Step-by-Step Guide: Registering a Chinese Company in Pakistan for Successful Business Ventures

Pakistan will be the 20th richest economy in 2030, with over 2.3 million new jobs created through CPEC as per PWC’s report.

Chinese companies are investing in various sectors, including the China-Pakistan Economic Corridor (CPEC). 

They are interested in sectors such as electronics, automotive, education exchange programs, insurance, agriculture, textiles, shoe manufacturing, chemicals, and battery recycling plants. 

The Government of Pakistan has signed an MOU with the Chinese government, which allows Chinese companies that are already registered to establish subsidiary or branch companies in Pakistan. 

To do this, they need to apply with The Securities and Exchange Commission of Pakistan (SECP). 

Once the subsidiary or branch company is registered, China Overseas Ports Holding Company Pakistan (Private) Limited (COPHC) will assist in the Gwadar free zone. This facilitation center will help Chinese and other foreign investors do business in Pakistan. 

 The MOU aims to promote cooperation between the two entities by establishing a facilitation center. 

The center, operated by the SECP, will act as a bridge between the SECP’s registration offices and foreign investors. 

It will assist with the registration of companies and provide support for post-incorporation activities in Pakistan.

Coordination with Government Bodies in Pakistan

Launched in 2015, CPEC created more than 75,000 direct jobs of different categories, from high-skilled and medium-skilled to blue-collar jobs.

Foreign companies must obtain a permission letter from the Government of Pakistan’s Board of Investment (BOI) to establish and maintain a business in Pakistan. This permission letter has a specific validity period. 

The letter, along with the necessary documents, must be submitted for the registration of the Chinese or foreign company. 

Additionally, approval from the respective ministries is required based on the category and nature of the business before incorporating these companies.

How Can Foreign Companies Be Incorporated In Pakistan?

The cumulative value of the CPEC projects stands at $60 billion, which is estimated to increase significantly as a result of future projects.

Foreign companies can be incorporated in Pakistan in three ways: as a fresh company, as a liaison company/office, or as a branch company/office. 

A branch office is established by a foreign company to fulfill contractual obligations with the public or private sector in Pakistan. 

However, its activities are limited to those mentioned in the signed agreement or contract, and it cannot engage in commercial or trading activities.

On the other hand, a liaison office is established by a foreign company for product promotion, technical advice and assistance, exploring collaboration opportunities, and export promotion. However, it is not allowed to undertake any commercial or trading activities.

In conclusion, foreign companies intending to do business in Pakistan must follow proper procedures and obtain the necessary permissions and approvals. 

The type of company they choose to establish will determine the scope of their activities in the country.

Procedure for Establishment of Chinese or Foreign Company in Pakistan

To apply, fill out the application form and send eight sets of the following documents: 

1. Application Form (filled in and signed with a stamp)
2. Attested copy of the foreign company’s registration by the Pakistani Embassy
3. Attested copy of the Articles and Memorandum of Association by the Pakistani Mission
4. Copy of the company’s Resolution/Authority letter to establish a Branch/Liaison Office in Pakistan
5. Copy of the contract/agreement (for Branch Office only)
6. Company profile
7. Resumes of the foreign directors
8.  Authority letter for the person authorized to act on behalf of the Foreign Directors.

BOI requests views and suggestions from relevant parties on the required documents and criteria. 

Once all concerned departments/quarters provide clearance, BOI grants permission for the registration of a Foreign Company/branch office in Pakistan.

Documentation

After the approval from BOI, the company applies to name availability with the respective RTO, SECP. 

Once the name is approved by SECP, the next step is documentation.

• A foreign company must submit several documents to the concerned RTO, SECP within thirty days of establishing a place of business in Pakistan. 
• These documents include forms (38-43) as prescribed under the Rules, a certified copy of the company’s charter, statute, or Memorandum and Articles, the address of the registered or principal office of the company, particulars of directors, the Chief Executive and Secretary, and the principal officer of the company in Pakistan. 
• Additionally, the company must provide the particulars of the person(s) authorized to accept service on behalf of the company in Pakistan, along with the necessary appointment order, authority letter, and consent of the principal officer. The address of the principal place(s) of business in Pakistan must also be provided.
• Lastly, an authority letter in the name of the authorized representative of the foreign company and a fee challan must be filed with SECP for the establishment of a branch office.

Security Clearance Requirement for Chinese/Foreigners Registering/Acquiring a Company in Pakistan.

Pakistan will become one of the world’s 20 biggest economies by 2030, and CPEC is set to create more than 2.3 million new jobs according to a PWC report.

When filing registration documents or sharing transfer documents for creating a Chinese company in Pakistan, security clearance documents are also filed with the Securities and Exchange Commission of Pakistan. 

The same applies when transferring shares to a foreign national/company or appointing a foreign national as a director/chief executive. In these cases, security clearance is obtained from the Ministry of Interior Pakistan. 

To obtain a security clearance, the following documents of proposed directors/chief executive/shareholders are required: complete bio-data, copies of valid passports, three passport-size colored photographs, contact details (postal address, phone number, email address), and signed undertakings from all directors/chief executive/shareholders (notarized).

Documents of the shareholder company shall be required

The CPEC will bring about an increase in GDP of 1.5%, and Employment and Globalization are a positive link with each other that has significant importance.

To obtain a security clearance, the shareholder company must provide certain documents. 

• These documents include the complete name of the company, notarized certificates of incorporation, and notarized memos and articles of association. 
• The details of the company’s directors must also be notarized. Additionally, the authorized signatory of the company must provide their name, details, designation, two passport-size photographs, and passport copies. 
• The company must also submit board resolutions for the acquisition of a company in Pakistan, along with details of the investment/acquisition of shares and authorization of signatories. 
• The company’s registered office address, telephone number, fax number, and official email address must be provided. Notarized undertakings from the company are also required.
• The Securities and Exchange Commission of Pakistan accepts registration documents and forms for the transfer of shares and appointment of directors based on an undertaking. 
• This undertaking states that the foreign director/shareholder/chief executive will transfer their shares or resign if their security clearance is not confirmed by the Ministry of Interior Pakistan.

Welcome to Trek Law, your trusted partner in navigating the complex landscape of international business law. 

With our deep expertise and experience, we are here to guide you through the step-by-step process of registering a Chinese company in Pakistan for successful business ventures. 

• Understanding Legal Requirements

Trek Law specializes in international business law and possesses in-depth knowledge of the legal requirements for registering a Chinese company in Pakistan. 

We provide comprehensive guidance on the necessary steps and documentation needed for a seamless registration process.

• Tailored Strategies For Success

Our experienced team of legal professionals at Trek Law assists clients in developing customized strategies to maximize the chances of success for their Chinese company in Pakistan. 

We analyze market dynamics, competition, and regulatory frameworks to help clients make informed decisions.

• Building Strong Foundations

We emphasize the importance of establishing a strong foundation for your Chinese company in Pakistan. 

Our step-by-step guide includes insights on choosing the right business structure, complying with corporate governance norms, and protecting intellectual property rights to ensure long-term growth and sustainability.

• Navigating cultural nuances

Trek Law understands the cultural nuances and business practices in both China and Pakistan. 

We offer valuable insights into building strong relationships with local partners, understanding the market dynamics, and adapting your business strategies accordingly.

Our dedicated team of legal professionals understands the intricacies of both Chinese and Pakistani legal systems, enabling us to provide actionable insights and tailored strategies to help you establish a strong foundation and unlock global opportunities.

Contact us today for more information and details on legal requirements for starting a Chinese company in Pakistan!