A Private Limited Company means a corporation or corporate body which is registered under the Companies Act 2017 for doing any kind of business. For example trading, services, or manufacturing. Private limited companies are of two types.
(A) Limited by Shares: whose shareholders liability is limited to their investment or shares held.
(B) Limited By Guarantee: in these types of companies shareholders’ liability is limited to the Guaranteed amount that shareholders agreed upon.
Separate legal identity:
It is a basic principle that The corporation is a separate legal person from its shareholders or owners and has its rights and duties. The only difference is that company is an artificial person whereas shareholders (individuals) are natural persons. To simplify the companies can own assets or property in their name, take loans, singed the contracts, and also be personally liable for all of its taxes payable.
Shareholders’ limited liability:
The other most important feature of companies is that members’ liability to pay back the debts of the company is limited to the amount of any unpaid capital which they have agreed to pay at the time of its incorporation. In other words, a business is personally responsible for the payments of all of its dues, not the directors or shareholders. As an example, if the corporation has taken a loan of 500, 000 and one of its shareholders has own shares worth 100, 000 from which amount of 50,000 remains unpaid. Then the shareholder has no responsibility for payment of all debt of the organization, he has to pay the only unpaid amount of 50,000.
Lifting veil of incorporation:
In some instances, the shareholders or owners are personally responsible for debts or liabilities of the organization. For example, if the company has failed to pay taxes payable then under the income tax ordinance 2001 all the directors are personally liable for payment of tax due by the company. Similarly, if the directors have given any personal guarantee in any contract or bank loan then the directors are personally and equally liable.
Life of company:
The life of the company is unlimited as compared to others forms of business. Ownership can be transferred to the legal heirs in case of death. Whereas partnership is dissolved in event of the death of partners.
How to Register?
All new companies are required to be registered with the Securities and Exchange Commission of Pakistan (SECP). Currently, the Company Registration process is very simplified and can be processed in just one day. Both manual and online application forms are available. However, fees for manual applications are double that online process.
Documents Required & Process Submission:
- Sign up through SECP E-Services and create User ID and Password.
- Fill out an application form for Incorporation (Form- II).
- Memorandum and Articles of association(MOA): In case of combined process (Name Reservation and registration) attachment of memorandum and articles of association is not required.
- Attachment of scan copies of CNIC of directors/subscribers.
- Finally for Process Submission ( all subscribers are required to sign the process separately).
In the following cases, prior approval from concerned Ministries / Departments is also required.
Bank or financial institution: Ministry of Finance and State Bank of Pakistan.
Security Services: NOC from Ministry of Interior.
Brokerage House: Stock Exchange.