Company Formation Options For Foreigners in Pakistan 14082016

A comparison among various forms of company registration in Pakistan by foreigners / Non Pakistanis
(choices and options for foreigners)

*****
By: Muhammad Abdul Hannan

M.com, M.B.Econ, LLB, FPFA, ACIS
Former Assistant Registrar SECP
Corporate Consultant / Senior Partner
Synergy Business Consulting, Islamabad Pakistan
INTRODUCTION:
This article outlines the general requirements and comparison among various forms of company registration in Pakistan by foreigners /
Non Pakistanis and how foreign companies can set up their offices in Pakistan. A company which is incorporated or formed outside
Pakistan which establishes its place of business within Pakistan is called a ‘Foreign Company’. The article is intended as an introductory
guide only. You can obtain, on request, further information from a consultant at Synergy Business Consulting. SECP also stated in one
of its guide that it is advisable to consult a professional for detailed guidance. The relevant provisions of law are contained in Part XIV
of the Companies Ordinance, 1984 (the Ordinance) and Rules 22 & 23 of the Companies (General Provisions and Forms) Rules, 1985 (the
Rules). This is a guidance article only and should be read with the relevant legislation.
A place of business includes branch, management, share transfer or registration office, factory, mine or fixed place of business but does
not include an agency unless the agent exercises a general authority to negotiate and conclude contract or maintains stock of merchandise
on behalf of the company. Following are the exceptions: 1. Company shall not be deemed to have an established place of business in
Pakistan merely because it carries on business dealings in Pakistan through a bona fide broker or general commission agent acting in the
ordinary course of his business. 2. The fact that a company has a subsidiary which is incorporated, resident, or carrying on business in
Pakistan, shall not of itself constitute the place of business of that subsidiary an established place of business of the company.
A foreign company is required to obtain a permission letter from the Board of Investment with a specific validity period for opening and
maintaining of its branch/liaison office in Pakistan. Copy of such permission letter is required to be furnished with the documents meant
for registration. Renewal/ extension of the permission to open/maintain a branch/liaison office is also required to be obtained from the
Board of Investment on the expiry of the validity period of the permission originally granted. Whenever such renewal/extension is
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granted, a copy must be furnished to the registrar concerned.
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Company Registration in Pakistan - options for foreign/Non Pakistani Individuals and Companies www.sbconsulting.com.pk
A comparison among various forms of company registration in Pakistan by foreigners / Non Pakistanis is as under;
Description Single Private Subsidiary of Branch Office Liaison Office Public

Member Limited Foreign of Foreign of Foreign Limited
Private Company - Company Company in Company in Company
Limited Two or more Pakistan Pakistan
Company – natural persons
Only one natural as shareholders
persons as
shareholder
HOW ……(SMC-PVT.) ……(PVT.) LTD. If 100% owned The company The company ……..LTD
COMPANY LTD. OR OR by the foreign will adopt the will adopt the
NAME IS ……(SMC- ……(PRIVATE) company, then same name as is same name as is OR
WRITTEN IN PRIVATE) LIMITED ……(SMC-PVT.) in country of in country of …….LIMITED
LEGAL LIMITED LTD. OR origin / foreign origin / foreign
……(SMC- country subject country subject
DOCUMENT
PRIVATE) to approval by to approval by
S?
LIMITED SECP. SECP.
If there are one

or more than one
shareholders
beside that
foreign company
then
……(PVT.) LTD.
OR
……(PRIVATE)
2
LIMITED
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persons as
shareholder
RELEVANT Relevant Relevant Relevant Relevant Relevant Relevant
COMPANY Company Company Company Company Company Company
REGISTRATI Registration Registration Registration Registration Registration Registration
ON Office, Securities Office, Securities Office, Securities Office, Securities Office, Securities Office, Securities
AUTHORITY & Exchange & Exchange & Exchange & Exchange & Exchange & Exchange
Commission of Commission of Commission of Commission of Commission of Commission of
Pakistan (SECP) Pakistan (SECP) Pakistan (SECP) Pakistan (SECP) Pakistan (SECP) Pakistan (SECP)
MINIMUM Only One (1) Two (2) Only One (1) UNLISTED:
NUMBER OF Three (03)
MEMBERS LISTED: Seven
(07)
OR
SHAREHOL
DERS
MAXIMUM Only One (1) Fifty (50) Fifty (50) UNLIMITED
NUMBER OF
MEMBERS
OR
SHAREHOL
DERS
LOCAL Local Resident Local Resident Local Resident Local Resident Local Resident Local Resident
RESIDENT Shareholder(s) or Shareholder(s) or Shareholder(s) or Shareholder(s) or Shareholder(s) or Shareholder(s) or
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SHAREHOL
persons as
shareholder
DERS / Director(s) NOT Director(s) NOT Director(s) NOT Director(s) NOT Director(s) NOT Director(s) NOT
DIRECTORS mandatory mandatory mandatory mandatory mandatory mandatory
MINIMUM PKR 1 (However PKR 1 (However PKR 1 (However PKR 1 (However PKR 1 (However PKR 1 (However
AUTHORIZE a standard a standard a standard a standard a standard a standard
D SHARE capital of PKR capital of PKR capital of PKR capital of PKR capital of PKR capital of PKR
100,000 is being 100,000 is being 100,000 is being 100,000 is being 100,000 is being 100,000 is being
CAPITAL
used / used / used / used / used / used /
recommended) recommended) recommended) recommended) recommended) recommended)
MINIMUM As decided by As decided by As decided by Same as in Same as in As decided and
PAID Company Company Company Foreign Foreign articulated by
UP/SUBSCRI Company Company the Company in
its Articles of
BED
Association.
CAPITAL
WHO CAN Only Only Nominee N/A N/A Only
BE shareholders can shareholders can Director will act shareholders can
DIRECTOR be Director of be Director of as Director be Director of
the Company the Company the Company
OF THE
COMPANY?
WHO CAN Any Person Any Person Any Person N/A N/A Any Person
BE CEO OF whether whether whether whether
shareholder or shareholder or shareholder or shareholder or
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THE
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not not not not
COMPANY?
persons as
shareholder
PRIOR Not Required Not Required Not Required MANDATORY MANDATORY Not Required
LICENSE OR
NOC FOR
COMPANY
REGISTRATI
ON FROM
GOVERNME
NT OF
PAKISTAN
TRADE Not Required Not Required Not Required Not Required Not Required Not Required
LICENSE
(PRIOR OR
SUBSEQUEN
T TO
REGISTRATI
ON)
SECURITY Required. Required. Required. Required. Required. Required.
CLEARANCE However However However However However However
OF process of process of process of process of process of process of
security security security security security security
FOREIGNER
clearance will be clearance will be clearance will be clearance will be clearance will be
5
S OR clearance will be
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initiated after the initiated after the initiated after the initiated after the initiated after the initiated after the
persons as
shareholder
FOREIGN Company has Company has Company has Company has Company has Company has
COMPANY been formed been formed been formed been formed been formed been formed
PHYSICAL Mandatory. It Mandatory. It Mandatory. It Mandatory. It Mandatory. It Mandatory. It
REGISTERE needs to be needs to be needs to be needs to be needs to be needs to be
D OFFICE arranged before arranged before arranged before arranged before arranged before arranged before
ADDRESS / filing company filing company filing company filing company filing company filing company
PLACE OF registration with registration with registration with registration with registration with registration with
CRO CRO CRO CRO CRO CRO
BUSINESS
IN
PAKISTAN
PHYSICAL Not Required Not Required Not Required Not Required Not Required Not Required
PRESENCE
OF FOREIGN
SHAREHOL
DERS FOR
COMPANY
REGISTRATI
ON
PROCESS
PHYSICAL Mandatory Mandatory Mandatory Resident Resident Mandatory
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PRESENCE Principal Officer Principal Officer
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persons as
shareholder
OF FOREIGN may act on may act on
SHAREHOL company behalf company behalf
DERS FOR
TAX
REGISTRATI
ON
PHYSICAL Generally Generally Generally Generally Generally Generally
PRESENCE Required Required Required Required Required Required
OF FOREIGN
SHAREHOL
DERS FOR
COMPANY
BANK
ACCOUNT
OPENING
CORPORATE 25% 31% 25% 31% 31% 31%
TAX RATE
AVERAGE 10 – 15 working 10 – 15 working 15-30 working 90 -100 working 90 -100 working 20-30 working
NUMBER OF days days days days days days
DAYS TO
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FORM
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persons as
shareholder
SCOPE OF A branch office is Activity is
ACTIVITIES set up by a restricted to the
foreign firm to promotion of
execute the product(s),
contracts provision of
awarded to it. technical advise
and assistance,
exploring the
Activity will be possibility of
restricted to the joint
work mentioned collaboration
in the and export
agreement/ promotion (these
contract signed activities are to
be mentioned in
the application)
Cannot indulge
in commercial/
trading
activities
Cannot
undertake any
commercial/
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persons as
shareholder
trading
activities
MEETING All expenses will All expenses will

EXPENSES be met out of be met out of
funds transferred funds transferred
from abroad from abroad
through normal through normal
banking channel banking channel
and converted to and converted to
local currency local currency
account or from account
the amounts
received through
execution of the
agreement /
contract
REMITTANC Remittance of No remittance

E FACILITY profits etc. is facility allowed.
allowed subject
to submission of
information /
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documents as
Page
required in terms
persons as
shareholder
of Para 13
Chapter XIV of
the Foreign
Exchange
Manual of SBP.
HIRING OF Employment of Employment of

FOREIGN foreign nationals foreign nationals
NATIONALS shall be made shall be made
subject to the subject to the
prior approval of prior approval of
the Government the Government
as per policy and as per policy and
in accordance in accordance
with the policy with the policy
of of
Pakistanization. Pakistanization
IMPORT Import/Export Nil

AND of machinery and
EXPORT OF equipment and
its re-export shall
MACHINERY
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be governed by
the
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Import/Export
persons as
shareholder
policies of the
Government
REGISTRATI Mandatory Mandatory

ON WITH
SECP
FINALIZATI 6-8 weeks 6-8 weeks

ON OF CASE
PERIOD OF 3-5 years; 3-5 years;

PERMISSIO renewable renewable
N
DOCUMENT 1. Six sets of the Six sets of the

S REQUIRED following following
documents documents are
are required: required:
2. Application
form 1. Applicati
3. Copy of on form
11
registration 2. Copy of
Page
of the foreign registration
persons as
shareholder
company of the
duly attested foreign
by Pakistan company
Mission duly
attested by
4. Copy of
Pakistan
Articles and
Mission
Memorandu
m of 3. Copy of
Association Articles and
Memorand
5. Copy of
um of
agreement /
Association
contract in
case of 4. Copy of
Branch Office Company
Profile
6. Copy of
Company 5. Copy of
Profile Resolution
/ Authority
7. Copy of
letter of the
Resolution /
Authority company to
establish
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letter of the
liaison
company to
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establish
persons as
shareholder
branch office office in
in Pakistan. Pakistan
RENEWAL Following Following

documents are documents are
required: required:
1. Copies of 1. Performanc
valid e/Activity
agreements report
/ contracts 2. Receipt
along with and
their Payment
duration Statement
2. Income 3. Proceeds
tax returns Realizatio
(for the last n
03 years) Certificate
3. Copy of s
13
latest
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persons as
shareholder
Audited
Accounts
4. Proceeds
Realization
Certificates
CHANGE OF Has to be Has to be

ADDRESS / intimated to the intimated to the
TELE ETC. Board of Board of
Investment and Investment and
other concerned other concerned
quarters quarters
DOCUMENT The following The following

S REQUIRED documents are documents are
FOR required: required:
CLOSURE 1. Request letter 1. Request letter
for closure for closure
2.Activity 2.Activity
Report, Report, Proceeds
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Proceeds Realization
Realization Certificates, and
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persons as
shareholder
Certificates, Receipt and
and Audited Payment
Accounts for Statement for the
the last last permitted
permitted period
period 3. Copies of
3. Copies of press press clippings
clippings regarding
regarding closure closure
published in two published in
national dailies. two national
dailies.
4. Confirmation
from tax 4.
authorities that Confirmation
all assessments from tax
and dues are authorities that
clear. all dues are
clear.
---End of Document---
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Company Formation Options For Foreigners in Pakistan 14082016

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A comparison among various forms of company registration in Pakistan by foreigners / Non Pakistanis

(choices and options for foreigners)

By: Muhammad Abdul Hannan

Description Single Private Subsidiary of Branch Office Liaison Office Public

If there are one

MEETING All expenses will All expenses will

REMITTANC Remittance of No remittance

HIRING OF Employment of Employment of

IMPORT Import/Export Nil

REGISTRATI Mandatory Mandatory

FINALIZATI 6-8 weeks 6-8 weeks

PERIOD OF 3-5 years; 3-5 years;

DOCUMENT 1. Six sets of the Six sets of the

RENEWAL Following Following

CHANGE OF Has to be Has to be

DOCUMENT The following The following

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