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VARIOUS TYPES OF COMPANIES
A place of business includes a branch, management, share transfer or registration office, factory, mine, or fixed place of business but does not include an agency unless the agent exercises a general authority to negotiate and conclude a contract or maintains a stock of merchandise on behalf of the company. The following are exceptions:
- The company shall not be deemed to have an established place of business in Pakistan merely because it carries on business dealings in Pakistan through a bona fide broker or general commission agent acting in the ordinary course of his business.
- The fact that a company has a subsidiary that is incorporated, resident, or carrying on business in Pakistan, shall not of itself constitute the place of business of that subsidiary an established place of business of the company.
A foreign company is required to obtain a permission letter from the Board of Investment with a specific validity period for opening and maintaining of its branch/liaison office in Pakistan. A copy of such permission letter is required to be furnished with the documents meant for registration. Renewal/ extension of the permission to open/maintain a branch/liaison office is also required to be obtained from the Board of Investment on the expiry of the validity period of the permission originally granted. Whenever such renewal/extension is granted, a copy must be furnished to the registrar concerned.
A comparison among various forms of company registration in Pakistan by foreigners / Chinese is as under;
| Description | Single Member Private Limited Company
Only one natural person as a shareholder |
Private Limited Company
Two or more natural persons as shareholders |
A subsidiary of a Foreign Company | Branch Office of Foreign Company in Pakistan | Liaison Office of Foreign Company in Pakistan | Public Limited Company |
| HOW COMPANY NAME IS WRITTEN IN LEGAL DOCUMENTS? | ……(SMC-PVT.) LTD. OR ……(SMC-PRIVATE) LIMITED | ……(PVT.) LTD. OR ……(PRIVATE) LIMITED | If 100% owned by the foreign company, then……(SMC-PVT.) LTD. OR ……(SMC-PRIVATE) LIMITED | The company will adopt the same name as is in country of origin / foreign country subject to approval by SECP. | The company will adopt the same name as is in country of origin / foreign country subject to approval by SECP. | ……..LTD |
| OR | ||||||
| If there are one or more than one shareholders beside that foreign company then | …….LIMITED | |||||
| ……(PVT.) LTD. OR ……(PRIVATE) LIMITED | ||||||
| RELEVANT COMPANY REGISTRATION AUTHORITY | Relevant Company Registration Office, Securities & Exchange Commission of Pakistan (SECP) | Relevant Company Registration Office, Securities & Exchange Commission of Pakistan (SECP) | Relevant Company Registration Office, Securities & Exchange Commission of Pakistan (SECP) | Relevant Company Registration Office, Securities & Exchange Commission of Pakistan (SECP) | Relevant Company Registration Office, Securities & Exchange Commission of Pakistan (SECP) | Relevant Company Registration Office, Securities & Exchange Commission of Pakistan (SECP) |
| MINIMUM NUMBER OF MEMBERS OR SHAREHOLDERS | Only One (1) | Two (2) | Only One (1) | UNLISTED: Three (03)LISTED: Seven (07) | ||
| MAXIMUM NUMBER OF MEMBERS OR SHAREHOLDERS | Only One (1) | Fifty (50) | Fifty (50) | UNLIMITED | ||
| LOCAL RESIDENT SHAREHOLDERS / DIRECTORS | Local Resident Shareholder(s) or Director(s) NOT mandatory | Local Resident Shareholder(s) or Director(s) NOT mandatory | Local Resident Shareholder(s) or Director(s) NOT mandatory | Local Resident Shareholder(s) or Director(s) NOT mandatory | Local Resident Shareholder(s) or Director(s) NOT mandatory | Local Resident Shareholder(s) or Director(s) NOT mandatory |
| MINIMUM AUTHORIZED SHARE CAPITAL | PKR 1 (However a standard capital of PKR 100,000 is being used / recommended) | PKR 1 (However a standard capital of PKR 100,000 is being used / recommended) | PKR 1 (However a standard capital of PKR 100,000 is being used / recommended) | PKR 1 (However a standard capital of PKR 100,000 is being used / recommended) | PKR 1 (However a standard capital of PKR 100,000 is being used / recommended) | PKR 1 (However a standard capital of PKR 100,000 is being used / recommended) |
| MINIMUM PAID UP/SUBSCRIBED CAPITAL | As decided by Company | As decided by Company | As decided by Company | Same as in Foreign Company | Same as in Foreign Company | As decided and articulated by the Company in its Articles of Association. |
| WHO CAN BE DIRECTOR OF THE COMPANY? | Only shareholders can be Director of the Company | Only shareholders can be Director of the Company | Nominee Director will act as Director | N/A | N/A | Only shareholders can be Director of the Company |
| WHO CAN BE CEO OF THE COMPANY? | Any Person whether shareholder or not | Any Person whether shareholder or not | Any Person whether shareholder or not | N/A | N/A | Any Person whether shareholder or not |
| PRIOR LICENSE OR NOC FOR COMPANY REGISTRATION FROM GOVERNMENT OF PAKISTAN | Not Required | Not Required | Not Required | MANDATORY | MANDATORY | Not Required |
| TRADE LICENSE (PRIOR OR SUBSEQUENT TO REGISTRATION) | Not Required | Not Required | Not Required | Not Required | Not Required | Not Required |
| SECURITY CLEARANCE OF FOREIGNERS OR FOREIGN COMPANY | Required. However process of security clearance will be initiated after the Company has been formed | Required. However process of security clearance will be initiated after the Company has been formed | Required. However process of security clearance will be initiated after the Company has been formed | Required. However process of security clearance will be initiated after the Company has been formed | Required. However process of security clearance will be initiated after the Company has been formed | Required. However process of security clearance will be initiated after the Company has been formed |
| PHYSICAL REGISTERED OFFICE ADDRESS / PLACE OF BUSINESS IN PAKISTAN | Mandatory. It needs to be arranged before filing company registration with CRO | Mandatory. It needs to be arranged before filing company registration with CRO | Mandatory. It needs to be arranged before filing company registration with CRO | Mandatory. It needs to be arranged before filing company registration with CRO | Mandatory. It needs to be arranged before filing company registration with CRO | Mandatory. It needs to be arranged before filing company registration with CRO |
| PHYSICAL PRESENCE OF FOREIGN SHAREHOLDERS FOR COMPANY REGISTRATION PROCESS | Not Required | Not Required | Not Required | Not Required | Not Required | Not Required |
| PHYSICAL PRESENCE OF FOREIGN SHAREHOLDERS FOR TAX REGISTRATION | Mandatory | Mandatory | Mandatory | Resident Principal Officer may act on company behalf | Resident Principal Officer may act on company behalf | Mandatory |
| PHYSICAL PRESENCE OF FOREIGN SHAREHOLDERS FOR COMPANY BANK ACCOUNT OPENING | Generally Required | Generally Required | Generally Required | Generally Required | Generally Required | Generally Required |
| CORPORATE TAX RATE | 25% | 31% | 25% | 31% | 31% | 31% |
| AVERAGE NUMBER OF DAYS TO FORM | 10 – 15 working days | 10 – 15 working days | 15-30 working days | 90 -100 working days | 90 -100 working days | 20-30 working days |
| SCOPE OF ACTIVITIES | A branch office is set up by a foreign firm to execute the contracts awarded to it. | Activity is restricted to the promotion of product(s), provision of technical advise and assistance, exploring the possibility of joint collaboration and export promotion (these activities are to be mentioned in the application) | ||||
| Activity will be restricted to the work mentioned in the agreement/ contract signed | ||||||
| Cannot undertake any commercial/ trading activities | ||||||
| Cannot indulge in commercial/ trading activities | ||||||
| MEETING EXPENSES | All expenses will be met out of funds transferred from abroad through normal banking channel and converted to local currency account or from the amounts received through execution of the agreement / contract | All expenses will be met out of funds transferred from abroad through normal banking channel and converted to local currency account | ||||
| REMITTANCE FACILITY | Remittance of profits etc. is allowed subject to submission of information / documents as required in terms of Para 13 Chapter XIV of the Foreign Exchange Manual of SBP. | No remittance facility allowed. | ||||
| HIRING OF FOREIGN NATIONALS | Employment of foreign nationals shall be made subject to the prior approval of the Government as per policy and in accordance with the policy of Pakistanization. | Employment of foreign nationals shall be made subject to the prior approval of the Government as per policy and in accordance with the policy of Pakistanization | ||||
| IMPORT AND EXPORT OF MACHINERY | Import/Export of machinery and equipment and its re-export shall be governed by the Import/Export policies of the Government | Nil | ||||
| REGISTRATION WITH SECP | Mandatory | Mandatory | ||||
| FINALIZATION OF CASE | 6-8 weeks | 6-8 weeks | ||||
| PERIOD OF PERMISSION | 3-5 years; renewable | 3-5 years; renewable | ||||
| DOCUMENTS REQUIRED | 1. Six sets of the following documents are required:2. Application form | Six sets of the following documents are required: | ||||
| 3. Copy of registration of the foreign company duly attested by Pakistan Mission | 1. Application form | |||||
| 4. Copy of Articles and Memorandum of Association | 2. Copy of registration of the foreign company duly attested by Pakistan Mission | |||||
| 5. Copy of agreement / contract in case of Branch Office | 3. Copy of Articles and Memorandum of Association | |||||
| 6. Copy of Company Profile | 4. Copy of Company Profile | |||||
| 7. Copy of Resolution / Authority letter of the company to establish branch office in Pakistan. | 5. Copy of Resolution / Authority letter of the company to establish liaison office in Pakistan | |||||
| RENEWAL | The following documents are required: | The following documents are required: | ||||
| Copies of valid agreements/ contracts along with their duration | Performance/Activity report | |||||
| Income tax returns (for the last 03 years) | Receipt and Payment Statement | |||||
| Copy of latest Audited Accounts | Proceeds Realization Certificates | |||||
| Proceeds Realization Certificates | ||||||
| CHANGE OF ADDRESS / TELE ETC. | Has to be intimated to the Board of Investment and other concerned quarters | Has to be intimated to the Board of Investment and other concerned quarters | ||||
| DOCUMENTS REQUIRED FOR CLOSURE | The following documents are required:
Request letter for closure |
The following documents are required:
Request letter for closure |
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| Activity Report, Proceeds Realization Certificates, and Audited Accounts for the last permitted period. | Activity Report, Proceeds Realization Certificates, and Receipt and Payment Statement for the last permitted period. | |||||
| Copies of press clippings regarding closure were published in two national dailies. | Copies of press clippings regarding closure were published in two national dailies. | |||||
| Confirmation from tax authorities that all assessments and dues are clear. | Confirmation from tax authorities that all dues are clear. |