Legal obligations of a registered company in Pakistan

In Pakistan, registering a company is just the beginning. Once incorporated with the Securities and Exchange Commission of Pakistan (SECP), a company is legally bound to comply with a broad set of statutory, financial, regulatory, and corporate governance obligations. These obligations ensure transparency, accountability, and good corporate conduct in line with the Companies Act, 2017 and other applicable laws.

This comprehensive guide outlines all legal duties a registered company in Pakistan must fulfill, covering areas such as annual filings, tax compliance, financial reporting, record maintenance, and director responsibilities. Whether you’re a startup or an established entity, understanding these obligations is essential for operating within the legal framework and avoiding penalties.

Statutory Obligations under Companies Act, 2017

1. Certificate of Incorporation

Upon registration, a company receives a Certificate of Incorporation from SECP. This is the official recognition of the company as a legal entity and must be:

• Displayed at the registered office

• Quoted on official documents

• Shared with banks, vendors, and stakeholders

2. Registered Office

Every company must maintain a registered office in Pakistan. Any change in address must be reported to SECP through Form 21 within 15 days of such change.

3. Display of Company Name and Details

Companies are legally obligated to:

• Display company name outside the office premises

• Mention company name, incorporation number, and registered address on all letterheads, invoices, and official correspondence

4. Maintenance of Statutory Registers

The following registers must be maintained and updated:

• Register of Members (Form C)

• Register of Directors and Officers (Form 29)

• Register of Charges

• Minutes of Board and General Meetings

These registers should be available at the registered office for inspection.

5. Holding of Meetings

Companies must conduct:

• First Board Meeting within 30 days of incorporation

• Annual General Meeting (AGM) every calendar year (for public and private companies having share capital)

• Board meetings at least once in every quarter

Proper minutes must be recorded and signed by the chairman of the meeting.

6. Appointment and Resignation of Directors

All director appointments, resignations, and changes must be reported to SECP through Form 29 within 15 days. Companies must ensure compliance with minimum director requirements:

• Private Limited: At least one director

• Public Limited: At least three directors

Financial Reporting and Audit Requirements

1. Preparation of Financial Statements

Companies must prepare:

• Annual financial statements including balance sheet, profit & loss account, cash flow statement, and notes

• Statements must comply with International Financial Reporting Standards (IFRS)

2. Audit Requirements

• Private companies with paid-up capital above Rs. 1 million must have their accounts audited by a Chartered Accountant

• Audit reports must be approved by the Board and submitted to SECP

3. Filing of Annual Returns

All companies must file the following with SECP:

• Form A (Annual return of company having share capital)

• Form B (For companies not having share capital)

Due within 30 days of AGM. Late filing attracts penalties under Section 509 of the Companies Act.

4. Appointment of Auditor

An auditor must be appointed at the AGM and notified to SECP. Listed companies must rotate their external auditors every five years.

Taxation and Regulatory Filings

1. NTN and STRN Registration

After incorporation, every company must:

• Obtain National Tax Number (NTN) from FBR

• Register for Sales Tax (STRN) if applicable (for taxable goods/services)

2. Filing of Income Tax Returns

Companies must file:

• Annual Income Tax Return by December 31 (for financial year ending June 30)

• Withholding Tax Statements monthly and annually

• Advance Tax Payments quarterly under Section 147

3. Filing of Sales Tax Returns

If registered for sales tax, monthly sales tax returns must be filed by the 15th of each month through the FBR IRIS portal.

4. Active Taxpayer List (ATL)

Companies must ensure timely filing to maintain ATL status, which:

• Reduces withholding tax rates

• Improves credit and compliance standing

• Enables participation in government contracts

Labor and Human Resource Compliance

1. EOBI Registration

Companies with employees must register with the Employees’ Old-Age Benefits Institution (EOBI) and make monthly contributions:

• 5% by employer

• 1% by employee

2. Social Security Registration

Employers must also register with provincial Social Security Institutions (e.g., Punjab Employees Social Security Institution – PESSI) and contribute as per applicable laws.

3. Minimum Wage and Workplace Safety

Registered companies must:

• Pay at least the provincial minimum wage

• Ensure workplace safety under the Factories Act, 1934

• Maintain employee records and issue appointment letters

Other SECP Reporting Requirements

1. Change in Shareholding

Any change in shareholding pattern must be reported to SECP through:

• Form 3 for allotment of shares

• Form 4 for return of share transfers

• Update of Register of Members

2. Alteration in Memorandum or Articles

Companies must obtain SECP approval and file:

• Special Resolution

• Form 26 and Form 28 for amendments

3. Declaration of Beneficial Ownership

As per recent AML regulations, companies must submit Form 45 identifying ultimate beneficial owners with more than 25% shares or voting rights.

Regulatory Compliance and Sectoral Licensing

Some sectors require additional licenses and oversight:

• NBP, SBP, SECP for financial services

• PEMRA for media companies

• DRAP for pharmaceutical businesses

• PSEB for IT and software exporters

Failure to obtain required sectoral licenses can result in legal action, fines, and cancellation of registration.

Record Maintenance and Inspection

1. Books of Account

Section 220 requires companies to maintain books of account for 6 years, including:

• Daybooks

• Ledgers

• Cash registers

• Bank statements

• Invoices and tax documents

2. Inspection Rights

SECP and other authorities have the right to:

• Inspect books of account and statutory registers

• Visit premises and request explanation

• Take legal action in case of concealment

Corporate Governance and Code of Conduct

For public and large private companies, adherence to Corporate Governance Code is mandatory:

• Establishment of Audit and HR Committees

• Appointment of Independent Directors

• Disclosure of conflicts of interest

• Implementation of Whistleblower policies

Legal Consequences of Non-Compliance

Companies that fail to meet their obligations may face:

• Monetary penalties under Companies Act

• Striking off by SECP

• Blacklisting on FBR ATL and SECP defaulters list

• Prosecution of directors and officers

• Disqualification of directors under Section 172

It is essential to respond promptly to notices from SECP, FBR, and other authorities to avoid escalation.

Role of Company Secretary and Legal Advisors

Registered companies, especially larger entities, are advised to appoint a Company Secretary or engage a legal consultant to manage:

• Statutory filings

• Meeting minutes and resolutions

• Communication with SECP and FBR

• Corporate compliance calendar

At Sterling.pk, we offer comprehensive company secretarial and compliance services to ensure smooth business operations.

Compliance Checklist for a Registered Company

Future Developments in Corporate Compliance

With SECP and FBR increasing their focus on transparency and digitization, the future includes:

• End-to-end online compliance filing

• Real-time integration between FBR, SECP, and PSEB

• Automated reminders for filing deadlines

• Greater enforcement of AML and BO disclosure

Companies must adopt digital governance practices to stay ahead.

Conclusion

The legal obligations of a registered company in Pakistan extend well beyond the initial incorporation process. From annual filings and tax compliance to corporate governance and labor regulations, companies are subject to a robust legal framework aimed at ensuring accountability and good business practices.

Complying with these obligations not only protects the company from penalties but also enhances its credibility and long-term sustainability. At Sterling.pk, we specialize in helping businesses meet their legal and financial obligations with precision and efficiency.