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FOR Foreign INVESTORS
Companies Regulatory Requirements
Business Activities may be carried out through a company, modaraba, branch, partnership or sole proprietorship.. Companies incorporated in Pakistan and branches or liaison / representative offices of foreign companies are regulated by the Companies Act, 2017 [CA], and Rules framed there under, administered by Securities &Exchange Commission of Pakistan [SECP].
Forms of Companies
The Companies Act mentions the following types of Companies. Companies are required to get themselves registered under the tax laws and obtain a National Tax Number (NTN).
The personal liability of shareholders is limited to the amount (if any) unpaid on their shares. Effectively, the shareholder's liability does not exceed the amount committed, when taking up the shares in the company.
In this type of company, the memorandum binds each member to contribute to the assets of the company in the event of its being wound up while he is a member, or within one year afterwards, for payment of the debts and liabilities of the company contracted before he ceases to be a member, and of the costs, charges and expenses of winding up, and for adjustment of the rights of the contributories among themselves, such amount as may be required, not exceeding a specified amount.
- The law also allows formation of company with unlimited liability of its members.
- From a practical perspective, the limited liability company with share capital would be the type of company contemplated by a non-resident interested in investing in Pakistan.
- A company incorporated in Pakistan, may either be a "Public Company” or a "Private Company”.
A public company can also be a listed company.
A private company can be easily formed by a minimum of two members (except for a single member company) and may commence its business immediately after its incorporation. A private company, through its Articles of Association (AoA):
- Restricts its members to transfer shares
- Limits the number of its members to fifty
- Prohibits any invitation to the public to subscribe for its shares or debentures.
An individual is entitled to obtain corporate status by forming a single member company and avail
privileges of limiting the liability. The introduction of the concept of a single member company has
facilitated sole proprietorships to obtain corporate status, giving them the privilege to limit the liability of their proprietors.
All the shares are vested with single member; however, he / she is required to nominate two individuals, one of whom shall become nominee director in case of death of the single member and the other shall become alternate nominee director to work as nominee director in case of non-availability of the nominee director.
Single-Member Company is required to appoint a qualified company secretary and to write “SMC” in
addition to Private Limited with its name.