Public Limited Company Compliance Requirements in Pakistan

This blog presents the most common statutory and legal requirements for public limited companies in Pakistan.

The Securities and Exchange Commission of Pakistan (SECP) regulates corporate sector and capital market of Pakistan. PSX (Pakistan Stock Exchange), NCCPL (National Clearing Company of Pakistan Limited) and CDC (Central Depository Company) complements the Commission in fulfilling its responsibilities.

This blog splits its content into:

Statutory requirements under the Companies Act 2017 and the Companies regulations
Basic structure of Board of Directors
Basic requirements of IPO

Let’s take a look at them one by one.

Statutory requirements for Public Companies

Below requirements make the base of compliances for a public company whether it is listed or un-listed. It covers structure of board of directors, commencement of commercial operations, appointment of officers, maintaining records, holding meetings and SECP annual filing etc.

Minimum shareholders and directors’ requirement:

Sr. No.	Company	Minimum Directors
1	Public unlisted company	3 (three)
2	Public listed company	7 (seven)

A public company requires at least 3 shareholders for registration. Also note:

Director must be shareholder.
The requirement of shareholding for CEO of a public company is not necessary. A non-shareholder can be appointed as director.

Appointment of CEO

A public company must appoint:

First CEO at incorporation.
Subsequent CEO appointments by the Board (after tenure of 3 years).

CEO particulars must be reported to SECP through Form-9.

Appointment of Company Secretary

Every public company must appoint a Company Secretary. A secretary may be:

ICAP member;
ICMAP member;
Chartered Secretary or Corporate Secretary;
MBA, M.Com, Law Graduate with prescribed experience;
Certain retired government officers.

The company secretary ensures legal compliances of a public company.

Certificate of commencement of business (COCB)

A public company cannot commence business or exercise borrowing powers until:

Minimum subscription received.
Directors pay for their shares.
Filing of Form-22 (declaration of a public company before commencing business) is filed to registrar and it is approved by the registrar.

The Form -22 is filed right after the registration of the company. Only after getting COCB, it can start its commercial operations legally.

Registered Office

A public company must maintain registered office.

The registered office address can be reported at time of incorporation. But if, it has not been arranged, company can notify it within 30 days of incorporation.

Annual General Meeting (AGM)

Every public company must hold AGM annually. Key matters typically include:

Adoption of financial statements.
Auditor appointment.
Election of directors (where applicable).
Dividend matters.

Holding a Statutory Meeting

Holding an AGM is annual requirement.

Public companies are required to hold a statutory meeting and file a statutory report. This meeting will be held with earlier of:

Within 180 days of issuance of COCB; or
9 months of incorporation

The requirement of statutory meeting is only applicable on public companies. At the statutory meeting, the founders of public company discuss the matters listed in Section 131 of the Companies Act 2017 and; purpose, vision and future plans of the company.

After holding the statutory meeting, the public company will file Form-25 (along with the statutory report) with the registrar.

Auditor Appointment

Public companies must appoint auditors annually. Unlike individuals, partnerships and private company (subject to a threshold), it is required to appoint a statutory auditor under the Companies Act 2017.

Auditor details are reported through Form-9.

Filing of Annual return with SECP

Off course, annual filing of Form-A is also necessary.

Filing of financial statements

The company must:

Prepare financial statements.
Arrange their audit.
Lay them before AGM.
File them with SECP within prescribed time.

Reporting of Ultimate Beneficial Ownership (UBO)

It is also mandatory to:

Identify UBOs.
Obtain declarations from members.
Maintain UBO Register.
File Form-19 annually along with Form-A.

UBOs are the natural persons who exercise ownership or control a company through at least 25% shareholding or voting rights.

Statutory register

The company secretary will ensure the proper maintenance of registers of:

Directors
CEO
CFO
Company Secretary
Auditors
Legal Adviser

Corporate Governance Requirements for listed companies

When a public company moves towards listing, it has to implement corporate governance. Below are the requirements of corporate governance for the listed companies.

Board Composition Requirements

Sr. No.	Directors	Minimum number
1	Independent directors	At-least 2 or one third of BOD whichever is higher
2	Female director	At least 1 (one)
3	Executive directors including CEO	Executive directors, including the CEO, cannot exceed one-third of BOD.

Chairman and CEO must be separate.

Board responsibilities

The Board is responsible for:

Corporate governance oversight
Internal control environment
Risk management framework
Ethical conduct
Strategic direction
Monitoring management performance

The Board should maintain:

Vision and mission statement
Corporate strategy
Code of conduct
Internal control systems
Annual Board performance evaluation mechanism

Initial Public Offerings (IPO) basic requirements

Before listing and getting enrolled in IPO, the board of directors has to consider the fundamentals of offerings. In the coming lines, I am explaining these basics.

Type of offerings

Sr. No.	Securities	Types
1	Equities	Ordinary and preference shares
2	Debt securities	Term finance certificates, sukuks, commercial papers and convertible bonds
3	Others	REITs, SPAC offerings and GEM market offerings

Initial Readiness for IPO

SECP pending forms have been filed like Form A, Form 9, UBOs, and audited accounts.
Board approval
Company must have profits for at least 2 preceding financial years
At least 51% shareholding must have been held by the same persons for the preceding two years in applicable cases.
The issuer, sponsors, directors and substantial shareholders should not be loan defaulters in CIB.
For IPO, company must appoint consultant to the issuer, underwriter, share registrar, balloter and banker to the issue.
Company will issue prospectus.

IPO methods

Sr. No.	Methods	How does it work
1	Fixed Price	Offer price is fixed before subscription. Prospectus must contain a Valuation Section. DCF, DDM and GGM valuation methodologies may be used. The entire issue must be underwritten.
2	Book building	It follows Dutch auction method. Floor Price set by issuer. Price Band is established. Bidders compete electronically. Strike Price is discovered through bidding. Up to 75% allocation may be made to book building investors. At least 25% is allocated to retail investors.

For larger IPOs, book building method is used.

An overview of prospectus

Sr. No.	Parts of prospectus	Contents
1	Corporate information	History, business model, products, services and industry overview.
2	Share capital	Exiting capital, post-IPO capital and sponsor holdings.
3	Financial information	Audited accounts, financial ratios and projections.
4	Governance	Directors, CEO, CFO, senior management and audit committee.
5	Legal matters	Litigation, overdue loans and regulatory actions
6	Valuation of business and assessment of risks	Risks like business, project, financial and regulatory.
7	Why IPO is needed	New business venture, existing business extension etc.

After IPO

Sponsors must retain their shareholding for 12 months and must maintain minimum 25% of paid-up capital for a prescribed time period. After listing, the issuer must report use of IPO proceeds in:

Quarterly reports
Half-yearly reports
Annual reports

Conclusion

Due to the public interest and money involved, the public companies are subject to regulations of SECP, stock market and others.

Disclaimer

This blog is for informational and educational purpose only and it does not constitute any legal opinion or a professional advice. Laws and regulations may change over time. So, we don’t accept any responsibility for any decision taken on the basis of the content of this blog / web page. It is recommended to consult a professional for your compliance matters.

Legal References

Companies Act 2017
Companies Regulations 2024
Securities Act 2015
Public Offering Regulations 2017
Code of Corporate Governance issued by SECP

Muhammad Faisal Chaudhary

Muhammad Faisal Chaudhary (APFA) is a business and tax consultant specializing in Pakistani and Australian taxation, corporate compliances, and business advisory. With extensive experience in SMSF bookkeeping (Australia), SECP regulations, and taxation, he helps businesses streamline compliance and optimize financial performance.