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A Complete Guide on How to Register a Company in Pakistan

Legal matters in Pakistan, like registering a company with the Securities & Exchange Commission of Pakistan (SECP), can be quite confusing if one engages in the matter on their own. Breaking the process down into small steps will not only increase your understanding of the legal matters involved but will also enable you to complete the process in a timely manner. 

Graana.com, Pakistan’s smartest property portal, has outlined the process of registering a company in Pakistan below. 

 

Securities & Exchange Commission of Pakistan

 

The Securities & Exchange Commission of Pakistan was set up in 1999 with the primary goal of regulating the corporate sector and capital market. Therefore, the SECP oversees and undertakes the process of registering a company in Pakistan. Other primary objectives include:

 

Types of Companies You Can Register

 

Under the parameters laid down by the Companies Act (2017), a person can register three types of legal companies in Pakistan:

  • Single Member Company
  • Private Limited Company 
  • Public Limited Company

Single Member Company

 

As the name suggests, a single member company (SMC) is formed by an individual member. A company is an SMC if it complies with the requirements laid out in the First Schedule, Part II, Section 4 of the Companies Act. These requirements include: 

  • The company shall not invite the public to subscribe to any shares in the company;
  • it shall not register any share(s) in the name of two or more persons to hold one or more shares jointly; and
  • the number of members of the company shall be limited to one. 

Please note that all foreign nationals, except for Israeli nationals, are also eligible to set up an SMC in Pakistan.

 

Private Limited Company

 

SECP regulation requires that two or more persons can set up a private limited company for lawful purposes. This may be of different types, however, the method of incorporation is primarily the same in all. The Companies Act has listed the requirements of the registration of a private limited company in Pakistan:

  • A company that restricts the right to transfer its shares;
  • limits the number of its members to fifty, not including persons who are in the employment of the company; and
  • prohibits any invitation to the public to subscribe for the shares (if any) or debentures or redeemable capital of the company. 

Again, all foreign nationals (except for Israeli nationals) may set up a private limited company in Pakistan. 

 

Public Limited Company

 

A public limited company can, for lawful purposes, be set up by three or more persons in Pakistan. The partners will have to subscribe their names to a Memorandum of Association and, as with private and single limited companies, the public limited company must comply with the requirements of the Companies Act. One thing to keep in mind is that such a company is set up for the general public, and its shares are offered with limited liability. These shares are made available through a public offering or through the stock market.

There are two different types of public limited companies that can be registered in Pakistan: listed and unlisted. The difference between these is that the former offers its share to the public and anyone can acquire them. On the other hand, an unlisted company does not offer its share to the general public.

 

Registering a Company in Pakistan

 

Now that we know the different types of companies that are eligible, let us take a look at the process of registering a company.

Registering a Company Name

 

The first step is registering the company’s name. You should consult section 10 of the Companies Act (2017) before deciding a company name as it has a list of prohibited terms. 

Once you have decided on a unique name for your company or firm, you can create an online account with SECP and check the availability of the name. If it is available, you can reserve it for your company through the following steps:

  • Log in to e-services on the SECP website.
  • Pakistani nationals need a valid CNIC, and foreign nationals need a valid passport.
  • Select the ‘Fast Track Registration Services (FTRS)’ for same-day registration services.
  • Provide the required information on the online form and submit it.
  • You will receive a security code on your phone or email as selected by you.
  • A PIN will be generated once the security code is verified.
  • The challan form will be generated, which can be deposited in the selected branches of MCB or UBL (or the fee can be deposited online via your credit or debit card).
  • If there is no prohibited word in the company name, you will receive a confirmation within a day that the company name has been reserved on your credentials.

If, for some reason, the system is not working, SECP also offers offline services where a person may submit an application with three proposed names of the company at the registrar’s office. The offline process takes 3 to 5 days to complete, after which the person will be licensed to use the approved name in official documents for company incorporation.

 

Company Incorporation

 

You will require the following documents for registering a company in Pakistan:

  • Articles of Association (rules and regulations that govern the company) and Memorandum of Association (contains information for company incorporation)
  • CNIC copies of the directors, CEO, nominee or copy of passport in case of foreign nationals
  • If you are planning to set up a specialised business, you will require a NOC or letter of intent from the concerned authority.
  • If you intend to set up a foreign company incorporation, you will be required to provide details of the directors, their nationality, the company profile, a certified copy of the company’s charter, along with a Memorandum of Association and Articles of Association.
  • The authorisation of subscribers for filing documents
  • Registration fee slip
  • The company incorporation fee is Rs.1800 for online submission if the nominal capital is not more than Rs, 100,000. If you submit the company incorporation offline, you will be charged Rs. 3500.

Registering a Company for Income and Sales Tax

 

Federal Bureau of Revenue (FBR) Pakistan

Source: Factfile

 

You cannot register a company in Pakistan if you do not have a National Tax Number (NTN). Application for an NTN is submitted at the Regional Tax Office of the Federal Bureau of Revenue (FBR). Given below are the documents you will need for acquiring an NTN number:

  • Duly filled out NTN form
  • Proof of registration
  • Memorandum and Articles of Association
  • Valid bank account number
  • Copies of valid CNICs of directors
  • A business address

Certificate of Incorporation

 

Once you have compiled all the documents and have submitted the required fees, you will submit the documents to SECP, which will vet the information and then give the requisite approval. Simultaneously, the National Institution of Facilitation Centre (NIFC) will generate and grant a seal to the company. 

Once SECP has verified and approved your documents, you will be issued a Certificate of Incorporation, which is a formal and legal approval to commence business in Pakistan. The shareholders will be required to transfer the amount corresponding to their shares in the company’s bank account. 

SECP has greatly streamlined the entire process, and the submission of a registration fee online is a giant leap as registering a company in Pakistan can now be completely done digitally. 

For similar guidelines, you can visit Graana.com

The post A Complete Guide on How to Register a Company in Pakistan appeared first on Graana.com Blog.

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