If you’re considering registering a company in Pakistan, it’s important to be well-prepared before starting the process. Making an informed decision can save you time, and money, and prevent a potential failure. Before beginning your application, consider these ten important points. Remember, starting a business in Pakistan can be a long journey, so it’s essential to weigh the pros and cons carefully.

Company registration in Pakistan is governed under the Companies Act 2017 (the Act). The Act provides details about the formation and running of a company. The power to register a company is with the Securities & Exchange Commission of Pakistan (SECP). SECP governs the formation of companies, their compliance, and monitoring and grants licenses for licensed businesses. That is why company registration is also known as SECP company registration. SECP works through Company Registration Offices in Islamabad, Karachi, Lahore, Peshawar, Quetta, Multan, Faisalabad, and Gilgit.

The industry or sector you want to do business in is the most important point to consider. Aren’t you looking for profits through your intended business? If the industry or sector you choose is not profitable you will waste your time, money, and efforts.

So, before doing anything to register a company in Pakistan, do proper market research to find where the profits are good and consistent. You can choose a market based on area, products, and delivery channels.

While you search for a profitable market, you must also evaluate the competition level, entry requirements, and capital required for smoothing start and scaling.

If you have done your market research, the next step is to consider the amount of investment you want to bring in. You may start with a small amount or you may start with a big blast. But starting small and growing gradually would be a prudent approach. You should not push all the money at once. See if you can do good and then expand.

Consider these points before you start

After deciding the market and the investment, you should now consider what type of company your should register. There are quite a few types of companies in Pakistan.

You can register a Single member company (SMC), a private limited company, or a public limited company. Your decision will be based on the number of persons who want to register a company in Pakistan.

If you are alone taking the challenge, an SMC would be a good option. In case you have partners to collaborate with, you may go for a private limited company. These options are for privately held equity.

However, if you have plans to go public, you should consider registering a public limited company from the very beginning. It will save you a lot of money, hassle, and time in conversion.

Since your company will have a separate legal entity, it should have a name. You are free to choose or copy any name. But choosing a name by copying another’s name will put you in trouble, sooner or later.

So, the name should be unique and correspond to the principal line of business of the company you are planning to register. For a suitable name for your company, you can use SECP Company Name Search. There are also some points that you should consider while choosing a name.

However, you must understand that only an SECP company name search may not be enough. Any other business with the same or similar name may be in the market, though in any other form of business like sole proprietorship, partnership, or LLP.

There is a possibility that the name you choose is registered by someone else as a trademark in Pakistan. If you choose a name that is already trademarked, you are making a fatal decision to take up that name. No one will allow you to get the benefit of his trademark, as it’s an asset that is built with years of hard work, nor should you.

So, before choosing a name for your company check if you can it as a trademark or not. You must conduct a trademark search also before choosing the name for your company. Don’t sleep over it, or else you will lose a lot.

The next point you must consider before your register a company in Pakistan is the Capital structure of the company. The total capital of the company for which a company can issue shares is called “Authorized Capital” – also called Nominal Capital. When the company issues any shares to the members/shareholder that is called “Paid up Capital”.

At the time when you file your application to register a company, you will have to choose the amount of Authorized Capital with a value for each share. In addition, every person who signs the memorandum and articles of the company shall subscribe to a specific number of shares.

Your authorized Capital must be as per your business plans. If you want to do business with an amount of 10 million, your Authorized Capital must be 10 Million. It can be more and keeping in view the future expansion plan you must keep it even higher.

However, you can start with a lesser amount of Authorized Capital if you have financing opportunities to run or expand your company.

Though you are free to do any business in Pakistan by registering a company, however, not all businesses are easy to start. Certain business activities require a license. For example, banking, security services, or any kind of financing business requires a license from the relevant ministry/department.

So, before you register a company in Pakistan, you must check if the business you plan to do requires any license. This initial survey of licensing requirements will save you a lot of time.

Doing business is a legal activity and involves a lot of legal input from experts. Right from the beginning almost every step of your business operations would have legal implications.

You must check what labour/employment laws may apply to you. You must also have a fair idea about business laws to run your operations (especially when money is involved).

You must be aware of the laws that may apply to your business so that you do not indulge in any illegal activity. For a safe (risk-free) business, you must have a lawyer on board who can guide you through each step.

When you make money, the government gets a share. Like individuals, a company, being a legal person, has to pay taxes.

Before your register a company in Pakistan, you must consider the tax implications. You may be liable to income tax, sales tax, and other financial liabilities towards the local provincial, or federal government.

Having on board a tax consultant would be a wise approach who can advise you on bookkeeping practices, accounting, and tax for your company.

Lastly, you must consider compliance obligations related to your company. Every company may have compliance requirements; some may need a little compliance obligation and others may have to implement specialized compliance programs and appoint experts for compliance functions in the company.

Therefore, you must evaluate your compliance obligations before you register a company in Pakistan.

To complete the company registration process in Pakistan with SECP, you must follow the procedure and complete certain documentation. The step-by-step process will help you complete all the formalities and get your company incorporation certificate.

If you, after considering the relevant factors for deciding to register a company in Pakistan, the first decision you need to take is about its status. You can choose a single-member company (SMC), a private limited company, or a public limited company. If you want to go solo a SMC is the option, with all benefits of a limited liability company. However, a private company is a good choice if you want to keep the business within the close circle of family or friends. Instead, if you plan to expand the business in the future, with public investment, then your choice must be a public company.

For a private company, there must be at least two persons (but not more than 50), and for a public company at least three persons will have to join hands and there is no upper limit. To invite investment from the general public, you can apply for a listing on the Pakistan Stock Exchange.

Steps for Registration of Company

Once you have decided on the status of the company, then you will have to choose a name for the proposed company. For choosing a name for the proposed company, first, you will have to confirm whether the proposed name is available or not. There are many important points you must consider before deciding on a name.

You can check the availability of your preferred name and if your chosen name does not appear in the results, it means that the name may be available for registration of a company. Yet, the final decision about the availability of the name is of the registrar.

The next step is to file an application for reservation of name in which you can mention three names, in order of priority. You will use Form App-1 for this purpose. Upon confirmation, you will have to file all the relevant documents for the incorporation of the company within 60 days. If you fail to register the company within the given time, the name shall not be available anymore. However, you can apply again for the same name it is available.

To submit the documents to the concerned CRO, two options are available. You can either file the documents online or submit them in physical form, at your choice.  However, online filing is a cheaper and more convenient option.

You may choose your preferred way of filing the application and submitting the documents for examination and approval.

The documents required for company incorporation are identity documents of the promoters, a Memorandum of Association, and Articles of Association. You will have to file your application in the prescribed format (Form-1) in which you will mention all the details about the company, its promoters, directors, shareholders, CEO, capital structure, registered office address,  and a declaration.

A Memorandum of Association is the constitutive document of the company, containing information about the name of the company, and its main business. Moreover, it contains the name of the province in which its registered office will situate, the authorized capital, and the limit of liability of the members. There are five main clauses of the Memorandum, given below.

You will need to file the following documents

Equally important is the Articles of Association, a document that governs the internal business procedures of the company. It provides legal guidelines on how the company will run its business as an organization. It includes many things like the number of directors, procedures for their election, and their powers and duties. Further, it provides the procedure for the issuance and transfer of shares, holding meetings, books of accounts, audits, and dividend payments. Most importantly, this document must be in compliance with the Act to be valid.

Most importantly, both Memorandum of Association and Articles of Association shall be signed by all the promoters. This is a separate page containing a table, mentioning names, family names, nationality, residential addresses, and occupations. Lastly, it provides information about the number of shares subscribed by the proposed.

Lastly, to confirm the truthfulness of the information and contents of the documents, one of the promoters will sign a declaration.

Lastly, you will have to submit the prescribed fee for Incorporation. The fee for incorporation is based on the amount of Authorized Capital. A higher amount of Authorized Capital will require a higher fee. Besides, there is a fee for the submission of the forms with the application for incorporation.

Once the concerned officer at the CRO satisfies himself, he will issue you a Certificate of Incorporation. The certification will mention the name of the company, date of Incorporation, a Unique Identification Number (UIN), and fees charged. This will be conclusive proof that your company registration process is complete.