Company formation in brief
Given a potential foreign investor’s practical interest, the most attractive legal and organisational form for the establishing of a company in Pakistan is a limited liability company which may be established as a public or private company.
Public Limited Company is established by at least seven shareholders and characterised as follows:
• minimum charter capital is PKR 100’000 (US$1 is approximately PKR 60);
• maximum number of shareholders is not limited;
• shares may be offered in open subscription;
• shares may be transferred to third parties without the approval of the shareholders’ majority if it is provided for by the Charter and the Memorandum of Association;
• company’s name should include the words “Public Limited”;
• company is managed by the Board of Directors.
Private Limited Company is established by at least two shareholders and characterized as follows:
• No minimum capital is required to establish the company.
• maximum number of shareholders is 50;
• shares may not be issued for public subscription or transferred to third parties without the approval by the shareholders majority;
• company’s name should include the words “Private Limited”;
• company is managed by the Board of Directors.
All companies in Pakistan are required to have an office, a secretary, an accountant, an auditor and a legal counsel.
Companies planning to carry out one of the following licensed activities in Pakistan should obtain the approval from relevant Ministries and Departments, namely:
• banking – in the Investment Management Department of the Ministry of Finance and the State Bank of Pakistan;
• insurance – in the Ministry of Trade;
• stock exchange transactions – in the Securities and Exchange Commission;
• investment and leasing – in the Ministry of Finance.
Companies may not be established in a number of Pakistani provinces for reasons of security, national defence and environmental protection.
For establishing a company engaged in manufacturing or marketing most types of products or services in Pakistan no authorisation is required. The exceptions are as follows:
• manufacturing of weapons, ammunition and explosives;
• production of radioactive substances;
• printing of monetary instruments, banknotes and stamping of coins;
• manufacturing of alcohol products (except for in manufacturing purposes).
Hospitality and tourism are considered industrial activities in Pakistan. This economic sector provides for incentives and benefits to foreign investors in accordance with the law.
Agriculture, services provision and social sector are open to foreign investments subject to the following conditions:
• the foreign capital to be invested should be at least US$1’000’000;
• at least 40% of the capital should be owned by a partner – a Pakistan-resident.
40 percent participation in the capital by a Pakistani partner is not required if the projects provide for the development of industrial areas.
Lands in Pakistan may be leased for agricultural purposes for a period of up to 30 years, and this period may be extended for another 20 years. Lands may not be transferred by a foreign company engaged in lands development and cultivation to another foreign company unless the transfer was specifically authorized by the Federal Government and a respective Pakistani Province Government.
Manufacturing organisations having more than 10 employees are required, in accordance with the country's factory law, to register with the technical control department of a respective province.
All companies must be registered with the Income Tax Authority of Pakistan’s relevant district to be assigned a national tax number.
Pakistan has currency regulations in place.
Pakistan is not a tax heaven or offshore jurisdiction, and a concept of Pakistan tax exempt company (and/or Pakistan offshore company, International Business Company, trust, foundation etc. registration) does not exist in Pakistan as such. A company formation in Pakistan could be arranged with a professional registered agent providing incorporation, virtual office and other corporate services in Pakistan. To set up a company in Pakistan is possible by correspondence, but to open a bank account in Pakistan will, most probably, require a personal visit.
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