How to register a joint venture company in Pakistan?

A Joint Venture (JV) is a business collaboration between two or more parties who agree to pool resources, share risks, and work together for a specific business project or long-term business activity. In Pakistan, there is no separate legislation for joint ventures, but they can be structured through either contractual agreements or by incorporating a new company under the Companies Act, 2017, regulated by the Securities and Exchange Commission of Pakistan (SECP).

Joint ventures are widely used in energy, infrastructure, real estate, mining, and construction sectors, especially in partnerships between local and foreign companies.

Types of Joint Ventures in Pakistan

Incorporated Joint Venture

This involves creating a new legal entity (a company), jointly owned and operated by the JV partners. The incorporated company can be:

• A Private Limited Company

• A Public Limited Company (listed or unlisted)

Each partner holds shares based on their contribution or agreement.

Unincorporated Joint Venture (Contractual JV)

This is a purely contractual arrangement between two or more parties, where no new legal entity is created. Instead, a Joint Venture Agreement outlines the scope, roles, profit sharing, and liabilities.

• Common in project-based sectors like construction

• Less formal and not treated as a separate taxable entity

• Requires clarity in contract drafting to avoid disputes

Recommended Structure

For formal business operations and better legal protection, it is advisable to incorporate a Private Limited Company for the joint venture. This structure offers:

• Legal identity and limited liability

• Recognition from banks, regulators, and tax authorities

• Transparent shareholding and profit distribution

Step-by-Step Procedure to Register a Joint Venture Company in Pakistan

Step 1: Mutual Agreement Between Parties

The joint venture partners should draft and sign a Joint Venture Agreement covering:

• Purpose and scope of the JV

• Capital contribution by each party

• Shareholding ratio

• Board composition and decision-making

• Roles, responsibilities, and profit sharing

• Dispute resolution and termination clauses

This agreement is critical for both contractual and incorporated JVs.

Step 2: Name Reservation with SECP

Go to the SECP eServices Portal and reserve a name for the JV company.

• Use the “Company Name Reservation” feature

• Ensure the name is not identical to existing companies and follows SECP’s naming guidelines

• Upon approval, SECP will issue a Name Reservation Certificate, valid for 60 days

Step 3: Draft Memorandum and Articles of Association (MOA & AOA)

Prepare the following:

• Memorandum of Association (MOA) – Defines the company’s objectives and scope

• Articles of Association (AOA) – Defines internal governance, rights, and responsibilities of shareholders and directors

These should reflect the joint venture’s business goals and terms outlined in the JV Agreement.

Step 4: Incorporate the Company via SECP

Log in to SECP’s eServices and complete the online application for incorporation of a Private Limited Company.

Required documents:

• Name Reservation Certificate

• MOA and AOA

• CNICs or Passports of directors and shareholders

• Joint Venture Agreement (optional but recommended)

• NOC from parent companies (if applicable)

• Address of registered office

• Details of company secretary, CEO, and directors

Pay the registration fee online or via designated bank branches.

Upon successful submission, SECP will issue:

• Certificate of Incorporation

• National Tax Number (NTN)

• Company Profile on SECP database

Step 5: Register for Tax and Other Statutory Requirements

1. FBR Registration (NTN & STRN)

   • Use SECP-synced profile or register manually with FBR’s Iris portal

   • Apply for Sales Tax Registration Number (STRN) if the JV is providing taxable goods/services

2. Provincial Sales Tax Registration (if offering services)

   • Register with PRA, SRB, KPRA, or BRA based on the JV’s business location

3. Chamber of Commerce & Industry

   • Register with the relevant regional chamber for business recognition and certification

4. Social Security, EOBI, and Labour Department

   • Register the company with these departments for employee compliance, if applicable

5. Licensing and NOCs

   • Based on business nature (e.g., construction, telecom, energy), obtain relevant licenses or sectoral NOCs

Step 6: Open a Bank Account

Open a corporate bank account in the JV’s name. Requirements include:

• Certificate of Incorporation

• NTN

• Board Resolution

• Copies of MOA and AOA

• CNICs/Passports of authorized signatories

Deposit the capital contributed by each party per the agreement and record the equity structure accordingly.

Taxation and Financial Obligations

Income Tax

• Taxed as a separate legal entity under the Income Tax Ordinance, 2001

• Corporate tax rate for companies: 29% (Tax Year 2025)

• Must file annual income tax return, audited accounts (if applicable), and monthly withholding statements

Sales Tax

• Register for sales tax if providing taxable goods or services

• Must file monthly sales tax returns with FBR or provincial authorities

Withholding Tax

• JV Company will act as a withholding agent for salaries, contractor payments, rent, and other specified transactions

Key Considerations for Joint Ventures

Shareholding and Control

• Clearly define percentage of shares and voting rights

• Joint control mechanisms must be incorporated in the AOA and Board structure

Governance

• Equal representation on Board of Directors may be considered

• Decision-making powers for operational vs strategic matters should be separated

Exit Clauses

• Include terms for voluntary withdrawal, buy-sell clauses, or transfer of shares

• Define what happens in case of breach, death, or insolvency of a partner

Confidentiality and IP Protection

• Include intellectual property and non-disclosure clauses in the JV Agreement

• Define ownership of jointly developed IP or technology

Documents Checklist for Registering a JV Company

Benefits of Registering a Joint Venture Company in Pakistan

• Shared capital and expertise

• Local market access for foreign firms

• Legal recognition and credibility

• Limited liability protection

• Tax registration and invoicing ability

• Regulatory compliance ensures easier access to public contracts or tenders

Common Use Cases of Joint Ventures

• Foreign investment projects in energy and infrastructure

• Real estate development between landowner and investor

• Technology transfer between a foreign R&D company and a local manufacturer

• Engineering, procurement, and construction (EPC) projects

Conclusion

Registering a joint venture company in Pakistan is a strategic way to collaborate on commercial projects while maintaining a legal structure that protects each party’s interests. It involves mutual agreement, incorporation through SECP, and registration with tax and regulatory authorities. By choosing an incorporated JV model and following proper legal documentation, both local and foreign investors can ensure regulatory compliance, business success, and dispute avoidance.