Introduction
When you decide to register a company, the first milestone is to make a selection from different types of companies in Pakistan. A company is one of the types of business entities.
The Company law in Pakistan provides various options for you to choose from, keeping in view your business needs and the proposed structure.
But before that, it is important to know what types of companies there may be and how they are categorized.
Overview
- Introduction
- Types of Companies
- Different Types of Companies in Pakistan
- How to Choose a Type of Company for You?
- Company Limited by Shares
- Private Limited Company
- Company Limited by Guarantee
- Guarantee Limited Company (With Share Capital)
- Unlimited Company
- Private Unlimited Company
- Not for profit Companies
- Not for Profit Company
Types of Companies
Since a company is a creation of law, its types or kinds are defined by law. The laws in different countries allow different types of companies. Companies may be differentiated based on the nature of the liability of members, the number of shareholders, and their share capital.
The law in a country may allow the formation of a company based on it nature of liability of members as a company limited by shares, a company limited by guarantee, or an unlimited company. A company may be formed with or without share capital if the law allows. The generally known types of companies are categorized based on the number of shareholders like single-member companies, private limited companies, and public limited companies.
Different Types of Companies in Pakistan
The law provides you with options to register different types of companies in Pakistan, keeping in view your objectives. You can choose to register
- a company limited by shares
- a company limited by guarantee and
- an unlimited company
- Trade Organization
- Not-for-profit association
How to Choose a Type of Company for You?
You can choose a type of company based on different considerations or factors. The most important factor in choosing a suitable type of company is the shareholding structure. You will decide the type of company on the basis of the number of shareholders. If you want to keep the company in your close circle of family or friends, your choice may be different from the case in which you want large public funds.
The second factor that may affect your decision is the liability of the members of the company. You must consider beforehand how and to what extent the members of the company will be responsible in case of winding up.
Another factor while choosing a type of company is the profitability of the business of the company; you are doing business for profit or it’s a non-profit venture.
Keeping in view the above factors you can make a decision to choose your preferred type of company from the different types of companies listed below.
After finalizing the type of company, you can follow the step-by-step guide to know how you can register your company. Next, you can register your company online for which you will have to register on the SECP portal.
Company Limited by Shares
A company limited by shares may be of three categories and you can choose the most suitable category based on a number of partners (promoters). One of the most attractive benefits of a company limited by shares is the concept of limited liability. Since the company is treated as a separate legal entity, the debts of the company remain on the company. If you have paid the full amount of shares of the company, your liability in case of winding up is ZERO.
Single Member Company (SMC)
If you have decided to go solo, you can register an SMC. You will be the sole promoter, shareholder, and director of the company. However, you may appoint another person to act as CEO of your company if you deem it necessary. While registering an SMC you will have to nominate one of your kins to act as trustee in case of death of legal incapacity. The name of the company will include at the end parenthesis and words “(SMC-Private) Limited”.
Private Limited Company
Going solo is not always the choice especially when you need more capital and skilled human resource to run your business. In such a case you can join hands with one or more persons to register a Private Limited Company. At least 2 persons will act as directors to run the company and one of them can be CEO or you can appoint a paid employee as CEO. However, the number can not go beyond 50 in which case you will have to register a public limited company.
A private limited company is the best option from amongst various types of companies for small an