Business subsidiary in Pakistan in the Oil and Gas Sector​

Online Email Query No-0997: Our company is planning to expand in Pakistan by establishing subsidiary and start oil and gas exploration work with our own technologies. In order to begin the process we are looking for a business law firm, which will provide us with the services of business registration and provide assistance on obtaining the type of the license that enables us to do the oil and gas exploration in licensed territories of Pakistan; to allocate the oil and gas, sign an agreement with the needed parties; followed by the drilling process. This will basically mean covering all the stages and aspects of the oil and gas cycle.

Firstly, we would like to ask you whether you have experience of working on this kind of cases, particularly involving acquiring permit and registering for exploration work of oil and gas in licensed territories, if yes, please send us information about required and implemented procedure by your firm as well as the fee and time needed for these services.

In terms of business subsidiary registration, please kindly advise on the following questions:

  1. License types or ownership we could have; if its LLC,LTD…etc.
  2. Time frame to get the license and do the registration.
  3. Min no. of shareholders
  4. Minimum start capital

Answer/Response

Regarding your query, we are one of the Top Energy law firms of Pakistan and are also in the Legal500.
The pride of our team is our  leading Oil and Gas expert e (with an LLM in Oil and Gas Law from the University of Aberdeen). She has also authored the Pakistan Chapter of the Oil and Gas Regulation Guide of the ICLG series (Published by the GLG group London) last year.The response below seeks to answer some of your concerns.

For the purposes of Oil and Gas Operations we believe you are better off with LTD (Private Limited) Registration as this is a favorable corporate vehicle at the Petroleum Ministry.

It is best to register your company in Islamabad or Karachi, which are the major cities here. If you are registering a brand new company with foreign directors it will take around 4-6 months (the Government/Ministry of Interior has to clear the security of the directors before SECP registers the company. It takes 2-3 months maximum for local nationals. The delay for clearance of foreign directors is often caused due to Government Red Tape of the interior ministry but we will try our best to have the company registered sooner for you.

If you are registering a Branch Office of your company in Germany instead of a Brand New Pakistani Company, then we will need to contact the Board of Investment in Pakistan for you and get a permit before SECP registration. It will take almost 6 months for this process.

Please note that New Company Registration (with foreign directors) and Branch Office Registration of A Foreign Company are two different things.

Please note that a Foreign Company can be a director too, in a local Pakistani Company.

You are best advise to set up a new company with Foreign Shareholders, as, if you register a Branch Office only you will be limited in your future operations. As a local company in Pakistan (where we can also make the German Company a shareholder) you will have more freedom to carry out your operations in the local Oil and Gas Sector.

What about the shareholders? If they are nonresidents, they need to have a permission of the State Bank of Pakistan, can you please tell me what kind of permission do they mean by that?

For Foreign Shareholders, the state will also clear the security through the Board of Investment and the Ministry of Information, prior to SECP registration. We can assist you with all of this process.

Our advice will include guidance on how you can set up your local office and structure your taxation structures. This also involves due diligence based legal services. Our team will be at your disposal for 4 months for any Oil and Gas legal advice apart from Company and Trade name registration, and will also co-operate in helping you investigate any proposed local interests and business propositions in the Oil and Gas sector for this time period.

If you agree to the above, we would be happy to give a presentation to your Senior Management via a conference call.

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