Entity choice & incorporation

This chapter states the position as of April 2026. It is general information, not legal advice. Specific figures, fees and timelines are marked for verification where they change frequently.

The vehicles

Pakistani law offers a short list of vehicles. Most foreign and domestic investors choose from five.

A private limited company is the default. It is incorporated under the Companies Act, 2017 and regulated by the Securities and Exchange Commission of Pakistan (SECP). It needs at least two members and two directors. Liability is limited to unpaid share capital. There is no general minimum capital requirement.

A single member company (SMC) is a private company with one shareholder. It suits wholly owned subsidiaries. It needs one director and a nominee who takes over on the member's death.

A public limited company needs at least three members and three directors. It is required for businesses that intend to raise capital from the public or list on the Pakistan Stock Exchange. Listing brings the PSX Rulebook and the Listed Companies (Code of Corporate Governance) Regulations on top of the Act.

A limited liability partnership under the Limited Liability Partnership Act, 2017 combines limited liability with partnership flexibility. It is registered with the SECP. Uptake has been modest. Professional firms and joint ventures use it; most operating businesses still incorporate companies.

A branch or liaison office lets a foreign company operate in Pakistan without a local subsidiary. Both require permission from the Board of Investment (BOI). A liaison office may not earn revenue in Pakistan; it exists for representation, promotion and technical liaison. A branch may only carry out the activity permitted in its approval, and in practice branches are most common for foreign contractors performing specific contracts. Permission is granted for a fixed initial period and is renewable [initial validity, typically three to five years — TO BE VERIFIED BY REVIEWING LAWYER].

General partnerships under the Partnership Act, 1932 and sole proprietorships remain available. Neither offers limited liability. Foreign investors rarely use them.

Why the private company is the default

The private company is cheap to form, familiar to banks and regulators, and can be wholly foreign-owned in most sectors (see Chapter 2). It files annual returns and audited accounts with the SECP but is spared the governance code that applies to listed companies. Share transfers are restricted by the articles, which suits joint ventures. Almost every subsidiary we see is a private limited company or an SMC.

The main reasons to depart from the default are regulatory. Banks, insurers, and certain licensed businesses must take prescribed forms. Companies that will seek public money must be public companies. Foreign contractors executing a single project sometimes prefer a branch because it avoids capitalising and later winding up a subsidiary.

The incorporation process

Incorporation runs through the SECP's online portal, eZfile. The sequence is short.

First, reserve a name. The applicant proposes a name; the SECP checks it against the register and against the prohibited-names criteria in the Act and the regulations. Names suggesting state patronage, or identical or deceptively similar to existing names, are refused. Name reservation is usually decided within a few working days [current fee and processing time — TO BE VERIFIED BY REVIEWING LAWYER].

Second, file the incorporation application. It includes the memorandum of association (which states the principal line of business), the articles of association, particulars of directors and subscribers, the registered office address, and the declaration of compliance. The SECP publishes model articles; most incorporations adapt them rather than draft from scratch.

Third, pay the fee and receive the certificate of incorporation. For straightforward applications with no foreign shareholders, the certificate typically issues within a few working days of a complete filing [current standard processing time — TO BE VERIFIED BY REVIEWING LAWYER]. The SECP's process also generates the company's National Tax Number (NTN) registration with the Federal Board of Revenue as part of incorporation, which removes a step that used to be separate.

Foreign shareholders and directors

Where a foreign national or foreign company appears as a subscriber or director, the SECP requires security clearance from the Ministry of Interior. The applicant files the prescribed particulars and an undertaking; the clearance process then runs in the background. In our experience this is the single most common cause of delay for foreign-owned incorporations, and the timeline is not within the applicant's control [current SECP practice on whether incorporation proceeds pending clearance — TO BE VERIFIED BY REVIEWING LAWYER].

Foreign corporate shareholders must supply constitutional documents, board resolutions and a power of attorney, legalised or apostilled in the home jurisdiction. Pakistan acceded to the Apostille Convention, which has simplified this step for documents from other contracting states [effective date and current practice — TO BE VERIFIED BY REVIEWING LAWYER]. Build document preparation into the timetable; a missing apostille costs weeks.

There is no general requirement that directors be Pakistani residents. Sector regulators may impose their own conditions.

After the certificate

Incorporation is the start, not the end. The usual first-ninety-days list looks like this.

Open a bank account. Banks apply their own know-your-customer requirements, and for foreign-owned companies these are heavier: beneficial ownership declarations, legalised group documents, and source-of-funds evidence. Remit share subscription money through banking channels and keep the bank's confirmation; it matters later for repatriation (see Chapter 2).

Register for tax beyond the NTN where needed: sales tax registration with the FBR for goods, and with the relevant provincial revenue authority for services (see Chapter 3).

Register as an employer where thresholds are met: the Employees' Old-Age Benefits Institution (EOBI) and the provincial social security institution (see Chapter 4).

Set up the statutory books. The Act requires registers of members, directors, and other prescribed registers, and timely filings on changes: allotments of shares, transfers, changes of directors or registered office, and creation of charges over assets. Charges must be registered with the SECP within the statutory period or the security is at risk against a liquidator and creditors [current filing period, historically 30 days — TO BE VERIFIED BY REVIEWING LAWYER].

Appoint the auditor. Companies above modest thresholds must have their accounts audited by a chartered accountant. Annual audited accounts and the annual return are filed with the SECP.

What slows people down

Three things, in practice. Security clearance for foreign participants, which cannot be expedited from the applicant's side. Document legalisation from the home jurisdiction, which is a mechanical task but a slow one. And the bank account, because account opening for foreign-owned companies moves at the pace of the bank's compliance department, not the company's.

None of these is a reason to avoid Pakistan. All of them are reasons to start the paperwork before the commercial timetable demands it. A well-prepared incorporation, with clearances pending, banking documents in hand and tax registrations queued, is a matter of weeks. An unprepared one is a matter of months.