Investing in Pakistan has several benefits, some of which have little or no competition; a huge consumer market, a growing economy, etc. The most important part of setting up a business is deciding on which entity to set up. Generally, there are four types of business entities in the country namely, sole proprietorship, private limited company, partnership, and limited liability partnership. Each structure differs in terms of liabilities, taxes, and the capacity to regulate profits and losses incurred.
If you are looking to conduct business here, the guide offers you detailed information on the specified entity type you wish to incorporate.
What it is
A form of entity, which does not allow the sale of its shares to the public and keeps private financial statements. It is usually controlled by the shareholders or a board of appointed directors. Its shares are not available for trading on Pakistan Stock Exchange and all accounts do not need to be audited. It is allowed a minimum of two partners and can be fully owned by foreigners.
Features of the Company
Establishing this structure comes with a lot of perquisites, this is due to the numerous features it has. Listed below are some of the characteristics:
Liability of Shareholders
The liability of a shareholder or partner is limited to the amount contributed.
Ownership
It can be owned by foreigners of which the shareholders may be of any nationality, except for citizens from Israel. Foreign investors can start up businesses in almost all sectors they wish to in the country.
Registered Address
When registering a company, it must have a registered business address. The address can be rented or leased, provided it can receive emails from government bodies.
Minimum Capital
The two types of share capital are paid-up capital and authorized capital. Both must be declared in the Articles of Association during registration. Paid-up capital is the amount all shareholders contribute while authorized capital is the maximum amount of capital the corporation can authorize to issue to its shareholders. Although there is no fixed minimum capital for PLCs, most business owners take it to be PKR 100,000 (~US$823).
Number of partners
The maximum number of shareholders is 50 partners with a minimum of two partners.
Company Registration
The process of incorporating a PLC is the same as that of a public limited company or a Partnership, except for the fact that certain documents required during registration may differ. The following are the steps involved in registering a business within the territory:
Company Name Approval
The first step of incorporation is choosing a business name and ascertaining that the name is unique, relates to the services or products of the company, and is distinct from other companies.
Submission of Documents
After the name is approved, one must submit the incorporation documents to the Securities and Exchange Commission of Pakistan (SECP).
Certificate of Incorporation
Once the documents are verified, the National Institutional Facilitation Technologies (NIFT) grants a digital signature, and a certificate of incorporation is issued.
Deposit of Shares
After registering the business, all shareholders must deposit their number of shares into the corporate bank account opened for the company.
Registration of all Taxes
The final step is to register with the Federal Board of Revenue (FBR) and be issued a national tax number (NTN). Depending on the circumstances, a sales tax registration number can be registered.
Documents Required for Incorporation
A company requires the following documents to be incorporated:
- Application letter
- Copies of the Memorandum and Articles of Association
- Registration form
- Details of the board of directors (or Shareholders if not applicable)
- Receipts for Payments, etc.
Processing Time
It takes six weeks to incorporate a PLC here. The process is subject to approval by the Board of Investment and a clearance from the Ministry of Interior.
