If any foreign entity needs to operate as a branch office in Pakistan, it must have a contractual agreement local company either public or private. They can move the registration process. Aside from signing the contract, the branch firm is not permitted to engage in any commercial activity in Pakistan. The concept of a branch company is significant in the context of corporate strategy, growth, and operations. This entity is not legally separate from the parent company but rather an extension, sharing the same corporate identity and engaging in the same line of business.
Procedures For Establishing A Branch Company
First, you need a permission letter from the Board of Investment, Government of Pakistan. They issue an approval letter with a specific validity period (from 1 year to 5 years) for opening and maintaining a place of business in Pakistan. Follow these steps to seek a license letter from BOI.
1. Application (duly completed, signed, and stamped)
2. Copy of registration of the alien company duly attested by the respective Pakistani Embassy;
3. Copy of Reports and Memorandum of Association duly attested by Respective Pakistan Mission;
4. Copy of Board Resolution / Authority letter of the company to set up Branch / Liaison Office in Pakistan;
5. List of board of directors including their name, surname, passport No. usual residential address; along with copies of the passports of all board members.
6. Appointment letter of the selected person authorized to act on behalf of the companies;
7. Authority letter in favor of the authorized person to represent the point before BOI.
8. Fees of 3000 US $ for the Branch for an initial period of one year. 1500 US $ for the Sub-Office of Branched Office. The amount (US$ or equivalent in Pak Rupees) shall be deposited in the Board of Investment Account being maintained with the National Bank of Pak.
Renewal of Branch Office:
Copy of valid Contract agreements along with their period.
Income Tax Returns (for the last 03 years)
Copy of latest Financial Statement (duly audited)
Proceeds Realization Certifications
Renewal Charges for each year @ US $ 1000 per year (1-5 years renewal based on the request of the company).
Types Of Branch Companies
Sales
These are established solely to handle sales operations in a specific area. Management is responsible for promoting and selling the parent corporation’s products or services. We deal with local customers. We manage relationships. Sales departments are often strategically placed in high-potential markets to reach a larger audience.
Production
In some cases, companies are set up to manufacture or assemble products. To reduce time to market and logistics costs, they often make the goods for the local market.
Administrative
These oversee a company’s regional administrative operations, encompassing duties such as finance, customer service, human resources, and legal compliance.
Research and Development
Businesses in sectors such as engineering, technology, or pharmaceuticals may be focused on certain activities. These focus on innovation and product development, typically in regions that offer favorable conditions for scientific research or access to talent pools.
Challenges Of Branch Company
The financial services industry is significantly impacted by regulations. During any department redesign, they remain a crucial factor to take into account. Many banks are confined by more stringent stress tests and stricter policies when it comes to liquidity and capital. Any changes to your bank will have to be completed through the lens of regulation. Banks are heavily embracing digital technology as a major trend these days. ATMs, online banking, mobile devices – all of these tools simplify the user experience, and many save money for the banks themselves.
When you open a new office everyone must be on the same page. Now this is a vital problem, especially for physically remote offices that are hard to keep an eye on. Just as the information needs to reach down to the bottom of the hierarchy, it is also important for it to go back up as well. Most large companies struggle with this, even within the same building and it gets exponentially messier as the number of offices grows, particularly if they are located further away.
A corporation can encounter cultural differences and operational challenges when operating in a different country or region. Foreign businesses may encounter language barriers, different business rules, or local resistance. International tax legislation may give rise to issues with tax benefits provided by branches. Business Registration In Pakistan
