There are many reasons to invest in Pakistan.
Its main advantages are low competition, a large population, and fast economic growth. This article outlines the various legal entities available to foreign investors. We will also share a step-by-step guide on how to register a business in Pakistan. The information provided is constantly changing per Pakistani laws and changes. We are updating our article according to it.
Pakistan allows foreign ownership:
Unlike many other similar markets, Pakistan welcomes foreign investors very much. Due to its negative international reputation, the country has opened up significantly to foreign investment in recent years.
For example, you can even import certain products without getting any license.
In addition, foreign investors can set up 100% foreign companies in most business areas. Shareholders can be of any nationality other than Israeli citizens.
Paid-in capital and equity:
When you set up a company, you must specify these two types of capital in the company’s articles of incorporation. Paid-in capital is the amount the company receives from shareholders.
On the other hand, authorized capital is the maximum authorized capital that a company can issue to its shareholders. Pakistan has no official minimum capital requirements for limited liability companies. For this reason, PKR 100,000 ( $823) is generally accepted as the minimum capital.
But in reality, the paid-in capital should correspond to your planned expenditure. For example, if you plan to build a factory for your business, you also need to have sufficient funds.
Types of legal entities in Pakistan:
The number of foreign investors who see Pakistan as an investment market is increasing.
For example, in March 2018, foreign investment in Pakistan increased by US$152; it is considered to be increased by 17.2% by 2020.
To invest in Pakistan, you can choose from the following types of legal entities.
1 Private Limited Partnership
A foreign investor can establish a limited liability Company (LLC) wholly owned by foreign investors in Pakistan. The minimum number of shareholders required to register such a company is two.
Except for Israeli immigrants, any foreign citizen can become a shareholder in such a company.
Generally speaking, PKR 100,000 (~ $823) is considered the minimum capital required. But please note that the actual minimum capital you need to inject depends on your planned expenditures. Another requirement is that the company must be located in Pakistan.
The deadline for registration of a Pakistan Limited Company is usually six weeks. Registration also requires the approval of the Investment Committee and the approval of the Ministry of the Interior.
2 Sole proprietorship
Foreign investors who are not Israeli citizens can also establish a sole proprietorship in Pakistan with only one shareholder. Like a limited liability company, you can also set up a sole proprietorship in Pakistan for 100,000 PKR. (~823) Minimum capital.
The standard registration time is 4 weeks while ensuring that the company’s registered address is in Pakistan.
3 Listed companies
Generally, the shares of listed companies are sold to the public. Liability for these actions is limited. Anyone can buy stocks. It can be a public sale or stock market negotiation. There are two types of listed companies in Pakistan: unlisted companies and publicly traded companies.
Step 1: Approval of the company name
The first step in registering a company in Pakistan is to choose a company name. It is important to create a unique company name that will make you stand out in the industry.
You need to comply with restrictions and instructions. For example, make sure that your company name does not contain any illegal words.
Step 2: Submit documents:
After the company name is approved, you must submit the constitutional documents to the Securities and Exchange Commission of Pakistan (SECP).
Step 3: Registration certificate:
After the documents are submitted, the SECP will evaluate them and check their validity. …The digital signature is provided by the National Agency for Facilitation Technology (NIFT) and can be purchased through SECP. They also issue a company contract, which may require a company introduction, but it depends on its location.
Step 4. Stock deposit:
After registration, shareholders must deposit an appropriate number of shares into the company’s bank account.
Step 5: Registration of income tax, sales tax, and business tax
The final step in registering a business in Pakistan is to finally register with the Federal Taxation Commission (FBR) and assign a National Tax Number (NTN). If necessary, you can register a tax number.
Alternatives to registering a company in Pakistan.
If your company wants to do business in Pakistan without setting up a separate legal entity, a branch is a suitable alternative to registering a company.
It is possible to set up an office in Pakistan to perform the contract. However, the branch cannot engage in any business or commercial activities, so its activities depend on the contract it signs. The contract restricted their activities. The parent company owns 100% of the shares in the branch in the country of origin. A limited liability company also does not require minimum capital.
Although some contracts stipulate that only technical assistance and product promotion can be provided, activities such as export promotion cannot be carried out. So it looks like a branch. There will be no equity because it is only located in the country of origin.
The standard time for opening a liaison office in Pakistan is seven (7) weeks. Your license is valid for 1 to 5 years after it is issued. It must also be approved by the Board of Investment (BOI).
How do I start to register a company in Pakistan?
If you plan to invest in Pakistan, please contact Emerhub, and we will handle the company registration process on your behalf. To get started, all you need to do is tell us: the name, address, and shares of each shareholder. The size of authorized capital. Copy of shareholder’s passport. Suggested company name.