There are several methods of conducting business in Pakistan including sole proprietorships, partnerships, and companies. Companies can be incorporated as private limited companies, public limited companies, or companies limited by guarantee. Foreign companies wishing to operate in Pakistan can open project/branch/liaison offices by registering with the relevant authorities and providing required documents.

1. Methods of Conducting Business in Pakistan Sole Proprietorship Partnership Registered firms Unregistered firms Company Incorporated A company limited by share A company limited by guarantee An unlimited company Registration of a Company Company Formation Availability of Name of the Company Documents for Registration of Companies Private Limited Company Public Limited Company Company Limited by Guarantee Association not for Profit Foreign Companies Opening of Project/ Branch/Liaison Offices by Foreign Firms

2. Methods of Conducting Business in Pakistan There are three major legal forms of business:- Sole Proprietorship Partnership 3. Company Incorporated

3. Methods of Conducting Business in Pakistan Sole Proprietorship In Sole Proprietorship, an individual on his / her own account carries out the business or profession. No formality for setting up a sole proprietary concern.

4. Methods of Conducting Business in Pakistan Partnership A partnership is a business relationship entered into by a formal agreement between two or more persons or corporations carrying on a business in common. The capital for a partnership is provided by the partners who are liable for the total debts of the firm and who share the profits and losses of the business concern according to the terms of the partnership agreement. Partnership (other than banking companies) is generally limited in size to twenty partners. The interest of a partner is transferable only with the prior consent of the other partner (s). However, a partner's right t a share of the for taxation purposes, partnerships are classified into:- 1. Registered firms 2. Unregistered firms The income of the registered firm is subject to super tax before distribution to the partners. Also the individual income of the partners is subject to income tax at the usual rates. For unregistered firms, income tax is levied on the firm's income and the partners are not liable to pay tax on the shares of profit received from the unregistered firms.

5. Methods of Conducting Business in Pakistan Company A company is a legal entity formed under the Companies Ordinance, 1984. It can have share capital or can be formed without share capital. A company heaving share capital may be formed as: A company limited by share A company limited by guarantee and An unlimited company

6. Methods of Conducting Business in Pakistan 1. Company limited by share The liabilities of its members are limited to the extent of their shares in the paid-up capital of the company. These companies may further be classified as public limited and private limited companies. Public limited Companies can be formed by at least seven persons by subscribing their names to the 'Memorandum and Articles of Association' f the company. The word 'Limited' is used as the last word of its name. Private Limited Companies may be formed by one person or more by subscribing their names to the 'Memorandum and Articles of Association' of the company. A private limited company, by its Articles of Association: 1. Restricts the right to transfer its share; 2. Limits the number of its members to fifty; and 3. Prohibits any incitation to the public to subscribe for shares or debentures of the company. A private limited company is required to use the words "(Private) Limited" as the last word of its name.

7. Methods of Conducting Business in Pakistan 2. Company Limited by Guarantee Means a company having the liability of its members limited by memorandum to such amounts as the members may respectively undertake to contribute to the capital of the company in the event of its closure. A company limited by guarantee is usually formed on a 'non profit basis'. Companies limited by guarantee use the words "(Guarantee) Limited" as the last words of their names.

8. Methods of Conducting Business in Pakistan 3. Unlimited Company Means a company having unlimited liability of its members.

9. Methods of Conducting Business in Pakistan Registration of a Company

10. Methods of Conducting Business in Pakistan 1. Company Formation A Public Company or a Private company may be formed by a group of persons, associated for any lawful purpose, by subscribing their names to the Memorandum of Association and complying with the requirements of the Companies Ordinance, in respect of the registration. The minimum requirement for the number of persons for private company is one or more persons while for Public Company three or more person. Prior Approval of the respective Ministries is required for incorporation of companies. A list of such companies with concerned organizations noted against each is as under: Banking Company Ministry of Finance, State Bank of Pakistan Insurance Company Ministry of Commerce Investment Finance Company (Investment Bank) Ministry of Finance, State Bank of Pakistan Leasing Company Securities and Exchange Commission of Pakistan Venture Capital Securities and Exchange Commission of Pakistan Assets Management Company Securities and Exchange Commission of Pakistan Arms and Ammunition Ministry of Industries Board of Investment Securities Printing, Currency and Mint Ministry of Industries Board of Investment High Explosives Ministry of Industries Board of Investment Radioactive Substances Ministry of Industries Board of Investment

11. Methods of Conducting Business in Pakistan 2. Availability of Name of the Company The first step with regard to incorporation of a company is to confirm the availability of the name of the proposed company from the concerned Registrar on payment of a nominal fee. The name should not be inappropriate, deceptive or designed to offend the religious sensibilities of the people, and it should neither be identical nor have a close resemblance to the name of any existing company.

12. Methods of Conducting Business in Pakistan Documents for Registration of Companies For Private Limited Company 1 . Four copies of the Memorandum and Articles of Association signed by the promoter and one copy duly stamped 2. Declaration regarding compliance with the requirements of the companies Ordinance, 1984 signed by one of proposed Directors or an Advocate or Chartered Accountant or Cost and Management Accountant (on Form 1) 3. Address of the registered office of the company (on Form 21) 4. Particulars of the Chief Executive, Directors and other officers/executives (on Form 29) For Public Limited Company In addition to the documents required for registration of a private limited company, the following documents must be filed with the concerned Registrar: 1. List of persons consenting to act as Chief Executive/Directors (on Form 27) 2. Consent of the Chief Executive and Directors (on Form 28) For Company Limited by Guarantee All the document meant for registration of a public company. back to top

13. Methods of Conducting Business in Pakistan For Association not for Profit Association being formed for the promotion of commerce, art, science, sports, social services, charity or other such socially useful objectives are required to obtain a license form the Securities and Exchange Commission of Pakistan. The application for obtaining the requisite license should be accompanied by the draft Memorandum and Articles of Association, the list of promoters, the declaration, the names of associated companies and estimates of annual income and expenditure (Section 42).

14. Methods of Conducting Business in Pakistan For Foreign Companies A foreign company, i.e. a company incorporated outside Pakistan, is required to deliver following documents to the concerned Registrar within 30 days of the establishment of its place of business in Pakistan: 1. A certified copy of charter, statute or Memorandum and Articles of Association of the company in the English or Urdu language accompanied by prescribed Form 38 2. Address of the registered or principal office of the company (on Form 39) 3. A list of Directors, the Chief Executive and Secretaries (if any) the company (on Form 40) 4. Particulars of the principal officer of the company in Pakistan (on Form 41) 5. Particulars of person (s) resident in Pakistan authorized to accept services on behalf of the foreign company (on Form 42) 6. Address of the principal place of business in Pakistan of the foreign company on Form 43 (Section 451). Cont…

15. Methods of Conducting Business in Pakistan For Foreign Companies Opening of Project/ Branch/Liaison Offices by Foreign Firms Foreign companies that intend to undertake export activities in Pakistan will be registered immediately on production of valid documents 2. Permission to companies engaged in contractual obligations of contracts with public sector entities will be granted on production of valid document without circulation to government departments. Visit the Board of Investment (BOI) web site (http://www.pakboi.gov.pk) for the application form and the required documents. 3. Permission for opening a liaison office by a foreign company to promote products and services will be granted by the BOI in consultation with the concerned agencies 4. Companies that wish to open their branch/liaison or representative offices in Pakistan may apply to BOI for permission on prescribed form. The BOI process and decide such cases within a period of 6 to 8 weeks. 5. Details on the required documentation, etc. are available at all offices of the BOI. A specimen of the application for permission to establish branch/liaison offices by foreign companies can be obtained form the BOI website (http://www.pakboi.gov.pk) 6. Permission for opening of branch/liaison offices may be granted by the BOI for a period of 3 to 5 years. Further extensions will be granted after reviewing the past performance of the foreign companies. Request for renewal will be processed by the BOI within two weeks.

16. Methods of Conducting Business in Pakistan Reference www.helplinelaw.com www.pakboi.gov.pk www.taxonline.com.pk www.paktax.com Companies ordinance 1984 Thank you, [email_address] Amir Saif