Cost of Registering a Company in Pakistan

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It could be challenging to register a corporation with the Securities & Exchange Commission of Pakistan (SECP) if one handles legal matters in Pakistan on their own. It will be easier for you to complete the process quickly and have a better understanding of the underlying legal concerns if you divide it up into manageable pieces.


Securities & Exchange Commission of Pakistan

The Securities & Exchange Commission of Pakistan was established in 1999 with the main objective of policing the capital market and business sector. As a result, the SECP controls and conducts the company registration process in Pakistan.

The Securities and Exchange Commission of Pakistan (SECP), which was established to oversee and modernize the corporate sector, has been given significant consideration in light of recent digitalization measures launched by the Pakistani government. With the goal of assisting the nation's business community, this state-owned regulatory body is now digitally powered by a robust internet platform.

Therefore, prospective business owners who want to register a company in Pakistan can now do so easily without than having to deal with the hassle of submitting a physical application.

Here is a thorough breakdown of the administrative and legal challenges an entrepreneur must face to incorporate and register a new business, along with the time and set-up costs involved.  It looks at how to start a commercial or industrial company with up to 50 people and how much it will cost.

According to SECP standards, we will describe both online and offline procedures for business registration in Pakistan in this blog.


Company Types You Can Register

Three different legal businesses can be registered in Pakistan under the constraints set forth by the Businesses Act of 2017:

- Single Member Company

- Private Limited Company

- Private Limited Company

- Public Limited Company


1. Single Member Company:

A single member forms a single-member company (SMC), as the name implies. If a business satisfies the criteria listed in the First Schedule, Part II, Section 4 of the Companies Act, it is considered an SMC. These prerequisites consist of:

- the firm may not solicit subscriptions for shares from the general public.

- it is not allowed to register shares that can be held jointly by two or more people.

- may only have one member.

Please be aware that anyone from a foreign country can open an SMC in Pakistan, with the exception of Israeli citizens.


2. Private Limited Liability Company

According to SECP regulations, a private limited company can only be established for legal reasons by two people or more. The technique of incorporation is largely the same regardless of the type of this, though.

Before a private limited company can be registered in Pakistan, the following prerequisites must be satisfied:

- Be allowed to impose restrictions on the transfer of its shares.

- restricts membership to fifty people (excluding those who are employed by the company).

- prohibits requesting subscriptions from the public for the company's shares, debentures, or redeemable capital.

All foreign nationals may establish a private limited corporation in Pakistan, with the exception of Israeli nationals.


3. Public Limited Liability Company

In Pakistan, three or more people can establish a public limited corporation for legitimate purposes. As with private and single limited businesses, the public limited company must abide by the Businesses Act's regulations and the partners will be required to sign a Memorandum of Association in their names.

The fact that a company like this was established with the general public in mind and that its shares are issued with limited liability should not be overlooked. These shares are put up for sale in the open or on the stock exchange.

Public limited businesses can be registered in Pakistan as either listed or unlisted entities. The primary difference between the two types of companies is that the listed Public Liability Company can make portions of the company available for purchase.

In contrast, an unlisted company doesn't offer its shares for sale to the general public.

Let's examine the procedure for forming a corporation now that we are aware of the many business entities that qualify.


Step 1: Registration of a Company Name:

The company name must be registered as a preliminary step. It is advisable that you go through Section 10 of the Companies Act of 2017 before deciding on a company name as the section lists words that are not allowed.

After deciding on a unique name for your company or organization, you may check the availability of the name by creating an online account with SECP.

In accordance with the Companies Ordinance, 1984 and its revisions in 2002 and update in February 2009, the firm offers one or more names in order of preference and submits them for approval to the Securities and Exchange Commission of Pakistan (SECP) via e-services or in person (offline) for review. The first step is to look for current company names online to see if the proposed names are available.

Upon payment of the name search charge of PKR 200 (for online name reservations) or PKR 500 (for offline name reservations) at the bank specified by the SECP, the formal confirmation (or refusal) of the chosen name and its availability is obtained by email or via courier. The CRO Regulation Act of 2003's Regulation 9 specifies that cases must be resolved promptly, ideally within 24 business hours. The company has 90 days to become formed during which time the authorized name is reserved. To increase the effectiveness and efficiency of the SECP's business processes, the E-services were successfully introduced in August 2008. Although more people are submitting applications online, a large majority of business owners in some locations still favor paper applications.


Step 2: Pay the Fee for Name Registration Using Bank Challans at the Appropriate Bank (MCB).

In accordance with the 6th Schedule of the Companies Ordinance 1984, the firm is required to pay the fees for name search availability and incorporation. The Muslim Commercial Bank Ltd. must receive the challans as payment. They are available for download from the bank, the SECP offices, and the Internet.


Step 3: Utilize online E-services to register the company with the Securities & Exchange Commission of Pakitan (SECP).

The business can register either in person at the SECP or online through the e-Services. The following papers must be submitted in order to incorporate a private company:

a. Form 1 is a declaration of compliance.

b. Form 21 is used to identify the location of the office.

c. Form 29 is used to provide information about the company's directors, secretary, chief accountant, auditors, and others.

d. One copy of the memorandum and articles of association duly signed by all members in the presence of a witness.

The following fees are required in accordance with the 6th Schedule of Fees, which became effective in June 2009, for the incorporation of a company with an authorized capital of up to PKR 600,000:

1. Online submission: 5,000 Pakistani rupees for registration and 2,000 rupees for filing;

2. Physical (offline) submission with PKR 10,000 registration fee and filing fees of PKR 4,000.

The actual certificate is delivered by email and courier a few days after receiving an instant confirmation of the online or in-person submission. Any Company Registration Office, regardless of the jurisdiction, will accept the company's registration. Computers are used in every SECP regional office.


Step 4: Obtain a Digital Signature via e-Service from the National Institutional Facilitation Technologies (NIFT).

The SECP reviews and confirms the validity of all the provided documents after you have finished submitting the required documentation and paying the company registration fee in Pakistan. After that, a digital signature for your company is granted by the National Institutional Facilitation Technologies (NIFT), which may be obtained through SECP's e-portal.

A digital signature can be acquired both online and in person at many SECP of National Institutional Facilitation Technologies (NIFT) sites. All digitally signed documents are attested to by NIFT. To submit an application, the business must include the Digital Signature Certificate Request Form, scanned copies of the Directors' identification cards, a Name Availability Certificate, and payment documentation.


Step 5: Obtain a Certificate of Incorporation

You will need to submit all the documents and relevant paperwork to SECP after paying the necessary fees. SECP will review the information and then grant the necessary approval. At the same time, the National Institution of Facilitation Centre (NIFC) will produce a seal for the business.

After SECP has examined and approved your paperwork, you will be awarded a Certificate of Incorporation, which is a formal and legal authority to launch a business in Pakistan. Transferring funds to the company's bank account requires that the amount equal to each shareholder's shares be done so.

The entire procedure has been substantially expedited by SECP, and the ability to submit a registration fee online is a huge advance because it now makes it possible to form a company in Pakistan.

Obtaining both the digital signature and a certificate of incorporation can cost as much as PKR 650 (certificate fees) + PKR 126.75 (19.5% federal excise duty) + PKR 500 (validation fees) for 1 day.


Step 6: Register for Income Tax and Apply For a National Tax Number (NTN).

This is one of the final and most crucial steps in the establishment of a corporation in Pakistan. You must apply for a National Tax Number in order to register your business with the Federal Board of Revenue (FBR) for income tax.

Every company must register for income tax under the Income Tax Ordinance of 2001, as well as get the national tax number (NTN) that is typically required by other registering agencies, such as Chambers of Commerce, the Import-Export Regulatory Authority, utility authorities, etc. When the return is filed, which is usually due on June 30th, six months after the business's fiscal year-end, the income tax is paid at that time. NTNs have been issued with everlasting validity since 2002 when the Income Tax Ordinance 2001 became law (i.e., they are not subject to renewal).

The mandatory requirements are listed below, which you must send with your application.

- Proof of Your Company's Registration,

- Memorandum and Articles of Association,

- National Tax Number (NTN) Form

- Bank Account Number

- Verified Business Address

- Copies of the Directors' Computerized National Identity Cards (CNICs)

Send your application to the Federal Board of Revenue's tax facilitation counter at your regional tax office (RTO).

You must obtain a Sales Tax Number (STN) and go through a comparable process in order to register your firm for sales tax. On the other hand, the procedure for professional tax is slightly different and necessitates that you register your business with the Excise and Taxation (ET) Department.


In Summary:

You must have at least PKR 100,000 in approved capital to register a firm, and the SECP will charge you PKR 1,800 for an online application and PKR 3,500 for an offline application. As previously said, the incorporation charge largely depends on the startup money, firm location, size, and/or industry.

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