Embarking on Business Setup in Pakistan

Embarking on Business Setup in Pakistan: A Comprehensive Guide

 

Disclaimer: This information serves as a general guide and is not a substitute for professional legal advice.

 

Introduction:

Starting a business in Pakistan involves understanding various legal structures and procedures. The choice of business form depends on factors such as ownership, liability, and nature of the enterprise. Below are the primary forms of business entities practiced in Pakistan:

 

  1. Non-Registered: Sole Proprietorship:

– A business owned and operated by a single individual.

– No formal registration required.

– The proprietor is personally responsible for business obligations.

 

  1. Non-Registered: Partnership:

– An association of two or more individuals carrying on a business for profit.

– No formal registration required, but a partnership deed is advisable.

– Partners share profits and liabilities.

 

  1. Private Limited: Single-Member Company (only one Director):

– A private company with a single owner.

– Provides limited liability to the sole member.

– Requires registration and compliance with the Companies Ordinance, 1984.

 

  1. Private Limited Company (more than one Directors):

– A separate legal entity with limited liability for shareholders.

– Requires a minimum of three directors.

– Shares can be transferred with certain restrictions.

 

  1. Foreign Company Incorporation:

– For foreign entities establishing a presence in Pakistan.

– Registration with the Securities & Exchange Commission of Pakistan (SECP) is mandatory.

– Compliance with local laws and regulations is essential.

 

  1. Non-profit Company (NPO, NGO, or Charitable Organization):

– Formed for charitable or non-profit purposes.

– Requires compliance with specific laws governing non-profit organizations.

– Contributions and profits are directed towards the organization’s objectives.

 

Company in Pakistan:

– Governed by the Companies Ordinance, 1984.

– Can be formed as a Company Limited by Shares, a Company Limited by Guarantee, or an Unlimited Company.

 

Company Limited by Shares in Pakistan:

– Member liabilities limited to their shares in the paid-up capital.

– Classified as Public Limited Companies and Private Limited Companies.

 

– Public Limited Companies:

– Formed by at least three persons.

– The word ‘Limited’ is used in their name.

 

– Private Limited Companies:

– Formed by one or more persons.

– Single Member Companies can be formed by a sole member.

 

Company Limited by Guarantee in Pakistan:

– Member liabilities are limited to agreed amounts in the event of winding up.

– Typically formed on a non-profit basis.

 

Unlimited Company in Pakistan:

– Members have unlimited liability.

– Less common due to higher personal risk.

 

Services Offered by City Laws Associates:

– Selection of the company type.

– Assistance in choosing a suitable name.

– Obtaining ‘name availability’ from SECP.

– Drafting and executing Memorandum & Articles of Association.

– Payment of fees and liaison with SECP.

– Procurement of incorporation certificates.

– Subscription to the agreed share capital.

– Preparation and filing of a prospectus for public companies.

– Obtaining commencement of business certificate for public companies.

 

Note: Business laws and regulations may undergo changes, and it is advisable to consult the latest legal provisions or seek professional legal advice for accuracy.

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