Special Legal Advice for Foreign Companies Setting Up Business in Pakistan

Options for Foreigners to Open a Limited Liability Company in Pakistan

If you are a foreign national or a foreign company looking to establish a limited liability company in Pakistan, there are four main options available to you. However, it is important to note that these options are subject to security clearance.

1. Branch Office: You can set up a branch office in Pakistan, which will serve as an extension of your foreign company. The branch office can engage in commercial activities and conduct business on behalf of the parent company. It is essential to comply with all legal and regulatory requirements in Pakistan for the smooth operation of the branch office.
2. Liaison Office: Establishing a liaison office is another option for foreigners. The primary purpose of a liaison office is to promote the products or services of the foreign company, provide technical advice and assistance, explore collaboration opportunities, and facilitate export promotion. However, a liaison office is not permitted to engage in commercial or trading activities.
3. Incorporate a New Company: Foreign nationals or companies can choose to incorporate a new limited liability company in Pakistan. This involves registering a separate legal entity under the Companies Act. By incorporating a new company, you will have your own distinct identity and legal status in Pakistan. This option provides more autonomy and flexibility in managing your business operations.
4. Acquisition of Shares: If you prefer to acquire shares in an already incorporated company in Pakistan, you have the option to do so. However, it is crucial to comply with the security clearance requirements set by the Ministry of Interior. Additional documents need to be submitted to the Securities and Exchange Commission of Pakistan during the registration process to seek security clearance.

Security Clearance Requirement: For foreign nationals serving as shareholders or directors in a company, security clearance is mandatory. These individuals must submit additional documents to the Securities and Exchange Commission of Pakistan at the time of filing company registration documents. The purpose is to seek security clearance from the Ministry of Interior.

In cases involving the transfer of shares to foreign nationals or the appointment of foreign individuals as directors or chief executives, security clearance is also obtained from the Ministry of Interior. However, if clearance is not granted, the foreign individual or company must provide an undertaking stating their willingness to transfer the shares or resign from the Board of Directors, as required.

Client information Article on structuring a local entity in Pakistan

When advising foreign companies and directors on the prospect of establishing a sister, affiliate, or subsidiary company in Pakistan, we believe that it’s crucial to understand the distinctions between these entities and the specific legal steps for setting them up.

Here’s an informed analysis for our clients tailored to guide them effectively in this regard.

Sister Company A sister company in Pakistan is a distinct legal entity that shares the same parent company with another company. It operates independently, although connected through common ownership. It’s essential for foreign entities to recognize that while sister companies may collaborate, they are legally separate and thus must adhere to Pakistani corporate laws independently.

Affiliate Company An affiliate company, while also a separate legal entity, differs in the degree of control exerted by the parent company. The parent entity might not have full ownership, but possesses significant influence, possibly through a substantial shareholding. In Pakistan, affiliates operate with some level of autonomy but must align certain decisions with the controlling company, especially if these decisions significantly impact the affiliate’s operations or financial health.

Holding Company A holding company is established with the primary purpose of owning shares in other companies (subsidiaries). It typically doesn’t engage in producing goods or services itself. In Pakistan, a holding company’s role is to oversee and manage its subsidiaries, making it a strategic choice for foreign entities looking to exert control over multiple companies while segregating liabilities and operations.

Establishing These Entities in Pakistan: Legal Steps

1. Company Name Approval: Initiate by applying for company name approval with the Securities and Exchange Commission of Pakistan (SECP).
2. Registration with SECP: Submit necessary documentation including the memorandum and articles of association, details of directors, and compliance documents.
3. Obtain National Tax Number (NTN): Secure an NTN from the Federal Board of Revenue.
4. Open a Corporate Bank Account: Essential for financial transactions.
5. Licenses and Permits: Depending on the business, obtain relevant permits from local or federal authorities.
6. Register with the Chamber of Commerce: Useful for networking and accessing business support.
7. Labour Law Compliance: Ensure adherence to Pakistani labour laws for employee management.

Key Legal Considerations

• Control and Influence: These entities differ in their degree of control and influence. A holding company has substantial control over subsidiaries, an affiliate is influenced but not completely controlled, and sister companies, while related, operate independently.
• Legal Liability: Each entity’s legal liabilities are typically contained, safeguarding other related entities from direct legal issues.
• Financial Independence: Sister and affiliate companies may exhibit more financial independence than subsidiaries under a holding company.
• Operational Autonomy: Sister companies generally enjoy more autonomy compared to affiliates or subsidiaries.

Conclusion The decision to establish a sister, affiliate, or holding company in Pakistan should be aligned with the business objectives, control requirements, and investment strategies of the foreign entity. Due to the complexities of corporate structuring and compliance with Pakistani laws, it’s advisable to seek legal and financial counsel to navigate these processes effectively.

This guidance aims to provide a foundational understanding for foreign entities considering expanding into Pakistan, highlighting the importance of strategic decision-making in line with legal and regulatory frameworks.

Registering a Foreign Company in Pakistan

Registering a foreign company in Pakistan involves a step-by-step process that requires compliance with the Companies Act 2017 and the Foreign Companies Regulations 2018 (as amended), obtaining permission from the Board of Investment (BOI), and fulfilling the registration requirements set by the Securities and Exchange Commission of Pakistan (SECP). It is essential to differentiate between foreign companies and local Pakistani companies with foreign directors or shareholders to ensure compliance with the relevant laws

Defining a Foreign Company in Pakistan:

Under the Companies Act 2017, a foreign company in Pakistan refers to any company or body corporate incorporated outside Pakistan that meets specific criteria:

• It maintains a place of business or liaison office in Pakistan, either directly or through an agent, physically or via electronic mode.
• It conducts any business activity in Pakistan through other means specified in the law.
• It has registration with the Securities and Exchange Commission of Pakistan (SECP) and permission from the Board of Investment (BOI) of Pakistan are mandatory for classification as a foreign company.

Differentiating Foreign Companies from Local Pakistani Companies:

It is crucial to understand that a foreign company is distinct from a local Pakistani company with foreign directors or shareholders. The registration process and legal requirements for these entities differ significantly. If you are a foreign entity interested in registering a company in Pakistan, please refer to the link below

Company Registration & Post Incorporation Compliance in Pakistan

Obtaining Permission for Branch or Liaison Office from the BOI (Board of Investment of Pakistan)

Before applying for name availability at the SECP, the first step for registering a foreign or multinational company in Pakistan is to acquire permission from the Board of Investment (BOI) for establishing a Branch or Liaison Office. The permission from BOI has to be annexed to the name availability application at the SECP.

Establishing a branch office in Pakistan allows foreign companies to fulfill their contractual obligations with the public or private sector.

A branch office, as defined by the Companies Act 2017, refers to any establishment set up by a foreign company that carries out the same or substantially similar activities as its parent company. It includes offices, factories, registration offices, or other fixed places of business. However, it does not include agencies unless the agent has the authority to negotiate and conclude contracts on behalf of the company.

To operate a branch office in Pakistan, companies must comply with all legal, regulatory, and procedural requirements set by relevant government departments and agencies. These requirements encompass guidelines prescribed by the Board of Investment (BOI), Securities and Exchange Commission of Pakistan (SECP) for branch offices, the State Bank of Pakistan (SBP) for fund flow, and the Federal Board of Revenue (FBR) for taxation and transactions. Branch offices are restricted from engaging in commercial or trading activities.

Renewal of Registration:

The permission granted by the Board of Investment (BOI) for establishing a branch office is subject to renewal. Companies must provide all necessary documents and pay the applicable fees to renew their registration.

Submission of Request for Branch office  to the BOI (Board of Investment)

The foreign company seeking to open a branch office must submit its request through the online “Branch/Liaison Management Information System (BLMIS)” on the Board of Investment’s website. All formalities and fees related to the application process should be completed.

Application and Documentation for submission at the BOI (Board of Investment)

• Completed application form for a branch office, as prescribed by the Board of Investment to be sent to BOI portal.
• Copy of the foreign company’s registration or certificate of incorporation, attested by the respective Pakistani Embassy, High Commission, or Consulate General.
• Copy of the foreign company’s Memorandum and Articles of Association, attested by the respective Pakistani Embassy, High Commission, or Consulate General.
• Copy of the resolution or authority letter from the company authorizing the establishment of a branch office in Pakistan.
• Company profile of the foreign company.
• Copy of the designated person’s CNIC/Passport and Curriculum Vitae (CV) who will act on behalf of the company.
• Payment of the prescribed fees set by the Board of Investment.
• Any additional documents requested by the Board of Investment.
• Directors’ Information: Include the CVs and copies of the passports of all directors of the foreign company.

For further assistance and guidance on registering a branch office in Pakistan, please contact our knowledgeable team of legal experts at Josh and Mak International. We are dedicated to helping foreign companies navigate the complexities of the registration process and ensure compliance with all applicable laws and regulations of Pakistan.

Establishing a Liaison Office in Pakistan (BOI Permission)

Foreign companies seeking to promote their products, provide technical advice, explore collaboration opportunities, and engage in export promotion can establish a liaison office in Pakistan. This article aims to provide a comprehensive overview of the registration procedure for liaison offices, including the required documents and the application process. Understanding these guidelines is essential for foreign companies looking to enhance their presence and activities in Pakistan.

A liaison office, as a representative office of a foreign company in Pakistan. Its primary functions include product promotion, provision of technical advice and assistance, exploring collaboration opportunities, and facilitating export activities. However, it is important to note that liaison offices are not permitted to engage in any commercial or trading activities.

Submission of Request to the BOI

The foreign company should submit a written request to the Board of Investment (BOI) or complete the online application process, ensuring that all necessary formalities and fees are fulfilled.

Application and Documentation:

The following documents are required for BOI (Board of Investment) permission the opening of a liaison office:

• Completed application form for a liaison office, as prescribed by the Board of Investment.
• Copy of the foreign company’s registration or certificate of incorporation, duly attested by the respective Pakistani Embassy, High Commission, or Consulate General.
• Copy of the foreign company’s Memorandum and Articles of Association, duly attested by the respective Pakistani Embassy.
• Copy of the resolution or authority letter from the company, granting permission to establish a liaison office in Pakistan.
• Company profile providing information about the foreign company’s activities, experience, and objectives.
• Copy of the designated person’s CNIC/Passport and Curriculum Vitae (CV) who will act on behalf of the company.
• Payment of the prescribed fees set by the Board of Investment.
• Any additional documents requested by the Board of Investment.
• Directors’ Information: Include the CVs and copies of passports of all directors of the foreign company.

Establishing a liaison office in Pakistan enables foreign companies to engage in various promotional and collaborative activities while exploring opportunities in the local market. By adhering to the registration process outlined by the Board of Investment, companies can navigate the legal requirements and expand their presence in Pakistan. It is crucial to seek guidance from experienced legal professionals to ensure compliance with all applicable laws and regulations.

For expert advice and assistance regarding the registration of a liaison office in Pakistan, please contact our dedicated team of legal experts at Josh and Mak International. We possess extensive experience in corporate matters and can guide you through the entire process, ensuring a smooth and successful establishment of your liaison office in Pakistan.

Should you register as a Branch Office of A Foreign Company and a Liaison Office of A Foreign Company in Pakistan? A comparative chart.

Once the BOI grants permission, the next phase involves fulfilling the SECP’s registration requirements. This includes submitting the necessary documents and information as specified by the SECP.

Our experienced team of legal professionals is ready to assist you in navigating the complexities of company registration and ensuring compliance with local laws and regulations

Due Diligence Process with Certified Copies of Company Documents (Memorandum and Articles of Association, Certificate of Incorporation)

Foreign Company Registration in Pakistan (the SECP Process)

Frequently Asked Questions (FAQs) about Foreign Company Liaison Office /branch Office  registration in Pakistan at the SECP

What is meant by a foreign company?

A foreign company is a company registered outside Pakistan, governed by a foreign law other than Pakistani law and establishes its place of business in Pakistan.

Is registration of a foreign company mandatory with the Securities & Exchange Commission of Pakistan?

Yes, registration of a foreign company with the Securities & Exchange Commission of Pakistan is mandatory.

Is a foreign company required to obtain any other permission from any other organization for opening and maintaining of its branch/liaison office in Pakistan?

A foreign company desirous of setting up a branch or liaison office is required to obtain permission from the Board of Investment, Government of Pakistan.(The procedure has been discussed above).

For how long does the Board of Investment grant permission to open a branch/liaison office of a foreign company in Islamic Republic of Pakistan?

The permission for the opening of a branch/liaison office is granted by the Board of Investment for an initial period of three to five years. Copy of such a permission letter is required to be furnished with the documents needed for the registration of a foreign company.

Following expiry does the branch/liaison need permission again from Board of Investment?

Yes. After expiry the renewal/extension of the permission to open/maintain a branch/liaison office is also required to be obtained from the Board of Investment on the expiry of the validity period of the permission originally granted. Whenever such a renewal/extension is granted, a copy must be furnished to the Registrar SECP concerned. A further extension is granted after reviewing the performance of the entity during the initial period.

Can a foreign company adopt any name it likes or are there are any restrictions?

A foreign company can establish a principal place of business in Pakistan in the name of the company registered in the country of origin.

The memorandum and articles of association of a foreign company is in language other than English, will the Securities & Exchange Commission of Pakistan accept them?

If the document constituting charter, statute or memorandum and articles of association are not in English or Urdu, duly certified translation into English or Urdu must be provided. Where any such translation is made outside Pakistan it shall be authenticated by the signature and seal of the public officer or public notary in the country where the company is incorporated, provided that the signature or seal of the person so certifying has been authenticated by a Pakistan diplomatic consular or consulate officer.

Within how many days is a foreign company required to deliver requisite documents to the Registrar Securities & Exchange Commission of Pakistan?

Every foreign company that establishes a place of business in Pakistan has to deliver the requisite documents to the registrar concerned within thirty days of establishment of a place of business in Pakistan.

What type of certification is required for the documents constituting or defining the constitution of a foreign company?

A copy of any charter, statute, memorandum, articles or other instrument, constituting or defining the constitution of a foreign company is required to be duly certified by:-

• the public officer in the country where the company is incorporated to whose custody the original is committed; or
• a public notary of the country where the company is incorporated; or
• an affidavit of a responsible officer of the company in the country where the company is incorporated

The signature and seal of the official referred to above, or the certificate of the public notary referred to above shall be authenticated by a Pakistani diplomatic consular or consulate officer.

Is a foreign company required to file any document/s to the registrar concerned regarding change or alteration therein?

Yes, foreign company is required to notify the registrar on any changes or alterations of the documents.

What is meant by Global Accounts Filing in Pakistan?

Global accounts are the accounts which a foreign company files with the authorities in its country of origin. If a foreign company is not required to file the Accounts in the country of origin, it will prepare global accounts and get them audited for the purpose of filing such accounts under the Companies Act 2017 in the same manner as a public company.

Are there any statutory obligations for foreign companies?

A foreign company is required to comply with the statutory obligations i.e – to maintain at its principal place of business in Pakistan a register of Pakistani members and debenture holders, directors and officers, which shall be open to inspection.

• – In every prospectus inviting subscriptions for its shares or debentures in Pakistan, state the country in which the company is incorporated.
• – Conspicuously exhibit on the outside of every place where it carries out business in Pakistan the name of the company and the country in which the company is incorporated in letters easily legible in English or Urdu characters and also, if any place where it carries out business is beyond the local limits of the ordinary civil jurisdiction of a High Court, in the characters of one of the vernacular language used in that place. The name of the company and of the country in which the company is incorporated must be mentioned in all legible English or Urdu characters in all bill-heads and letter papers, and in all notices, advertisements, documents and other official publication of the company.
• If the liability of the members of the company is limited, notice of that fact must be stated in legible English or Urdu characters in every prospectus inviting subscriptions for its shares, all letters, bill headings, notices, advertisements, and other official publications of the company in Pakistan, and to be exhibited on the outside of every place where it carries out business in Pakistan.

Is there any exclusion to foreign companies in terms of delivering accounts?

No there is no exclusion. All foreign companies must deliver accounts in Pakistan, and accounts would be prepared and adjusted like any public company.

Are company law provisions on registration of mortgages and charges also applicable to foreign companies?

Yes, all the provisions of Company law in Pakistan relating to the registration of mortgages and charges are also applicable to a foreign company.

Do books of account need be kept by a foreign company?

Every company has to keep at its registered office proper books of accounts, the provisions of the said section also apply to the foreign companies.

Does a foreign company need to give notice to the registrar before closure of its business in Pakistan?

Any foreign company, at least thirty days before it intends to cease to have any place of business in Pakistan, must give a notice of intention to the concerned registrar and 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. As from the date of intention to cease to have any place of business in Pakistan stated in the notice, unless the said date is by a similar notice altered, the obligation of the company to deliver any document to the registrar shall cease, provided it has no other place of business in Pakistan.

If a foreign company having an established place of business in Pakistan goes into liquidation in the country of origin what procedure is to be adopted in Pakistan?

If a foreign company that has an established place of business in Pakistan goes into liquidation in the country of its incorporation then it shall within thirty days give notice thereof to the registrar, and simultaneously publish a notice at least in two daily newspapers circulating in the Province or Provinces in which its place or places of business are situated and furnish to the registrar within thirty days of the conclusion of the liquidation proceedings all returns relating to the liquidation and the liquidation account in respect of such portion of the company’s affairs as relates to its business in Pakistan. Publish a statement on every invoice, order, bill-head, letter or notice of other publication in Pakistan that the company is being wound up in the country of its incorporation. Where a company has been dissolved no person shall, after the date of such dissolution or cessation, carry on or purport to carry on any business in Pakistan in the name or on behalf of such a company.

If a foreign company in Pakistan fails to comply with the provisions of the Companies Legislation is there any penalty?

If any foreign company fails to comply with any of the provisions of the Company Laws in Pakistan then the company and every officer or agent of the company who knowingly or wilfully authorizes or permits the default shall be liable to fine.

Are foreign companies required to be registered with tax authorities in Pakistan?

Yes, Liaison/Branch office are required to be registered with the tax authorities in Pakistan.

Please contact Josh and Mak International law firm for further details and professional business and legal consultation, at [email protected] 

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More information on Foreign Company Registration in Pakistan

Company Ownership in Pakistan, What does ‘Owned or Controlled by Aliens’ mean?

A company in which 50% or more of the shares are subscribed by a foreign national would be regarded as a company controlled by a person resident outside Pakistan. Foreign-controlled companies engaged in manufacturing are entitled to borrow working capital without limit; semi-manufacturing and non-manufacturing concerns are allowed to borrow 75% and 50% respectively of their paid up capital including reserves. Such companies engaged in manufacturing also permitted to raise rupee capital requirements from local banks or financial institutions. Except for restriction above, corporations controlled by aliens are treated on same basis as Pakistani controlled companies.

Companies (Appointment of Legal Advisers) Act 1974.

Under § 3 every company with paid up capital of more than Rs. 500,000 shall appoint at least one legal adviser on retainership to advise such company in performance of its functions and discharge of its duties in accordance with law.

Retainer in respect of a legal adviser appointed by a company shall not be less than Rs.1,200 per mensem.

An advocate may represent three companies as legal adviser and a registered firm may represent product of three and total number of partners of firm.

An advocate means an advocate entered in any roll under provisions of Legal Practitioners and Bar Councils Act 1973.

Listed Companies (Substantial Acquisition of Voting Shares and Takeovers) Ordinance 2002 prohibits any person from directly or indirectly acquiring voting shares, which (taken together with voting shares, if any, held by such person) would entitle such person to more than 25% voting shares in listed company or control of listed company unless such person makes public announcement of offer to acquire voting shares or control of such company. Acquisition of shares must be preceded by public announcement required to be published in one Urdu and one English daily newspaper having circulation in province in which concerned stock exchange is situated. Copy of announcement also needs to be submitted to SECP, concerned stock exchange and target company at least two working days prior to publication. In addition, acquirer is required to make disclosure of aggregate of his shareholding in target company to company itself as well as to concerned stock exchange. Acquirer is also required to send letter containing formal offer to target company, all shareholders (including convertible security holders, if any) of target company and concerned stock exchange within two working days of publication. List of relevant shareholders is required to be supplied to acquirer by board of directors of target company.

What is a foreign company under the Companies Act 2017?

As per the Act a “foreign company” is defined as any company or body corporate incorporated outside Pakistan, which—

(a) has a place of business or liaison office in Pakistan whether by itself or through an agent, physically or through electronic mode; or

(b) conducts any business activity in Pakistan in any other manner as may be specified;

 What is the process for reservation of name by a Foreign Company ?

As per sections 435 and 442 of the Companies Act 2017  and as per the Foreign Companies Regulations 2018, a foreign company desirous of establishing a place of business in Pakistan can apply to Registrar for reservation of name in terms The registrar, while considering the application may require it to furnish additional information or document as deemed appropriate and necessary. This needs to be done within the time allowed by the registrar which is basically a period of sixty days if he is satisfied that the name applied for registration by the foreign company is identical to its name in the country of origin and does not fall within the prohibitions provided in Section 10 of the  Companies Act 2017.If the applicant fails to file documents for registration under regulation 5 of the Foreign Companies Regulations, 2018 along- with evidence of payment of fee within sixty days period, the name shall not remain available. After the reservation of name, a foreign company shall be bound to obtain all necessary approvals from relevant authorities as per the applicable policy of the Federal Government of Pakistan.

Can the foreign company name be refused? Yes, and if this is the case the registrar will order issues of refusal as per Annexure-II of the 2018 Regulations.

Is there a requirement for the establishment of a place of business or liaison office in Pakistan by a Foreign Company?

AS per regulation 5 of the 2018 Regulations, subject to sections 434 and 435 of the Act and regulation 3, every foreign company shall deliver the information and documents as mentioned in section 435 of the Act to the registrar as per Form-II along with payment of fee.

(2) Copies of documents required to be filed with the registrar shall be certified in the manner as provided in regulation 13 and the translation of any document in English or Urdu shall be certified in a manner as provided in Regulation 14.

Companies Act 2017 relates retrospectively to foreign companies wishing to establish a place of business in Pakistan. As per section 434 the provisions of the Act shall apply to all foreign companies, that is to say, companies incorporated or formed outside Pakistan which, after the commencement of this Act, establish a place of business within Pakistan or which have, before the commencement of this Act, established a place of business in Pakistan and continue to have an established either a place of business within Pakistan or conduct business in Pakistan through an agent or any other means at the commencement of this Act.

Which Documents are to be delivered to the SECP registrar by foreign companies?

As per section 435 every foreign company which, after the commencement of this Act, establishes a place of business in Pakistan shall, within thirty days of the establishment of the place of business or conduct of business activity, deliver to the  SECP registrar—

(a)  a certified copy of the charter, statute or memorandum and articles of the company, or other instrument constituting or defining the constitution of the company, and if the instrument is not written in the English or Urdu language, a certified translation thereof in the English or Urdu language;

(b)  the full address of the registered or principal office of the company;

(c)  a list of the directors, chief executive, and secretary (if any) of the company;

(d)  a return showing the full present and former names and surnames, present and former nationality, full address in Pakistan and such other particulars, as may be specified, of the principal officer of the company in Pakistan by whatever name called; and

(e)  the full present and former names and surnames, full addresses and such other particulars as may be specified of some one or more persons resident in Pakistan authorized to accept on behalf of the company service of process and any notice or other document required to be served on the company together with his consent to do so; and

(f)  the full address of that office of the company in Pakistan which is to be deemed its principal place of business in Pakistan of the company.

How would you define Business Activity for a Foreign Company under the Companies Act 2017 and Foreign Companies Regulations 2018?

As per the 2017 Act “conduct of business activity” includes any business to be undertaken by a foreign company by virtue of its memorandum and articles of association or as licensed or authorized by any law (of Pakistan).

What particular list of the directors, chief executive, and secretary (if any) of the Foreign company is to be submitted to the Registrar?

With respect to each director, chief executive, and secretary:

• In the case of an individual director/ chief executive his present and former name and surname in full, his usual residential address, his nationality, and if that nationality is not the nationality of origin, his nationality of origin, and his business occupation, if any, and any other directorship which he holds;
• In the case of a body corporate/ chief executive as a director, its corporate name and registered or principal office; and the full name, address, nationality and nationality of origin, if different from that nationality, of each of its director;
• In case of a Secretary (individual), his present and former name and surname, and his usual residential address and in the case of a Secretary (body corporate), its corporate name and registered or principal office.
• Where all the partners in a firm are joint secretaries of the company, the name and principal office of the firm may be stated instead of the particulars mentioned above.

What if a foreign company registered before 2017, failed to comply with the old Companies Ordinance 1985 (section 451)?

If a foreign company, has not delivered to the registrar before the commencement of the 2017 Act, the documents and particulars specified in section 451 of the Companies Ordinance, 1984 (XLVII of 1984), shall continue to be under an obligation to deliver those documents and particulars and be liable to penalties in accordance with the provisions of the 1984 Ordinance.

If any of my Foreign Companies Details change in the country of Incorporation or Pakistan, do I need to resubmit these documents?

As per Section 436 of the Companies Act 2017, if any alteration is made or occurs in the following records of a Foreign Company in the original Country of Incorporation or in Pakistan, the company within thirty days of the alteration has to deliver to the SECP registrar a return containing the specified particulars of the alteration and in the case of change in persons authorized to accept service of process, notices and other documents on behalf of the company,their consent to do the same.

(a)  the charter, statute or memorandum and articles of a foreign company or any such instrument as is referred to in section 435;

(b)  the address of the registered or principal office of the company

(c)  the directors, chief executive or secretary or in the particulars contained in the list referred to in section 435;

(d)  the principal officer referred to in section 435;

(e)  the name or addresses or other particulars of the persons authorized to accept service of process, notices, and other documents on behalf of the company as referred to in the preceding section 435, or

(f)  the principal place of business of the company in Pakistan;

What are the laws about Financial Reporting by Foreign Companies in Pakistan?

As per Section 437 of the Companies Act 2017, every foreign company shall annually make out and file with the registrar, together with a list of Pakistani members and debenture-holders and the places of business of the company in Pakistan

(a)  such number of copies of financial statements, not being less than three, as may be specified, in such form, audited by such person, containing such particulars and including or having annexed or attached thereto such documents (including, in particular, documents relating to every subsidiary of the foreign company in Pakistan ) as nearly as may be as under the provisions of this Act it would, if it were a company formed and registered under this Act, be required to file in accordance with the provisions of this Act, in respect of the company’s operations in Pakistan as if such operations had been conducted by a separate public company formed and registered in Pakistan under this Act; and

(b)  in a case where, by the law for the time being in force of the country in which the company is incorporated, such company is required to file with the public authority an annual statement of financial position and profit and loss accounts, also such number of copies of that statement of financial position and profit and loss account together with any documents annexed thereto as may be specified, and if the same is not in the English language a certified translation thereof; or

(c) in a case where a company is not required to file with the public authority of the country in which the company is incorporated an annual statement of financial position and profit and loss account as referred to above the specified number of copies, not being less than three, of the statement of financial position and profit and loss account and the report of auditors and other documents annexed thereto, in such form and manner as under the provisions of this Act it would, if it had been a public company within the meaning of this Act, be required to make out and lay before the company in general meeting.

The period within which the documents, returns, or reports referred to in sub-section (1) are to be filed with the registrar shall be a period of forty-five days from the date of submission of such documents or returns to the public authority of the country of incorporation or within one hundred and eighty days of the date up to which the relevant accounts are made up, whichever is earlier.

Guide on Regulatory Regime for Foreign Investments in Pakistan

Introduction

Josh and Mak International is dedicated to providing robust legal support and information regarding the regulatory landscape for foreign investments in Pakistan. The regulatory framework is shaped by a combination of statutory provisions and policy directives from the Board of Investment (BOI). Understanding these elements is crucial for foreign investors seeking to navigate the legal and administrative requirements in Pakistan.

Board of Investment Policies

The BOI plays a significant role in shaping the investment climate through its fluid and adaptable policies. Although the BOI does not possess statutory authority, its policies historically influenced compliance due to its control over remittances through the State Bank of Pakistan. However, with the liberalisation of the foreign exchange regime under the Foreign Exchange Regulation Act, the strict enforcement of BOI policies has decreased, although compliance remains essential for smooth operations.

Statutory Regulation: Companies Act, 2017

The primary statutory framework for foreign investments is found in the Companies Act, 2017, particularly Part XII (Sections 434 to 445). This part mandates that foreign companies establishing a ‘place of business’ in Pakistan must register with the Securities and Exchange Commission of Pakistan (SECP). A ‘place of business’ encompasses any form of office, including liaison or branch offices.

Registration Requirements

Foreign companies must submit several documents to the SECP:

• Constitution and bye-laws
• Full address of the registered office
• List of directors
• Audited balance sheets and profit or loss accounts
• Address of the company in Pakistan

Failure to register precludes the foreign company from filing suits or claiming set-offs in Pakistani courts, though their contracts remain valid.

BOI Directives

In addition to statutory requirements, the BOI issues directives that foreign companies must follow. For instance, foreign companies establishing a branch or liaison office must file an application with the BOI. These offices are limited to non-commercial activities such as quality control, technical assistance, joint collaboration exploration, and export promotion.

Options for Foreign Investors

Foreign nationals or companies can invest in Pakistan through several avenues, subject to security clearance:

1. Branch Office: For conducting activities aligned with the parent company.
2. Liaison Office: For non-commercial activities.
3. Incorporating a New Company: Establishing a separate legal entity.
4. Acquisition of Shares: In an existing Pakistani company.

Security Clearance

Security clearance from the Ministry of Interior is mandatory for foreign shareholders or directors. This involves submitting comprehensive documentation, including:

• Complete bio-data of directors/chief executive/shareholders
• Resumes, qualifications, and valid passports
• Passport size photographs
• Contact details
• Notarised undertakings confirming compliance with security clearance requirements

In cases where a foreign company is a shareholder, additional documentation such as notarised certificates of incorporation, memoranda and articles of association, and board resolutions are required.

Repatriation of Foreign Investment

Profits from foreign investments can be repatriated with an ‘Entitlement Certificate’ from the State Bank of Pakistan. This certificate authorises scheduled banks to handle remittances of dividends to non-resident shareholders, following the procedures outlined in the Foreign Exchange Manual.

Conclusion

Navigating the regulatory regime for foreign investments in Pakistan involves understanding both statutory requirements and policy directives. At Josh and Mak International, we are committed to guiding our clients through these processes to ensure compliance and facilitate successful investments. By adhering to these regulations, foreign investors can confidently engage in business activities within Pakistan.

What legal obligations of foreign companies in Pakistan arise under the Companies Act 2017?

As per the Act every foreign company shall–

(a)  maintain at its principal place of business in Pakistan, or, if it has only one place of business in Pakistan, in that place of business, a register of Pakistani members and debenture-holders, directors, and officers, which shall be open to inspection and copies thereof supplied as in the case of similar registers maintained by a company under this Act;

(b)  in every prospectus inviting subscriptions for its shares or debentures in Pakistan, state the country in which the company is incorporated;

(c)  conspicuously exhibit on the outside of every place where it carries on business in Pakistan the name of the company and the country in which the company is incorporated in a letter easily legible in English or Urdu characters and also, if any place where it carries on business is beyond the local limits of the ordinary original civil jurisdiction of a Court, in the characters of one of the vernacular language used in that place;

(d)  cause the name of the company and of the country in which the company is incorporated mentioned in legible English or Urdu characters in all bill-heads and letter papers, and in all notices, advertisements, documents, and other official publications of the company; and

(e) if the liability of the members of the company is limited, cause notice of that fact to be stated in legible English or Urdu characters in every prospectus inviting subscriptions for its shares, and in all bill-heads and letter papers, notices, advertisements and other official publications of the company in Pakistan, and to be exhibited on the outside of every place where it carries on business in Pakistan.

What powers does the SECP have to require information from foreign companies in Pakistan?

As per section 439 of the Companies Act, the Commission may, at any time, call upon a foreign company to furnish information of shareholding including beneficial ownership or such other information or document, as may be required for this Act or in connection with any inspection, inquiry or investigation and it shall be the duty of the company and its officers to furnish such information or document within specified time.

What is the legal requirement for serving process documents or notices on a foreign company in Pakistan?

A document may be served on the company against an acknowledgement or by post or courier service to, any place of business established by the company in Pakistan or through electronic means or in any other manner as may be specified.

Refer to Section 440 of the Companies Act 2017, where it is stated that any process, notice, or other document required to be served on such company as is referred to in this Part shall be deemed to be sufficiently served if addressed to any person whose name has been so filed with the registrar as aforesaid and left at or sent by post to the address which has been so filed.This is based on the two conditions below:

 (a)  where any such company makes default in delivering to the registrar the name and address of a person resident in Pakistan who is authorized to accept on behalf of the company service of process, notices, or other documents; or

(b)  if at any time all the persons whose names and addresses have been so filed are dead or have ceased to so reside, or refuse to accept service on behalf of the company or for any reason cannot be served;

Does a company’s failure to comply with section 435 or section 436  affect its arrangements under contracts (right to sue or liability to be sued) it has signed in Pakistan?

As per Section 441 Any failure by a foreign company to comply with any of the requirements or section 435 or section 436 shall not affect the validity of any contract, dealing, or transaction entered into by the company or its liability to be sued in respect thereof; but the company shall not be entitled to bring any suit, claim any set-off, make any counter-claim or institute any legal proceeding in respect of any such contract, dealing or transaction until it has complied with the provisions of section 435 and section 436.

Do the same provisions which apply to domestic companies apply to foreign companies with respect to names, changes in names, and SECP powers of inspection, inquiries, and investigation?

As per Section 442 the provisions of sections 10 to 13 of the Companies Act 2017 relating to names and changes in the names of companies shall, as far as applicable, also apply to foreign companies and the power of inspection, inquiries, and investigation conferred by this Act on the registrar and the Commission in respect of companies shall likewise extend to such foreign companies.

Exiting Pakistan, what is the obligation of intimation of ceasing to have a place of Business in Pakistan upon a foreign company?

As per section 443 Companies Act 2017,  any company to which this Part applies shall at least thirty days before it intends to cease to have any place of business in Pakistan, –

(a)  give a notice of such intention to the SECP registrar; and

(b)  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.

As per Section 445 (c)  the expression “place of business” includes a branch, management, share transfer or registration office, factory, mine, or other fixed place of business, but does not include an agency unless the agent has, and habitually exercises, a general authority to negotiate and conclude contracts on behalf of the company or maintains a stock of merchandise belonging to the company from which he regularly fills orders on its behalf:

 (i) a company shall not be deemed to have an established place of business in Pakistan merely because it carries on business dealings in Pakistan through a bona fide broker or general commission agent acting in the ordinary course of his business as such;

(ii) the fact that a company has a subsidiary which is incorporated, resident, or carrying on business in Pakistan (whether through an established place of business or otherwise) shall not of itself constitute the place of business of that subsidiary an established place of business of the company; and

What is the law relating to issues, circulation, or distribution of prospectus offering for subscription securities of a foreign company or soliciting deposits of money?

Section 446 of the Companies Act 2017 states that No person shall issue, circulate or distribute in Pakistan any prospectus offering for subscription securities of a foreign company or soliciting deposits of money, whether the company has or has not established, or when formed will or will not establish, a place of business in Pakistan unless authorized to do so by the Commission under the relevant law or as may be specified.

Is there a restriction on canvassing for sale of securities of a foreign company in Pakistan?

Section 447 states that no person shall go from house to house offering securities of a foreign company for subscription or purchase to the public or any member of the public.This provision pertains to a restriction on canvassing for the sale of securities, specifically those issued by foreign companies. According to this provision it is prohibited for any individual to go door-to-door, approaching households to offer securities of a foreign company for subscription or purchase to the public or any member of the public. This section further clarifies that the term “house” in this context does not encompass an office used for business purposes. In other words, the restriction on canvassing applies to residential premises and not to offices or establishments primarily engaged in business activities.This provision is designed to regulate and control the offering and sale of securities by foreign companies to the public, ensuring transparency and safeguarding the interests of investors. By prohibiting door-to-door solicitation of securities, the provision aims to prevent unscrupulous practices and maintain the integrity of the securities market.Individuals and companies involved in the sale and distribution of securities need to comply with such regulations to maintain legal and ethical standards while engaging with potential investors.

What are the obligations of a foreign company in Pakistan for registration of charges on property by property acquired or owned by foreign company?

As per Section 448 of the Companies Act 2017, sections 100 to 112 of the Companies Act 2017 shall apply to charges on properties in Pakistan which are created, and to charges on property in Pakistan that is acquired, by a foreign company which has an established place of business in Pakistan. With regard to these sections, the registered office of the foreign company shall be deemed to be reference to the principal place of business in Pakistan of the company. This provision also deals with the situtations where a charge is created outside Pakistan or the completion of the acquisition of property takes place outside Pakistan.

Where a company to which this section  448 applies creates or has created at any time before establishing a place of business in Pakistan, a charge on any property otherwise registerable under this Act it shall register the same with the SECP registrar by the provisions of this Act−

 (a)  within thirty days of the establishment of a place of business in Pakistan; or

(b)  if the charge was created before the commencement of this Act and subsisted immediately before such commencements, within ninety days thereof.

What law is applicable for a foreign company with regards to notice to SECP of appointment of a receiver?

As per section 449, the provisions of sections 113 and 114 of the Companies Act 2017 shall mutatis mutandis apply to the case of all foreign companies having an established place of business in Pakistan and the provisions of section 220 of the Companies Act 2017 shall apply to foreign companies to the extent of requiring them to keep at their principal place of business in Pakistan the books of account required by that section(220) with respect to money received and expended, sales and purchases made, and assets and liabilities in relation to its business in Pakistan. Here registered office of the company means the principal place of business in Pakistan of the company.

If a foreign company having an established place of business in Pakistan goes into liquidation in the country of its incorporation, does it have to notify the SECP Registrar in Pakistan?

The answer is yes, as per section 450 of the Companies Act 2017 if a foreign company having an established place of business in Pakistan goes into liquidation in the country of its incorporation, it shall–

(a)  within thirty days give notice thereof to the registrar, and simultaneously publish a notice at least in two daily newspapers circulating in the Province or Provinces or the part of Pakistan not forming part of a Province, as the case may be, in which its place or places of business are situated and furnish to the registrar within thirty days of the conclusion of the liquidation proceedings all returns relating to the liquidation and the liquidation account in respect of such portion of the company’s affairs as relates to its business in Pakistan; and

(b)  cause, in legible letters, a statement to appear, on every invoice, order, bill-head, letter paper, notice of other publication in Pakistan, to the effect that the company is being wound up in the country of its incorporation.

How can a foreign company in Pakistan change its name and register alteration in documents/details of the foreign company in the country of its incorporation?

As per the Foreign Companies Regulation, in case a foreign company changes its name in the country of origin, it may file an application to the registrar to change its registered name subject to compliance with the requirements of section 12 of the Companies Act 2017  as far as applicable and regulation 3 of these regulations.The SECP registrar after satisfying himself that the requirement under the Act and these regulations are fully met shall register the new name in place of the former name and shall issue a certificate as per Annexure-IV of the Foreign Companies Regulation to meet the circumstances of the case.

As per Foreign Companies Regulation 2018, pursuant to the provisions of section 436 of the  Companies Act, a return for any alteration in any documents and other details of a foreign company as per Fnc. Form-III containing the specified particulars of the alteration shall be delivered along with payment of specified fee within thirty days of the alteration to the registrar for registration.In case of change in persons authorised to accept service of process, notices and other documents on behalf of the company, the consent of such person shall also be attached to Fnc. Form-III of the Foreign Companies Regulation 2018.

Which accounts need to be filed by the foreign company in Pakistan?

As per Foreign Companies Regulation 2018 every foreign company shall, in every year within the time period as mentioned in sub-section (2) of section 437 of the Companies Act 2017 file the following accounts as per Fnc. Form-V with the registrar, together with a list of Pakistani members and debenture-holders and of the places of business of the company in Pakistan,—

(i) three copies of accounts in respect of the company’s operations in Pakistan, pursuant to clause (a) of sub-section (1) of section 437 of the Companies Act 2017; and

(ii) three copies of the accounts and documents as referred to in clause (b) of sub-

section (1) of section 437 Companies Act 2017, together with such additional documents, if not already attached, as are required to be annexed with the accounts referred to in clause (a) of sub-section (1) of section 437; or

(iii) three copies of the accounts together with the documents as referred to in clause (c) of sub-section (1) of section 437 of the Companies Act 2017

As per Foreign Companies Regulation 2018 Regulation 10 a foreign company shall at least thirty days before it intends to cease to have any place of business in Pakistan give notice to the registrar on Fnc. Form-VI along with payment of SECP fee.

Who can file Foreign Company documents?

Any application, document, or report required to be filed or lodged by the foreign company under any provision of the Act or these regulations shall be so filed or lodged online through e-service or in physical form in the following manner to the Commission or the Registrar, as the case may be:

(i) through authorized intermediary or authorized officer ;

(ii) accompanied by the fee payment as per Seventh Schedule;

(iii) signed and verified by the authorized intermediary or authorized

officer;

(iv) in case of manual application, it shall be in printed form setting out precisely the facts, grounds and specifying the relevant provisions of the Act under which action is applied for along with documents referred to in the application;

(v) in case of an appeal, it shall be accompanied by a certified copy of such order or decision.

What kind of certification of documents is required to be filed by a foreign company under the Companies Act 2017?

As per Foreign Companies Regulation 2018, a copy of any charter, statute, memorandum, articles or other instrument, constituting or defining the constitution of a foreign company required to be filed with the registrar under clause (a) of sub-section (1) of section 435 and 436 and any other document required to be filed under Part XII of the Act and these regulations, shall be duly certified to be a true copy by –

(i) the public officer in the country where the company is incorporated to whose custody the original is committed; or

(ii) a Notary public of the country where the company is incorporated; or

(iii) an affidavit of an authorized officer of the company duly authorized in the country where the company is incorporated.

The signature and seal of the official referred to above or the certificate of the Notary Public referred to above shall be authenticated by a Pakistan diplomatic consular or consulate officer.

The affidavit of the officer of the foreign company referred shall be signed before a Pakistan diplomatic consular or consulate officer. The document regarding his authorization by the company for making such affidavit, shall be accompanied therewith and shall likewise be authenticated by a Pakistan diplomatic consular or consulate officer.

How is the certification of translation of documents required to be filed under the Companies Act 2017 and the 2018 regulations?

The translation into English or Urdu of documents required to be filed with the registrar in pursuance of section 435, 436 or 437 or any other document required to be filed under the Companies Act 2017 and these regulations, shall be certified to be the correct translation of the original.

If any such translation is made outside Pakistan, it shall be authenticated by the signature and seal, if any, of

(i) the public officer in the country where the company is incorporated to whose custody the original is committed; or

(ii) a Notary Public of the country where the company is incorporated:

(Provided that the signature or seal of the person so certifying shall be authenticated by a Pakistan diplomatic consular or consulate officer)

If such translation is made within Pakistan, it shall be authenticated by an affidavit of any person having, in the opinion of the registrar, an adequate knowledge of the language of the original and of English or Urdu, as the case may be.

What Amendments to the Foreign Companies Regulations 2018 deal with ultimate beneficial ownership of Foreign Companies ?

This amendment was made on 28th September, 2020 via  S.R.O. 926 (I)/2020 to Foreign Companies Regulations, 2018 S.R.O. 866 (I)/2020 to define ultimate beneficial owner means a natural person who ultimately owns or controls a foreign company, whether directly or indirectly, through at least 25% of shares or voting rights or by exercising effective control in that company through other means. ‘Control through other means’ may be exercised through a chain of ownership or through close relatives or associates having significant influence or control over the finances or decisions of the foreign company.

 The amendment also deals with maintenance of records of ultimate beneficial owners of foreign company and states that in case of a member of a foreign company holding at least twenty five percent of the shares, voting rights or controlling interest in the foreign company on behalf of some other person, following additional particulars of ultimate beneficial owner(s), shall be obtained, maintained and duly updated by the foreign company:

1. Name of the member of the foreign company not having beneficial interest in the foreign company
2. Name of the natural person who is the ultimate beneficial owner of the foreign company
3. Father’s name/Spouse’s Name
4. NIC/NICOP/ Passport no. alongwith date of issue
5. Nationality
6. Country of origin
7. Usual residential address
8. Email address

In case of indirect shareholding or control, following particulars of legal persons or legal arrangement through whom shareholding, interest or control exercised in the chain of ownership or control:

1. Name of the entity
2. Legal form (Company/ LLP/Partnership Firm/Trust/ Any other body corporate (to be specified))

• Date of incorporation/ registration

1. Name of the registration authority
2. Business Address
3. Country

• Email address
• Percentage of shareholding, control, or interest of UBO in the legal person or legal arrangement

1. Percentage of shareholding, control, or interest of the legal person or legal arrangement in the foreign company
2. Identity of the natural person who ultimately owns or controls the legal person or arrangement

The most recent development /amendment in the Foreigners Regulations 2018 has been made in 2023 (May) Islamabad, the 3rd May, 2023 and reads as follows

S.R.O. 532 (I)/2023.- In exercise of the powers conferred by sub-section (1) of section 512 of the Companies Act, 2017 (XIX of 2017), the Securities and Exchange Commission of Pakistan is pleased to make the following amendments to the Foreign Companies Regulations, 2018, the same having been previously published for public comments vide S. R. O. 472 (I)/2023, dated April 10, 2023, namely: to Regulation 13, for sub-regulation (1) the following to be substituted namely:

“(1) A copy of any charter, statute, memorandum, articles or other instrument, constituting or defining the constitution of a foreign company required to be filed with the registrar under clause (a) of sub-section (1) of section 435 and 436 and any other document required to be filed under Part XII of the Act and these regulations, shall be duly –

(i)  certified to be a true copy by the public officer in the country where the company is incorporated to whose custody the original is committed; or

(ii)  certified to be a true copy by a Notary public of the country where the company is incorporated; or

(iii)  certified to be a true copy by an affidavit of an authorized officer of the company duly authorized in the country where the company is incorporated; or

(iv)  apostillised by the designated competent authority of the state of origin of the foreign public document, who have acceded to the Hague Convention abolishing the requirement of Legalisation for foreign public documents (Apostille Convention) of 1961 and such state is also recognized by the Government of Pakistan for receiving of apostilled documents.’

Provided further that such translation shall also be accepted if the translated document is apostillised by the designated competent authority of the state of origin of the foreign public document, who have acceded to the Hague Convention abolishing the requirement of Legalisation for foreign public documents (Apostille Convention) of 1961 and such state is also recognized by the Government of Pakistan for receiving of apostillised documents.

Other legal considerations for Foreign Companies Entering the Pakistani Market

Expanding business operations to a foreign market like Pakistan requires careful attention to legal matters to ensure compliance with local regulations and protect the interests of the company. In this article, we will outline key legal considerations that foreign companies, should take into account before entering the Pakistani market.Our law firm is able to advise you on all the matters listed below.

Legal Structure and Incorporation:

To operate in Pakistan, foreign companies must choose the appropriate legal entity, such as a subsidiary or branch office. Compliance with the BOI registration requirements Companies Act, 2017 , and the Foreign Companies Regulations 2018 is essential for branch office and liaison office company registration, and necessary incorporation documents should be prepared and submitted to the BOI (Board of Investment) and Securities and Exchange Commission of Pakistan (SECP) accordingly as discussed liberally above.

Foreign Companies (issues of shares to non-residents of Pakistan)

Issue of shares to non-residents of Pakistan requires permission of SEC State Bank of Pakistan. Protection of minority shareholders is normally achieved by suitable provisions in Articles which under Companies Act 2017 can only be altered by special resolution requiring 3⁄4 majority. Special resolution is also required for reduction of issued share capital along with confirmation of reduction by court.

No shares or debentures in a company registered in Pakistan may be issued or transferred to a person who is not a resident of Pakistan (which expression is defined to include a foreign national who is for the time being resident in Pakistan and a company registered in Pakistan which is controlled directly or indirectly, by a person resident outside Pakistan) without permission of State Bank of Pakistan. However, State Bank has given general permission for certain categories of transactions for which no prior permission is required. Issues or transfer of shares of industrial companies (other than specified industries) quoted on Stock Exchange now allowed if price paid is not less than stock exchange price on date of sale. Disinvestment likewise permitted and disinvesting foreign investor permitted to repatriate proceeds provided not in excess of quoted price on date of transaction. Likewise issue or transfer of shares in private or public unquoted companies permitted if consideration paid is not less than “break-up” value as certified by chartered accountant. Likewise upon disinvestment in favour of resident repatriation of proceeds not exceeding break-up value certified by chartered accountant permitted. All issues required to be supported by evidence of remittance to issuing company in Pakistan. All transactions to be reported to State Bank and tax on capital gain, if any, required to be deducted.

Other laws requiring compliance by Foreign Companies in Pakistan

Tax and Financial Compliance:

Foreign companies must obtain a Taxpayer Identification Number (NTN) from the Federal Board of Revenue (FBR) and register for sales tax by obtaining a Sales Tax Registration Number (STRN). Compliance with income tax regulations, including the filing of annual income tax returns, is crucial. Proper accounting records and financial statements should be maintained in accordance with the Companies Act 2017 and International Financial Reporting Standards (IFRS).

 Employment and Labor Laws:

Compliance with labor laws and regulations is essential for foreign companies operating in Pakistan. This includes establishing employment contracts with employees in accordance with labor laws, ensuring compliance with minimum wage requirements and working hour regulations, and providing appropriate benefits while fulfilling social security obligations.

Intellectual Property Protection:

To safeguard intellectual property assets, foreign companies should conduct a comprehensive trademark search and register their trademarks with the Intellectual Property Organization of Pakistan (IPO). Protection for other intellectual property assets, such as copyrights and patents, should be pursued through registration or appropriate contractual arrangements.

Regulatory and Licensing Compliance:

Foreign companies should determine if specific licenses or permits are required for operating in their chosen industry sector and obtain the necessary approvals from relevant regulatory authorities. This may for example involve engaging with bodies such as the State Bank of Pakistan, Pakistan Standards and Quality Control Authority or the Drug Regulatory Authority of Pakistan.

Consumer Protection and Advertising Laws:

Compliance with consumer protection laws, including the Consumer Protection Act, 2005, is essential for foreign companies. Transparency and fair practices in advertising and marketing activities should be ensured to maintain consumer trust.

Data Protection and Privacy Laws:

Foreign companies must understand and comply with the provisions of the Personal Data Protection Bill ( still not enacted), or other applicable data protection and privacy laws. Implementing necessary measures to protect customer data and ensure data privacy is crucial.

 Environmental and Sustainability Regulations:

Compliance with environmental regulations, obtaining necessary clearances or permits, and promoting sustainability practices and corporate social responsibility initiatives are important for foreign companies to demonstrate their commitment to environmental stewardship.

Compliance Monitoring and Reporting:

Establishing internal compliance mechanisms, designating a compliance officer or team, regularly reviewing and updating compliance policies and procedures, and reporting any non-compliance or regulatory breaches to appropriate authorities are crucial steps for foreign companies to maintain compliance and mitigate legal risks.

Entering the Pakistani market as a foreign company requires meticulous attention to legal compliance. Seeking legal guidance and partnering with the experienced professionals at Josh and Mak International can further facilitate the compliance process and ensure a smooth market entry.

Matters of the BOI registration process and Post-Registration Legal Compliance at the BOI for a Foreign Company Setting Up a Branch office or Liaison office in Pakistan

Return of Documents and Withdrawal of Applications for Branch/Liaison Offices in Pakistan

When establishing a branch or liaison office in Pakistan, it is essential to be familiar with the procedures related to document submission, potential queries, and the possibility of withdrawing an application. This article aims to provide an overview of the return of documents process and the conditions for withdrawal of applications as prescribed by the Board of Investment (BOI) in Pakistan.

Return of Documents by the BOI:

Upon submission of the application and accompanying documents, the BOI conducts an initial review. If the application is found to be incomplete or requires further information, it will be returned to the company through the “Branch/Liaison Office Management Information System (BLMIS).” The company can access the returned documents through their user account on the BLMIS portal. This enables the company to rectify any deficiencies or provide the requested information and re-submit the application accordingly.

Rejection of Applications:

The BOI reserves the right to reject applications that contain incorrect information, inaccurate data, or fictitious addresses. In such cases, the fees paid by the company during the application process will not be refunded. It is crucial for companies to ensure the accuracy and validity of the information provided in their applications to avoid rejection and financial implications.

Withdrawal of Applications:

In certain circumstances, a foreign company may decide to withdraw its application for establishing a branch or liaison office in Pakistan. The following points outline the conditions and implications of application withdrawal:

• Refund of Fees: If a company withdraws its application before it has been circulated, the fees deposited with the BOI will be eligible for a refund. However, once the application has been circulated, no refund of fees will be granted.
• Proper Notification: The company must inform the BOI in writing about its decision to withdraw the application. This notification should be submitted promptly to ensure the smooth processing of the withdrawal request.

Understanding the processes related to the return of documents and withdrawal of applications is crucial for companies seeking to establish branch or liaison offices in Pakistan. It is essential to ensure the accuracy and completeness of application submissions to avoid rejection and financial loss. In case of any queries or incomplete documents, prompt action should be taken to rectify the deficiencies and resubmit the application. Additionally, companies should comply with the prescribed guidelines and notify the BOI in writing if they decide to withdraw their application. Seeking professional guidance from experienced legal experts can help navigate these processes efficiently and ensure compliance with all requirements.

For expert advice and assistance regarding the establishment of branch or liaison offices in Pakistan, please contact our dedicated team of legal experts at Josh and Mak International.

Processing of Branch/Liaison Office Applications at the Board of Investment in Pakistan

Establishing a branch or liaison office in Pakistan requires adherence to specific procedures and guidelines set by the Board of Investment (BOI). This article aims to provide an overview of the processing of branch/liaison office applications, including the necessary documents, timelines, and important considerations.

Processing of Applications at the Board of Investment:

• Document Examination: Upon receiving a complete application for a branch or liaison office, the BOI thoroughly examines it. If the application is found to be in order and complete, it is forwarded to the relevant stakeholders for their views, comments, and issuance of No Objection Certificates (NOCs).
• Timelines for Response: Stakeholders have a period of seven (07) weeks to provide their feedback and NOCs to the BOI. If no response is received within this timeframe, the BOI proceeds to issue or grant permission to establish the branch or liaison office in Pakistan.
• Cancellation/Withdrawal of Permission: The granted permission is subject to cancellation or withdrawal if adverse remarks or reports are received from any of the concerned stakeholders. In such cases, the branch or liaison office must be closed down. Additionally, if an application for a branch or liaison office is rejected or permission is cancelled or withdrawn, the fees paid by the company during the application process will be forfeited, and no refund claims will be entertained.
• Review Application: If a foreign company is aggrieved by the decision of the BOI, it has the option to file a review application within 30 days of such a decision. The BOI examines the review application and communicates its final decision to the company.
• Duration and Renewal: The permission granted for the establishment of a branch or liaison office is valid for a period of three years. Upon expiration, the permission can be renewed for successive terms, subject to compliance with the relevant regulations and requirements.
• Submission of Documents to SECP: Within 30 days of receiving permission from the BOI, the foreign company must submit the prescribed documents required under the Companies Act, 2017, to the Securities and Exchange Commission of Pakistan (SECP). The company will receive an acknowledgment certificate for the submitted documents from the SECP.
• Submission of SECP Certificate to BOI: A certificate confirming the submission of documents to the SECP must be provided to the BOI before applying for the renewal of permission.
• Registration with Tax Authorities: The foreign company must register with the local tax authorities and other relevant departments, wherever applicable, to fulfill its obligations and comply with local tax regulations.

Understanding the processing of branch/liaison office applications at the Board of Investment is vital for companies seeking to establish their presence in Pakistan. Adhering to the prescribed procedures, submitting the required documents within specified timelines, and complying with local tax and regulatory requirements are essential for the successful establishment and renewal of permission. Seeking professional legal assistance from experienced experts can provide valuable guidance and ensure compliance with all the necessary steps for establishing and maintaining a branch or liaison office in Pakistan.

For expert advice and assistance regarding the establishment of branch or liaison offices in Pakistan, please contact our dedicated team of legal experts at Josh and Mak International. 

Review and Conversion of Liaison Office to Branch Office or Vice Versa

Companies operating in Pakistan through liaison offices or branch offices may need to review their office structure or convert from one type to another due to changing business needs. This article outlines the process of reviewing adverse remarks or comments received from stakeholders and provides guidance on converting a liaison office to a branch office or vice versa.

Review Against Adverse Remarks:

• Review Request: If adverse remarks or comments are reported by stakeholders regarding the company, the company has the right to request a review of the decision. The review request must be submitted to the Board of Investment (BOI) within the specified timeframe, typically within 30 days of the adverse decision.
• Referral to Stakeholders: The BOI will refer the case back to the stakeholder(s) whose remarks or No Objection Certificates (NOCs) were not supportive of the company. The stakeholder(s) will be requested to review and reconsider their initial decision.

Conversion of Liaison Office to Branch Office or Vice Versa:

• Required Documents:
  • Prescribed Application Form: The company must complete the relevant application form through the “Branch/Liaison Office Management Information System (BLMIS)”.
  • Board Resolution: A resolution passed by the company’s board of directors approving the conversion is necessary.
  • Processing Fee: The applicable processing fee must be paid for the conversion, depending on whether it is a conversion from a liaison office to a branch office or vice versa.
  • Copy of Valid Permission/Renewal Letter: A copy of the latest valid permission or renewal letter issued by the Board of Investment must be provided.
  • Contract Agreement (for Conversion from Liaison Office to Branch Office): If converting from a liaison office to a branch office, a copy of the contract agreement supporting the conversion should be included.

Conclusion:

Reviewing adverse remarks or comments received from stakeholders is an important step in addressing concerns raised against a company. By submitting a review request, companies can seek reconsideration of the adverse decision and present their case for further evaluation. Additionally, when business requirements change, converting a liaison office to a branch office or vice versa may be necessary. Companies must follow the specified procedures and submit the required documents to the Board of Investment to successfully complete the conversion process.

At Josh and Mak International our team of legal experts can assist you in navigating the review process and guide you through the conversion of your liaison office to a branch office or vice versa. Contact us today for professional advice and support tailored to your specific needs.

Renewal of Permission at the Board of Investment in Pakistan: A Comprehensive Guide

Foreign companies operating in Pakistan through branch offices or liaison offices are required to renew their permission periodically. This article outlines the renewal process and provides information on the required documents for renewal at the Board of Investment (BOI) in Pakistan.

Renewal Process:

• Timely Submission: Companies must submit their request for renewal of permission at least three months before the expiry date to ensure sufficient processing time.
• Compliance with SOPs: The renewal request will be processed in accordance with the Standard Operating Procedures (SOPs) set by the BOI. It is essential to fulfill all the formalities and requirements prescribed by the BOI for successful renewal.

Required Documents for Renewal:

(a) Branch Office:

i. Online Request: Submit the renewal request through the “Branch/Liaison Management Information System (BLMIS)” online platform.

ii. Copy of Latest Audited Accounts: Provide a copy of the branch office’s latest audited accounts.

iii. Proof of Fees Paid: Include evidence of payment for the renewal fees.

iv. Proceeds Realization Certificate: Obtain a certificate from the concerned bank authorities to verify the realization of proceeds from the branch office’s bank account.

v. Copy of SECP Certificate: Submit a copy of the Securities and Exchange Commission of Pakistan (SECP) certificate for filing of documents.

vi. Copy of Income Tax Return: Include a copy of the branch office’s income tax return.

vii. Additional Documents: Provide any other relevant documents requested by the BOI to support the renewal process.

(b) Liaison Office:

i. Online Request: Submit the renewal request through the “Branch/Liaison Management Information System (BLMIS)” online platform.

ii. Performance Activity Report: Include a report detailing the liaison office’s performance during the last permitted period.

iii. Receipt and Payment Statement or Latest Audited Accounts: Provide a statement or copy of the latest audited accounts reflecting the liaison office’s financial transactions.

iv. Proof of Fees Paid: Include evidence of payment for the renewal fees.

v. Proceeds Realization Certificate: Obtain a certificate from the concerned bank authorities to verify the realization of proceeds from the liaison office’s bank account.

vi. Copy of SECP Certificate: Submit a copy of the Securities and Exchange Commission of Pakistan (SECP) certificate for filing of documents.

vii. Copy of Income Tax Return: Include a copy of the liaison office’s income tax return.

viii. Additional Documents: Provide any other relevant documents requested by the BOI to support the renewal process.

Renewal of permission for branch offices or liaison offices is an important process to ensure the continued legal operation of foreign companies in Pakistan. By adhering to the renewal timeline and submitting the required documents, companies can facilitate a smooth renewal process. It is crucial to comply with the BOI’s SOPs and meet all formalities and requirements specified by the BOI. For expert guidance and support in the renewal process, consult our experienced legal professionals at Josh and Mak International.

BOI required processes for Change of Address, Authorized Representative, and Closure of Foreign Company Offices in Pakistan

Foreign companies operating in Pakistan may encounter situations where they need to change their office address, authorized representative, or even close their branch or liaison office. This section  provides an overview of the processes and requirements for these administrative actions as regulated by the Board of Investment (BOI) in Pakistan.

Change of Address:

• Processing and Notification: The request for a change of address for the company’s branch, liaison office, or sub-office is processed and notified to the stakeholders involved. The BOI reviews the request, and if there are no negative remarks from any concerned stakeholders, the change of address is approved.

Change of Company’s Authorized Representative:

• Request Submission: To change the company’s authorized representative, a written request is submitted to the BOI along with a resolution passed by the company’s board of directors.
• Processing and Approval: The BOI processes the request, considering the provided resolution. Upon verification and satisfaction, the change of the authorized representative is approved.

Closure of the Branch/Liaison Office:

• Request Submission: The request for closure of the branch or liaison office is submitted to the BOI.
• Required Documents:
  • Request Letter: A formal request letter for closure is submitted to the BOI.
  • Board Resolution: A copy of the board resolution approving the closure of the office in Pakistan is included.
  • Activity Report and Audited Accounts: An activity report, proceeds realization certificate, and copies of audited accounts for the last permitted period are provided.
  • Press Clippings: Copies of press clippings from main Urdu and English newspapers, respectively, confirming the closure of the office are submitted.
  • Confirmation from Tax Authorities: A confirmation is obtained from the tax authorities indicating that all assessments are finalized, and no outstanding tax amount is due.
  • Legal Liability Affidavit: A legal liability affidavit is prepared and submitted to affirm the company’s compliance with legal obligations.

Foreign companies operating in Pakistan should be aware of the procedures and requirements for administrative changes such as address updates, authorized representative changes, and office closures. By following the processes outlined by the BOI and providing the necessary documents, companies can ensure a smooth transition and compliance with regulatory obligations. For expert legal guidance and support in these matters, consult our experienced team at Josh and Mak International.

Guidelines for Opening Sub Offices and Regularization of Missing Period for Foreign Companies in Pakistan

Foreign companies operating in Pakistan may require the establishment of sub offices at different locations or seek regularization of any missed renewal periods. The Board of Investment (BOI) has established guidelines and procedures to facilitate these actions. This article provides an overview of the application process, fees, and general regulations related to opening sub offices and regularization of missing periods.

Opening Sub Offices at Additional Locations:

• Application Submission: Foreign companies seeking to expand their network within Pakistan by opening sub offices at new locations submit an application to the BOI. The application is processed upon completion of all required formalities.
• Fees: A one-time fee for each sub office, as determined by the BOI, is charged separately. The specific fee amount is prescribed by the BOI and subject to change.

Regularization of Missing Period:

• Application for Regularization: If a foreign company fails to renew its permission within the due date, it can apply for the regularization of the missing period. The application must include a solid reason and justification for the delay.
• BOI Review: The BOI reviews the application and has the discretion to accept or reject the request for regularization. If accepted, the company may be required to pay the necessary fees as prescribed by the BOI.

General Guidelines regarding BOI permissions and processes for foreign companies:

• Attestation/Notarization: All documents requiring attestation or notarization must comply with Pakistan’s Law of Evidence/Qanoon-e-Shahadat Order 1984.
• Blacklisting: Companies that do not adhere to the contents of their application form or permission letter provided to the BOI, or violate any provisions outlined in the guidelines, may be declared “Blacklisted” by the BOI. Blacklisted companies are ineligible to open an office for a period of 5 years, but they have the right to appeal to the BOI.
• Authority to Decide: In situations not covered by these guidelines, the authority to make decisions rests with the Secretary of the BOI.
• Repeal of Previous Instructions: These guidelines supersede all previous instructions, directions, and guidelines issued by the BOI.

Foreign companies seeking to open sub-offices at additional locations in Pakistan or regularize missed renewal periods should adhere to the guidelines provided by the BOI. By following the application process, paying the prescribed fees, and ensuring compliance with the regulations, companies can expand their operations and maintain legal conformity. For expert legal advice and support throughout these processes, consult our experienced team at Josh and Mak International.