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BUSINESS
Forms of Business
There are three main forms of business found in this country:
1. Sole Proprietorship
2. Partnership
3. Company
Sole Proprietorship
1. In a sole proprietorship, an individual on his/her own account carries out the business or
profession.
2. No formal procedure or formality is required for setting up a sole proprietary concern.
Partnership
1. A partnership is a business relationship entered into by a formal agreement between two or
more persons or corporations carrying on a business in common.
2. The capital for a partnership is provided by the partners, who are liable for the total debts of
the firms and who share the profits and losses of the business concern according to the terms
of the partnership agreement.
3. Partnerships (other than banking companies) are generally limited in size to twenty partners.
4. The interest of a partner is transferable only with the prior consent of the other partner(s).
5. However, a partner's right to a share of the partnership income may be received in trust for
another person.
6. The partnerships are classified into the following two categories for the purpose of taxation:
i. Registered Firms
ii. Unregistered Firms
7. The income of the registered firm is subject to Super Tax before distribution to the partners.
8. Also the individual income of the partners is subject to income tax at the usual rates.
9. The unregistered firms, income tax may be levied on the firm's income and the partners are
not liable to pay tax on the shares of profit received from the unregistered firm(s).
COMPANY
1. A company is a legal entity formed under the Companies Ordinance, 1984. It can have share
capital or can be formed without share capital.
2. A company having share capital may be formed as:
i. A company limited by shares.
ii. A company limited by guarantee.
iii. An unlimited company.
Company Limited by Shares
1. The liability of its members is limited to the extent of their shares in the paid-up capital of the
company. These companies may further be classified as public limited and private limited
companies.
2. Public Limited Companies can be formed by at least seven persons by subscribing their names
to the 'Memorandum and Articles of Association' of the company. The word 'Limited' is used as
the last word of its name.
3. Private Limited Companies may be formed by at least two persons by subscribing their names
to the 'Memorandum and Articles of Association' of the company. A private limited company,
by its Articles of Association:
i. Restricts the right to transfer its shares;
ii. Limits the number of its members to fifty; and;
iii. Prohibits any invitation to the public to subscribe for shares or debentures of the
company.
4. A private limited company is required to use the words "(Private) Limited" as the last words of
its name.
Company Limited By Guarantee
1. A company limited by guarantee means the company having the liability of its members
limited by memorandum to such amounts as the members may respectively undertake to
contribute to the capital of the company in the event of its winding up.
2. A company limited by guarantee is usually formed on a 'non profit basis'. Companies limited
by guarantee use the words (Guarantee) Limited" as the last words of their name.
UNLIMITED COMPANY
1. Means a company having unlimited liability of its members.
REQUIRED DOCUMENTS TO INCORPORATE A FOREIGN COMPANY IN PAKISTAN
1. A foreign company incorporated outside Pakistan, is required to submit the following
documents to the concerned agencies within 30 days of establishing presence in Pakistan:
i. A certified copy of the charter, statute or Memorandum and Articles of the company, in
English or Urdu, accompanied by prescribed Form 38.
ii. Address of the registered or principal office of the company on Form 39.
iii. A list of Directors, the Chief Executive and Secretaries (if any) of the company on
Form 40.
iv. Particulars of the principal officer of the company in Pakistan on Form 41.
v. Particulars of person (s) resident in Pakistan authorized to accept services on behalf of
the foreign company on Form 42.
vi. Address of the principal place of business in Pakistan of the foreign company on Form
43.
2. Any change or alteration in particulars stated at serial No. 1 to 6 above is required to be filed
on Form 44 with the registrar concerned within 30 days of such change or alteration; and
3. Foreign company is required to give notice on Form 46 to the registrar concerned at least 30
days before it intends to cease to have a place of business in Pakistan and to publish a notice
of such intention at least in two daily newspapers circulating in the province or provinces in
which such place or places of business are situate.;
Companies doing business in Pakistan must register with the Registrar of Companies under
the Companies Ordinance, 1984.Securities & Exchange Commission of Pakistan (SECP) is
responsible for this registration.
LIMITED LIABILITY COMPANY
1. The liability of its members is limited to the extent of their shares in the paid-up capital
of the company.
2. These companies may further be classified as public limited and private limited companies.
3. Public Limited Companies can be formed by at least seven persons by subscribing their names
to the 'Memorandum and Articles of Association' of the company. The word 'Limited' is used as
the last word of its name.
4. Private Limited Companies may be formed by at least two persons by subscribing their names
to the 'Memorandum and Articles of Association' of the company.
5. A private limited company, by its Articles of Association:
i. Restricts the right to transfer its shares;
ii. Limits the number of its members to fifty; and;
iii. Prohibits any invitation to the public to subscribe for shares or debentures of the
company.
6. A private limited company is required to use the words "(Private) Limited" as the last words of
its name.
FEES TO BE PAID TO THE REGISTRAR OF COMPANIES
Registration Rupees
Reservation of a name 200
Application Fee 1000
1. For registration of a company, fees range according to nominal share capital, e.g:
Not exceeding Rs.500,000/- 5000
For every 100,000 rupees of nominal share capital or part of 100,000 rupees, after the first 500
500,000 rupees, upto 5,000,000rupees
For every 100,000 rupees of nominal share capital or part of 100,000 rupees, after the first 250
5,000,000 rupees
Average fees for Professional Company Secretarial Services
1. The services of a Professional Company are hired to prepare the necessary documents like
Article of Association & Memorandum of Association etc.
2. Average fee for a medium sized Company is asunder:
i. For Private Company____ 20,000
ii. For Public Company______ 20,000
Mode of Forming Companies
1. Any seven or more persons associated for any lawful purpose may, by subscribing their names
to the Memorandum of Association and complying with the requirements of the Companies
Ordinance, in respect of the registration, form a public company, and any two or more
persons, so associated may, in like manner, form a private company.
2. Prior approval of the ministries (which regulate their respective functions) noted against each
category of the following specified nature of companies is required before incorporation of
such companies.
1. Banking Company
Ministry of Finance/State Bank of Pakistan.
2. Insurance Company
Ministry of Commerce.
3. Investment Finance Company (Investment-Bank) (i) Ministry of Finance.
(ii) State Bank of Pakistan.
4. Leasing Company
Securities and Exchange Commission of
Pakistan.
5. Venture Capital Company
Securities and Exchange Commission of
Pakistan.
6. Asset Management Company
Securities and Exchange Commission of
Pakistan.
A company which invests in any of the following industries
i. Arms and Ammunition Ministry of Industries/Board of Investment.
ii. Security Printing, Currency and Mint. Ministry of Industries/Board of Investment.
iii. High Explosives. Ministry of Industries/Board of Investment.
iv. Radio Active Substances Ministry of Industries/Board of Investment.
Availability of Name of the Company
The first step with regard to incorporation of a company is to confirm the availability of the name of
the proposed company from the concerned registrar on payment of a fee of Rs.100, The name should
not be inappropriate, deceptive or designed to offend the religious sensibilities of the people, and it
should neither be identical nor have a close resemblance to the name of any existing company.
For companies that wish to open their branch/liaison or representative offices in Pakistan may apply to
BOI for permission on prescribed form.
The BOI will process and decide such cases within a period of 6 to 8 weeks.
Details on the required documentation, etc. are available at all offices of the BOI. A specimen of the
application for permission to establish branch/liaison offices by foreign companies is presented in
Annex-XXI.-
Permission for opening of branch/liaison offices will be granted by the BOI for a period of 3 to 5 years.
Further extensions will be granted by the BOI after reviewing and examining the past performance of
foreign companies. Requests for renewal or extension will be processed by the BOI within two weeks
provided the requests are supported with complete documentation
'Opening of Liaison Offices of Foreign Firms'
__Foreign companies that intend to undertake export activities Pakistan will be registered without
families
Permission to companies engaged in contractual obligation of contracts will be granted on production
of valid documents with circulating to government departments the activities of the foreign airline
companies, Pakistani General Sales Agents and
Courier Companies do not come under the industrial category and therefore, in order to monitor their
operations the government may continue to grant permission for their liaison office in consultation
with the concerned agencies
Permission for opening a liaison office will be granted by BOI in consultation with the concerned
agencies. A specimen of application form for permission for Pakistani firms to work as agent for
Foreign Firms is presented in Annex-XX
INCORPORATION OF A COMPANY IN PAKISTAN
A company is a legal entity formed under the Companies Ordinance, 1984. It can have share capital
having limited liability or can be formed without share capital unlimited liability. A limited liability
company may be in the nature of Private or Public company and may be formed as:
1. A company limited by shares
2. A company limited by guarantee
LIMITED LIABILITY COMPANY
The liability of its members is limited to the extent of their shares in the paid-up capital of the
company. 'These companies may further be classified as public limited and private limited companies.
Public Limited Companies can be formed by at least seven persons by subscribing their names to the
'Memorandum and Articles of Association' of the company. The word 'Limited' is used as the last word
of its name.
Private Limited Companies may be formed by at least two persons by subscribing their names to the
'Memorandum and Articles of Association' of the company. A private limited company, by its Articles of
Association:
1. Restricts the right to transfer its shares;
2. Limits the number of its members to fifty; and;
3. Prohibits any invitation to the public to subscribe for shares or debentures of the company.
A private limited company is required to use the words "(Private) Limited" as the last words of its
name.
Company Limited By Shares
The liability of its members is limited to the extent of their shares in the paid-up capital of the
company. These companies may further be classified as public limited and private limited companies.
Public Limited Companies can be formed by at least seven persons by subscribing their names to the
'Memorandum and Articles of Association' of the company. The word 'Limited' is used as the last word
of its name.
Private Limited Companies may be formed by at least two persons by subscribing their names to the
'Memorandum and Articles of Association' of the company. A private limited company, by its Articles of
Association:
1. Restricts the right to transfer its shares;
2. Limits the number of its members to fifty; and;
3. Prohibits any invitation to the public to subscribe for shares or debentures of the company.
A private limited company is required to use the words "(Private) Limited" as the last words of its
name.
Company Limited By Guarantee
A company limited by guarantee means the company having the liability of its members limited by
memorandum to such amounts as the members may respectively undertake to contribute to the
capital of the company in the event of its winding up. A company limited by guarantee is usually
formed on a 'non profit basis'. Companies limited by guarantee use the words (Guarantee) Limited" as
the last words of their name.
FORMING A PUBLIC COMPANY
Any seven or more persons associated for any lawful purpose may, by subscribing their names to the
Memorandum of Association and complying with the requirements of the Companies Ordinance, in
respect of the registration, form a public company, and any two or more persons, so associated may,
in like manner, form a private company.
Prior approval of the ministries (which regulate their respective functions) noted against each category
of the following specified nature of companies is required before incorporation of such companies.
1. Banking Company
Ministry of Finance/State Bank of Pakistan.
Ministry of Commerce.
2. Insurance Company i. Ministry of Finance.
3. Investment Finance Company (Investment-Bank) ii. State Bank of Pakistan.
4. Leasing Company
Securities and Exchange Commission of
Pakistan.
5. Venture Capital Company
Securities and Exchange Commission of
Pakistan.
6. Asset Management Company
Securities and Exchange Commission of
Pakistan.
A company which invests in any of the following industries
i. Arms and Ammunition
ii. Security Printing, Currency and Mint. Ministry of Industries/Board of Investment.
iii. High Explosives. Ministry of Industries/Board of Investment.
iv. Radio Active Substances Ministry of Industries/Board of Investment.
Ministry of Industries/Board of Investment.
PROCEDURE OF INCORPORATION OF COMPANY
Name Availability
The first step with regard to incorporation of a company is to confirm the availability of the name of
the proposed company from the concerned registrar on payment of fees of Rs.100. The name should
not be inappropriate, deceptive or designed to offend the religious sensibilities of the people, and it
should neither be identical nor have a close resemblance to the name of any existing company.
For companies that wish to open their branch/liaison or representative offices in Pakistan may apply to
Board of Investment (BOI) at Kandawala Building, M. A. Jinnah Road, Karachi for permission on
prescribed form. 'The BOI will process and decide such cases within a period of 6 to 8 weeks.
Details on the required documentation, etc. are available at all offices of the BOI. A specimen of the
application for permission to establish branch/liaison offices by foreign companies is presented in
Annex-XXI.'
Permission for opening of branch/liaison offices will be granted by the BOI for a period of 3 to 5
years. Further extensions will be granted by the BOI after reviewing and examining the past
performance of foreign companies. Requests for renewal or extension will be processed by the BOI
within two weeks provided the requests are supported with complete documentation
REQUIRED DOCUMENTS TO INCORPORATE A FOREIGN COMPANY IN PAKISTAN
A foreign company incorporated outside Pakistan, is required to submit the following documents to the
concerned agencies within 30 days of establishing presence in Pakistan:
1. A certified copy of the charter, statute or Memorandum and Articles of the company, in English
or Urdu, accompanied by prescribed Form 38.
2. Address of the registered or principal office of the company on Form 39.
3. A list of Directors, the Chief Executive and Secretaries (if any) of the company on Form 40.
4. Particulars of the principal officer of the company in Pakistan on Form 41.
5. Particulars of person (s) resident in Pakistan authorized to accept services on behalf of the
foreign company on Form 42.
6. Address of the principal place of business in Pakistan of the foreign company on Form 43.
Any change or alteration in particulars stated at serial No. 1 to 6 above is required to be filed on Form
44 with the registrar concerned within 30 days of such change or alteration.
Foreign company is required to file annually with the registrar concerned its annual accounts in
respect of the operations within Pakistan as well as its global accounts together with the list of
Pakistani members and debenture holders and particulars of places of business of the company in
Pakistan within the prescribed period.
Foreign company is required to give notice on Form 46 to the registrar concerned at least 30 days
before it intends to cease to have a place of business in Pakistan and to publish a notice of such
intention at least in two daily newspapers circulating in the province or provinces in which such place
or places of business are situate.;
Companies doing business in Pakistan must register with the Registrar of Companies under
the Companies Ordinance, 1984.Securities & Exchange Commission of Pakistan (SECP) is
responsible for this registration.
LIAISON OFFICES OF FOREIGN FIRMS
'Foreign companies that intend to undertake export activities Pakistan will be registered without
families
Permission to companies engaged in contractual obligation of contracts will be granted on production
of valid documents with circulating to government departments the activities of the foreign airline
companies, Pakistani General Sales Agents and
Courier Companies do not come under the industrial category and therefore, in order to monitor their
operations the government may continue to grant permission for their liaison office in consultation
with the concerned agencies
Permission for opening a liaison office will be granted by BOI in consultation with the concerned
agencies. A specimen of application form for permission for Pakistani firms to work as agent for
Foreign Firms is presented in Annex-XX.'
FEES TO BE PAID TO THE REGISTRAR OF COMPANIES
Registration Rupees
Reservation of a name 200
Application Fee 1000
For registration of a company, fees range according to nominal share capital
Not exceeding Rs.500,000/- 5000
For every 100,000 rupees of nominal share capital or part of 100,000 rupees, after the first 500
500,000 rupees, upto 5,000,000rupees
For every 100,000 rupees of nominal share capital or part of 100,000 rupees, after the first
5,000,000 rupees
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