There are a lot of reasons why to invest in Pakistan. Some of its prime benefits include low competition, a huge population, and a rapidly growing economy.
In this article, you will get an overview of different legal entities that are available for foreign investors. We will also share the step-by-step guide to company registration in Pakistan.
The information presented continues to change depending on the laws and amendments made in Pakistan. We update our articles accordingly.
Table of contents
Overview of Legal Entities in Pakistan
|Type of Entity||Minimum No. of Shareholders||Minimum Capital Requirement||Standard Time of Incorporation|
|Private Limited Company||2|
|Single Member Company||1|
|Public Listed Company (Listed)||3|
|Public Listed Company (Unlisted)||3|
|Branch Office||No shareholders||N/A||7 weeks|
|No shareholders||N/A||7 weeks|
Allowed Foreign Ownership in Pakistan
Unlike many other similar markets, Pakistan is very welcoming towards foreign investors. Due to negative international reputation, the country has significantly opened up to foreign investment over the past years.
For example, you can even import some products without acquiring an import license.
Moreover, foreign investors can set up 100% foreign-owned companies in most business lines. The shareholders can be of any nationality, except for Israeli nationals.
Minimum Capital Requirement in Pakistan
There are two types of share capitals in Pakistan, paid-up capital and authorized capital. Both capitals must be declared in the Articles of Association when you register your company.
Paid up capital is the amount of money that the company receives from its shareholders. On the other hand, authorized capital is the maximum amount of share capital that the company is allowed to authorize to issue to its shareholders.
There is no official minimum capital requirement for private limited companies in Pakistan. For this reason, a common practice is to consider PKR 100,000 (~US$823) as the minimum capital.
In reality, however, the paid up capital you inject must be in compliance with your planned expenses. For example, if you plan on building a factory for your business, you must also have sufficient capital for that.
Types of Legal Entities in Pakistan
More and more foreign investors recognize Pakistan as a market to invest in. In March 2018, for example, foreign investment in Pakistan increased by USD 152.7. It is expected to grow by 17.2% by 2020.
If you are planning to invest in Pakistan, here are the types of legal entities that you can choose from.
#1 Private Limited Company
Foreign investors can set up fully foreign-owned private limited companies (LLCs) in Pakistan. The minimum number of shareholders needed in order to register this kind of company is two. Any foreign national can be a shareholder in this kind of company, except for those coming from Israel.
In general, PKR 100,000 (~US$ 823) is considered to be the minimum capital requirement. However, take note that the actual minimum capital you need to inject depends on your planned expenses.
Another requirement is that the registered address of the company’s office must be located in Pakistan.
The incorporation time of a limited liability company in Pakistan is generally six weeks. The registration is also subject to approval from the Board of Investment and you also need to obtain clearance from the Ministry of Interior.
#2 Single Member Company
Foreign investors, apart from Israeli nationals, can also set up a single member company in Pakistan with only one shareholder.
Just like a limited liability company, you can also set up a single member company in Pakistan with PKR 100,000 (~US$ 823) of minimum capital.
The standard time of incorporation is four weeks and also make sure that the registered address of the company will be in Pakistan.
#3 Public Limited Company
Generally speaking, a public limited company has their shares offered to the general public. Those shares are with limited liability.
Anyone can acquire the shares. It may be through a public offering or through trading in the stock market.
There are two types of public limited companies in Pakistan, unlisted and listed.
|Allowed Foreign Ownership||100%||100%|
PKR 200 million
|Listed in Stock Exchange|
Shares must be subscribed by at least 500 applicants
|Minimum No. of Shareholders||7||3|
|Time of Incorporation||6 weeks||6 weeks|
How to register a company in Pakistan
The procedure of registering a public limited company is same as above. However, they may require you to submit more documents.
Step 1: Approval of Company Name
This is the first step of company registration in Pakistan is choosing the company’s name. It is important to devise a unique company name that would set you apart from the rest in the industry.
You must follow the restrictions and guidelines. For example, make sure that your company’s name does not include any prohibited words.
Step 2: Submission of Documents
Once the company name gets the approval, you need to submit the incorporation documents to the Securities and Exchange Commission of Pakistan (SECP).
Step 3: Certificate of Incorporation
After submitting the documents, the SECP evaluates them. They check their validity. A digital signature is granted by the National Institutional Facilitation Technologies (NIFT) and can be acquired through the SECP.
Also, they issue the certificate of incorporation. Presentation of the company may be needed. However, this depends on where the business started.
Step 4: Deposit of Shares
After the registration, shareholders must deposit their corresponding amount of shares to the company’s bank account.
Step 5: Registration of Income, Sales, and Professional Taxes
In conclusion, the last step of company registration in Pakistan is the registration with the Federal Board of Revenue (FBR) and issuance of a national tax number (NTN). A sales tax registration number may be registered if applicable.
Alternatives to company registration in Pakistan
A branch office is a suitable alternative to company registration if your company wants to have a presence in Pakistan without setting up a separate legal entity.
Branches carrying out a contract in Pakistan can be established. However, a branch office cannot take part in any commercial or trading activities of whatever nature. Therefore, your activities depend on the contract you signed. The contract restricts your activities.
The parent company owns 100% of the branch office in the country of origin. Since it is not a limited liability company, it does not require any minimum capital either.
Process time for the registration takes up seven weeks. The permit can be valid for 1 to 5 years if it has an approval from the Board of Investment (BOI).
If you want to promote your products in Pakistan, you can set up a 100% foreign-owned liaison office here.
Besides product promotion, you can also provide technical advice and assistance, explore the various possibilities of joint collaboration, and export promotion in Pakistan.
However, this type cannot engage in commercial or trading activities and it is not subject to any minimum capital either
A liaison office can only function according to the provisions of the contract or the assignment.
While part of the contract states that you can only provide technical assistance and product promotion, you cannot engage in export promotion and other activities.
Hence, it is similar to the branch office. Therefore, there will be no shareholding since it’s going to be in the country of origin only.
The standard time for establishing a liaison office in Pakistan is seven (7) weeks. Therefore, once granted your permit will have a validity period of 1 to 5 years. Also, the Board of Investment (BOI) needs to approve it.
How to start with company registration in Pakistan?
If you are planning on investing in Pakistan, get in touch with Emerhub and we will handle the process of company registration on your behalf.
All you need to send us to get started is:
- Name, addresses, and shareholding of each of the shareholders
- The amount of share capital
- Passport copies of the shareholders
- Proposed name of the company
Contact us via the form below and our consultants will gladly assist you with your company registration in Pakistan.