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AMLAW Advocates & Legal Consultants
120-E/1, Hali Road, Gulberg III, Lahore, Pakistan.

Telephone: +92.42.7060127 (9am till 5pm; PK Standard Time)
Mobile: +92.31.44191234
E-mail: help@amlaw.pk

Q. What is meant by Foreign Company?

A. Foreign Company is a company registered outside Pakistan, under a foreign law other than Pakistani law and establishes its place of business in Pakistan.

Q. Is registration of foreign company is mandatory with Securities & Exchange Commission of Pakistan?

A. Yes, registration of a foreign company with Securities & Exchange Commission of Pakistan is mandatory.

Q. Is a foreign company required to obtain any other permission from any other organization for opening and maintaining of its branch/liaison office in Pakistan?

A. A foreign company desirous of setting up a branch or liaison office is required to obtain permission from the Board of Investment, Government of Pakistan.

Q. For how long Board of Investment grants permission to open a branch/liaison office of foreign company in Islamic Republic of Pakistan?

A. The permission for opening of branch/liaison office is granted by the Board of Investment for an initial period of three to five years. Copy of such permission letter is required to be furnished with the documents meant for registration of a foreign company.

Q. After expiry does branch/liaison need permission again from Board of Investment?

A. Yes, after expiry renewal/extension of the permission to open/maintain a branch/liaison office is also required to be obtained from the Board of Investment on the expiry of the validity period of the permission originally granted. Whenever such renewal/extension is granted, a copy must be furnished to the Registrar SECP concerned. Further extension is granted after reviewing the performance of the entity during the initial period.

Q. Can a foreign company adopt any name it likes or if there are any restrictions?

A. Foreign Company can establish a principal place of business in Pakistan in the name of the company registered in the country of origin.

Q. Memorandum and Articles of Association of a foreign company, is in language other than English will Securities & Exchange Commission of Pakistan will accept them?

A. According to Rule 23 of Companies (General Provisions and Forms) Rules, 1985, if the document constituting charter, statute or memorandum and articles of association is not in English or Urdu, duly certified translation in English or Urdu language is required to be provided. Where any such translation is made outside Pakistan it shall be authenticated by the signature and seal of the public officer or Notary Public in the country where the company is incorporated, provided that signature or seal of the person so certifying shall be authenticated by a Pakistan diplomatic consular or consulate officer.

Q. Within how many days foreign company is required to deliver requisite documents to the Registrar Securities & Exchange Commission of Pakistan?

A. Every foreign company which establishes a place of business in Pakistan has to deliver the requisite documents to the registrar concerned within thirty days of establishment of a place of business in Pakistan.

Q. What type of certification is required for the documents constituting or defining the constitution of a foreign company?

A. As per Rule 22 of Companies (General Provisions and Forms) Rules, 1985 a copy of any charter, statute, memorandum, articles or other instrument, constituting or defining the constitution of a foreign company is required to be duly certified by:-

• the public officer in the country where the company is incorporated to whose custody the original is committed; or

• a Notary Public of the country where the company is incorporated; or

• an affidavit of a responsible officer of the company in the country where the company is incorporated.

The signature and seal of the official referred above or the certificate of the Notary Public referred above shall be authenticated by a Pakistani diplomatic consular or consulate officer.

Q. Whether a foreign company is required to file any document to the registrar concerned on change or alteration therein?

A. Yes, foreign company is required to notify registrar on any change or alteration of the documents.

Q. What is meant by Global Accounts?

A. Global accounts are the accounts which a foreign company files with the authorities in country of origin. If a foreign company is not required to file the Accounts in country of origin, it shall prepare Global Accounts and get the same audited for purpose of filing of such accounts under the Companies Ordinance, 1984 like a public company.

Q. Are there any statutory obligations for the foreign companies?

A. According to Companies Ordinance, 1984 a foreign company is required to comply with the statutory obligations i.e.

To maintain at its principal place of business in Pakistan a register of Pakistani members and debenture holders, directors and officers, which shall be open to inspection.

In every prospectus inviting subscriptions for its shares or debentures in Pakistan, state the country in which the company is incorporated.

Conspicuously exhibit on the outside of every place where it carries on business in Pakistan the name of the company and the country in which the company is incorporated in letters easily legible in English or Urdu characters and also, if any place where it carries on business is beyond the local limits of the ordinary civil jurisdiction of a High Court, in the characters of one of the vernacular language used in that place. Cause the name of the company and of the country in which the company is incorporated mentioned in legible English or Urdu characters in all bill-heads and letter papers, and in all notices, advertisements, documents and other official publication of the company.

If the liability of the members of the company is limited, cause notice of that fact to be stated in legible English or Urdu characters in every prospectus inviting subscription for its shares, all letter papers, bill heads, notices, advertisements, and other official publications of the company in Pakistan, and to be exhibited on the outside of every place where it carries on business in Pakistan.

Q. Is there any exclusion to foreign companies to deliver accounts?

A. No there is no exclusion, all foreign companies must deliver accounts in Pakistan, and accounts would be prepared and adjusted like a public company.

Q. Are provisions of Companies Ordinance 1984 for registration of mortgage and charges are also applicable to foreign companies?

A. Yes, all the provisions of Companies Ordinance, 1984, as applicable to other companies, relating to the registration of mortgage and charges are also applicable to a foreign company.

Q. Does books of account to be kept by a foreign company?

A. According to section 230 of the Companies Ordinance, 1984 every company shall keep at its registered office proper books of account, the provisions of the said section also apply to the foreign companies.

Q. Do a foreign company need to intimate registrar before closure of its business in Pakistan?

A. Any foreign company at least thirty days before it intends to cease to have any place of business in Pakistan give a notice of intention to the concerned registrar and publish a notice of such intention at least in two daily newspapers circulating in the Province or Provinces in which such place or places of business are situate. As from the date of intention to cease to have any place of business in Pakistan stated in the notice, unless the said date is by a similar notice altered, the obligation of the company to deliver any document to the registrar shall cease, provided it has no other place of business in Pakistan.

Q. If a foreign company having an established place of business in Pakistan goes into liquidation in the country of origin then what procedure is to be adopted in Pakistan?

A. If a foreign company having an established place of business in Pakistan goes into liquidation in the country of its incorporation then it shall within thirty days give notice thereof to the registrar, and simultaneously publish a notice at least in two daily newspapers circulating in the Province or Provinces in which its place or places of business are situated and furnish to the registrar within thirty days of the conclusion of the liquidation proceedings all returns relating to the liquidation and the liquidation account in respect of such portion of the company’s affairs as relates to its business in Pakistan. Publish a statement on every invoice, order, bill-head, letter paper, notice of other publication in Pakistan that the company is being wound up in the country of its incorporation. Where a company has been dissolved, ceased then no person shall after the date of such dissolution or cessation, carry on, or purport to carry on , any business in Pakistan in the name or on behalf of such company.

Q. If a foreign company in Pakistan fails to comply with provisions of Companies Ordinance, 1984 is there any penalty?

A. If any foreign company fails to comply with any of the provisions of the Companies Ordinance, 1984 then, the company and every officer or agent of the company who knowingly or willfully authorizes or permits the default, shall be liable to fine.

Q. Are foreign companies are required to be registered with tax authorities in Pakistan?

A. Yes, Liaison/Branch office is required to be registered with the Tax Authorities in Pakistan.

Please contact AMLAW law firm for further details & professional business & legal consulting.

AMLAW provides services in Company Incorporation in Pakistan, Establishment of Branch/Liaison office in Pakistan, Drafting Contracts in Pakistan, Buy-Sell Agreements in Pakistan, Shareholder Agreements in Pakistan, Corporate and Shareholders Disputes in Pakistan, Corporate Restructuring and Reconstruction in Pakistan, Company Negligence in Pakistan, Company Dissolution or Liquidation in Pakistan, Purchase of Commercial Real Estate in Pakistan, Contract Disputes in Pakistan, Employment Contracts in Pakistan, Foreign Collaboration and Joint Ventures in Pakistan, Mergers and Acquisitions.

Disclaimer: The information available above is not intended to be comprehensive, and many details which may be relevant to particular circumstances have been omitted. Accordingly, it should not be regarded as being complete source of foreign company law information. Web users are advised to seek independent professional advice before acting on anything contained herein. AMLAW will not take any kind of responsibility for the consequences along with errors or omissions.

Q. What is meant by Private Company?

A. According to Companies Ordinance, 1984 private company means a company, which, by its articles, restricts the right to transfer its shares, if any. Limits the number of its members to fifty not including persons who are in the employment of the company and prohibits any invitation to the public to subscribe for the shares, if any, or debentures of the company.

Q. Which law is applicable for incorporation of companies?

A. Relevant laws are Companies Ordinance, 1984, Companies (General Provisions and Forms) Rules, 1985, Single Member Companies Rules, 2003 and Code of Corporate Governance for limited companies.

Q. How many types of Companies are there?

A. Companies Ordinance, 1984 mentions three types of companies i.e. company limited by shares, company limited by guarantee and unlimited company. Companies which may be registered in the mentioned categories in Pakistan are a single member company, a private limited company, a public limited company; which may be listed or unlisted and a foreign company.

Q. What is Minimum number of members for forming a company?

A. A public unlisted company must have at least three members/directors whereas the company listed at stock exchange must have at least seven members/directors. A private company may have only two members/directors and a single member company can be formed with one chief executive and a company secretary.

Q. According to Company Law what is Special Resolution?

A. According to Companies Ordinance, 1984 Special Resolution means a resolution which has been passed by a majority of not less than three-fourths of such members entitled to vote as are present in person or by proxy at a general meeting of which not less than twenty-one days notice specifying the intention to propose the resolution as a special resolution has been duly given. Provided that, if all the members entitled to attend and vote at any such meeting so agree, a resolution may be proposed and passed as a special resolution at a meeting of which less than twenty-one days notice has been given.

Q .What is Memorandum of Association of a company?

A. Memorandum of Association primarily specifies the framework of company’s objectives and capital boundaries. It is the constitution of a company, and is its main document. A company cannot incorporate without a memorandum of association. It provides information about a company, its financial structure, and its functions. Memorandum of Association governs a company’s business operations by highlighting clauses of what a company can do and what it cannot. It includes Name clause, Registered Office Clause, Object Clause, Liabilities Clause, and Authorized Capital Clause. The object clauses cannot be changed or enlarged without the approval of Securities and Exchange Commission of Pakistan.

Q. What is Articles of Association?

A. Articles of Association highlight internal regulations for the management of the company. It states the roles and functions of the company’s management. Articles of Association govern company management’s operations they transcribes rules for conducting its daily business in accordance with applicable laws e.g. transfer and transmission of shares, mode of alteration in capital, holding of meetings, voting, powers and duties of directors and chief executive, distribution of dividends, capitalization of profits and reserves, preparation of accounts, winding up, etc.

Q .Can Articles of Association be altered after incorporation?

A. Yes, a company can alter its articles of association anytime after passing of a special resolution by the shareholders.

Q. Can I convert my sole proprietor business into a company?

A. Yes, sole proprietor business can be converted into sole proprietor company or a private limited company.

Q. To start a small business which forms should I adopt?

A. You can adopt any one option that is; by becoming a sole proprietor, by forming a single member company, by forming a partnership and you can also form a private limited company.

Q. Can a foreigner be a director in a Pakistani Company?

A. Yes, foreigner can be a director of a Pakistani Company after compliance with the Foreign Exchange Regulations.

Q. How does a director resign from a Private Limited Company?

A. A director can resign anytime subject to the clearance of any liability against him.

Q. What is the minimum paid-up capital of a Private Limited Company?

A. The minimum paid up capital at the time of incorporation of a private limited company has to be Pakistani Rupees 1, 00,000. There is no upper limit on having the authorized capital and the paid up capital. Capital can be increased any time.

Q. What is the difference between authorized capital and paid up capital?

A. The authorized capital is the limit up to which the directors are competent to issue shares. Paid up and subscribe capital means the capital actually issued in favor of the directors/shareholders within the limits of authorized capital.

Q. In future I am thinking to increase paid-up capital of my company is it possible?

A Yes, you can increase but subject to the compliance of the requirement of the Companies Ordinance, 1984.

Q. What are the requirements for a foreign company opening a branch in Pakistan?

A. Foreign company can establish a principal place of business in Pakistan after complying with the legal requirements laid down under section 452 to 460 of the Companies Ordinance, 1984.

Q. Can I change my company name after incorporation?

A. Yes, a company name can be changed any time after the incorporation, by passing a special resolution by the members and certificate of change of name is issued by the Securities and Exchange Commission of Pakistan in whose jurisdiction the registered office of the company is situated.

Q. I do not live in Pakistan Can I still set up a new company?

A. Yes, you can set up a company. If a Chief Executive/director resides outside Pakistan for more than three months then he can appoint an alternative director in his place.

Q. Can I choose any name I want for my new company?

A. You can choose any name but subject to the approval of the Securities & Exchange Commission of Pakistan.

Q. What are non-profit companies?

A. Non-profit companies are generally formed with the objective of promoting art, science, social services, etc. and the members are prohibited from receiving any dividend. Such companies are exempted from the requirements of using the word “limited” at the end of the name and are authorized to operate under a license issued by the regulator.

Q. Are there any restrictions on foreigners who wish to do business in Pakistan?

A. There is no restriction on foreigners to do business in Pakistan.

Q. Do foreigners need a Pakistani national to form a company?

A. Foreigner can form a company with 100% equity subject to the approval of Board of Investment, Government of Pakistan otherwise they must have someone from Pakistan to be a director.

Q. Does a company needs separate National Tax Number?

A. Yes, every company is assigned a national tax number without it a company cannot file its return. Documents which company requires for national tax number are photocopies of computer national identity card of all the directors or passport (in case of foreigner), incorporation certificate and application for national tax number by individual director in case they do not have national tax number.

Q. What are taxation rates for companies in the Pakistan?

A. The income tax payable by the companies in Pakistan is approximately 35% of the net profit of the company.

Q. Is it necessary to form a company or a partnership firm to start a business in Pakistan?

A. No, it is not necessary to form a company or a partnership firm to start a business in Pakistan.

Q. Can anyone be a Director in a company?

A. Yes anyone can be a company director provided he holds Computer National Identity Card and he or she is not debarred from any competent court of law to become a director.

Q. What does Limited Liability mean?

A. Limited liability means, that if a company is put into liquidation, the people who own the company will only be required to pay what they have already paid or agreed to pay towards settling its debts. Limited liability gives the owners of the company protection if the company fails. Liability of directors/members is limited to the extent of shares held by them in the company.

Q. What if I no longer need my company in Pakistan?

A. If you decide that you do not need a company that you have set up, you should consider putting it into voluntary liquidation if the company is solvent and is in a position to pay its liabilities within twelve months from the date of winding up, if the company cannot afford this and is insolvent then you may apply for its compulsory liquidation through court or to apply for it to be “struck off the register” if the company has no assets and liabilities.

Q. What are modes of Winding up a Company in Pakistan?

A. According to Companies Ordinance, 1984 modes of winding up of a company are by the Court, voluntary winding up or winding up subject to the supervision of Court and creditors winding-up.

Q. What is meant by Registered Office?

A Registered office is the official address of your company where the correspondence can be exchanged between the company and his clients.

Q. Can I change my registered office address from Karachi to Lahore?

A. A company can change the place of its registered office from province to province and from place to place in the same province.

When a company intends to shift its registered office from one province to another it must pass a special resolution, obtain confirmation of the change from the Securities and Exchange Commission of Pakistan, file a certified copy of authority’s order together with the altered memorandum with the registrar of both the provinces, notice of new location shall also be given to the registrar and every copy of memorandum and articles of association shall be amended accordingly.

The office of a company may be removed from one place to another within the same province by a special resolution and a notice to the registrar.

Q. What is meaning by unregistered company?

A. Unregistered company means a company, which is not incorporated under the Companies Ordinance, 1984.

Q. Can a Private Limited Company be converted into Public Limited Company?

A. Yes, a private company may convert its status into public limited company by altering its Articles of Association.

Q. Can a Public Limited Company be converted into Private Limited Company?

A. Yes a public limited company can be converted into private limited company subject to the approval of the Securities and Exchange Commission of Pakistan.

Q. Can I convert my Private Limited Company into Single Member Company?

A. Yes, a private company can be converted into a single member company by passing a special resolution for change of its status and make necessary alteration in its articles of association and obtain approval of the Securities and Exchange Commission of Pakistan.

Q. Can Single Member Company be converted into Private Limited Company?

A. Yes, single member company can be converted into private limited company.

Q. Can minor be a director in Private Limited Company?

A. No, minor cannot become a director in private or public limited company.

Q. Can director of a company hold government post?

A. No, director cannot hold any office of profit.

Q. What are the requirements after establishment of place of business by foreign companies in Islamic Republic of Pakistan?

A. As per Companies Ordinance, 1984 Foreign Company incorporated outside Pakistan, is required to file the following documents to the registrar securities and exchange commission of Pakistan concerned within 30 days from the establishment of its place of business in Pakistan;

A certified copy of the charter, statute or Memorandum and Articles of the company accompanied by Form 38. The certification is to be given by:- (a) the public officer in the country where the company is incorporated to whose custody the original is committed or (b) a notary public of the country where the company is incorporated; or (c) an affidavit of a responsible officer of the company in the country where the company is incorporated. The signature or seal of the person so certifying shall be authenticated by a Pakistani diplomatic consular or consulate officer. If the document is not in English, duly certified translation in English or Urdu language is provided

- Address of registered office or principal office of the company, on Form 39;
- Particulars of directors, Chief Executive and secretary (if any) of the company, on Form 40;
- Particulars of principal officer of the company in Pakistan, on Form 41;
- Particulars of person(s) resident in Pakistan authorized to accept service on behalf of the foreign company, on Form 42 along with the certified copy of the appointment order, authority letter of board of directors’ resolution and consent of the principle officer;
- Address of principal place of business in Pakistan of the foreign company, on Form 43.
- Permission letter from the Board of Investment with a specific validity period for opening and maintaining of a branch/liaison office by a foreign company.
- Any change or alteration in particulars stated in the documents and returns filed at the time of registration is required to be filed on form 44 with the registrar concerned within 30 days of such change or alteration. Foreign company is required to file annually with the registrar concerned annual accounts in respect of its operations within Pakistan as well as its global accounts together with the list of Pakistani members and debenture holders and of places of business of the company in Pakistan within the prescribed period. Foreign company is required to submit the renewal/extension of the permission to open/maintain a branch/liaison office from the Board of Investment on the expiry of the validity period of the permission, originally granted. Foreign company is required to give notice on form 46 to the registrar concerned at least 30 days before it intends to cease to have a place of business in Pakistan and to publish a notice of such intention at least in two daily newspapers circulating in the Province or Provinces in which such place or places of business are situated.

Q. What are Additional Directors?

A. Additional directors are those directors who are not required to acquire a share qualification of a director, as they are the nominees of the financial institution who extended the credit facilities to the companies.

Q. Can a body corporate be appointed as a director of a company?

A. No. A body corporate, association or firm cannot be appointed as a director of a company, and only an individual can be appointed as a director of a company as nominee.

Q. How Chief Executive is appointed in a company?

A. All companies are required to appoint a Chief Executive Officer except for a company managed by a managing agent. The first Chief Executive Officer is appointed by the directors of the company at the date of commencement of business or within 15 days from the date of incorporation, whichever is earlier and thereafter within 14 days of the date of election of directors.

Q. What happens if accounts and annual returns of a company not filed in time?

A. Failure to deliver documents on time is an offence under the Companies Ordinance, 1984. On this failure, directors could be prosecuted and penalized.

Q. Can share holders in a Private Limited Company removes a director?

A. Yes, shares holders can remove a director by passing a resolution in a general meeting.

Q. Are shares in a company are transferable?

A. Shares in a company are freely transferable, subject to certain conditions, such that no shareholder is permanently or necessarily wedded to a company. When a member transfers his shares to another person, the transferee steps into the shoes of the transferor and acquires all the rights of the transferor in respect of those shares.

Q. Can a company delegate his powers to any person?

A. Yes. A company may by writing under its common seal, empower any person either generally or in respect of any specified matters as its attorney, to execute deeds on its behalf in any place either in or outside Pakistan and every deeds signed by such attorney on behalf of company and under his seal, where sealing is required shall bind the company and have the same effect as if it were under its common seal.

Disclaimer: The information available above is not intended to be comprehensive, and many details which may be relevant to particular circumstances have been omitted. Accordingly, it should not be regarded as being complete source of company law information, and web users are advised to seek independent professional advice before acting on anything contained herein. AMLAW will not take any kind of responsibility for the consequences of errors or omissions.

Q. What is Aks-Shajra?

A. Aks-Shajra means image of a specific piece of land/specific khasra number from the map/plan of an estate or village defining its boundaries.

Q. What is meant by Fard Malkiat?

A. Fard Malkiat also known as (Record of Rights/ Jama Bandi/Misal Haquiat/ Register Haqdaran-e-Zameen) maintained for determination/record of various types of rights in the immovable property.

Q. What is Mutation (Intiqal)?

A. Mutation is a document containing an order by a revenue officer; who must be at least an Assistant Collector of grade III, whereby an entry in the record of rights is to be altered, changed or mutated in revenue record.

Q. What is meant by Tattima Registry?

A. Tattima means “supplementary” and Tattima Registry means supplementary sale deed in specified area.

Q. What is meant by Khasra?

A. Khasra is a piece of land with specific measurements and a specific number.

Q. What is Khasra Garrdwari?

A. Register Kharsa Gardwari is a register maintained for record of possession/cultivation.

Q. What is meant by Survey?

A. A drawing or map showing the precise legal boundaries of a property, the location of improvements, easements, rights of way, encroachments, and other physical features.

Q. Is mutation is a title document?

A. No, mutation is not a title document.

Q. What is the name of the document, which creates title in immovable property?

A.  Register Sale Deed (Registry /Baye-Nama) is a document, which creates a title in the immovable property.

Q.  What is meant by Conveyance Deed or Sale Deed?

A. Conveyance Deed or Sale Deed is a deed document by which the title of property is conveyed by the seller to the purchaser. Conveyance is the act of transferring ownership of the property from a seller to the buyer. Deed document will help you ascertain whether the property, which you are buying, is on land belonging to any development authority, society, builder in which the property is located, whichever the case may be.

Q. From where I can obtain my house documents or title deeds of my property?

A. You can obtain your house documents or title deed documents from office/department by which title of the house was conferred or transferred.

Q. What laws generally deal with real estate in Pakistan?

A. Among the laws, which deal with real estate in Pakistan, are The Transfer of Property Act, 1882, Land Revenue Act, 1967, Stamp Act, 1899 and Registration Act, 1908.

Q. What safety precautions should I take before buying property or real estate in Pakistan?

A. Before buying property in Pakistan a complete and thorough probe in respect of title of the seller to the real estate must be carried out. A general practice is to investigate title of the current seller and any previous owner. Original title document in favor of the vendor must be obtained along with other relevant documents including mutation in favor of the vendor, a fresh copy of fard, aks shajra and no-objection certificate or non-encumbrance certificate as the case may be.  If the vendor is selling the property in the capacity of an attorney of the owner then it must be ensured that the power of attorney is duly registered with the relevant sub-registrar. A holder of a forged and fabricated power of attorney is not at all able to transfer a valid title in an immovable property to a third party.

Q. In name of a Company, property is registered before purchasing it, what documents should I inspect?

A. Before purchasing property from a company you should verify from the Registrar of Companies at Securities & Exchange Commission of Pakistan that the property is not mortgaged or is not being used as a security against a loan, otherwise it will not be considered as a freehold property.  In addition, check memorandum of association that who is authorized to act on behalf of company for selling the property, if resolution is required then the same must be passed and verified. Further, inspect original title documents from the selling company.

Q. Can corporate bodies use residential properties as office space?

A. It is illegal to put residential properties to commercial use. However, service-based industries are allowed to operate from residential areas.

Q. Can foreigners buy Property in Pakistan?

A. Yes, foreigners can buy property in Pakistan but after completing all legal formalities.

Q. What inheritance laws apply in Pakistan?

A. Inheritance laws in Pakistan depend on religious affinities, Muslim Personal Laws for the Muslims and persons other than Muslims their personal laws.

Q. Is transfer of every immovable Property needs registration in Pakistan?

A. Transfer in the case of immovable property of the value of Rs 100/- and upwards only be made by a registered sale deed.

Q. An overseas Pakistani without visiting Pakistan can buy Property?

A. Yes, without coming to Pakistan an overseas Pakistani can buy property in Pakistan.

Q. What are the documents required to legally own a house?

A. Any deed verifying transfer in your favour i.e. sale deed, allotment letter and sale certificate.

Q. How do I own a house?

A. You can own house by purchasing from a private person, private builder, by allotment or purchase from public authority i.e. any development authority (LDA, CDA, FDA, MDA etc.) and by becoming member of any co-operative housing society.

Q.  What is Power of Attorney?

A. Power of Attorney is the power given to an agent by the principal to execute several acts and deeds for and on behalf of the principal. A power of attorney may also be given by a person to another to appear before any Court, Tribunal and Authority, buy sell, maintain real estate etc. When power is given in respect of a number of acts in a number of transactions, it is called General Power of Attorney and when power is given in respect of a particular act pertaining to one transaction; it is called Special Power of Attorney. General Power of Attorney must be registered.

Q.  Person holding Power of Attorney can transfer property in his name?

A. No. The person who is holding Power of Attorney has a fiduciary duty to act in your interest and try to do what you would do for yourself if you were able. Third parties will presume the person is acting on your behalf.

Q. Can I revoke my Power of Attorney?

A. Yes.

Q. When would a Power of Attorney gets cancelled?

A. Power of Attorney automatically gets cancelled on the death of Executants’ and when get cancelled by the Executants’.

Q. Is my Power of Attorney effective after I die?

A. No, Power of Attorney will ends upon your death.

Q. I am going to buy a flat in a building under construction, what are the papers should I check?

A. Check approved plan of the building along with the number of floors; ensure that the floor that you are buying is approved. Check if the land on which the builder is building is his or he has undertaken an agreement with a landlord. If so, check the title of the land ownership. Check the building byelaws as applicable in that area and ensure that the building is without any violation of front setback, side setbacks, height, etc. Check specifications given in the agreement to sell and that given in the brochure and see if he is providing the same actually on the ground or not. If the builder is a company incorporated with Securities & Exchange Commission of Pakistan, it may be checked that the company is allowed to do the business of sale and purchase of real estate.

Q. Can immovable property be sold while it is mortgaged?

A. No, immovable property cannot be sold.

Q. What are important documents one should check before buying any property?

A. Check approved layout plan, approved building plan, ownership documents, ask for all the deeds of title related to the property to be purchased, examine the deeds, ascertain the survey number, check previous encumbrances and loans, if any, on the property, request vendor(seller) to obtain, if applicable, consent permission, sanction, no objection certificate of various authorities, tax receipts and bills, measure the land etc.

Q. What is stamp duty and who is liable to pay the stamp duty, the buyer or seller?

A. Stamp duty is a fee/tax levied by the government on transfer of property and must be paid in full and on time. A stamp paid document considered proper and legal document. The liability of paying stamp duty is that of the buyer unless there is any commitment to the contrary.

Q. How to get approved building plan and why it is necessary.

Raising construction without having a building plan approved from the concerned agency is a violation of rules of the concerned Building Control Authority and can lead to demolition of construction. Therefore, for all practical purposes i.e. before raising construction approval for the same is mandatory.

Q. In Pakistan who maintains Land Record?

A. In Pakistan land records are maintained by district administration revenue department for deciding ownership and boundaries of land or property.

Q. I am a co-sharer in a property can I sell the said property?

A. Yes, you can sell the property but only to the extent of your share in the property and without specific boundaries unless consented expressly by the other co-sharer or co-sharers.

Q. Whether a sale deed drafted by a Wasiqa Nawees/Arzi Nawees is reliable?

A. No, sale deed must be drafted by a lawyer having knowledge of the relevant laws regarding transfer of property.

Q. What are essentials of Gift?

A. Essentials of gift are 1. Offer by the Donor (owner) 2. Acceptance by the Donee (to whom gift is being made) and 3. Delivery of possession.

Q. Can gift be revoked?

A. Yes, gift can be revoked except if made in favor of a person who falls in prohibited degree i.e. a person with whom marriage cannot be contacted.

Q. What are distinguishing features of gift from those of will?

A. Gift always can be made in the lifetime and it become effective at the very moment when it is complete, whereas will only can take effect after death of its maker. Other distinguishing feature is that an owner of property can make gift of his entire property in favor of a legal heir of him/her in his life time but he cannot make a will whereby the whole property is intended to be given to one legal heir. He/she can make will to the extent of 1/3rd of his/her holding in favor of any who is not legal heir and if made in favor of a legal heir then requires agreement/consent of other legal heirs.

DISCLAIMER: This site and any information contained herein are intended for informational purposes only and should not be construed as legal advice.

For competent & detailed legal advice please contact us.

Q. What is the definition of partnership under Partnership Act, 1932?
A. “Partnership” is the relation between persons who have agreed to share the profits of a business carried on by all or any of them acting for all. Persons who have entered into partnership with one another are called individually “partners” and collectively “a firm”, and the name under which their business is carried on is called the “firm name”.

Q. What are the rules framed under Partnership Act, 1932?
A. By the Provincial Governments in exercise of powers conferred by section 71 of the Partnership Act, 1932 rules which framed are Punjab Partnership (Registration of Firms) Rules, 1932, North-West Frontier Province Partnership Rules, 1932 and Sindh Partnership Rules, 1932.

Q. Is registration of partnership compulsory?
A. No, registration of partnership is not compulsory by law but it’s better to do so.

Q. Is a written partnership agreement required for partnership?
A. Yes there must be an agreement between the partners.

Q. What are different types of partnerships?
A. Partnership Act, 1932 provides different types of partnership i.e. Partnership at-will and Particular partnership. Partnership at-will is a partnership where no provision is made by contract between the partners for the duration of their partnership, or for the determination of their partnership. It is a partnership for indefinite period but can be dissolve after giving notices to all the partners. Particular Partnership is a partnership where a person may become a partner with another person in particular adventures or undertakings for a specified period. Particular partnership will be dissolved on the completion of particular business or undertaking.

Q. What is a Partnership Deed or Partnership Agreement?
A. Partnership deed or agreement is a document in which mutual rights and obligations of all the partners and conditions relating to partnership and the regulations governing its internal management and organizations are documented, the said deed should be signed by all the partners.

Q. What is deed of dissolution?
A. When the firm is dissolved by mutual consent of partners, deed of dissolution is executed. The dissolution deed provides for the valuation of assets including goodwill and distribution of the same amongst the partners. The deed of dissolution should clearly mentions debts, liabilities and obligations of the firm who will pay or discharge the same in the audit and accounts.

Q. Is deed of dissolution should be registered?
A. Yes deed should be registered.

Q. What is the difference between dissolution of partnership and dissolution of firm?
A. A firm can continue on dissolution of partnership, but on dissolution of firm, partnership will automatically end.

Q. What is meant by firm?
A. A firm is a relationship between two or more persons who have agreed to share profits of a business according to their participation. The partners are collectively called a “firm” and the name under which they do business is called the “firm name”. Any two or more persons but not more than twenty can form a partnership to do any one or more businesses through an agreement in writing.

Q. What is meant by dissolution of firm?
A. The dissolution of partnership between all the partners of a firm is called the “dissolution of firm”.

Q. How a firm can be dissolved?
A. A firm can be dissolved by agreement, by compulsory dissolution, by happening of certain contingencies, by notice of partnership at-will or by order of the court.

Q. Who can be a partner in a firm?
A. Ordinarily, it is individuals who constitute partnerships. A lunatic can also be a partner through his guardian. Similarly, a minor can be admitted to the benefits of a partnership but he is not responsible for loss. Apart from the natural persons, a limited company can also enter into partnership not only with a natural person but also with another limited company. However, a firm cannot be a partner in another firm nor can be an Association of Persons (AOP).

Q. Is it necessary to form a company or a partnership firm to start a new business?
A. No, it is not necessary to form a company or a partnership to start new business. Business can be started as a sole proprietorship.

Q. Are partners personally liable for business debts?
A. Yes, partners are personally liable for business debts. A partner is also legally bound by business transactions made by him or by his partners and can be held personally liable for those transactions. The liabilities of partners are unlimited.

Q. What happens if the number of partners falls below two?
A. If the number of partners falls below two then partnership will be dissolved.

Q. What is maximum number of partners in a firm?
A. Number of partners in a firm shall not exceed twenty a partnership having more than twenty persons is illegal.

Q. Can I give any name to my partnership firm?
A. A partnership can have any name it likes so long as it does not impinge any trademarks or trade name and a firm name shall not contain any words namely, “Government”, “Jinnah”, “Quaid-i-Azam or words expressing or implying the sanction, approval or patronage of the Federal Government or any Provincial Government or of the Quaid-i-Azam, except when the Provincial Government signifies its consent to the use of such words as part of the firm name by order in writing. A firm name shall not contain the name of the “United Nation” or its abbreviations through the use of its initial letters or of any subsidiary body set up by that body unless it has obtained the previous authorization of the Secretary-General of the United Nations in writing. A firm name shall not contain the name of the “World Health Organization” or its abbreviations through the use of its initial letters unless it has obtained the previous authorization of the Director General in writing. A firm name shall not contain any word which may be declared by the Provincial Government, by notification in the official Gazette, to be undesirable.

Q. Can a company be a partner?
A. Yes, a company is a juristic person and therefore can become a partner in a partnership firm, if it is authorized by its memorandum and articles of association.

Q. How a partner in a firm is retired?
A. A partner may retire with the consent of all the other partners, in accordance with an express agreement by the partners and where the partnership is at will, by giving notice in writing to all the partners of his/her intention to retire.

Q. What are the general duties of partners?
A. Partners are bound to carry on the business of the firm to the greatest common advantage, to be just and faithful to each other, and to render true accounts and full information of all things affecting the firm to any partner or his legal representative.

Q. How partners are taxed?
A. In partnership every partner pays tax on his individual share of profit.

Q. Can a foreigner be a partner in firm?
A. There is no restriction under the law but subject to certain conditions.

Q. Is goodwill of a firm included in its assets?
A. Yes, goodwill is included in the assets of the firm.

Q. We want to sell goodwill of our firm but confused how we will share the price?
A. Where the goodwill is sold value is divisible among the partners in the same manner as they share profits and losses, unless they agreed.

Q. What is meant by Association of Persons (AOP)?
A. Section 80 of Income Tax Ordinance, 2001 defines association of persons which includes a firm, a Hindu undivided family, any artificial juridical person and any body of persons formed under a foreign law, but does not include a company.

Q. How “association of person” is different from “associated person”?
A. Association of Persons (AOP) is defined under section 2(iii) of the Federal VAT (Value Added Tax) Bill, 2010 and associated person is defined under section 3 thereof. AOP refers to a group of persons, while the concept of “associated persons” defines relationship between two persons. Adoption of this concept is a result of harmonization of inland taxes laws & administration under the income tax ordinance.

Q. How to wind up an association of persons?
A. As in the case of Partnership Act, 1932.

Q. We got registered a partnership firm do I need National Tax Number for our firm?
A. Yes, every firm is assigned a national tax number without NTN firm cannot file its returns.

Q. Who has the authority to register partnership firm?
A. District Registrar is Registrar of Firms in his District is the authority to register partnership firm.

Q. Can a firm become partner of another firm?
A. A firm cannot become partner of another firm.

Q. What to include in Partnership agreement or Partnership Deed?
A. While drafting a partnership agreement/deed there are some important points to be kept in view
• There must be at least two major contracting parties.
• Total number of partners should not exceed twenty.
• Name of the Firm under which the business is to be conducted.
• Nature of the business to be conducted by the partners.
• Location of the business where it is to be opened and branches, if any.
• List of partners, their names, addresses of the partners with Computer National Identity Card Nos. should also be placed in the agreement.
• The amount of any salary payable to the partners..
• The division of work among the partners for the management of the firm.
• The name of the dealing bank.
• Provisions regarding the preparation, audit and signing by the partners of annual accounts.
• The duration of partnership whether at will or for a fixed period or a particular venture should be stated.
• The deed should indicate the share in which profits and losses are to be divided among partners.
• The amount that each partner shall be allowed to withdraw.
• Rules regarding to retirement, debt and admission of partners.
• How the value of good will of the firm will be determined.
• A provision regarding the partner who is to manage the affairs, sign cheques may be made.
• The date on which accounts are to be closed should be specified.
• Rights and duties of each partner should be mentioned.
• Settlement of accounts at the dissolution of the firm.
• In case of dispute provision should be made.
• How partnership will be dissolved.
• If the partners intend that the firm should not stand dissolved on death or retirement of a partner, a provision must be made in the deed.

Q. My partner wants to open a bank account in his own name not in name of firm, can he?
A. Implied authority of a partner does not empower him to open a bank account in his own name.

Q. I am living in UK and invested huge amount as a sleeping partner in a firm, for some time received profit regularly but then stopped. Now the said firm is playing delaying tactics as I forced then they issued me cheques which were dishonored. Can you advise me what remedies do I have to get my money back as per Pakistan law?
A. To get your money back you can avail both civil and criminal remedies at the same time, civil remedy is you can file a suit for the recovery of money from the said firm and criminal remedy is you can get registered a FIR (First Information Report) against the firm for the dishonoring of the cheques.

Q. We are four partners in a firm one of partner did fraud with third party for his act is firm liable?
A. Yes the firm and all partners are liable for the fraud committed by one partner on behalf of the firm which causes loss to third party. Any act done by any partner in the course of the ordinary partnership business will bind the other partners also.

Q. One of our partners is going to retire, can we continue the partnership?
A. If provisions have been made in the agreement; the partnership can be carried out even after the retirement of any of the partners. Otherwise as a general rule, the retirement of a partner changes the constitution of the partnership and the remaining partners cannot carry on the business.

Q. One of our partner in a firm is going to retire do he need to give public notice?
A. Yes public notice is mandatory if the partnership is registered under Partnership Act, 1932.

Q. Without giving public notice can a partner retire from partnership/firm?
A. Only a sleeping partner can retire from the firm without giving any public notice to this effect.

Q. There is no partnership agreement how partners should share the profit?
A. According to section 13(b) of the Partnership Act, 1932 partners are entitled to share equally in the profits earned and shall contribute equally to the losses sustained by the firm subject to agreement between the parties.

Q. In our firm one of partner wants to introduce a new partner can I stop him?
A. Yes, according to Partnership Act, section 31 every partner is entitled to prevent the introduction of a new partner into the firm without their consent.

Q. Can a partner on his own submit a dispute relating to the business of the firm to arbitration?
A. No not without others partners permission.

Q. Can I register my firm’s name as trademark?
A. Yes firm name can be registered as a trademark.

Q. Is suit filed by un-registered firm is maintainable?
A. No.

Q. I am entering into partnership business with my friend already there firm is working for many years I will be introduced as a new partner. My question is will I be liable for any debts which are on the firm before I entered?
A. Section 31 of the Partnership Act, 1932 provides that an incoming partner does not become liable to the creditors of the firm for anything done before he became a partner. He may, however, by an express agreement entered into at the time of admission, become liable to such debts. The operation on the account should not be stopped at the time of new admission, but a fresh mandate or partnership letter, duly signed by all the partners, should be obtained to cover the future operations on the account. In case the account has a debit balance, and the new partner has not got agreed to accept the debit balance of the old partners, the operation on the account should be stopped forthwith.

Q. Is partnership law is different from province to province in Pakistan?
A. Partnership in Pakistan is governed by Partnership Act, 1932 which extends to the whole of Pakistan.

Q. Do I need permission to conduct business in Karachi when I already registered my firm in Lahore?
A. No you can open office anywhere in Pakistan.

Q. My partner is taking too high of a salary. What can I do in accordance with law?
A. It depends on partnership agreement what does it say? Absent in agreement then partners cannot take any salary for their services, they must take profits from the partnership. Unless the agreement says otherwise, all partners are entitled to equal share in the profit.

Q. Are all partners in a partnership are personally liable?
A. Yes all the partners are personally liable for all business obligations and debts jointly and severally. Please contact AMLAW law firm for further details & professional business & legal consulting.

You may contact AMLAW if you need any legal advise related to Partnerships.

Disclaimer: The information available above is not intended to be comprehensive, and many details which may be relevant to particular circumstances have been omitted. Accordingly, it should not be regarded as being complete source of partnership law information, and web users are advised to seek independent professional advice before acting on anything contained herein. AMLAW will not take any kind of responsibility for the consequences of errors or omissions.

Q. Can Single Member Company be converted into private company?
A. Yes, a single member company can be converted into a private company on increase of the number of its members/directors to more than one. A private company having two or more members can become a single member company by passing a special resolution for change of its status and by making necessary alteration in its articles and obtaining approval from the Securities & Exchange Commission of Pakistan.

Q. Can single member company issue shares to public?
A. No, single member company cannot issue invitation to the public to subscribe for any share of the company.

Q. Can sole director in single member company act as secretary?
A. Sole director cannot be the secretary in the Single Member Company.

Q. I want to wind up single member company what procedure to follow?
A. The company shall follow, in case of its winding up, the relevant provisions of the Companies Ordinance, 1984.

Q. Is it mandatory in single member company to appoint nominee director?
A. The single member shall nominate two individuals, one of whom shall become nominee director in case of death of single member and the other shall become alternate nominee director to work as nominee director in case of non-availability of the nominee director.

Q. What is the pattern and style of the name of a single member company?
A. “XYZ (SMC-Private) Limited” is the pattern and style of the name of a single member company.

Q. Can single member company increase its share capital?
A. Yes, single member company can increase its share capital after complying with the requirements of law.

Q. Can one person be the sole director in a non-profit company incorporated under section 42 of the Company law in Pakistan?
A. Non-profit companies are formed under section 42 of the Companies Ordinance, 1984 and require having at least three directors.

Q. Do single member companies have to keep accounting records?
A. Yes. Single member companies must keep proper accounting records according to law and to file the audited accounts with Securities & Exchange Commission of Pakistan if the paid-up capital is 7.5 million or more.

Q. Can foreigner incorporate a single member company under company’s law in Pakistan?
A. Yes, if he is resident of Pakistan.

Q. What is meant by succession certificate?
A. This certificate is issued by a court of competent jurisdiction, which establishes the ownership of the legal heirs regarding movable assets i.e. deposits in the banks, shares, certificates and bonds, stocks, insurance amount etc. issued by the government or the financial institutions etc.

Q. Is Succession Act, 1925 applicable to whole of Islamic Republic of Pakistan?
A. Yes, Succession Act, 1925 is applicable to whole of Pakistan.

Q. What are the legal requirements to obtain succession certificate in Pakistan?
A. You need certified death certificate of the deceased along with detail of subject assets, computer national identity card of the legal heirs filing the application and to furnish requisite surety.

Q. Is security bond is required by the court before issuance of succession certificate?
A. Yes, before the issuance of succession certificate security bond is required to be submitted to the satisfaction of the court by the legal heirs.

Q. What procedure should legal heir/s adopt to get possession of money in the bank of deceased in Pakistan?
A. For getting possession of money in the bank, shares, insurance amount, stocks, bonds etc, a succession certificate is required under Succession Act, 1925.

Q. How long should it take to obtain the Succession certificate from the court?
A. It depends from case to case; however, estimated time for getting succession certificate in case of no opposition from public is between two to three months.

Q. Is there any time limit within which succession certificate must be obtained?
A. There is no time limit for applying to a court for issuance of succession certificate.

Q. Is succession certificate necessary as I am the only child of my deceased parents?
A. Yes, it is necessary.

Q. If a shareholder who held shares in his sole name dies how his legal heir/s can get the shares transmitted in their names?
A. After obtaining a succession certificate they will apply to the company who held shares of the deceased, a request letter for transmission of shares along with copy of succession certificate, death certificate, shares certificates in original, computer national identity card and other requisite information demanded by the said company, for transmission of shares.

Q. Can court grant more than one succession certificate to the same legal heir/s?
A. Yes, court can grant more than one certificate to the same legal heir/s?

Q. On what grounds succession certificate can be cancelled /revoked in Pakistan?
A. Succession certificate granted can be revoked if the proceedings to obtain certificate were defective, that the certificate was obtained fraudulently by making of a false suggestion or by the concealment from the court of something material to the case, that the certificate was obtained by means of an untrue allegation of a fact essential in point of law to justify the grant thereof, though such allegation was made in ignorance or inadvertently, that the certificate has become useless and inoperative through circumstances or that a decree or order made by a competent court in a suit or other proceeding with respect to effects comprising debts or securities specified in the certificate renders in proper that the certificate should be revoked.

Q. For movable property we need to obtain succession certificate, for immovable property what should we need?
A. You have to obtain a declaratory decree in favour of legal heirs from the court of competent jurisdiction.

Q. For substitution of name/s of legal heir/s of deceased person in the record of ownership/proprietorship what we need?
A. In case of immovable property legal heirs have to obtain a declaratory decree from the court of competent jurisdiction and in case of movable property a succession certificate is required.

Q. Under what law we file suit for declaration in Pakistan?
A. Suit for declaration is filed under Specific Relief Act, 1877 in Pakistan.

Q. What are the legal requirements for filing Suit for Declaration?
A. For filing of suit for declaration certified copy of death certificate of the deceased is required along with title document of subject property and computer national identity card of the legal heirs, filing the suit.

Q. What is the estimated time for getting decree in declaration suit?
A. It depends from case to case, however, in case of no opposition from public, estimated time is between two to four months.

Q. Can names of the legal heirs be substituted in the relevant records kept or maintained by the concerned departments?
A. Yes, once the court makes declaration in favour of legal heirs their names can be substituted as title holder in the record of relevant regulatory authority/department.

Q. Is there any time limit for applying to a court for a decree of declaration of legal heirs?
A. There is no time limit for applying to a court for obtaining declaratory decree.

Q: Where the Application has to be made?
A. The Application is to be made in the civil court, where the assets are situated and present.

You can contact AMLAW for detailed consulting & advice.

DISCLAIMER: This site and any information contained herein are intended for informational purposes only and should not be construed as legal advice.