Pakistan to reform corporate laws, aiming to save $880 million annually

ISLAMABAD: Pakistan is embarking on a major overhaul of its corporate laws, a reform initiative officials say could save businesses over Rs250 billion ($880 million) annually by reducing bureaucratic hurdles, simplifying company registration, and modernizing the Companies Act, 2017, The News reported. 

The Board of Investment (BoI) has already secured Cabinet Committee on Regulatory Reforms’ (CCoRR) approval for its first reform package, which includes 136 changes across various ministries and regulators. The reforms aim to eliminate 41 redundant regulations and simplify 75 others, with a strong focus on digitization and reducing inefficiencies.

On Friday, Prime Minister’s Special Assistant on Investment Haroon Akhtar Khan chaired a sub-committee meeting to discuss modernizing the Companies Act and simplifying company registration. The meeting, attended by regulatory reform expert Scott Jacobs, BoI representatives, Securities and Exchange Commission of Pakistan (SECP) officials, and the Overseas Investors Chamber of Commerce (OICC), reviewed recommendations to remove structural barriers and digitize outdated processes that hinder business growth.

Khan emphasised the need for reform, stating that outdated laws are discouraging entrepreneurs from formalizing their businesses. He suggested that corporate governance for unlisted firms should be guided by their by-laws rather than strict legal requirements.

The BoI also proposed reducing compliance thresholds for small and medium-sized enterprises, enhancing innovation in corporate structures, and increasing transparency through online access to company information and digital filings with the SECP.

These reforms are expected to cut costs and boost the growth potential of Pakistan’s private sector by creating a more business-friendly environment. The subcommittee will finalize its proposals before submitting them for government approval, marking a significant step toward modernizing Pakistan’s corporate legal framework.

Currently, Pakistan has 252,321 registered companies, but only 523 are listed, one of the lowest ratios compared to peer economies. Officials cite complex registration processes, excessive compliance requirements, and processing delays as key factors discouraging firms from joining the formal economy.