Registering a company in Pakistan with the Securities and Exchange Commission of Pakistan (SECP) is a crucial step towards establishing an official business entity in Pakistan. The SECP is the regulatory body responsible for overseeing the operations of the corporate sector, including company registrations, regulatory compliance, and corporate governance.
Choosing the right type of company to register depends on the nature, scope, liabilities and vision of your business. Understanding the types of companies recognized by the SECP can help you make well informed decisions that align with your business goals.
Type of Companies, their key features and requirements are discussed below to decide which one is right for you:
1. SOLE PROPRIETORSHIP
Although not formally registered as a company, sole proprietorships are the simplest form of business in Pakistan. However, if a sole proprietor wishes to operate under a business name and want to enjoy the perks of being a registered business, they must register it with SECP.
Key Features:
- Owned and managed by a single individual.
- No legal distinction between the owner and the business.
- Unlimited liability (personal assets can be used to settle business debts/liabilities).
- Minimal regulatory compliance.
Registration Process:
- Obtain a Business Name Registration (if operating under a trade name).
- Not mandatory to register with SECP unless scaling up to a private limited company.
2. PARTNERSHIP FIRM
A partnership is a business structure where two or more individuals manage and operate a business under a mutual agreement.
Key Features:
- Governed and Registered under the Partnership Act, 1932.
- Partners share profits, losses, and liabilities they decide in their Partnership agreement/Deed.
- Unlimited liability (partners are personally liable for debts/liabilities).
- No separate legal identity from its owners.
Registration Process:
- Draft a Partnership Deed (optional but recommended).
- Register with the Registrar of Firms (not mandatory but beneficial for legal enforceability).
3. LIMITED LIABILITY PARTNERSHIP (LLP)
An LLP combines features of a partnership and a private company, providing limited liability protection to its partners.
Key Features:
- Separate legal entity.
- Partners have limited liability.
- Flexible management structure.
- Governed by the Limited Liability Partnership Act, 2017.
Registration Process:
- Obtain a Name Availability from SECP.
- Submit incorporation documents (Partnership Agreement, Form A, etc.) in SECP Online and obtain Certificate of Incorporation of LLP.
4. PRIVATE LIMITED COMPANY (PVT. LTD.)
A Private Limited Company is the most common business structure for small to medium-sized enterprises (SMEs) in Pakistan. As majority of the start-ups in Pakistan are registered.
Key Features:
- Requires Minimum 2 member and directors and can have up to 50 members.
- Limited liability (shareholders are not personally liable).
- Separate legal entity.
- Restricted share transferability to general public.
Registration Process:
- Obtain Name Approval from SECP.
- Prepare Memorandum &
Articles of Association (MOA & AOA).
- Submit incorporation documents.
- Pay registration fees and obtain a Certificate
of Incorporation.
5. SINGLE MEMBER COMPANY (SMC)
An SMC is a variation of a private limited company but with only one shareholder.
Key Features:
- Single owner with limited liability.
- Separate legal identity.
- Suitable for small businesses and startups with one member.
Registration Process:
- Similar to a private limited company but with a single-member declaration.
6. PUBLIC LIMITED COMPANY (PLC)
A Public Limited Company is suitable for large businesses that wish to raise capital from the public via stock exchanges. Public limited companies can be further classified into two types: Listed and Unlisted.
- Unlisted Public Limited Company
Overview:
This type of company can have unlimited shareholders and may raise capital through private placements but not through stock exchange listing.
b. Listed Public Limited Company
Overview:
A listed company is one that is listed on a stock exchange and can offer shares to the public through IPOs.
Key Features:
- Minimum 3 directors and 7 shareholders.
- No maximum limit on shareholders.
- Shares can be publicly traded (if listed on the stock exchange).
- Strict regulatory compliance (audits, annual reports, etc.).
Registration Process:
- Obtain Name Approval from SECP.
- Draft and submit MOA & AOA.
- File incorporation documents.
- Obtain Certificate of Incorporation and Certificate of Commencement of Business.
7. NON-PROFIT ORGANIZATION (NPO)/ SECTION 42 COMPANY
A Section 42 Company is registered for promoting commerce, art, science, religion, or charity without profit intent.
Key Features:
- Profits are reinvested into the company’s objectives.
- Enjoy status of Private Limited Company without adding the word “(PVT.) Limited”
- Limited liability for members.
- Tax exemptions available (subject to approval).
Registration Process:
- Submit Name Application to SECP.
- Draft MOA & AOA with non-profit objectives.
- Obtain approval from SECP and register under Section 42 of the Companies Act, 2017.
8. FOREIGN COMPANY REGISTRATION
Foreign companies operating in Pakistan must register with SECP under the Companies Act, 2017.
Key Features:
- Must appoint a local representative.
- Compliance with Pakistani corporate laws.
- Can be a branch office, liaison office, or subsidiary.
Registration Process:
- Submit parent company documents (certified copies).
- Obtain approval from the State Bank of Pakistan (SBP) (if required).
- Register with SECP and obtain a business license.
CONCLUSION:
Choosing the right type of company for registration with SECP depends on factors like liability, ownership structure, funding requirements, and business objectives.
Private Limited Companies are ideal for SMEs, while Public Limited Companies suit large enterprises seeking public investment. LLPs and SMCs provide flexibility, whereas Section 42 Companies (NPOs) cater to non-profit ventures.
Tax Implications of Different Company Types:
Each type of company in Pakistan has unique legal and tax obligations.
For example:
- Sole Proprietorship: Income is taxed as personal income.
- Private Limited Company: Subject to corporate tax rates.
- Non-Profit Organization: May qualify for tax exemptions.
Before registration, entrepreneurs should take time to assess your options and consult with professional and experts to ensure long-term success of your business and compliance with SECP regulations. Proper business structuring from the outset can prevent legal complications and support long-term growth.
Struggling with Company registration process? Let our experts handle the hassle and ensure a smooth and stress-free registration of your business. Get in touch with Scounts.pk (Pvt.) Limited today or call/Whatsapp 0335-7193193 for hassle-free company registration right fit for your business. You can also visit https://leap.secp.gove.pk/#/landing-page for more details.
