Company law

To register a company in Pakistan:
Reserve a name on the SECP’s online portal.
Submit necessary documents like the Memorandum of Association (MOA) and Articles of Association (AOA).
Pay the registration fee and complete the application.
SECP will review and, if approved, issue a Certificate of Incorporation, establishing the company legally.

Under the Companies Act, 2017, the types of companies that can be registered in Pakistan include:
Private limited companies
Public limited companies
Single-member companies (SMC)
Non-profit organizations (NPOs)
Foreign companies Each type has specific requirements and regulatory obligations based on size, shareholder structure, and purpose.

The Securities and Exchange Commission of Pakistan (SECP) is responsible for enforcing company law, registering companies, ensuring corporate governance, and overseeing compliance with financialreporting standards. It monitors companies’ financial disclosures and ensures they meet the Companies Act, 2017 requirements.

A private limited company is a business entity with limited liability protection for its shareholders. In Pakistan, it requires at least two shareholders (unless it’s a single-member company) and can have a maximum of fifty shareholders. This structure restricts share transfers, provides liability protection, and requires compliance with SECP regulations.

The Companies Act, 2017 modernized corporate regulation in Pakistan by strengthening SECP’s oversight powers, improving shareholder rights, enhancing transparency, and simplifying the company registration process. It mandates regular financial reporting and corporate governance, thereby promoting accountability and investor protection.

To incorporate a company, you need:
Memorandum of Association (MOA): Outlines the company's objectives and scope.
Articles of Association (AOA): Defines the company’s internal governance and management structure.
Director and shareholder details. These documents, along with a name reservation and the prescribed fee, must be submitted to SECP.

Companies must: Hold annual general meetings (AGM).
Submit annual returns and financial statements to SECP.
Maintain accurate records of financial transactions and shareholder information.
Conduct regular audits (for larger companies) to ensure transparency and accountability.

Shareholders in Pakistan have rights including:
Voting rights on major company decisions.
Dividend entitlements when declared.
Access to company records and financial statements.
Right to legal action if directors’ actions harm shareholder interests. These rights ensure that shareholders have a say in corporate governance and receive returns on their investments.

Yes, foreign investors can establish a company in Pakistan by registering as a foreign company with SECP. They may need additional approvals from the Board of Investment (BOI), depending on the industry. Foreign entities must comply with local laws and submit annual returns to SECP.

A single-member company (SMC) is a type of private limited company with only one shareholder, which is suitable for sole proprietors. SMCs enjoy limited liability protection, meaning the owner's personal assets are protected from company debts. This structure requires simplified governance and registration with SECP.

Directors must: Act in the company’s best interest.
Exercise due diligence in decision-making.
Ensure compliance with SECP’s regulations.
Disclose any conflicts of interest. These responsibilities ensure that directors uphold ethical standards and work for the benefit of the company and its shareholders.

To change a company’s name:
Pass a special resolution by the board or shareholders.
Apply to SECP with the new name and a revised memorandum.
Once approved, SECP issues a certificate of incorporation with the updated name.

Mergers and acquisitions are regulated by SECP under the Companies Act, 2017. Companies must seek SECP approval for M&A transactions, and large transactions may require Competition Commission of Pakistan (CCP) clearance. These regulations ensure fair competition and protect stakeholders.

Corporate governance in Pakistan follows SECP’s Code of Corporate Governance. This code ensures companies operate transparently and ethically, mandating regular audits, disclosures, and responsible board conduct. Adherence to corporate governance rules protects shareholder rights and enhances corporate accountability.

Companies are subject to:
Corporate income tax on profits.
Withholding tax on dividends and certain payments.
Sales tax for specific sectors. Companies must file annual tax returns with the Federal Board of Revenue (FBR) and keep financial records to comply with tax laws.

Companies must:
Maintain accurate financial records of all transactions.
File annual audited financial statements with SECP.
Conduct audits by registered auditors, depending on company size. These requirements enhance transparency and assure investors of the company’s financial health.

A company can dissolve through:
Voluntary winding-up by shareholders or directors.
Compulsory winding-up by a court order, usually due to insolvency.
SECP must be notified, and the company’s assets are liquidated to settle debts before being removed from the register.

Shareholders provide capital, vote on major company decisions, and receive profits through dividends. They have the power to elect directors and can hold them accountable for the company’s performance. Shareholders’ rights and responsibilities are protected by the Companies Act, 2017.

To convert a private limited company to a public limited company:
Pass a special resolution by the board.
Apply to SECP with updated articles and relevant documents.
Upon approval, SECP issues a certificate acknowledging the change. This process enables the company to expand its shareholder base and offer shares to the public.