How to Register a Company in Pakistan :
A Comprehensive Guide
Starting a business in Pakistan can be a complex process. Also, Registering a company in Pakistan is quite a confusing matter. The process can be completed more quickly and with a deeper comprehension of the law if it is broken and divided into smaller portions.
The Securities and Exchange Commission of Pakistan (SECP) was set up to regulate and update the business sector, and it has been accorded proper weight in the government’s recent push towards digitization.
This government-run regulatory organization has gone digital with a robust website designed to make their services more accessible to the country’s commercial sector. So if you are going to start a new business you need to register the company, now you can register online easily. Wondering how? In this article we covered how to register a company in Pakistan in very detail.
What is SECP?
SECP stands for the Securities and Exchange Commission of Pakistan. This company was setup in 1999
It is the regulatory body responsible for regulating and supervising the securities market, non-banking finance companies, and insurance companies in Pakistan. The SECP is responsible for ensuring that the capital markets operate in a fair, transparent, and efficient manner, and that the rights of investors are protected.
In addition to regulating the securities market, the SECP also has the authority to register and regulate companies in Pakistan. It ensures compliance with the relevant laws and regulations, promotes the development of the corporate sector, and contributes to the growth of the economy.
Types of Companies You Can Register
According to the 2017 act, people of Pakistan can register only three types of legal companies.
Single Member Company
A Single Member Company (SMC) is a type of private limited company in Pakistan that has only one shareholder as its member. The concept of SMC was introduced in Pakistan in 2002 through the Companies (Single Member) Rules, 2003. Prior to this, a minimum of two members were required to form a private limited company.
The main advantage of an SMC is that it provides limited liability protection to the sole owner, just like a private limited company. This means that the owner’s personal assets are protected in case the business faces financial difficulties. Additionally, an SMC can be formed with minimal capital, making it an attractive option for small businesses and startups.
Some key features of an SMC are:
- It has only one shareholder who owns the entire share capital of the company.
- The shareholder can also be the sole director of the company or appoint another person as a director.
- An SMC is required to maintain proper books of accounts and file annual tax returns.
- An SMC is subject to the same legal and regulatory framework as a private limited company.
SMC is a suitable option for entrepreneurs who want to start a small business with limited liability protection and minimal capital. It allows them to have complete control over the business while enjoying the benefits of a separate legal entity.
Private Limited Company
A private limited company is a separate legal entity from its owners and shareholders, which means that it has its own identity and can enter into contracts, own assets, and conduct business in its own name.In accordance with SECP rules, a private limited company can only be formed for legitimate purposes by at least two people. In Pakistan, the Private Limited Company (PLC) is one of the most common types of business structures and is governed by the Companies Act, 2017.The following items are required by the Companies Act in order to register a private limited company in Pakistan:
- The company’s shares cannot be publicly traded, and the transfer of shares is restricted to the existing shareholders
- The liability of each shareholder is limited to the amount of capital they have invested in the company.
Public Limited Company
A Public Limited Company (PLC) is a type of company in Pakistan whose shares are traded on a stock exchange and can be owned by the general public. It is regulated by the Securities and Exchange Commission of Pakistan (SECP) and is subject to strict legal and regulatory requirements. In a public limited company 3 or more people are included.
A Memorandum of Association will need to be signed by all of the partners, and just like private and single limited businesses, the public limited company will need to follow the rules set forth by the Companies Act. two different types of public limited companies that can be registered in Pakistan, listed and unlisted.
The former provides its shares to the general public, and anyone can buy them. But an unlisted corporation doesn’t give out its stock to the public.
How to Register a Company in Pakistan - 3 Most Important Steps
The three most important steps to register a company in Pakistan are:
1. Company Name Registration:
Registering the company name with the Securities and Exchange Commission of Pakistan (SECP) is the first and most important step in registering a company in Pakistan. The company name must be unique and cannot be similar to an existing company’s name. The SECP will conduct a search to ensure that the proposed name is available.
2. Memorandum of Association and Articles of Association:
The Memorandum of Association and Articles of Association are legal documents that govern the company’s operations. These documents outline the company’s objectives, structure, and rules. It is important to ensure that these documents are drafted correctly and in compliance with Pakistani company law.
3. Incorporation of Company:
The final and most crucial step is the incorporation of the company with the SECP. This involves submitting the Memorandum of Association, Articles of Association, and other required documents. The SECP will review the documents and issue a certificate of incorporation if everything is in order.
What is the Difference Between a Private Limited and a Public Limited Company In Pakistan?
Overall, the choice between a Private limited company and a Public limited company in Pakistan depends on the business’s objectives, size, and need for capital. A Private limited company is suitable for larger companies that require significant amounts of capital and want to offer their shares to the public. A Public Limited Company, on the other hand, is suitable for smaller companies that do not require significant capital and prefer to keep their ownership structure private.
SECP company registration fee
The Securities and Exchange Commission of Pakistan (SECP) charges a fee for registering a company. The fee is based on the nominal share capital of the company. The minimum fee is Rs. 100/- and the maximum fee is Rs. 500,000/-. The fee can be paid online or offline.
To calculate the registration fee, you can use the SECP’s online fee calculator. The calculator is available on the SECP website.
Here are the steps on how to use the SECP’s online fee calculator:
- Go to the SECP website.
- Click on the “Company Formation” tab.
- Click on the “Fee Calculator” link.
- Enter the nominal share capital of your company.
- Click on the “Calculate” button.
- The calculator will display the registration fee.
You can also pay the registration fee offline by submitting a challan at any branch of the National Bank of Pakistan (NBP). The challan form is available on the SECP website.
Steps For Starting a Business in Pakistan
The following are the general steps for starting a business in Pakistan:
1. Business Idea:
The first step in starting a business is to develop a viable business idea. This involves conducting market research to identify gaps in the market, consumer needs, and competition.
2. Business Plan:
Once the business idea is finalized, the next step is to create a detailed business plan. The business plan should outline the company’s vision, mission, goals, products or services, marketing strategy, financial projections, and other key details.
3. Company Name Registration:
The next step is to register the company name with the Securities and Exchange Commission of Pakistan (SECP). The company name must be unique and cannot be similar to an existing company’s name.
4. Memorandum of Association and Articles of Association:
The next step is to draft the Memorandum of Association and Articles of Association, which are the legal documents that govern the company’s operations. These documents outline the company’s objectives, structure, and rules.
5. Tax Registration:
Once the company is incorporated, the next step is to register for tax purposes with the Federal Board of Revenue (FBR). This involves obtaining a National Tax Number (NTN) and Sales Tax Registration Number (STRN) if applicable.
6. Bank Account:
The next step is to open a bank account in the company’s name to conduct financial transactions.
If the business requires employees, the company must register with the Employees’ Old-Age Benefits Institution (EOBI) and the Social Security Institution (SSI).
Once the company is registered, it is required to comply with all legal and regulatory requirements, including filing tax returns
Q1: What is the minimum number of shareholders required to register a company in Pakistan?
In Pakistan, a company can be registered with a minimum of two shareholders.
Q2: How long does it take to register a company in Pakistan?
The time required for company registration in Pakistan depends on various factors such as the type of company, the number of directors, and the accuracy of documents. Generally, it takes around two to four weeks to complete the registration process.
Q3: Is it mandatory to have a physical office for company registration in Pakistan?
Yes, it is mandatory to have a physical office for company registration in Pakistan. The office address should be mentioned in the Articles of Association of the company.
Q4: Can a foreigner register a company in Pakistan?
Yes, a foreigner can register a company in Pakistan. However, they need to fulfill certain requirements such as obtaining a work visa, registering with the Securities and Exchange Commission of Pakistan, and complying with foreign investment regulations.
Q5: What taxes do I need to pay after registering my company in Pakistan?
After registering a company in Pakistan, various taxes need to be paid such as income tax, sales tax, and withholding tax. The amount of tax to be paid depends on the type and size of the company, as well as the profits generated. Companies also need to file regular tax returns and maintain proper financial records to ensure compliance with tax regulations.
Starting a business in Pakistan can be a complex process and registering a company is also a complex process.The Securities and Exchange Commission of Pakistan (SECP) was set up to regulate and update the business sector, and it has been accorded proper weight in the government’s recent push towards digitization. So in the above article we tell how to register a company in Pakistan in detail. I hope you get all the information through this article.