Most founders in Pakistan ask how to register a company. The better first question is which vehicle they ought to be registering at all, because changing the structure later is expensive, slow, and can trigger tax nobody budgeted for.
The options
- Sole proprietorship. No separate legal existence. Registration means obtaining a National Tax Number from the Federal Board of Revenue and, in practice, a business bank account. Cheapest and fastest; you are personally liable for everything.
- Partnership firm. Governed by the Partnership Act, 1932 and registered with the Registrar of Firms. Partners remain personally liable. Registration is not compulsory, but an unregistered firm cannot sue to enforce a contract - which is reason enough to register.
- Limited liability partnership. Under the Limited Liability Partnership Act, 2017, registered with SECP. Partnership flexibility with limited liability; less familiar to banks and counterparties than a company.
- Single member company (SMC-Private Limited). A private limited company with one member. Limited liability with sole control; requires a nominee director.
- Private limited company. The default choice for anything intended to grow, take investment or hire seriously. Separate legal personality, limited liability, transferable shares.
- Public limited company, and company limited by guarantee for not-for-profit work. A foreign company may instead register a branch or liaison office.
Incorporating with SECP
Incorporation is done through SECP's eServices portal under the Companies Act, 2017. The sequence is:
- Reserve the name. Apply for availability. Names that are deceptively similar to an existing company, or that suggest government patronage or a regulated activity, get refused - have alternatives ready.
- Prepare the constitutional documents. The memorandum of association sets the objects; the articles govern the internal affairs. Standard forms exist, but the articles are worth drafting properly where there is more than one shareholder - pre-emption rights, board composition and deadlock provisions are far cheaper to agree now than to litigate later.
- File the incorporation application with the prescribed forms, particulars of subscribers and directors, CNIC or passport copies, and the registered office address. A digital signature is required for online filing.
- Pay the fee, which varies with authorised capital and with whether you file online.
- SECP issues the certificate of incorporation with the company's unique identification number.
After incorporation, before you trade
- NTN for the company with FBR through the IRIS portal, and sales tax registration if you make taxable supplies. Services are taxed provincially, so register with the relevant provincial revenue authority.
- Bank account in the company's name - banks will ask for the incorporation certificate, memorandum and articles, a board resolution and the directors' identification.
- Employer registrations - EOBI and the provincial social security institution - once you have employees, plus professional tax where levied.
- Sector registrations where relevant: the Pakistan Software Export Board for IT companies claiming the applicable concessions, and any licence your activity requires.
Ongoing compliance people underestimate
The Companies Act, 2017 imposes continuing obligations, and the penalties for missing them accumulate quietly until you need a clean record for a transaction:
- Maintain the statutory registers - members, directors, charges, and beneficial ownership
- File the annual return, and file the prescribed return whenever directors, the registered office or the share capital change
- Hold the annual general meeting and lay the financial statements before it; file them with SECP
- Appoint an auditor where required, and comply with the audit and filing thresholds applicable to your size and class
- Declare ultimate beneficial ownership and keep it current
- Observe the rules on related-party transactions and on directors' interests - the most common source of trouble in family-owned companies
Choosing, in practice
If the business is a single person selling services with no employees and no outside capital, a proprietorship is often the honest answer. If there are two or more owners, if you will hire, if you will sign material contracts, or if you might ever raise investment, incorporate a private limited company at the start and get the articles and a shareholders' agreement right while everyone is still on good terms.
This article is general information about Pakistani business structures and SECP procedure, not legal or tax advice. Fees, forms and thresholds change; verify the current position with SECP and FBR, and take advice on the structure that fits your facts.