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As Pakistan continues to evolve as an emerging market, the country’s legal infrastructure for corporate governance and business regulation plays a crucial role in facilitating economic growth. Whether you're an entrepreneur launching a startup or a foreign investor seeking to establish operations, understanding corporate and company law in Pakistan is vital to ensure compliance and build sustainable enterprises.
This blog offers an in-depth overview of the legal framework regulating businesses in Pakistan, the key institutions involved, incorporation procedures, responsibilities of directors, statutory requirements, and compliance obligations under the country’s corporate law regime.
The Companies Act, 2017 is the principal legislation governing corporate entities in Pakistan. It replaced the earlier Companies Ordinance, 1984, aligning Pakistan's corporate regulations more closely with international standards of transparency, corporate governance, and ease of doing business.
Regulate incorporation and operation of companies
Protect shareholders’ rights
Promote good governance and accountability
Enhance investor confidence
Facilitate business innovation through legal support
The SECP is the apex regulatory body responsible for administering company law in Pakistan. Its mandate includes:
Company registration
Monitoring of corporate compliance
Issuance of licenses to specialized companies (e.g., non-profits, NBFCs)
Regulation of capital markets
Protection of minority shareholders
Enforcement of financial reporting standards
The SECP operates under the SECP Act, 1997, and also maintains the eServices portal, which allows online incorporation, document submission, and compliance filings.
Before registering a business, it’s crucial to understand the types of legal entities allowed under Pakistani law:
Not regulated under the Companies Act
Owned and controlled by one person
Registered with local tax authorities
Suitable for small-scale businesses
Governed by the Partnership Act, 1932
Requires registration with the Registrar of Firms
Unlimited liability for partners
Minimum 2 and maximum 50 members
Limited liability
Cannot offer shares to the public
Most common legal form for startups and SMEs
Minimum 3 members, no upper limit
Can be listed or unlisted
Listed companies trade shares on stock exchanges
Heavily regulated with stricter reporting standards
Owned by one person (under Companies Act, 2017)
Limited liability
Ideal for solo entrepreneurs who want to operate as a company
Foreign entities can set up a branch, liaison office, or subsidiary
Must be registered with SECP and the Board of Investment (BOI)
Subject to FDI laws and repatriation rules
The process for registering a company in Pakistan is now largely digital via SECP’s eServices platform.
Name Reservation
Apply for name availability via eServices
Follow guidelines under the Companies Act and SECP directives
Document Submission
Memorandum of Association (MoA)
Articles of Association (AoA)
CNICs of directors and shareholders
Form 29 (Particulars of directors)
Form 21 (Address of registered office)
Payment of Incorporation Fee
Based on authorized share capital
Certificate of Incorporation
Issued by SECP
Confirms the legal status of the company
Post-Incorporation Registrations
NTN from FBR
Sales tax registration (if applicable)
Bank account opening
Once a company is incorporated, several ongoing compliance obligations must be fulfilled:
Annual Returns (Form A/B)
Changes in directors (Form 29)
Change of registered office (Form 21)
Increase in capital (Form 7)
Maintain proper minutes of board and general meetings
Hold an Annual General Meeting (AGM) every year
Appointment of Company Secretary (mandatory for public companies)
Prepare and file annual audited financial statements
Follow International Financial Reporting Standards (IFRS)
Companies above certain thresholds must appoint external auditors
The board of directors plays a central role in company management. The Companies Act defines their duties and liabilities:
Act in good faith and in the best interest of the company
Ensure accurate books of account
Prevent conflicts of interest
Protect shareholder value
Civil and criminal liabilities for fraud, misrepresentation, or breach of fiduciary duties
Penalties for non-compliance with SECP regulations
Disqualification for five years upon conviction of corporate offenses
To ensure corporate accountability, the law provides specific rights to minority shareholders:
Right to call an Extraordinary General Meeting (EGM)
Right to access information and inspect books
Protection against oppressive conduct
Right to seek judicial remedy through Company Bench of High Court
These rights encourage investor confidence, especially in publicly listed companies.
Once incorporated, a company is subject to several financial obligations:
Corporate tax at the applicable rate (currently 29% for most companies)
Withholding taxes and advance income tax
Sales tax and federal excise duties (if applicable)
Annual tax return filing with the Federal Board of Revenue (FBR)
Compliance with anti-money laundering (AML) laws
SECP also monitors compliance with Corporate Social Responsibility (CSR) disclosures and AML/CFT regulations for companies in sensitive sectors.
Incorporated for charitable, educational, or religious purposes
Cannot distribute profits to members
Require special license from SECP
Must maintain proper governance and transparent financials
Introduced under the Limited Liability Partnership Act, 2017
Hybrid of company and partnership
Ideal for professionals like consultants, lawyers, and accountants
Companies may enter into joint ventures, mergers, and acquisitions
Subject to SECP’s Merger Guidelines
May require approval from the Competition Commission of Pakistan (CCP)
Corporate disputes in Pakistan are typically addressed through:
Company Benches in High Courts
Alternative Dispute Resolution (ADR) mechanisms
Arbitration clauses in MoA or AoA
SECP-mandated mediation (in specific sectors)
Prompt legal remedies are available for issues like:
Shareholder disputes
Corporate fraud or mismanagement
Breach of fiduciary duty by directors
Regulatory violations
Pakistan has taken several steps to improve its corporate climate:
Company registration within 4 hours via eServices
Elimination of seal/stamp requirements
Streamlining of Single Window operations
Launch of the Secured Transactions Registry to support SME lending
Strengthened beneficial ownership disclosure under FATF recommendations
These reforms aim to enhance transparency, reduce red tape, and attract both domestic and foreign investment.
Pakistan's corporate and company law framework has evolved into a robust structure designed to support modern business needs, encourage investment, and ensure legal compliance. With digital incorporation processes, enhanced governance requirements, and SECP’s regulatory oversight, businesses now have a clearer roadmap for sustainable growth.
However, legal compliance is not a one-time event—it is a continuous obligation. Whether you're starting a business or managing a growing enterprise, staying informed about your rights and responsibilities under the Companies Act, 2017 is essential to avoid penalties and build credibility.
Need Help?
Explore the SECP eServices portal or consult with a corporate lawyer or chartered accountant for professional guidance.