. This enhanced credibility can positively impact your company's reputation, making it easier to attract investors, secure financing, and enter into contracts.
Access to Financing
Registered businesses enjoy easier access to various funding sources, including bank loans, venture capital, and angel investors. Well-established companies with a structured business plan are more likely to receive support from lenders and investors.
Limited Liability
Certain registered entities, like private limited companies, offer shareholders limited liability protection. This means that shareholders are not personally responsible for the company's debts beyond their initial investment.
Tax Advantages
Registered businesses may qualify for tax breaks, exemptions, and incentives provided by the government. They can also benefit from a legal tax system that may result in lower tax obligations compared to unregistered enterprises.
Business Continuity
Registered businesses exhibit greater stability and continuity. The business can persist even if ownership changes or key individuals pass away, contributing to effective long-term planning and succession.
Access to Government Contracts
Some government projects and contracts may require businesses to be registered entities to be eligible to bid. Registering your business increases your chances of bidding on and securing government contracts.
Brand Protection
Registering your company name offers legal protection for your brand identity. This prevents others from using a similar name, reducing the risk of confusion in the market.
Global Expansion
If you plan to expand internationally, having a registered company facilitates establishing a presence in other countries, opening bank accounts, and complying with foreign business regulations.
Regulation Compliance
Registering a business ensures compliance with applicable state and municipal laws and regulations. This helps in avoiding issues and penalties associated with operating an unlicensed or unofficial business.
It's important to recognize that the specific benefits of registering a company in Pakistan can vary based on the type of company (e.g., sole proprietorship, partnership, private limited company) and the industry.
Also, the registration process and requirements may differ depending on the region in Pakistan, so, seeking guidance from legal and financial experts or government authorities tailored to your situation is the best course of action.
Now that we have covered the essential steps you need to know about how to register a company in Pakistan - let’s answer some of the most frequently asked questions about company formation.
Frequently Asked Questions
Are foreigners allowed company registration in Pakistan?
People from any country, except Israel, can set up a business by going through a straightforward legal procedure and paying a registration fee in Pakistan. They have the option to register any type of company using their international credentials.
What is the cost of company registration in Pakistan?
The expense of registering a company in Pakistan depends on the type of company and its location. Typically, you'll encounter fees for company incorporation, legal and consultation services, stamp duty, name reservation, and documentation. As these costs can change over time, it's recommended to consult with government authorities or legal experts for the most up-to-date fee information.
Conclusion
SECP has dramatically streamlined the entire process of company incorporation. The whole process, from name reservation to receiving the Certificate of Incorporation, can now be done entirely digitally, which is an excellent advancement in the process of company registration in Pakistan.
