ISLAMABAD: With the total number of registered companies in the country reaching approximately 240,000, the Securities and Exchange Commission of Pakistan (SECP) has issued new guidelines for selecting company names. This decision comes in response to an increasing rate of name rejections.

However, investors have expressed concerns that the stringent criteria of the SECP also discouraged corporatisation in the country.

The guidelines have stated that a paradigm shift has been witnessed in businesses due to rapid technological and societal advancements. “Guidelines have been devised to facilitate entrepreneurs and investors who intend to become part of the corporate sector by registering their business with SECP either as a company or limited liability partnership (LLP),” the SECP said.

Under the law, a ‘company’ is registered with the SECP under Sections 10 & 26 of the Companies Act 2017, while the LLPs are registered under Section 6 of the LLP Act and the foreign companies are registered under Section 442 of the Companies Act 2017.

The guidelines have highlighted that the key criteria for name reservation include selecting a company name that should not be identical with or, resemble or similar to the name of an already registered company or the LLP and deceptive names.

Similarly, the company or LLP name related to any government or international body was not allowed, or if the name gives the impression that the company was a state-owned entity.

“The company name is said to be inappropriate if it contains words that do not match with a principal line of business or commensurate with objects of the company, while the use of derogatory language and any other such words which appear to be improper are not allowed in a company name.”

However, in the case of using names of national heroes and famous personalities, either NOC from the personality may be provided or justification to the satisfaction of the registrar, etc.

On the other hand, the strict criteria have been criticised by several quarters, and the over-strictness has left few names for incorporation.

Published in Dawn, February 23rd, 2025