ZAFAR & ASSOCIATES - LLP | Corporate Law Services - Pakistan

Corporate Law Practice in Pakistan

Corporate law involves general rules and regulations associated with corporate affairs, such as the incorporation of entities, directors’ and shareholders’ rights, memorandum, articles, board meetings, secretarial matters, operational management, ownership and the public listing or delisting of entities.

Whether you are a company director or secretary struggling to make sense of your legal obligations or a busy professional looking to outsource your legal support requirements, ZA-LLP can help. Our range of corporate legal services will enable you to safely implement a variety of corporate law transactions in a cost-effective manner. Have you ever been asked to cancel unissued shares in a company or to prepare documentation to amend memorandum or articles of association but find that you have no idea where to start? Would ploughing through the provisions of the Companies Act, 2017, legal textbooks and precedent books to find out what you need to do eat into your valuable time?

ZA-LLP specialise in providing businesses with the complete range of services that they need and have a long-standing reputation for providing expert support and practical solutions to everyday problems. We are unrivalled in our ability to work closely with our clients to ensure that they have the correct corporate legal structure in place. Our in-house Corporate Legal Services team can help you with a range of matters, at very competitive rates.

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The Corporate department at ZAFAR & ASSOCIATES - LLP offers a comprehensive array of services that draw on all of the firm's resources and expertise. Our corporate lawyers are committed to providing our clients with incomparable service that includes:

• The highest level of substantive expertise and skills;

• Enthusiasm and commitment to our work and clients;

• Creative approaches and solutions to challenges; and

• Cost management through project budgeting, monitoring and efficient staffing.

ZA-LLP's other corporate legal services range from amending memorandum and articles, company name change, company re-registration, share classes, share transactions, cancellation, sub-divison and consolidation of shares, elective resolutions and issues of share warrants to bearer.

Who We Are

The Corporate Group operates as part of an overall business team and views legal issues through the lens of the specific goals and objectives of the client's business. Our 1:1 partner to associate ratio ensures senior level involvement in every client matter. We structure our teams to match client expectations relative to billing, communication, budget and reporting structure. Partners are actively involved and readily available to clients.

Whom We Counsel

Domestic, multinational and public limited companies, Pakistani and foreign privately-held companies at all stages of development, including start ups and emerging companies, entrepreneurs, closely held and family businesses, financial institutions, private equity firms, venture capital and hedge funds, as well as corporate executives. Our clients are engaged in a wide spectrum of industries, including manufacturing and distribution, high technology, Internet, financial services, real estate, capital formation, health care, medical technology, and not-for-profit and charitable efforts.

What We Do

We specialize in both sophisticated and innovative legal solutions. Achieving our clients' business goals is our primary objective. Because tax considerations are critical to all business planning, in all our representations we stress efficient tax planning that takes into account the economic interests of both the individual entrepreneur and the business enterprise. Our attorneys provide advice with respect to:

Business Formation	Commercial Contracts
Franchising	International Transactions
Mergers & Acquisitions	Strategic Alliances
Venture Capital Financing

Table: Corporate Solutions

For the convenience of general public, promoters and directors of companies, SECP had established its eight CROs at Islamabad, Karachi, Lahore, Peshawar, Faisalabad, Multan, Sukkur, and Quetta. Besides registration of companies and monitoring of their working according to law, functions of CRO’s include providing services and guidance and also to ensure that the companies and their directors comply with the statutory requirements as provided under the Companies Act, 2017. The record of companies maintained by the CROs is public record and the investors, share holders, creditors and general public, may inspect the record of company whenever they need and they may also obtained certified copy of any specific document forthwith on payment of nominal amount of fee.

Specialised Corporate Services & Procedure

Find more information on our specialised corporate services and setup procedure, please click on any of the service areas mentioned below:

Corporate Governance	Due Diligence Services
Insolvency Law	Joint Ventures
LLP & Firm Registration	Mergers & Acquisitions
Non-Governmental Organization	Provident Fund

Table: Specialised Corporate Services

Corporate Setup Guidelines

Any three or more persons associated for any lawful purpose may, by subscribing their names to the Memorandum of Association and complying with the requirements of the Act form a public company and any two or more persons so associated may, in like manner, form a private company. If only one member form a private company it is called a single member company and if it is formed by more than one member, it is termed as a private company.

Prior approval of the Ministries / Departments etc. noted against each category of the following companies is required to be obtained before incorporations of companies:

Class of Companies	Relevant Authorities
Banking Company	Ministry of Finance State Bank of Pakistan
Non Banking Finance Company (NBFC)	Securities & Exchange Commission of Pakistan
Security Service Providing Company	Ministry of Interior
Corporate Brokerage House	Stock Exchange (For transfer of Membership Card in favour of proposed Company)
Money Exchange Company	State Bank of Pakistan
Association Not for Profit under Section 42 of the Companies Act, 2017	Securities & Exchange Commission of Pakistan
Trade Organisation	Ministry of Commerce

Table: Company Classifications

Following are the requirements for registration of a new company under the Companies Act, 2017:

Before Incorporation Requirements

Availability of Name

The first step with regard to incorporation of a company is to seek the availability of the proposed name for the Company from the registrar. For this purpose, an application is to be made and Rs.200/- for online application and Rs.500/- for offline application is required to be paid seeking availability certificate for each name. To facilitate the promoters, a list of prohibited / sensitive names has also been provided at the link: Prohibitd Words

Required Documents for a Corporate Entity

The following documents are required to be filed with the registrar concerned for registration of a private limited company:

• Identification: Copy of National Identity Card or Passport, in case of foreigner, of each subscriber and witness to the Memorandum & Articles of Association.

• Memorandum & Articles of Association: Four printed copies of Memorandum & Articles of Association in case of offline submission and one copy for online submission, duly signed by each subscriber in the presence of one witness. In order to facilitate general public, the standardized specimen of Memorandum of Association of various sectors has been provided on the Commission’s website.

• Form 1: Declaration of Compliance with the Pre-requisites for Formation of the Company.

• Form 21: Notice of situation of registered office of the Company.

• Form 29: Particulars of first directors of the Company.

• Registration / filing fee: Original paid challan evidencing the payment of fee as prescribed in Table - II, in any of the authorized branches of MCB Bank Limited.

• Authorisation by Sponsors: The authorisation of sponsors in favour of a person to make good the deficiencies, if any, in Memorandum & Articles of Association as may be pointed out by the registrar concerned and to collect the Certificate of Incorporation.

Additional Requirements for the Incorporation

In addition to the requirements for incorporation of a private limited company as stated above, the public companies are required to file the following documents at the time of incorporation:

• Form 27: List of persons consenting to act as director

• Form 28: Consent of Directors

Additional Requirements for a Security Services Company

In case of company intending to provide the services of security guard, nine additional sets of each of the documents at I and II above along with the bio-data, four attested photographs of each subscriber and financial position / bank statement of the subscribers are also required to be provided. The Ministry of Interior normally grants the NOC for a security object company.

Documents Required for a Single Member Company (SMC)

Any person may form a Single Member Company (SMC) and would file with the registrar at the time of incorporation, a nomination in the form as set out in Form S1 indicating at least two individuals to act as nominee director and alternate nominee director, of the Company in the event of his death. All the requirements for incorporation of a Private Limited Company shall mutatis mutandis apply to SMC.

Certified Copies of the Memorandum & Articles of Association and Certificate of Incorporation

In order to obtain certified copies of memorandum of Association, Articles of Associations and certificate of incorporation, challan of the requisite copying fee and court stamps fee of the requisite value should be furnished along with registration documents.

Documents Required for an Association Not for Profit

All the documents meant for incorporation of a limited company along with a licence issued by the SECP. In case of a trade body, a licence issued by Ministry of Commerce would also be submitted to the registrar concerned. The application for obtaining the requisite licence from the commission should be accompanied by draft memorandum and articles of association, list of promoters, bio-data of each promoter, declaration, names of companies in which the promoters of the proposed association hold any office, estimates of annual income and expenditure and brief statement of work already done or to be done. (Section 42).

Any three or more persons associated for lawful purpose may by subscribing their names to the memorandum and Articles of association and complying with the requirement of Companies Act, 2017 and companies general provisions and form rules 1985 form a company. A not-for-profit association (also called an NGO or NPO) may be registered as company under the provisions of the Companies Act, 2017. A not-for-profit association applies its profits or income in promoting its objects only and prohibits the payment of any profits, income, dividend or proceeds to its members, this differentiates it from the other type of companies. Any such association is required to obtain licence under Section 42 of the Ordinance read with rule 6 of the Companies (General Provisions and Forms) Rules, 1985 before its registration as a company.

The licence is issued for a period of five (5) years, renewable for further term (s) of five (5) years each. The procedure for obtaining licence, subsequent registration of such association as company limited by guarantee, and thereafter renewal of the licence when due, is provided in the provided link:

Transfer of Membership of SMC to a New Member

If the membership of SMC is transferred to a new member, the Company shall, within fifteen days from such transfer, also file with the registrar, a nomination in the form as set out in Form S1

Change in the status of SMC

SMC can be converted into a Private Company on increase of its members to more than one. The Company shall pass a Special resolution for change of status and alter its Articles accordingly within thirty days and transfer the shares within seven days. The Company shall appoint and elect one or more additional directors within fifteen days of passing the Special Resolution and notify the appointment on Form 29 prescribed under the Companies (General Provisions and Forms) Rules, 1985 within fourteen days. Furthermore, the Company is required to file a notice of the fact in writing in the form as set out in Form S2, with the registrar within sixty days from the date of passing of Special Resolution.

Company becoming SMC

A Private Company having two or more members shall become SMC by passing a Special Resolution for change of its status, making necessary alteration in it’s articles and obtaining the approval of commission. An application for seeking Commission’s approval shall be submitted by the Company in the form as set out in Form S4 within thirty days of passing the Special Resolutions for change of status to SMC.

The Company shall transfer shares in the name of single member within fifteen days of the approval of the commission and notify change in the Board of Directors on Form 29 within fourteen days from date of transfer of shares.

A certified copy of the order containing the approval together with a notice in the form as set out in Form S5 and a nomination of nominee directors in the form as set out in Form S1 shall be filed with the registrar concerned within fifteen days.

Online Procedure for Incorporation

eServices Access

The client will connect to SECP eServices to log on to his / her account or signup, in case of a new user.

For incorporation process, please note that you will need to create separate User IDs for all proposed Subscribers, in order to obtain their system generated PIN. After obtaining name availability, User should use the “Manage Company Users” button available on the top right hand side of the web page to create separate / additional User IDs.

Enter the Information / Data

A successful logon to eServices by entering user ID and password will display a list of available and unavailable processes. If the Company name has been reserved successfully, the Company Incorporation facility will be available at this stage.

User will click on the company incorporation process. An input page is displayed, wherein the following information will be entered by the user.

Application Details

Check the details of the proposed company in terms of its complete name and kind to ensure that the information is correctly displayed. In case of any issue, please contact the concerned Company Registration Office (CRO).

Click on “Mode of Payment” and select the mode whether you want to make payment through “Bank Challan” or “Credit Card”.

In case you choose “Bank Challan”, then click on “Locate Bank” and select the designated bank branch from the available branches of MCB Bank Limited or United Bank Limited.

Declarant

In this section, enter the compulsory information about the declarant / Company representative. A declarant can be any person authorised to represent the proposed Company by the Owners / Board of Directors. Any employee or even the director of the proposed Company could be chosen for this responsibility.

Director / Subscriber

Enter detailed data regarding the Board of Directors and Subscribers in this section. “Add” and “Remove” buttons will create and remove rows for data entry.

Corporate Information

Enter corporate information e.g., registered office address, sector classification, share capital, objects etc., in this section.

Signatory

Enter details of a signatory in this section.

Press Continue Link

By pressing Continue Link, Process Document Listing Page will be displayed, containing the following links along with Sign form option:

• Update Form(s) Data: Click link if you want to update the data. After updating data, press Continue link again. Process Document Listing Page will be displayed again.

• View Forms: System automatically fills out the required forms using the data entered by you. You can view these forms by clicking on the given link.

• View Company Profile Form: To see company profile, click this link.

• Fill New Attachment Form: In this link, you can attach the required documents in PDF format e.g., copy of CNIC, name availability letter, etc. Press Save Form button after attaching the required documents.

• Fill New Attachment Form Articles of Association: Click this link and attach the Articles of Association in PDF format. Press Save Form button after attaching the said file.

• Fill New Attachment Form Memorandum of Association: Click this link and attach the Memorandum of Association in PDF format. Press Save Form button after attaching the said file. Please note that all the above mentioned PDF file names should be short, without spaces, and should not contain any special characters.

• Fill New Bank Challan: Click link and bank challan will be displayed. Bank Challan is automatically populated with prescribed fee and other information by the eServices application. Press Save Form. Do not print and pay challan before submitting the process / form.

• Sign Forms (Using PIN): The user shall Click “Sign form”. Please note that sign form link will be activated when all mandatory documents are attached and challan is saved.

Enter the PIN and click “Apply user PIN”, field for “PIN APPLIED” will be auto-populated and on clicking “Submit process to SECP” button, process will be submitted to SECP. Please note that every subscriber needs to sign the documents by logging in with his/her User ID and password and applying their respective PIN. Click this button. All the documents will be submitted to the SECP and a process reference number will be displayed. Please keep this reference number for any future correspondence, if required.

• Make Payment:

Payment through Challan: Click on Submitted Processes link available on the left side of the page. Documents submitted by you along with bank challan will be displayed. Click and open challan and then press Print. Four copies will automatically be printed as original copy, applicant copy, bank copy and branch copy.

The fee shall be deposited in the Bank branch selected by the applicant from the designated branches of MCB Bank Limited / United Bank Limited. The bank shall retain the branch and bank copies and return remaining two copies (original and applicant copy) to the client.

Payment through Credit Card: To facilitate investors and speed up processing time of transactions in eServices, SECP has introduced online payment of fee through Credit Cards. This facility is only available to depositors / applicants using eServices online submission option of SECP and transact through eServices portal. To make payment through Credit Card, click on “Online Payment” link available on the left side of the page, then select the relevant check box under “Make Payment” and follow procedure.

For obtaining further information regarding payment of fee through Credit Cards, please visit SECP website and see Online Payment Guide available on the eServices page. Payment through MCB Online Fund Transfer Facility SECP has also arranged with MCB Bank Limited to introduce an “On-line Fund Transfer (OFT)” facility whereby its depositors can pay SECP fee directly into SECP’s bank account in MCB through on-line fund transfer from their MCB Bank account, without the need to visit a branch for physically depositing the amounts. This facility is only available to depositors / applicants using eServices online submission option of SECP and transact through eServices portal.

For obtaining further information regarding MCB OFT Facility, then please visit SECP website and see Online Fund Transfer Facility Guidelines available on the main page.

The process will be initiated as soon as the SECP receives the verification of deposit of fee from the Bank.

User will receive response from the SECP via email, with any of the response, acceptance (Incorporation Certificate Dispatched through Courier), rejection or issue resolution.

After Incorporation Requirements

Private Companies	Public Companies
Directors of every Company are required to appoint the first chief executive not later than fifteen days from the date of incorporation and thereafter within fourteen days from the date of election.	All the requirements meant for private companies given at left column are also applicable to public companies. However, the listed companies are also required to file list of members on CD / DVD / USB FlashDrive to the Commission and the associations are required to file with the registrar concerned annual return on Form ‘B’ instead of Form ‘A’.
The first auditor is required to be appointed by the directors within sixty days from the date of incorporation and thereafter in each AGM of the Company.	List of Directors and consent of Directors and Chief Executive are required to be filed within 14 days after the election of Directors and appointment of Chief Executive on Forms 27 & 28.
A Single Member Company (SMC) is also required to appoint a Company Secretary within fifteen days of incorporation or of becoming a SMC or of the office of Company Secretary falling vacant and notify such appointment on Form 29 within fourteen days of the date of such appointment.	A Private Company may commence its business immediately after its incorporation. However, a Public Company shall be entitled to commence its business after obtaining commencement of business certificate from the registrar concerned.
Any appointment, election or change in the Directors, Chief Executive, Auditors, Chief Accountant, legal adviser etc. is required to be notified to the registrar concerned on Form '29' within 14 days of the said election, appointment or change.	Statutory meeting is required to be held within a period of not less than three months but not more than six months from the date at which the Company is entitled to commence business. A statutory report is required to be circulated to the members and the registrar within the time frame as prescribed under the law.
A Company is required to notify the change in its registered office on Form-21 within 28 days from the date of change.	Return containing beneficial ownership of listed securities and change therein on Form 31 and Form 32 are required to be filed with the Registrar concerned and the SECP.
First Annual General Meeting (AGM) of the Company is required to be held within eighteen months from the date of incorporation and subsequent Annual General Meetings are required to be held once at least in every calendar year, within a period of four months following the close of its financial year and not more than fifteen months after holding of its last preceding AGM.	A Listed Company is also required to appoint a Company Secretary.
Annual return on prescribed Form ‘A’ / ’B’ as applicable is required to be filed with the registrar concerned once in each year made as on the date of Annual General Meeting, where no such meeting is held, on the last day of the calendar year .
In case of increase in paid-up capital, the Company is required to offer new shares to the existing shareholders and the offer is required to be accompanied by a circular issued under Section 83 to all the shareholders strictly in proportion to the shares held by them and, on the allotment of shares, return of allotment on Form '3' is required to be filed with registrar concerned within 30 days from the date of allotment of shares. Partly paid shares are not allowed to be issued at all.
In case of death of single member of a Single Member Company, the secretary shall manage affairs of the company till transmission of shares to legal heirs of the single member, and inform the registrar concerned about the death, provide particulars of the legal hairs and in case of any impediment report the circumstances seeking within seven days of the death of directors in the form as set out in Form S 3.

Table: After Incorporation Requirements

Requirements After Establishment by Foreign Companies

A Foreign Company incorporated outside Pakistan, is required to file the following documents to the registrar concerned within 30 days from the establishment of its place of business in Pakistan (Sections 434 To 443 of the Companies Act, 2017):

• A certified copy of the Charter, Statute or Memorandum & Articles of the Company accompanied by Form 38. The certificate is to be given by: (a) The public officer in the country where the Company is incorporated to whose custody the original is committed or (b) A notary public of the country where the Company is incorporated; or (c) An affidavit of a responsible officer of the Company in the country where the Company is incorporated.

  The signature or seal of the person so certifying shall be authenticated by a Pakistani diplomatic consular or consulate officer.

  If the documents is not in English, dully certified translation in English or Urdu language is provided (Rule 23 of Companies (General Provisions and Forms) Rules, 1985.

• Address of registered office or principal office of the Company on Form 39;

• Particulars of directors, Chief Executive and secretary (if any) of the company, on Form 40;

• Particulars of principal officer of the Company in Pakistan, on Form 41;

• Particulars of person (s) resident in Pakistan authorised to accept service on behalf of the Foreign Company, on Form 42 along with the certified copy of the appointment order, authority letter of board of directors’ resolution and consent of the principle officer;

• Address of principal place of business in Pakistan of the Foreign Company, on Form 43 (Section 435).

• Permission letter from the Board of Investment (BOI) with a specific validity period for opening and maintaining of a Branch / Liaison Office by a Foreign Company.

Any change or alteration in particulars stated in the documents and returns filed at the time of registration under Section 435 is required to be filed on Form 44 with the registrar concerned within 30 days of such change or alteration (Section 436); and

Foreign Company is required to file annually with the registrar concerned annual accounts in respect of its operation within Pakistan as well as its global accounts together with the list of Pakistani members and debenture holders and of places of business of the Company in Pakistan within the prescribed period (Section 437); and

Foreign Company is required to submit the renewal / extension of the permission to open / maintain a Branch / Liaison Office from the Board of Investment (BOI) on the expiry of the validity of the permission, originally granted. Foreign Company is required to give notice on Form 46 to the registrar concerned at least 30 days before it intends to cease to have a place of business in Pakistan and to publish a notice of such intention at least in two daily newspapers circulating in the Province or Provinces in which such place or places of business are situated.

Information for the Companies having Foreign Investment

Foreign Investors are permitted to hold 100% equity of industrial projects without any permission of the Government. No Government sanction is required for setting up any industry, in terms of field of activity, location and size except for the following:

• Arms and Ammunitions

• High Explosives

• Radioctive Substances

• Security Printing, Currency and Mint

No new units for the manufacture of alcoholic beverages or liquors will be allowed. There is no requirement for obtaining No Objection Certificates (NOC) from the provincial governments for locating the project anywhere in the country except in areas that are notified as negative areas. With the announcement of Investment Policy, 1997 by Government of Pakistan, the foreigner investment has since been allowed on repatriate able basis in agriculture, service, infrastructure and social sectors subject to conditions indicated against each. They will have to simply register a Company with SECP under the Ordinance and to inform State Bank of Pakistan provided the relevant conditionality is fulfilled.

Service Sector

Service Sector Activities

Foreign Direct Investment (FDI) Services Sector is allowed for any activity subject to any condition that services which require prior permission / NOC or licence from the concerned agencies will continue to get the same treatment until and unless de-regulated by such agencies and will be subject to provision of respective sectoral policies. The list of deregulated services in telecommunications is as under:

• E-mail / Internet / Electronic Information Services (EIS)

• Data Communication Network Services

• Trunk Radio Services

• Cellular Mobile Telephone Services

• Audio Texts Services

• Voice Mail Services

• Card Pay Phone Services

• Close User Group for Banking Operations

• International Satellite Operations for Domestic Data Communication

• Paging Services

• Vehicle Tracking System (VTS)

• Burglar Alarm System (BAS)

• Global Mobile Personal Communication System (GMPCS)

• Any other Telecommunication Service, which is deregulated in future, will become part of this list

Note: Those sectors which have not been deregulated, and are with Pakistan Telecommunication Corporation Limited (PTCL), are open to foreign investors in collaboration with PTCL.

Service Sector Conditions

• The amount of Foreign Equity Investment in the Company / Project shall be at least US$ 0.3 Million.

• Foreign investors are allowed to hold 100% of the equity subject to the condition that the repatriation of profit shall be restricted to a maximum of 60% of the total equity or profits and that a minimum of 40% of equity is held by Pakistani Investor (including sale of shares in stock exchange) within five years.

Infrastructure Sector

Infrastructure Sector Activities

Infrastructure projects including development of industrial zones.

Infrastructure Sector Conditions

• The amount of Foreign Equity Investment in the Company / Project shall be at least US$ 0.3 Million.

• 100% Foreign Equity is allowed on repatriateable basis.

Social Sector

Social Sector Activities

Education, Technical / Vocational Training, Human Resource Development (HRD), Hospital, Medical and Diagnostic Services

Social Sector Conditions

• The amount of Foreign Equity Investment in the Company / Project shall be at least US$ 0.3 Million

• 100% Foreign Equity is allowed.

Agriculture Farming (CAF) Sector

The Cabinet decision dated June 19, 2002 on Corporate Agriculture Farming (CAF) Policy enunciates that such local and foreign companies would be entitled CAF legal entity that are locally incorporated under the Companies Act, 2017. In this connection, in case of foreign collaboration, 60% of Foreign Equity is allowed with minimum investment of US$ 0.3 Million. Beside the following agriculture related activities are included in CAF under the approved policy package.

• Land development/reclamation of batter land, desert and hilly areas for agriculture purpose and crop farming.

• Reclamation of Water Front Areas / Creeks.

• Crops, Fruits, Vegetables, Flowers Farming / Integrated Agriculture (Cultivation and Processing of Crops).

• Modernization and Development of Irrigation Facilities and Water Management.

• On Farm Construction of Wheat / Grain Storage and Construction of Cold Storage for captive use (not on commercial basis).

Others

• Tourism: Tourism has been given the status of industry and placed under priority industries i.e. category ‘c’ of the Investment Policy.

• Housing and Construction: The housing and construction sector has been declared as Industry and placed under priority Industries i.e. category ‘c’ of the Investment Policy.

  Local and Foreign Companies involved in real estate projects will not market these projects unless the title of the property is transferred in the name of a locally incorporated Company and the ‘Commencement of Business’ Certificate is issued by the Securities & Exchange Commission of Pakistan (SECP) to the Company.

• Information Technology: Computer Software and Information Technology (IT) have been declared as Industry.

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Our Core Competencies

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