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TYPES of COMPANIES

In Pakistan, companies are categorized by legal structure, including Sole Proprietorships, Partnerships, Limited Companies, and Non-Profit Organizations, regulated by the SECP. Key types include Private Limited Companies (Pvt. Ltd.), Public Limited Companies, Single Member Companies, and Government-Owned Enterprises, each with distinct features and regulations. Additionally, companies operate under various business models such as B2B and B2C, catering to different market needs.

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54 views5 pages

TYPES of COMPANIES

In Pakistan, companies are categorized by legal structure, including Sole Proprietorships, Partnerships, Limited Companies, and Non-Profit Organizations, regulated by the SECP. Key types include Private Limited Companies (Pvt. Ltd.), Public Limited Companies, Single Member Companies, and Government-Owned Enterprises, each with distinct features and regulations. Additionally, companies operate under various business models such as B2B and B2C, catering to different market needs.

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innocent angel
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© © All Rights Reserved
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TYPES of COMPANIES

In Pakistan, companies are categorized based on their legal structure,


industry, and business model. Below are the main kinds of companies
found in Pakistan which based on legal structure as per SECP regulations.

The Securities and Exchange Commission of Pakistan (SECP)


regulates different types of companies in Pakistan.

1. Sole Proprietorship: A Sole Proprietorship is the simplest and


most common form of business structure, where a single
individual owns and operates the business. In this setup, the owner
and the business are considered one entity, meaning the individual
is personally responsible for all aspects of the business, including its
debts and obligations.

 Owned and managed by a single individual.


 Not a separate legal entity.
 Example: Small retail shops, freelancers, consultants.

2. Partnership Firm (Registered under the Partnership Act, 1932): A


Partnership Firm is a business structure where two or more
individuals (called partners) agree to share the profits, losses, and
responsibilities of running a business. It is governed by the
Partnership Act, 1932 in Pakistan. Partners contribute to the
business with capital, skills, or both, and share in the management
and decision-making.

 Two or more partners share ownership.


 Profit/loss is divided among partners.
 Example: Law firms, medical clinics, and small businesses.

3. Limited Company (Pvt. Ltd.): A Private Limited Company (Pvt.


Ltd.) is a legally registered business entity that is privately owned
and has limited liability for its shareholders. It cannot publicly trade
its shares and is regulated under the Companies Act, 2017 in
Pakistan.

Example: Careem Pakistan (Pvt.) Ltd., Foodpanda Pakistan (Pvt.)


Ltd.

Key Features:

 Limited Liability: Shareholders are only responsible for the


company's debts up to the amount they invested. Their
personal assets are protected.
 Private Ownership: Shares are not traded on the stock
exchange and are held by a limited number of people.
 Minimum & Maximum Members: Minimum: 1 shareholder
(Single Member Company - SMC Pvt. Ltd.) and Maximum 50
shareholders.
 Perpetual Succession: The company continues to exist even
if shareholders change or die.
 Legal Entity: A Pvt. Ltd. company has a separate legal
identity from its owners, meaning it can enter contracts, own
property, and sue/be sued in its own name.
 Registration with SECP: A Pvt. Ltd. company must be
registered with the Securities and Exchange Commission
of Pakistan (SECP).

4. Limited Company (Listed & Unlisted): A Public Limited


Company (Ltd.) is a company that is legally registered and allowed
to offer its shares to the public through the stock exchange. It has
limited liability, meaning shareholders are only responsible for the
company’s debts up to their investment. Public limited companies in
Pakistan are regulated under the Companies Act, 2017 and the
Securities and Exchange Commission of Pakistan (SECP).
 Listed Public Companies are listed on the Pakistan Stock
Exchange (PSX) and sell shares to the public. Example: Engro
Corporation, HBL, Lucky Cement
 Unlisted Public Companies do not trade on the stock exchange
but have multiple shareholders.

5. Single Member Company (SMC-Pvt.): A Single Member Company


(SMC-Pvt. Ltd.) is a privately-owned company with only one shareholder. It
is a type of Private Limited Company (Pvt. Ltd.) but with a single owner,
giving full control to one person while providing limited liability. In
Pakistan, SMCs are governed by the Companies Act, 2017, and regulated
by the Securities and Exchange Commission of Pakistan (SECP).

6. Non-Profit Organization (NPO) / NGO: A Non-Profit Organization


(NPO) or Non-Governmental Organization (NGO) is an entity that operates
for social, educational, religious, charitable, or humanitarian purposes
rather than for profit. Unlike commercial businesses, an NPO/NGO does
not distribute profits to its members or owners; instead, any revenue
generated is reinvested into achieving its objectives. In Pakistan, NPOs
and NGOs are regulated under different laws depending on their structure
and purpose, including:

 The Companies Act, 2017 (Section 42 for charitable companies)


 The Societies Registration Act, 1860
 The Trusts Act, 1882
 The Voluntary Social Welfare Agencies (Registration and
Control) Ordinance, 1961
 Example: The Citizens Foundation (TCF), Edhi Foundation

7. Foreign Companies & Multinationals: A foreign company is a


business entity incorporated outside Pakistan but operating within the
country. It is registered under the Companies Act, 2017 with the Securities
and Exchange Commission of Pakistan (SECP).
 Operates in Pakistan but registered in another country, Complies
with Pakistani laws but follows parent company's rules, Needs SECP
registration and an office in Pakistan
Examples: Google Pakistan, Coca-Cola Pakistan, Samsung Pakistan,
Nestlé Pakistan, Unilever Pakistan, Toyota Indus Motors

8. Government-Owned Companies (SOEs - State-Owned


Enterprises): A Government-Owned Company (SOE), also known as a
State-Owned Enterprise, is a company that is owned or controlled by the
government at the federal, provincial, or local level. These companies are
formed to perform commercial activities while serving the public interest
or fulfilling government policy objectives. In Pakistan, SOEs are
established through government legislation, and their ownership is held
by the federal or provincial governments.

 Managed by the Government of Pakistan.


 Example: Pakistan Railways, PIA, SNGPL, SSGC

Based on Business Model

a) B2B (Business-to-Business) Companies: A B2B company is a


company that sells products or services to other businesses rather than
directly to individual consumers. These companies provide goods,
services, or software that help other businesses operate efficiently.

These companies supply raw materials, machinery, or components to


other businesses.

 Engro Fertilizers – Supplies fertilizers to agricultural businesses.


 Lucky Cement – Provides cement to construction firms.
 Nishat Mills – Supplies textiles to clothing brands.
b) B2C (Business-to-Consumer) Companies: A B2C (Business-to-
Consumer) company is a company that sells products or services
directly to individual consumers rather than to other businesses.
These companies focus on mass marketing, retail sales, and
consumer needs.

 Sell products or services directly to consumers.


 Example: Daraz, Foodpanda, Careem, Unilever Pakistan

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