Corporate compliance requirements for registered companies in Pakistan

Once a company is incorporated in Pakistan, it must fulfill a range of corporate compliance requirements to maintain its legal standing, avoid penalties, and ensure operational transparency. These obligations are outlined primarily under the Companies Act, 2017, but also extend to regulations issued by the Securities and Exchange Commission of Pakistan (SECP), the Federal Board of Revenue (FBR), and relevant provincial authorities.

This article offers a complete breakdown of corporate compliance requirements for registered companies in Pakistan. From statutory filings and financial reporting to taxation, audit, and labor compliance, this guide is designed to help businesses remain compliant and thrive within the regulatory framework.

Why Corporate Compliance Matters

Corporate compliance is more than just meeting deadlines. It ensures:

• Legal protection for the company and its directors

• Transparency and accountability to shareholders and stakeholders

• Credibility with banks, investors, and government agencies

• Eligibility for tax incentives, funding, and public contracts

• Avoidance of fines, penalties, and risk of deregistration

Overview of Regulatory Authorities

• SECP: Oversees corporate structure, filings, governance, and beneficial ownership

• FBR: Administers tax compliance including income tax, withholding, and sales tax

• Provincial Revenue Authorities: Handle sales tax on services and professional tax

• EOBI, Social Security, Labor Departments: Oversee employee welfare compliance

Each authority has its own set of reporting formats, deadlines, and enforcement powers.

Key Corporate Compliance Requirements

1. Maintenance of Statutory Registers

Under the Companies Act, every company must maintain:

• Register of Members

• Register of Directors and Officers

• Register of Share Transfers

• Register of Charges and Debentures

• Minutes Book for board and general meetings

These must be kept at the registered office and available for inspection.

2. Holding Board and Shareholders’ Meetings

Board Meetings:

• First Board Meeting: Within 30 days of incorporation

• Subsequent Meetings: At least one per quarter

• Notice and Agenda: Must be sent in advance to directors

• Minutes: Must be recorded and signed

Annual General Meeting (AGM):

• Required for companies having share capital

• Must be held within 18 months of incorporation, and then once every year

• Agenda includes approval of audited accounts, appointment of auditors, and director elections

3. Filing Annual Returns with SECP

Every company must file Form A (companies with share capital) or Form B (without share capital) within 30 days of AGM.

The annual return includes:

• Shareholder details

• Shareholding structure

• Registered office address

• Director and secretary details

Late filing can result in fines of Rs. 1,000 per day under Section 130.

4. Audited Financial Statements

Under Section 223, companies must prepare:

• Balance Sheet

• Profit & Loss Account

• Cash Flow Statement

• Statement of Changes in Equity

• Notes to the Accounts

Audit is mandatory for:

• Private companies with capital above Rs. 1 million

• All public companies

Auditor must be a practicing Chartered Accountant, and reports must comply with International Financial Reporting Standards (IFRS).

5. Appointment and Rotation of Auditors

• Appointment must be done in AGM

• Listed companies must rotate auditors every 5 years

• Notice of appointment must be filed with SECP using prescribed form

6. Beneficial Ownership Disclosure

Every company must disclose its ultimate beneficial owners (UBOs) who hold more than 25% shares or voting rights.

Disclosure is done using:

• Form 45

• Submitted annually or upon change

• Required under SECP’s AML framework and FATF obligations

Failure to comply can lead to Rs. 1 million penalty per defaulting director or officer.

7. Filing of Form 29

Form 29 must be filed for:

• Appointment or resignation of directors

• Change in CEO, secretary, or legal representative

• Appointment of auditors

Must be filed within 15 days of such change.

8. Form 3 and Form 4 (Share Allotment and Transfer)

• Form 3: For new allotment of shares

• Form 4: For transfer of shares between existing or new shareholders

Must be filed within 45 days of issuance or transfer.

Tax Compliance Requirements

1. Income Tax Filing

Companies must:

• Obtain National Tax Number (NTN)

• File annual income tax returns by December 31

• File withholding tax statements monthly and annually

• Pay advance tax quarterly under Section 147

Late or incorrect filing leads to:

• Penalty of Rs. 2,500 per day

• Disqualification from the Active Taxpayers List (ATL)

2. Sales Tax Filing (If Registered)

Companies dealing in taxable goods/services must:

• Register for Sales Tax (STRN)

• File monthly returns by the 15th of each month

• Maintain input-output tax records

• Issue CNIC-linked tax invoices

Sales tax returns are filed through the FBR IRIS or eFBR portal.

3. Withholding Agent Responsibilities

Companies are withholding agents and must:

• Deduct tax at source on salaries (Sec 149), contracts (Sec 153), rent (Sec 155), imports (Sec 148), and more

• Deposit withheld taxes by the 15th of the following month

• File monthly statements under Section 165

Failure to withhold or deposit leads to default surcharge, penalties, and expense disallowance.

Labor and Employment Compliance

1. EOBI Registration

All companies employing five or more employees must register with the Employees’ Old Age Benefits Institution (EOBI).

• Employer contributes 5% of salary

• Employee contributes 1%

Monthly returns must be filed and payments made through EOBI’s online portal.

2. Social Security Registration

Companies must register with their provincial Social Security Institution, e.g., PESSI in Punjab.

• Contributions are calculated as a percentage of salary

• Employers must file returns and deposit contributions monthly

3. Minimum Wage Compliance

Ensure all employees are paid at least the minimum wage set by the provincial government. Failure to comply may lead to labor department penalties and legal action.

4. Workplace Regulations

• Maintain appointment letters, attendance records, and salary slips

• Ensure safety standards under the Factories Act, 1934

• Display notices of minimum wage, working hours, and EOBI registration at the workplace

Corporate Governance (For Public and Large Private Companies)

Mandatory for listed and certain large private companies:

• Establish Audit, HR, and Risk Committees

• Appoint Independent Directors

• Implement Whistleblower and conflict of interest policies

• Ensure code of ethics is adopted and followed

These requirements enhance transparency and reduce regulatory risk.

Special SECP Compliances

1. Change of Registered Office

• File Form 21 with SECP within 15 days

• Provide utility bill and tenancy agreement as address proof

2. Change in Memorandum or Articles

• Requires special resolution

• File Form 26 with updated MOA or AOA

3. Increase in Authorized Share Capital

• Pass special resolution in AGM or EGM

• File Form 7 along with updated MOA

4. Cessation or Dormancy

If a company wishes to cease operations, it must:

• File Form 38 (Application for Inactive/Dormant status)

• Submit last filed accounts and tax returns

• Inform SECP and FBR in writing

Penalties for Non-Compliance

Best Practices for Corporate Compliance

• Maintain a compliance calendar

• Use cloud-based accounting and compliance tools

• Conduct internal audits at least once a year

• Appoint a Company Secretary or Legal Advisor

• Review compliance status quarterly in board meetings

How Sterling.pk Helps with Compliance

At Sterling.pk, we provide end-to-end compliance solutions:

• Company secretarial services

• Annual filing and statutory reporting

• Tax return preparation and filing

• Withholding tax reconciliation

• Beneficial ownership and audit facilitation

• EOBI, PESSI, and labor law registrations

Our expert team ensures that your company stays fully compliant with all SECP, FBR, and labor regulations, saving you time, cost, and legal risk.

Conclusion

Corporate compliance is a continuous and essential aspect of running a registered company in Pakistan. From SECP filings and board meetings to tax returns and labor law registrations, non-compliance can result in severe penalties and reputational damage.

By following a structured compliance roadmap and seeking professional support, companies can focus on growth while ensuring that all regulatory obligations are fulfilled. At Sterling.pk, we empower businesses with the knowledge and tools they need to remain legally sound and fully compliant