Registration of Startups in Pakistan

What is a Startup? How Startup is defined under the Law?

A startup is a young, dynamic company built on technology and innovation where the founders attempt to develop a product or service for which they believe there is a demand. 

Law defines Startup as:

 “Startup is a company that is working towards the innovation, development or improvement of products or processes or services or is a scalable business model with a high potential of employment generation or wealth creation”.

1.       At which stage startup incorporation is necessary?

 Startups generally go through following stages:

• The Ideation Stage
• The Co-founder Stage
• The Prototype Stage
• The Business Model Stage
• The Business Plan Stage
• The Branding Stage
• The Company Incorporate Stage
• The Pitch Deck Stage
• The Funding Stage
• The Scale-Up Stage

Company incorporation is necessary before making investor pitch, it shows your seriousness to take your startup into formal business format and ready to scale up. Incorporated company also enables you to formally sign any contract on behalf of your business in which you have limited liability.

1.       What is the best business structure for my startup?

As our startup eco system is producing numerous brilliantly scalable ventures and attracting various international investments, a startup should be incorporated as Limited Liability Company to cater for future needs of expansion.

1.       What does ‘Limited Liability’ means?

Limited Liability means that any debt, losses or legal claims associated with the company are the responsibility of the company not of founders being shareholders or directors of the company. Maximum loss is limited to investment in the share capital of the company or in other words total assets of the company. Business creditors cannot get access to personal assets of the founders.

1.     What type of Limited Liability Company should startups have?

Startups should be registered as a multi member Private Limited Company, not a single member Private Limited Company because when a single member company share equity and introduce new members then it has to be converted into a multi member Private Limited company.

1.    Can a startup raise public funding after incorporation as Private Limited Company?

A startup can raise funding by sharing its equity to any private investor but cannot solicit for general public investment. Only Public Limited companies can raise investment through public offering (IPO). A Private Limited Company can have maximum 50 members/shareholders.

1.     Can a Public Limited Company be converted into Public Limited Company later on?

Yes, a Private Limited Company can be converted into a Public Limited Company at any time by fulfilling certain conditions and can start public offering (IPO) for raising investment from general public.

1    What are the major requirements of Private Limited company incorporation process?

• Proposed Name of the company
• Principal Line of Business
• Registered office address
• Personal details of Founders/subscribers/shareholders (at least 2 in case of multi member private limited company)

IBI-REMEDIUM offers you the facility of getting your startups registered so if you want to get your startups registered, you can do it by availing our services. 

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