Why Incorporate a Company in Pakistan?
Incorporating a company offers legal protection, credibility, and access to formal business opportunities. Whether you’re launching a startup, a single-member company, or a not-for-profit association, the Companies Regulations, 2024, provide clear guidelines to ensure compliance and ease of setup. With options for digital filings and fast-tracked processes, Pakistan is an attractive destination for entrepreneurs.
Step-by-Step Procedure for Company Incorporation
The incorporation process is detailed in Chapter III of the Companies Regulations, 2024 (Regulations 8–19). Here’s how to form a company:
Step 1: Choose the Type of Company
Decide on the type of company you want to form, such as:
- Private Limited Company (limited by shares)
- Single Member Company (SMC)
- Public Limited Company
- Company Limited by Guarantee (e.g., not-for-profit)
- Unlimited Company
Each type has specific requirements, so ensure your choice aligns with your business goals.
Step 2: Reserve a Company Name
Before incorporation, you must reserve a unique company name that complies with Section 10 of the Companies Act, 2017, and Regulation 5 of the Companies Regulations, 2024.
– How to Apply:
- File an application using Form App-1 through the SECP’s e-service platform (online) or physically at a Company Registration Office.
- Propose up to three names in order of priority.
- Ensure the name avoids prohibited terms (e.g., “Federal Government,” “United Nations”) or restricted terms (e.g., “Bank,” “Insurance”) unless you have the necessary approvals (Regulation 5).
- Pay a non-refundable fee as per the Seventh Schedule to the Act.
– Outcome:
- If approved, the Registrar issues a name availability letter, reserving the name for 60 days.
- If rejected, an order of refusal is issued, and you can reapply with new names.
– Timeline: 4 working hours for both online and physical submissions.
Tip: Use the SECP’s online name search tool to check name availability before applying to avoid rejections.
Step 3: Prepare and Submit Incorporation Documents
You can file for incorporation in two ways:
- Separate Application: After reserving the name, file for incorporation.
- Combined Application: Simultaneously reserve the name and incorporate (only for companies limited by shares, not for businesses requiring licenses).
– How to Apply:
- Submit the incorporation application using Form-1 via e-service or physically.
- Pay the incorporation fee as per the Seventh Schedule.
- For combined applications, the e-service platform generates the Memorandum and Articles of Association automatically (not available for specialized businesses).
– Required Documents (Regulation 8):
- Memorandum of Association:
- Must align with Table B, C, D, E, or F of the First Schedule to the Act (Regulation 9).
- Include an undertaking prohibiting restricted activities (e.g., multi-level marketing, banking) unless licensed.
- For physical filings, stamp as per the Stamp Act, 1899.
- For online filings, attach a PDF or use a system-generated version.
- Articles of Association (Regulation 10):
- For combined applications, adopt Table A of the First Schedule.
- For separate applications, adopt Table A or submit custom articles.
- Mandatory for companies limited by guarantee or unlimited companies.
- Identification Documents:
- Valid CNIC/NICOP for Pakistani subscribers, directors, and CEO.
- Valid passport for foreign nationals.
- For single-member companies, include CNIC/NICOP or passport of the nominee.
- CNIC of a witness for physical filings.
- Authority Letter (for physical filings):
- Notarized letter on stamp paper authorizing a subscriber or registered intermediary to act on behalf of subscribers.
- Regulatory Approvals (if applicable):
- NOC/Letter of Intent/License from relevant authorities for specialized businesses (e.g., banking, insurance).
- Corporate Subscriber Documents (if applicable):
- CNIC/NICOP/passport of the authorized person and a board resolution for body corporates.
- CNIC/NICOP/passport of the designated partner and empowering instrument for LLPs.
- Foreign Subscriber Documents (Regulation 19):
- For individuals: Bio-data, passport copies, and an undertaking (Annexure-S) attested by a notary public.
- For companies/body corporates: Profile, directors’ details, passport copies, charter, memorandum, certificate of incorporation, board resolution, and an attested undertaking (Annexure-S).
- Documents executed outside Pakistan must be certified by a public officer, notary public, or apostilled per the Hague Convention.
- Ultimate Beneficial Ownership (UBO) Information (Regulation 13):
- For subscribers with ≥25% shares, voting rights, or control:
- Name, father’s/spouse’s name, CNIC/NICOP/passport, nationality, address, email, and date of UBO status.
- For indirect ownership, details of intermediary entities and the controlling natural person.
- Fee Payment Evidence:
- Original bank challan or other proof for physical filings.
Timeline: 4 working hours for incorporation with standardized documents.
Step 4: Address Any Discrepancies
- The Registrar reviews the submitted documents for compliance (Regulation 15).
- If discrepancies are found, you’ll receive a written notice to resolve them within 7 days.
- Failure to respond triggers a first reminder, followed by a final reminder after 7 days.
- If unresolved within 7 days of the final reminder, the application may be rejected.
Step 5: Receive the Certificate of Incorporation
- Once all requirements are met, the Registrar registers the documents and issues a Certificate of Incorporation (Annexure-C), signed or sealed, as proof of incorporation (Regulation 16).
- The certificate may be issued electronically.
- This document confirms your company is legally incorporated under the Companies Act, 2017.
Fees for Incorporation
Fees are specified in the Seventh Schedule to the Companies Act, 2017:
- Name Reservation Fee: Non-refundable, payable at the time of Form App-1 submission.
- Incorporation Fee: Payable with Form-1, varying based on the company type and authorized capital.
- Stamp Duty: For physical memorandum submissions, as per the Stamp Act, 1899 (not applicable for electronic filings until provincial mechanisms are in place).
Note: Exact fee amounts are not detailed in the regulations but can be found in the Seventh Schedule on the SECP website (https://www.secp.gov.pk/). Typically, fees range from a few thousand PKR for small companies to higher amounts for larger authorized capital.
Special Considerations
Single Member Companies (Regulation 17)
– Follow the same incorporation process but include a nominee’s CNIC/NICOP or passport, meeting Section 79(3) criteria.
– Ideal for solo entrepreneurs seeking limited liability.
Not-for-Profit Associations (Regulation 18)
– Obtain a Section 42 license from the SECP before applying for incorporation.
– Suitable for charitable or community-focused organizations.
Foreign Subscribers (Regulation 19)
– Provide additional documents, including security clearance undertakings (Annexure-S).
– Non-Indian foreign subscribers can incorporate with an undertaking, pending clearance from the Ministry of Interior.
– Indian nationals or entities require prior security clearance.
– Documents executed abroad must be notarized or apostilled.
Tips for a Smooth Incorporation
- Use E-Services: Online filings via the SECP’s e-service platform are faster, require no witnesses, and offer system-generated documents for standard companies.
- Check Name Restrictions: Review Regulation 5 to avoid prohibited or restricted names, saving time on rejections.
- Prepare Documents in Advance: Ensure all identification and regulatory documents are valid and properly attested.
- Consult Professionals: Engage a registered intermediary (Regulation 126) for complex filings, especially for foreign subscribers or specialized businesses.
- Monitor Deadlines: Respond promptly to Registrar’s notices to avoid application refusal.
Why Choose Pakistan for Your Business?
Pakistan’s business-friendly reforms, including digital incorporation and fast-tracked timelines (4 hours for name reservation and incorporation), make it an ideal place to start a company. The SECP’s robust regulatory framework ensures transparency, while options like single-member companies cater to diverse entrepreneurial needs.
Conclusion:
Forming a company in Pakistan is a straightforward process with clear steps, minimal timelines, and flexible filing options. By following the Companies Regulations, 2024, and preparing the required documents, you can establish your business in as little as a few hours. For the latest fee details or assistance, visit https://www.secp.gov.pk/ or contact your nearest Company Registration Office.
Ready to start your entrepreneurial journey? Contact us at Baakza & Bansari to help ensure a smooth process.