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Laws of Business Formation in Pakistan



A partnership is the most common form of business formation in Pakistan. Typically, in most businesses, the mode of partnership is formed where there is a need for flexibility in organizational structures and relationship formality between partners. In Pakistan, there is no mandatory obligation to register partnership business; however, there are a few legal and tax-related proceedings involved in the registered one.

The legal requirements involved in the establishment of a partnership firm are clearly stated in the Partnership Act, 1932, and it defines partnership in the following words:

“as 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.”

A group of twenty or fewer partners mutually agreed to carry out any business activity in a lawful manner, can form a partnership; however there are a few exceptions: a group of twenty or more partners may come together on a platform to carry out practices as lawyers or accountants or any other, which cannot be counted as a limited liability enterprise under the stated law.

A partnership firm can be registered with the Registrar of firms in an area where the company office is located or considered to be located. A statement, stating the following points, should be delivered to the Registrar in the prescribed form:

  • Name of the company
  • Location/principal place of the business
  • Names of other places where the business operations may be carried out
  • Date of each partner’s joining
  • Full names and complete residential address of all the partners
  • Duration of the company

The above-mentioned statement must be signed by each partner or an authorized agent acting on their behalf. Moreover, the statement must be verified by each person signing it. Then, the Registrar confirms and verifies if the statement abides by the law, he records the statement’s entry in the Registrar of Firms and files it.

Statutory Corporations

Statutory Corporations are created by the Central or Provincial Government through a Central or Provincial statute, depending on the nature of the case. The management, authority, power, responsibilities and legal status of such corporations are presided over by each individual’s approval under which statutory corporation has formed. The management of such firms is conferred to the regulating body. The conditions of dissolving such businesses are also stated under the written law.

There is no such requirement to register statutory firms.

Joint Ventures

Joint ventures are cases where two or more parties intend to retain their separate identity, but they mutually agree to operate together on a single venture under specific terms and conditions. In such cases, two or more parties agree to enter into an agreement, and the relationship between the parties, liabilities and share of loss/profit is based on the terms and conditions of the agreement.

Legally, there is no registration requirement for the agreement; however, the joint venture may require registration under the law.

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