Company registration remains the most favored form of business organization in Pakistan. Incorporation of a company helps boost business for medium as well as large-scale business enterprises. All company registrations and regulations are controlled by the Companies Ordinance Act of 1984.
The function of administration of all companies is governed by the Securities and Exchange Commission of Pakistan and the Registrar of Companies appointed by the Securities and Exchange Commission of Pakistan (for the particular province) where such company is to be registered.
Under the provisions of the Companies Ordinance, 1984 a company is a corporate body with a separate legal entity and perpetual succession. A company may be formed by persons associating for any lawful purpose by subscribing their names to the Memorandum and Articles of Association and complying with other requirements for registration of a company under the provisions of the Ordinance.
According to the Companies Ordinance, 1984 there can be three different types of companies:
- A company limited by shares
- A company limited by guarantee
- An unlimited liability company
The following steps need to be followed to create and register a company in Pakistan.
1. Seek approval on name of the company
The first step towards incorporation of a company is to seek the “availability of name” for the proposed company from the concerned registrar of companies. Although, it sounds simple enough, but there are certain prohibitions and restrictions, the applicants have to look into while choosing a name for a company. This is the SECP official guideline for choosing a name.
2. Pay fee’s associated with incorporation and registration of the company
Post receiving the name availability certificate from SECP, the applicants have to file an application for incorporation. There are two ways to go about it:
a. Online Incorporation
For an online submission, the applicants are required to create an account (username and password) under the user registration system of eServices and generate a PIN for signing the application. A video tutorial prepared by SECP for user registration at eServices is available here.
Once you submit the process as per the guidelines suggested in the video, you can now pay the fees associated with the company registration process by credit card, debit card or online funds transfer (the online transfer facility is available for Muslim Commercial Bank (MCB) and United Bank Limited (UBL) account holders only.) Alternatively, the print out of the fee challan can be submitted in the designated branch of MCB or UBL.
b. Offline Incorporation
The fees associated with the process can be paid by generating a manual challan from this Challan link and submitting it along with a company registration application at the designated branches of MCB or UBL in Pakistan.
Post payment of the fee, SECP then requires the applicant to submit the following documents:
- Declaration of compliance
- Identification of office’s location
- Copies of CNIC/NICOP of the subscribers/ directors/ chief executive officer/ nominee (for single member
company)/authorized representative or copies of Passport in case of a foreigner
- NOC/Letter of Intent/ License (if any) of the relevant regulatory authority in case of a specialized business
- In case the subscriber is a foreign company, the profile of the company, detail of its directors, their
nationality and country of origin, a certified copy of its charter, statute or memorandum and articles etc.
- Copies of the Memorandum and Articles of Association with each member’s signature, where:
Memorandum of Association explains the business sector of your company e.g. Institution, Travel agency, Trading or manufacturing, Supply or chain of stores. To put it simply, MOA tells about the relationship of your company with the outside world.
Articles of Association lets know about the day-to-day proceedings within the company i.e. what role CEO and directors would play, business concerned meetings, and the appointments of employees, in short- how the company will run.
At the completion of the process, the subscriber registering the company shall receive a Certificate of Incorporation issued electronically or in physical form.
Once the certificate of incorporation is received, a private company /single member company can start its function.
3. Obtain a digital signature and create a company seal
The signature is granted by National Institutional Facilitation Technologies (NIFT) and can be obtained by using the electronic services of the SECP. After the certificate of incorporation is issued, the company representatives may be required to present a company seal, depending on where the business will be head quartered or started.
4. Register for Income, Sales and Professional Taxes
To register for Income tax, the company will have to apply for a National Tax Number (NTN) at the tax facilitation of the Regional Tax Office (RTO) of the Federal Board of Revenue (FBR). The requirements for this application include:
- NTN form
- Incorporation Certificate
- Memorandum and Articles of association
- Bank account number
- Copies of National Identity Cards (NICs) of companies’ Directors
- An attestation of business address
Sales tax, like the income tax can be registered for, by applying for a Sales Tax Number (STN) at the tax facilitation center of RTO of FBR. For the professional tax, provided it applies, the company will have to register with the Excise and Taxation (ET) Department of the District.
5. Register with ESSI and EOBI
Depending on the location of the business, the company will need to register with
- Punjab Employees Social Security Institutions (PESSI)
- Sindh Employees Social Security Institution (SESSI)
- Likewise (BESSI) or (KPKESSI) for Balochistan and Khyber Pakhtunkhwa respectively.
Under the Employees Old Age Benefits Institution (EOBI), insured employees are entitled to a pension, upon retirement, invalidity in the case of disability, old-age grant and survivor’s pension. Every industry or commercial establishment with five or more employees has to be registered with the Federal Employees Old age Benefits Institution (EOBI).
6. Register with the Labor Department of the District
To safeguard the labor standard of the workers, all company’s are required to registration with the District Chief Inspector of the labor department in each district. For registration, an employer must submit the application form A accompanied with the relevant bank form.
Once these requirements are met and vetted by SECP, the company is then ready to become an independent operating body in Pakistan and will be treated as such.
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