Company Registration in Pakistan: Complete Process and Fees
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Posted by: Admin | August 28, 2024
Starting a business in Pakistan presents a world of opportunities, but before you can begin operations, it’s crucial to navigate the formalities of company registration. The process, though straightforward, requires careful attention to detail, from choosing the right type of company structure to complying with legal and regulatory requirements. This comprehensive Blog will walk you through every step of the company registration process in Pakistan, highlighting the necessary documents, steps, fees, and post-registration compliances.
1. Understanding the Types of Companies in Pakistan
Broadly speaking, in Pakistan 03 business formats are in the market. First is the Sole Proprietorship Concern. This business format is for small business and it can be registered by updating the Business name with the Federal Board of Revenue. Second is the Partnership Firm. This is a format wherein 02 or more person jointly start their startup by getting it registered from Registrar of Firms. Usually in every, district Deputy Commissioner (or his any assignee officer) works as Registrar of Firms. This business format is nationally recognized business format. It is governed by the Partnership Act, 1932, and involves two or more individuals who share profits and liabilities. However, it lacks the legal protection and structure of a company. Limited Liability Partnership (LLP) is also form of Partnership which can be registered from Securities and Exchange Commission of Pakistan (SECP). Third is Company registration. Company can be registered from SECP. Before diving into the registration process available in Pakistan, it's essential to understand the different types of companies you can register in Pakistan. Each type has specific legal implications, benefits, and limitations.
The most common and preferred business structure in Pakistan is the Private Limited Company. It is an independent legal entity with a separate identity from its shareholders. The liability of shareholders is limited to the amount of shares they hold, making it a safer option for entrepreneurs. Key features include:
A Public Limited Company can raise capital by offering shares to the public. This type of company is suitable for larger businesses that require significant capital investment. There are two types of Public Limited Companies:
Key features include:
A Single Member Company is a type of private limited company owned and managed by a single person. It offers the same benefits as a Private Limited Company but is designed for individual entrepreneurs who wish to retain full control over their business.
Non-Profit Organizations in Pakistan are registered as companies under Section 42 of the Companies Act, 2017. These companies are formed for charitable purposes, and any profits made are reinvested into the organization’s activities rather than distributed to shareholders.
Before proceeding with the registration, you must consider several key factors to ensure a smooth process.
The first and most crucial step is to select a unique name for your company. The name must not be identical or too similar to any existing company name in Pakistan. It should not violate any trademarks or existing brand names. The SECP has strict guidelines regarding company names, and certain words, such as "national," "federal," and "government," are prohibited unless special approval is obtained.
The Memorandum of Association (MOA) and Articles of Association (AOA) are foundational documents for your company. The MOA outlines the company’s objectives, scope of activities, and the rights of shareholders. The AOA details the company’s internal regulations, including the management structure, duties of directors, and procedures for shareholder meetings.
These documents must be meticulously prepared as they will guide the operations of your company and are required for registration with the SECP.
Once you have chosen your company type, selected a name, and prepared the necessary documents, you can begin the registration process with the SECP. The process is entirely online, making it convenient and efficient.
The Securities and Exchange Commission of Pakistan (SECP) is the regulatory authority responsible for company registration. The registration process can be completed through the SECP’s e-services portal called “EZFILE”.
Start by creating an account on the SECP e-services portal “EZFILE”. You will need to provide your basic information, including your name, CNIC (Computerized National Identity Card) number, email address, and phone number. Once your account is created, you can log in and start the registration process.
The first official step in the registration process is to reserve your company’s name. To do this:
1. Submit an Application for Name Reservation: Log in to the SECP portal and navigate to the name reservation section. Here, you will submit your chosen name for approval. It’s a good idea to have a few alternative names in case your first choice is unavailable.
2. SECP Review: The SECP will review your application to ensure that the name is unique and complies with the regulations. If approved, the name will be reserved for 60 days, during which you must complete the registration process. Section 10 to 15 of the Companies Act, 2017 is the relevant provision of law.
The name reservation fee typically ranges from PKR 250 to PKR 500, depending on whether you opt for an online or physical submission.
Once the company name is reserved, the next step involves preparing and submitting the incorporation documents.
As mentioned earlier, the MOA and AOA must be drafted carefully. You can use templates available on the SECP website or hire a legal professional to ensure they meet all legal requirements. These documents must be signed by all directors and shareholders.
In addition to the MOA and AOA, you will need to submit:
Log in to the SECP e-services portal “EZFILE”, navigate to the "Incorporation of Company" section, and fill out the required forms. Attach the prepared documents and submit the application online. The entire process is designed to be user-friendly, and the portal provides step-by-step guidance.
The registration fee varies depending on the type of company and the authorized capital. Here’s a breakdown of the typical fees:
For authorized capital exceeding PKR 100,000, the fees increase progressively.
Again, higher fees apply for larger authorized capital.
Fees are similar to those for a Private Limited Company.
There may be additional fees for special approvals, increased authorized capital, or other specific requirements. It’s advisable to review the SECP’s fee schedule for the most accurate information.
After submitting the application and paying the required fees, the SECP will review your documents. If everything is in order, the SECP will issue a Certificate of Incorporation. This certificate is proof that your company is officially registered and can begin operations.
The entire process, from name reservation to issuance of the Certificate of Incorporation, typically takes about 5 to 10 working days, assuming all documents are in order and there are no delays.
Once your company is registered, several post-registration steps are essential to ensure compliance with legal and regulatory requirements.
After obtaining the Certificate of Incorporation, you must register your company with the Federal Board of Revenue (FBR) for income tax and sales tax. The process involves:
Tax registration is a critical step, as failure to comply can result in penalties and legal action.
A corporate bank account in the name of your company is necessary for conducting financial transactions. To open a corporate account, you will need:
The account will be used for all business transactions, including receiving payments, paying taxes, and managing payroll.
After registration, your company is required to maintain certain statutory registers and records, including:
An Annual General Meeting (AGM) must be held within 18 months of incorporation and every year thereafter. During the AGM, shareholders review the company’s financial performance, approve dividends, and make decisions on key matters. Proper notice of the AGM must be given to all shareholders, and minutes of the meeting must be recorded.
The process of registering a company in Pakistan is generally straightforward, but there are a few challenges that entrepreneurs might face:
Sometimes, the SECP may take longer than expected to approve a company name, especially if the name is similar to an existing one. To avoid delays, ensure your proposed name is unique and consider having backup options.
Preparing the MOA and AOA can be challenging without legal expertise. Hiring a legal professional to assist with drafting these documents can prevent errors and ensure compliance with legal requirements.
Post-registration compliance, such as tax registrations contributions, can be complex. Working with a tax consultant or legal advisor can help ensure that all obligations are met on time.
Maintaining statutory registers, filing annual returns, and holding AGMs are ongoing requirements that must not be neglected. Failure to comply can lead to penalties or even the dissolution of the company.
Registering a company in Pakistan is a crucial step toward establishing a legitimate and recognized business. While the process involves several steps, from choosing the right company structure to preparing and submitting the necessary documents, it is designed to be efficient and accessible through the SECP’s online portal.
By understanding the requirements, preparing the necessary documents, and following the steps outlined in this guide, you can successfully register your company in Pakistan and position your business for growth and success.
Whether you are a local entrepreneur or a foreign investor looking to tap into the Pakistani market, this guide provides the information you need to navigate the company registration process with confidence.
The Legal Lines (Advocates and Corporate Consultants), Islamabad has expert and experienced team for dealing corporate matters including the company registration.
For further details, please call us at +92333-3897788 or 051-2817057.
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