Benefits of Company Registration in Pakistan

Securities and Exchange Commission of Pakistan regulates the corporate sector of the country. Companies Ordinance, 1984, is the major corporate statute of the country.

Pakistan is a country where mostly businesses are unregistered, being an unregistered business is  not a big issue, if one is involved in trading, cottage industry or any other traditional occupation. But if a business doing a large scale or involved in dealing with government, embassies and multinationals then registration adds value. Registration being a company restricts one’s liability. In case of sole proprietor or partnership business the liability of sole proprietor and partners is unlimited. It means In case of bankruptcy or insolvency personal property of sole proprietor and a partner of a business can be used to make good the debts and liabilities.

Bank and Financial institution grant loan and leasing facility on priority basis to companies due to regulated financial reporting framework of companies.

Perpetual succession is the continuation of existence of a company or other organization despite the death, bankruptcy, insanity, change in membership or an exit from the business of any owner or member, or any transfer of shares etc. Private Company has perpetual secession.

All types of companies are considered artificial judicial person or separate entities. A company is created by law and separate from its director or members. It means that a company is an artificial judicial person which is distinct from its member (s).

Securities and Exchange Commission of Pakistan, regulator of corporate sector, has reduced registration fees for Registration of Companies. Further process and legal requirements are also relaxed by the SECP not Company Registration in Pakistan  has become too easy and cost effective.

A sole proprietorship is not a corporation; it does not pay corporate taxes, but rather the person who organizes the business pays taxes on the profits on his business thus salary of sole proprietor is not an admissible deduction. Moreover as per clause (J) of section 21 of Income Tax Ordinance, 2001, salary or any remuneration paid or payable to a member of a partnership firm is also not an admissible expense while determining the profit of an association of persons.