01/09/2019
Company Registration Procedure in Pakistan
Company registration procedure in Pakistan is not much complicated compared to company registration in some of the other parts of the world. However, in order to successfully go through the procedure of company registration in Pakistan, you have to go through some basic steps that are mentioned below:
Before jumping to the procedure of company registration in Pakistan, it is quite important for you to understand that in Pakistan, companies are registered with Securities and Exchange Commission of Pakistan (SECP) which is the only body granted the powers of company registration in Pakistan by the Government of Pakistan.
Step 1: Name Availability
The first step in company Registration in Pakistan is to make an application to the registrar of companies for the availability of name. The application can be made both online and in offline mode and normally takes a period of 3 to 4 days before confirmation of the name applied for new company registration in Pakistan. Before making an application to the Securities and Exchange Commission of Pakistan for company registration please do not forget to do Company Name Search on the Securities and Exchange Commission of Pakistan website. Once the name is confirmed you can proceed with the next process in company registration procedure in Pakistan.
Step 2: Preparation of Documents
The second step in company registration procedure in Pakistan is to start preparing documents necessary for the process of company registration. The following are the set of documents need to be prepared in order to successfully complete the process of company registration in Pakistan:
A) Memorandum of Association
Memorandum of Association is the basic document where all the objectives of the company registration are stated e.g. the basic objective of company registration is to engage in the business of general order supplier or trading company or any other business.
All the business the company is planning to undertake must be stated in the memorandum in order to get the company registration procedure in Pakistan to complete.
Four copies of Memorandum of Association must be prepared for company registration in Pakistan.
B) Articles of Association
Articles of Association is the basic document where all the rules of the company to operate are stated e.g. How directors are going to operate, when how General Meetings of the company undergoing the process of company registration in Pakistan is to be conducted etc.
Four copies of Articles of Association must be prepared also.
C) Form 1
Form I for company registration is the basically a declaration of one of the directors of the company about to be registered. Form 1 can be downloaded from Securities and Exchange Commission of Pakistan website. This is another compulsory component of company registration process in Pakistan.
D) Form 21
Form 21 is the form whereby the address of company undergoing the process of company registration in Pakistan is notified to the registrar.
E) Form 29
Form 29 contains information about the particulars of the directors of the company that is undergoing the process of company registration in Pakistan. Form 29 is submitted in duplicate.
F) Power of Attorney
Power of Attorney in favor of any person authorized to submit documents and liaison with the company registration office about different issues during company registration procedure in Pakistan.
G) Copies of CNICs of Directors
Copies of CNICs are of Directors and witness who signed the memorandum and articles of Association of the company that is undergoing the company registration procedure in Pakistan.
H) Name Availability Letter/Email from SECP
Letter receives from the Securities and Exchange Commission of Pakistan confirming the name applied for the company that is undergoing the company registration procedure in Pakistan.
Step 3: Submission of Documents and Collection of Certificate
The last step in company registration procedure in Pakistan is to submit all the above mentioned certificates to the registrar of the companies. Once satisfied with the documents incorporation certificate of the new company registered is issued by Securities and Exchange Commission of Pakistan within 3 to 5 working days and company registration procedure in Pakistan completes with the issue of this certificate.
At this stage it is worth mentioning the advantages associated with company registration as Private Limited Company. Few of the advantages are as under:
1. Minimization of Business Risk:
Small business owners often commit one common mistake that is mixing the money earned through business with their personal wealth. As long as the business is going profitable there is no harm in the aforesaid practice but let’s take the situation if the business goes into loss then as per the requirements of Companies Act, 2017 if you have not registered your company as Private Limited company even the personal property of the proprietor can be taken by the Government to settle the debts of the business.
Smart businessmen take care of this risk of loss by undergoing the process of company registration for their business. As soon as your company is registered as Private Limited the liability of proprietor is secured. In other words, Private Limited Company means that the liability of the shareholders will be limited up to the capital subscribed by them as company is a separate legal person.
Making the debate simple the liability of company registered as Private Limited Company has the liability up to its capital and no personal asset of Directors or Shareholders shall be involved in any case.
Therefore, company registration as Private Limited Company is very important step towards minimizing your business risks.
2. Minimization of Tax Burden:
Sole proprietor pays taxes on their total income. However, business companies that have undertaken the process of company registration as Private Limited Companies pay taxes on their total profits or in other words taxes are calculated by the following formula:
Total Income minus (-) Total Expenses = Net Profit into (x) Tax Rate = Total Tax Payable
Therefore, company registration saves you from paying extra amount of taxes.
3. Positive Impacts and Appeal Enhances towards Customers:
Company Registration creates a really positive image towards your customers. People see companies’ registered properly as serious people interested in doing business rather than un-registered small businesses. Loans from Banks and advantages of business visa to foreign countries are also two of the most appealing benefits to make your business undergo the process of company registration.
4. Capacity Building for Bigger Projects:
Company registration opens the doors for you towards bigger projects in the industry. Individual efforts do not enjoy the same level of trust and qualified professionals are also reluctant to move towards un-registered businesses. Company registration opens the new doors of business and financing from the financial institutions of the country.
5. Double Advantages:
Company registration proves really fruitful to directors in multiple ways. On one side they receive remuneration as directors and on the other hands they are paid dividends as shareholders if the company makes profits.
6. Name Reservations:
Company registration gives you a unique name that can only be used by you across the country and therefore provided you with the chance of developing a brand name and in return Goodwill for that name.
7. Enhancement of Managerial Skills:
The secret of being a successful businessman is to have command over the blend of managerial and financial skills both. Only Company registration offers you the opportunity to apply both of these skills to together to develop yourself into successful businessman.
8. Winding Up and Transfer of Company is Quite Easy:
Company registration provides you the chance to easily get away from business if you intend to. The shareholding to Private Limited Company can easily be transferred to other shareholders on ongoing concern. This easy change of transfer of ownership can only be achieved by company registration.
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