Comparison of public vs. private limited company registration in Pakistan

In Pakistan, the most common legal structures for businesses that wish to operate formally and gain corporate recognition are private limited companies and public limited companies. Both are registered under the Companies Act, 2017 and regulated by the Securities and Exchange Commission of Pakistan (SECP). However, the two differ significantly in terms of formation requirements, regulatory obligations, capital raising ability, and operational scope. This comprehensive guide compares the registration process, legal structure, compliance, and strategic advantages of private versus public limited companies in Pakistan, helping entrepreneurs and investors make informed decisions.

Understanding Private and Public Limited Companies

Private Limited Company
A private limited company (Pvt Ltd) is a closely held business entity with limited liability. It cannot invite the general public to buy its shares and is commonly used by small to medium enterprises and family-owned businesses.

Public Limited Company
A public limited company (PLC) can offer its shares to the general public and may be listed on the Pakistan Stock Exchange (PSX) or remain unlisted. These companies are subject to stricter SECP compliance due to their ability to raise capital from the public.

Legal Framework
Both types of companies are governed under the Companies Act, 2017, but specific rules differ based on whether the company is private or public. All incorporations are processed through SECP’s eServices portal.

Key Differences Between Public and Private Limited Companies

1. Number of Members (Shareholders)

• Private Limited Company: Minimum 2, maximum 50 members

• Public Limited Company: Minimum 3, no upper limit

Public companies can attract a much larger pool of investors, while private companies operate with a limited and often close-knit ownership base.

2. Number of Directors

• Private Limited Company: Minimum 1 director (single member), otherwise 2

• Public Limited Company: Minimum 3 directors

Public companies require a more formal governance structure due to their public accountability.

3. Share Capital Requirements

• Private Limited Company: No minimum capital requirement

• Public Limited Company (Unlisted): Minimum paid-up capital of Rs. 100,000

• Public Limited Company (Listed): Minimum paid-up capital of Rs. 200 million

Listing also requires compliance with PSX’s capital and reporting thresholds.

4. Share Transferability

• Private Limited Company: Restricted by Articles of Association; shares cannot be freely transferred or traded

• Public Limited Company: Shares are freely transferable; listed companies can be traded on PSX

This key distinction enables public companies to raise capital through the stock market.

5. Ability to Raise Capital

• Private Limited Company: Cannot raise funds from the general public; must rely on private investments

• Public Limited Company: Can issue prospectus, Initial Public Offering (IPO), and rights issues

Public companies can tap into public capital markets, making them ideal for large-scale business operations.

6. Regulatory Oversight

• Private Limited Company: Less stringent regulatory reporting

• Public Limited Company: Higher level of regulation, mandatory disclosures, and regular audits by SECP and PSX

Public companies must submit quarterly and annual reports, notify shareholders of material events, and comply with the Listed Companies (Code of Corporate Governance) Regulations, 2019.

7. Registration and Incorporation Process

Private Limited Company Registration

• Choose and reserve company name through SECP eServices

• Submit incorporation application with:

  • Memorandum & Articles of Association

  • CNICs of directors

  • Address and contact details

  • Paid-up capital statement

• Obtain Certificate of Incorporation within 1–2 working days (in most cases)

Public Limited Company Registration (Unlisted or Listed)

• Reserve company name

• Submit incorporation documents including:

  • Memorandum & Articles of Association

  • Initial directors’ details

  • Statement of compliance

  • Prospectus (if offering shares to public)

• SECP reviews documentation thoroughly

• Incorporation may take 3–5 working days for unlisted and longer for listed companies due to coordination with PSX and Central Depository Company (CDC)

8. Requirement of Company Secretary and Auditors

• Private Limited Company: Not mandatory unless the company meets certain size thresholds

• Public Limited Company: Must appoint a qualified company secretary and statutory auditor from a registered CA firm

9. Annual Filing and Reporting

10. Listing on Stock Exchange

• Private Limited Company: Not allowed

• Public Limited Company: Can list on PSX after meeting SECP and PSX requirements

Listing enhances credibility, provides liquidity to shareholders, and creates opportunities for expansion and mergers.

11. Access to Government Incentives

Both company types are eligible for:

• Export incentives

• Tax exemptions under specific SROs

• Access to financing through SBP refinance schemes

However, listed public companies may enjoy enhanced investor confidence, easier loan approvals, and access to capital markets.

12. Use Cases

13. Cost of Compliance

14. Confidentiality and Control

• Private Limited Company: Greater control, less disclosure, ideal for confidential operations

• Public Limited Company: Requires public disclosure of operations, directors’ remuneration, and major decisions

Private companies are generally better for those who prefer control and privacy, while public companies are suitable for scalability and public trust.

Conversion from Private to Public Company

A private company may convert into a public limited company by:

• Passing a special resolution

• Altering its Memorandum and Articles of Association

• Filing a notice with SECP

• Complying with new minimum capital and governance requirements

This path is often taken by startups preparing for an IPO.

Key Advantages of Private Limited Company

• Quick registration and low setup cost

• Fewer compliance burdens

• Greater flexibility in operations

• Suitable for closely-held and family businesses

• Can convert into public limited later

Key Advantages of Public Limited Company

• Access to capital from the public and institutions

• Enhanced brand credibility and recognition

• Liquidity for shareholders through public trading

• Ideal for large-scale expansion and infrastructure projects

• Increased valuation and exit opportunities for founders and investors

How Sterling.pk Helps You Choose and Register the Right Company

At Sterling.pk, we provide:

• Name reservation and SECP registration support

• Drafting of MoA, AoA, and compliance documents

• Filing of Form A, Form 29, and Form 21

• Guidance on converting to a public company or listing on PSX

• Ongoing compliance support including tax, audit, and secretarial filings

• Tailored advisory based on your business size, growth goals, and investor requirements

Whether you’re registering your first private company or scaling to go public, Sterling.pk ensures a smooth and fully compliant registration process.

Conclusion
Both private and public limited companies offer significant advantages depending on business goals, ownership structure, and growth plans. Private limited companies are ideal for startups, SMEs, and family-run enterprises seeking limited liability with less regulatory burden. Public limited companies, on the other hand, are suitable for larger ventures that require substantial capital, public investment, and visibility. Understanding the differences in registration, compliance, and operational scope is critical for choosing the right legal structure. Sterling.pk stands as your trusted partner in helping you register, convert, or scale your company in full compliance with Pakistan’s corporate laws