Incorporation of a company in Pakistan
Incorporation is the legal process used to form a corporate entity or company. A corporation is a separate legal entity from its owners, with its own rights and obligations. Corporations can be created in almost every country in the world and are generally identified as such through the use of terms such as “INC.” gold “Limited” in their names.
Around the world, corporations are the most widely used legal vehicle for operating a business. While the legal details of forming and organizing a corporation differ from jurisdiction to jurisdiction, most have certain elements in common.
Incorporation of a company in Pakistan:
Any three or more persons associated with a legal purpose may, by signing their names to the Memorandum of Association and complying with the requirements of the Companies Act of 2017, form a public company and any or more persons thus associated may, in the same way , form a private company. If only one member forms a private company, it is called a single member company.
Limited liability company: A private company is required to have a minimum of 2 members and 2 directors. You can start your business immediately after its incorporation. A private company, through its Bylaws (AoA) restricts the right to transfer its shares, limits the number of its members to fifty (50) and prohibits any invitation to the public to subscribe its shares.
Sole proprietorship: Single-member company, as is clear from the name, is the type of company with only one member, who is also the sole director of the company. All shares are vested in a single partner; however, it is mandatory that the sole member nominate one person as the nominee director, who will act as director in the event of his or her death, and an alternate nominated director who will act as the nominated director in the event that the nominated director is unavailable. A corporate body cannot become your member or director.
Limited public company: An unlisted public company must have at least 3 members and 3 directors. You do not have the right to start your business unless you obtain a “Certificate of Start of Business” from the Registrar of Companies, Pakistan Securities and Exchange Commission. There is no restriction on the maximum number of partners and transfer of shares. A public company has the option of listing its securities / shares on any stock exchange in Pakistan. Then it must have at least 7 members and 7 directors. Your minimum paid-up capital must be Rs 200 crore and you must also make a public offering / issue of your shares, which must be subscribed by at least 500 applicants. Post-issuance paid-up capital is required to be a minimum of Rs 500 million.
Approval from ministries / departments is required:
Prior approval of the Ministries / Departments, etc. Listed in each category the following companies are required to obtain prior to company incorporation.
- A banking company: (I) Ministry of Finance (II) State Bank of Pakistan
- A non-bank finance company (NBFC): SECP
- A company that provides security services: Ministry of Interior
- A corporate brokerage: Stock Exchange (for transfer of membership card in favor of the proposed company)
- A currency exchange company: State Bank of Pakistan
- A non-profit association u / s 42 of the Companies Act of 2017: SECP license.
- A business organization: License from the Ministry of Commerce
The following are the requirements for registering a new company under the Companies Act 2017.
The first step regarding company incorporation is to look up the availability of the proposed company name at the registrar. It is required to make a request with the prescribed rate looking for a certificate of availability for each name.
Documents for the registration of a limited company:
The following documents must be submitted to the corresponding registrar for the registration of a private limited company:
(I) Copy of national identity card or passport, in case of being a foreigner, of each subscriber and witness of the articles of incorporation,
(II) Memorandum and Bylaws: Four printed copies of the Memorandum of Association in case of offline filing and one copy for online filing, duly signed by each subscriber in the presence of a witness. In order to make it easier for the general public, the standardized template Memorandum of Association of various sectors has been provided on the Commission’s website.
(III) Form – 1: Compliance Applicant Statement
(IV) Form – 21: Notice of the company’s registered office situation
(V) Form – 29: Data of the first directors of the company
(SAW) Registration / Presentation Fee: Original Challan paid proving the payment of the fee as prescribed in any of the authorized branches of the bank.
Obtaining a Digital Signature of Directors:
The client will connect to https://eservices.secp.gov.pk/eServices, to log into their account or register, in case of a new user. The user will receive an email with the user’s activation link. Clicking on the link will activate the user account.
You already have a username / login that will be used for a Director of the proposed Company. For the remaining directors, create secondary user IDs by logging into the existing user ID in SECP eServices for all directors.
Digital signatures are mandatory to submit the case through electronic (online) services. For the digital signature of directors, get the form and have it signed by each director (One form for one director). SBC will complete the rest of the NIFT Form and send it to the National Institutional Facilitation Technologies (NIFT) counter at CRO-SECP along with the following documents;
Certified copies of the CNIC of all Directors
Certified copies of the name availability letter issued by the SECP.
NIFT will deliver the details of the digital signatures by email. Download the signature the same day by following the instructions given in that email. NIFT charges a prescribed fee per director.
Additional requirements for the constitution of a public company:
In addition to the requirements for incorporation of a limited liability company as stated above, public companies must present the following documents at the time of incorporation:
Model 27 (List of people who agree to act as director)
Form 28 (Consent of directors)
Contractual capacity and right to invest:
Immediately after registering with the SECP, the entity becomes eligible to enter into contracts or agreements with resident or non-resident entities or individuals. The right to invest is an inherent right of a limited liability company inside or outside Pakistan.
Start of business:
A Certificate of Incorporation issued by the Registrar of Companies is conclusive proof of the establishment of the entity in Pakistan. This also entitles a PLC to start their business.