Disclaimer
The information provided here is for general guidance only and does not constitute legal advice. For professional assistance regarding company incorporation, registration, taxation, or corporate compliance in Pakistan, contact City Laws Associates.
Decoding Company Registration in Pakistan: A Detailed FAQ Guide
This guide explains company registration in Pakistan, including private companies, foreign companies, incorporation requirements, legal obligations, and compliance under Pakistani law.
Frequently Asked Questions – Company Registration in Pakistan
1. What is a private company in Pakistan?
A private company under the Companies Ordinance, 1984:
Limits share transfers
Restricts membership to 50 (excluding employees)
Prohibits public subscription for shares or debentures
2. Which laws govern company incorporation?
Company incorporation is governed by:
Companies Ordinance, 1984
Companies (General Provisions and Forms) Rules, 1985
Single Member Companies Rules, 2003
Code of Corporate Governance for limited companies
3. How many types of companies exist in Pakistan?
Three primary types:
Company limited by shares
Company limited by guarantee
Unlimited company
Variations include single-member, private limited, public listed/unlisted, and foreign companies.
4. What is the minimum number of members required?
Private companies: 2 members
Public unlisted companies: 3 members
Public listed companies: 7 members
Single-member companies: 1 member with a chief executive and company secretary
5. What is a special resolution?
A resolution passed by at least three-fourths of eligible members at a general meeting after 21-day prior notice specifying the resolution.
6. What is the Memorandum of Association?
A document outlining a company’s objectives and capital limits, including clauses like:
Name
Registered office
Objects
Liabilities
Authorized capital
Amendments require approval from the SECP.
7. What do Articles of Association cover?
They define internal management rules, including:
Roles of directors
Share transfer and capital alteration
Conduct of meetings and voting
Dividend distribution
Daily business operations
8. Can Articles of Association be altered after incorporation?
Yes, changes are possible via a special resolution passed by shareholders.
9. Can a sole proprietorship be converted into a company?
Yes, it can be converted into a sole proprietorship company or a private limited company.
10. Can a foreigner be a director in a Pakistani company?
Yes, after compliance with Foreign Exchange Regulations.
11. How can a director resign?
Directors can resign at any time, subject to clearing liabilities.
12. What is the minimum paid-up capital for a private limited company?
The minimum at incorporation is PKR 100,000, with no upper limit.
13. Difference between authorized and paid-up capital?
Authorized capital: Maximum shares a company can issue
Paid-up capital: Actual shares issued and paid for
14. Can paid-up capital be increased later?
Yes, under compliance with the Companies Ordinance, 1984.
15. Can a foreign company open a branch in Pakistan?
Yes, subject to sections 452–460 of the Companies Ordinance, 1984 and permissions from the Board of Investment (BOI).
16. Can a company change its name after incorporation?
Yes, through a special resolution and SECP approval.
17. Can non-residents establish a company in Pakistan?
Yes, by appointing a resident alternative director if the chief executive/director resides abroad for more than three months.
18. How is a company name approved?
The proposed name must be approved by SECP.
19. What are non-profit companies?
Companies promoting art, science, social services, etc., cannot pay dividends to members and operate under a special license, without the word “limited” in their name.
20. Are there restrictions for foreigners doing business?
No, foreigners can freely establish companies in Pakistan.
21. Is a separate National Tax Number required?
Yes, a NTN is essential for filing company tax returns.
22. What are the taxation rates for companies?
Corporate tax in Pakistan is approximately 35% of net profit.
23. Is forming a company necessary to start a business?
No, businesses can operate as sole proprietorships or partnerships, but a company provides limited liability and corporate benefits.
24. Who can be a director?
Any individual with a valid CNIC and no legal restrictions from courts.
25. What does limited liability mean?
Owners’ liability is limited to their investment, protecting personal assets if the company fails.
26. How to close a company?
Options include:
Voluntary liquidation
Striking off the register (if solvent)
Court-supervised winding up
27. What are the modes of winding up?
By the Court
Voluntary winding up
Winding up under Court supervision
Creditors’ winding-up
28. What is a registered office?
The official address for company correspondence.
29. Can a registered office be changed?
Yes, with a special resolution, SECP confirmation, and proper filing.
30. What is an unregistered company?
An unregistered company is one not formally registered with government authorities, lacking legal recognition.
May operate informally but cannot enjoy legal protections
Registration ensures liability protection, taxation compliance, and legal standing
