9 January 2014
Private Limited Companies (“Companies”) in Pakistan are set up under the Companies Ordinance, 1984 (to download complete act: http://www.secp.gov.pk/corporatelaws/pdf/Comp_Ord1984.pdf) and are regulated by the Securities and Exchange Commission of Pakistan (the “SECP”) (www.secp.gov.pk).
The process to set up a Company in Pakistan is fairly straightforward. It is prudent, however, to consult a legal professional in this matter but the following information will provide basic guidelines in respect of setting up / incorporation/ registration:
1. Name of the Company.
(1) Choose a name for the Company.
(2) The SECP does not allow names that are inappropriate, deceptive or designed to exploit or offend the religious susceptibilities or identical nor similar to the name of an existing company.
(3) There are certain words that are prohibited from being part of the name of the Company (http://www.secp.gov.pk/ns/pdf/Prohibited_words.pdf).
(4) The validity and the availability of the proposed name of the Company can be checked on http://www.secp.gov.pk/ns/index.asp, the e-service provided by the SECP.
(5) The Company is required to obtain a name availability certificate from the SECP. The application fee for this is Rs. 200 (Rupees Two Hundred Only) for online applications and Rs. 500 (Rupees Five Hundred Only) for offline applications. SECP shall then issue a certificate re availability and validity of proposed name of the Company.
(The abovementioned amounts are as presently confirmed by SECP and are subject to change. The amounts must be re-confirmed at a date prior to the submission of the application fee.)
2. Share Capital of the Company
(1) Decide the authorized capital or share capital of the Company. The capital of the Company is the total investment made in the Company.
(2) Registration fee of the Company (to be given to the SECP) is based on the total share capital. The Fee Calculator provided by the SECP e-services (http://www.secp.gov.pk/ns/CalculatorCS.asp) is a helpful tool in this regard.
3. Incorporation Documents
(1) Copies of Computerized National Identity Cards (“CNICs”) of each subscriber (or “Shareholder”) of the Company.
(2) Four (4) printed copies of the Memorandum of Association and Articles of Association of the Company.
The Memorandum of Association (the “Memorandum”) is the document that provides that the details of the Company and the activities that it is authorized to undertake. It governs the relationship of the Company with the outside world. The Object Clause of the Memorandum (the operative clause in respect of what the Company is authorized to do) is usually drafted to include all those tasks and activities that the Company may wish to / foresee that it shall undertake and all other tasks ancillary thereof.
The Articles of Association (the “Articles”) provides the details of the everyday running of the Company like election of directors, audit of accounts, annual general meetings, notices etc. It specifies the regulations for a company’s operations and lays out how tasks are to be accomplished within the organization.
The Memorandum and Articles are crucial, foundation documents of the Company and should be prepared / reviewed meticulously.
(3) Form I, the declaration of the applicant for incorporation.
(4) Form 21, the notice of the situation of the registered office of the Company.
(5) Form 29, the particulars of the directors, chief executive, company secretary etc.
(The abovementioned Forms are available for download at http://www.secp.gov.pk/forms.asp)
(6) The original paid challan evidencing the payment of fee in any of authorized branches of MCB Bank Limited.
(7) The authorization of the Shareholders in favor of a person to correct the deficiencies, if any, pointed out by the Registrar in any documents submitted for incorporation/registration.
4. Submission to SECP
(1) The documents once submitted to SECP may take between seven (7) to fourteen (14) days for scrutiny and review.
(2) Any mistake/omission found shall be informed to the requisite person who shall be required to re-submit the documents after correcting /amending the mistake or providing the necessary information as intimated by the SECP.
(3) If the documents are in order the SECP shall issue an incorporation certificate reflecting the incorporation of the Company and the permission to commence business.
Disclaimer: The above information is not legal advice but basic guidelines to help in understanding the process of setting up a company in Pakistan. Nothing provided herein should be used as a substitute for advice of competent counsel.
Myra Khan Qureshi is a Barrister-at-Law from the Honourable Society of Lincoln’s Inn and Vice Chairperson Women Rights Committee of the Lahore High Court Bar Association. She is currently practicing law in Lahore, Pakistan.
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