Introduction
Starting a business in Pakistan involves a systematic process of company registration to ensure legal compliance and establish a solid foundation for your venture. This step-by-step guide will walk you through the types of legal entities and the process of registering a private limited company in Pakistan, helping you navigate the legal requirements seamlessly.
Types of Legal Entities in Pakistan
- Sole Proprietorship:
A sole proprietorship is the simplest form of business organization where a single individual owns and manages the business.
Key Features:
- Full control and decision-making authority rest with the owner.
- Unlimited personal liability; the owner is personally responsible for all debts and obligations.
- Easy to set up with minimal regulatory formalities.
- Partnership:
A partnership involves two or more individuals who agree to share the profits and losses of a business.
Key Features:
- Partnerships can be general or limited, with different levels of liability for partners.
- Partnership agreements govern the relationship between partners.
- Partners share management responsibilities and contribute to decision-making.
- Single Member Private Limited Company:
Introduced to allow a single individual to form a private company with limited liability.
Key Features:
- Similar to a private limited company but with a single shareholder.
- Offers limited liability protection.
- Simplifies decision-making as there is only one shareholder.
- Private Limited Company:
A Private Limited Company is a separate legal entity distinct from its owners, offering limited liability to shareholders.
Key Features:
- Limited liability protects personal assets of shareholders.
- Requires a minimum of two and a maximum of fifty shareholders.
- More complex regulatory compliance compared to sole proprietorships and partnerships.
- Limited Liability Partnership (LLP):
Combines features of a partnership and a company, providing limited liability to partners.
Key Features:
- Partners have limited liability for the company’s debts.
- Flexible structure with minimal regulatory compliance compared to companies.
- Public Limited Company:
A Public Limited Company can raise capital from the public through the sale of shares on the stock exchange.
Key Features:
- Minimum of seven shareholders required.
- Shares can be traded on the stock market, providing liquidity to shareholders.
- Stringent regulatory requirements and disclosure standards.
- Not-for-Profit Organization:
Entities established for charitable, educational, or other non-profit purposes.
Key Features:
- Exempt from certain taxes.
- Governed by specific laws and regulations pertaining to non-profit organizations.
- Not allowed to distribute profits among members.
- Foreign Company/Branch Office:
Allows foreign companies to establish a presence in Pakistan.
Key Features:
- Subject to certain restrictions on business activities.
- Must register with the SECP and obtain necessary approvals.
- Usually established for specific projects or activities.
How to register a Private Limited Company in Pakistan?
As discussed above, a private limited company can be registered with 2 directors known as Private Limited (PVT) LTD Company as well as with 1 director which is known as Single Member Private Limited (SMC-PVT) LTD Company. Here is the step-by-step guide on how to register a Private Limited Company in Pakistan:
Step 1: E-Services Registration
Once you’ve decided on a business structure, you need to create an account on the Securities And Exchange Commission Of Pakistan’s eZfile portal. It’s an easy process that registers your credential using your email address, mobile number, and CNIC. If you are a foreign national in Pakistan, you will also need to provide a picture and the information from your passport in addition to the previously mentioned details. Two distinct pins will be sent to your email address and phone number for verification when your sign-up is complete. You will be provided with a special PIN to sign the forms and send them to SECP after the verification procedure.
Step 2: Approval of Company Name
After registering yourself on E-Services portal, you have to choose a unique name for your company. Conduct a name availability search on the Securities and Exchange Commission of Pakistan (SECP) online portal [https://eservices.secp.gov.pk/eServices/NameSearch.jsp] to ensure your chosen name is not already in use. Once, you have decided the name then, you must submit the name reservation form online after logging into E-services. The name will be reserved for you to begin the company registration process for 60 days after it is applied to SECP and confirmed to be accessible.
Step 3: Submission of Company Incorporation Application
Following name reservation, an application for incorporation may be filed with SECP along with Memorandum and Article of Association, providing information on the company’s registered office, authorized and paid-up capital amounts, shareholder names, and the names of the directors and chief executive officer.
- MEMORANDUM OF ASSOCIATION
A company’s charter is found in its memorandum of association. It not only outlines the company’s goals, objectives, and scope, but it also provides specific information about its stockholders, including the percentage of shares each subscriber or shareholder owns in the company. The application for company registration in Pakistan is submitted with the Memorandum of Association attached.
- ARTICLES OF ASSOCIATION
The company’s governing documents, approved by the directors and shareholders, are the articles of association. The articles include information on the rights of shareholders as well as the managerial and administrative structure and obligations of the company. Article of Association is also filed along with application for company registration in Pakistan.
*This concludes Company Incorporation Process as upon acceptance of application, certificate of incorporation along with other necessary documents can be received from Company Registration Office as well as through CEO’s email.
PROCESSING TIME
A new and more straightforward approach for company registration in Pakistan has been provided by SECP, which has redesigned the process. As a result, the company registration procedure is now more sophisticated and quicker.
