Company Name
Avoid These 5 Mistakes While Registering a Company in Pakistan: The name of the business should be unique, appropriate and consistent with the nature of the business. It is important that the name reflects the nature of your business; otherwise, the business may be of some other nature and the name may reflect something else.
Logo, name and slogan are very important. All big brands have a story behind their names which is usually mentioned on their website, catalogue or brochure.
Compatibility with Brand and Trademark
- While naming a business, also research whether there is any registered brand or trademark in the market with this name or a similar name. If the trademark is registered, you may face problems in the future.
- It is a common desire to have the same name for your company and brand. However, it is important to know that they are registered by different and departments.
- Company registration are managed by SECP (Securities and Exchange Commission of Pakistan).
- Trademark or brand registration is deal by the IPO (Intellectual Property Organization).
What is the best Legal Structure for a Company?
- Legal structure refers to deciding which structure is suitable for your business, whether it is a Single Member Company (SMC), Private Limited, or Limited Liability Partnership (LLP). It depends on the nature of your business.
- For example:
- If the business is being run by a single owner, it is best to register an SMC.
- The advantage of an SMC is that it requires less legal compliance, annual meetings, and other formalities.
Disadvantages of a Private Limited Company (if family members are involved)
- Most people only formally appoint their wife, brother or father as directors when registering a business. The problem is that the signatures of all directors are required for opening a bank account, signing cheques and board meetings.
- If one of director is not available, then the work comes to a standstill. In reality, there is only one owner of the business, the rest are directors in name only.
- It is not easy to remove a director later in case of family disputes, because he becomes a shareholder of the company.
- The best way is to register an SMC first, as the SECP has now provided this option.
Think to Consider When Deciding a Capital Structure of the Compnay
Capital structure refers to how much the authorized share capital and paid-up capital of the company will be and how much each shareholder will have.
Avoid These 5 Mistakes While Registering a Company in Pakistan
- When forming a company, keep the share capital as much as required. Generally, people keep a capital of Rs 100,000.
- If you have to increase the capital later, then the fee will be charged again, because in this case you will have to change both the Memorandum and the Articles of Association.
- Additional fees (which is currently around Rs 8,000) have to be paid for these changes. While the basic fee for new registration is less. So, decide well the first time.
Mistake to avoid about paid-up capital
It is usually a mistake that the paid-up capital is kept low so that the fees and compliance costs are less, although the actual investment is very high.
When differences arise between the directors later, the distribution of the entity assets (Shares) becomes very difficult because this distribution is according to the capital kept at the time of registration.
What is the Correct Way to Decide the Capital Structure of the Compnay?
If there are four directors, then the amount of investment made by all of them should be their share in the paid-up capital.
What are the Disadvantages in case of excessive capital?
If you hold more capital than required:
Registration fees will increase.
Annual compliance costs will increase.
Example: If your share capital is more than Rs 10 lakh, you will have to appoint an auditor and also get an audit done. If it is less than one million, it will not be required.
For bank loans:
If you need a large bank loan, it is necessary that your capital is also large, otherwise you will not be able to get a loan.
Company Address
- Keep the organization address in mind when registering for the first time.
- First find an office or place where you want to do business, and then register the business at that address.
- All correspondence from SECP will be sent to the address you provided at the time of registration.
- An incorrect address or home address will cause problems.
- Changing the address later, especially from one province to another, is a difficult, time-consuming and expensive process. It requires paying additional fees and changing both the Articles of Association and Memorandum of Association.
Including family members as directors can be detrimental to business
Earlier, family businesses were run, but now they have become difficult to run. For example, initially, two brothers start a business together, but later, due to differences the businesses has to be separated, which causes problems.
Therefore, make a well-thought-out decision in advance. The best way is to register an SMC, which
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