Agribusiness company, commonly referred as an entity or a company or enterprise involved in cultivating and processing foods and other agricultural products. Additionally, these also refer to enterprises related to marketing and distribution of farm products, including warehouses, wholesalers, processions, retailers etc.
The Agricultural Sector in Pakistan plays a vital role in the economy of Pakistan as not only being an important source of foreign exchange earnings and stimulating growth in other sectors but also contributes 18.9% to the GDP and engages 42.3% of the labor force. According to the Economic Survey 2019-2020, agriculture contributed 19.3 percent to the annual GDP. Although the agricultural sector has suffered due to the recent locust attacks on crops and the various impacts of COVID-19, however some relief was also seen in the year 2020, where a rise was seen in rice and wheat, pulses, oilseeds and vegetables production and a growth in the livestock production was also observed. Fertilizer production rose by 5.8 percent and a 20.7 percent decrease in fertilizer import was noted. In 2020, the Economic Coordination Committee (ECC) approved a multi-billion-dollar package, of PKR 50 billion, providing farmers subsidies on fertilizers, reduction in bank markup on agricultural loans, subsidy on cotton seed and white fly pesticides and sales tax on subsidy on locally manufactured tractors, where the subsidy scheme would be implemented and disbursed through scratch card scheme, being monitored carefully to ensure that the actual beneficiaries of package were genuine farmers.
AGRIBUSINESS COMPANY SETUP IN PAKISTAN
For the incorporation and registration of an agricultural company in Pakistan, three agencies are engaged for this purpose, namely:
- Securities & Exchange Commission of Pakistan (SECP)
- Federal Board of Revenue (FBR)
- Other Compulsory Registrations relating to nature of business
REGISTRATION WITH SECURITIES & EXCHANGE COMMISSION OF PAKISTAN (SECP)
The SECP is a regulator granted with the mandate to regulate the corporate sector and thereby specifically handles the object of incorporation of all public and private companies. The incorporation procedure is divided into three steps:
RESERVATION OF NAME
The first step towards the incorporation of a company is to reserve a suitable name subject to Section 10 of the Companies Act 2017. Three proposed names which fulfill the criteria provided are to be specified for approval. Such reservation can either be made by a separate application or the same can be made alongside the application for incorporation. No extra fee is chargeable for reserving a name alongside the application for incorporation of company. However, for a separate application, a fee of rupees 200/- is chargeable for an e-application and for a physical application a fee of rupees 500/- is chargeable. After the submission of the application and due fees, the registrar will examine the names provided, and if they fulfill the criteria provided, will issue a certificate for reservation of name for up to 60 days, within which the application for incorporation of company is to be made.
APPLICATION FOR INCORPORATION
As previously stated, an application for incorporation of company can either be separate or alongside application for reservation of name. Fee for incorporation is in accordance to the type, capital and size of the company, in accordance to Seventh Schedule of the Companies Act 2017.
Such application is to be accompanied by the following documents:
- Memorandum of association duly signed by the subscribers. In case of physical submission, it shall be duly stamped under Stamp Act 1877;
- Articles of associations duly signed by the subscribers;
- Copies of NIC / NICOP of the subscribers / directors / chief executive officer;
- Copy of NIC of witness in case of physical filing of application;
- Duly stamped authority letter of subscriber or intermediary authorizing him to file documents for incorporation for a physical submission; and
- Original paid bank challan in case of physical submission.
For an online application, all relevant documents are to be scanned and uploaded except for the memorandum and articles which will be generated online.
ISSUANCE OF INCORPORATION CERTIFICATE
Once all the relevant documents have been submitted to the registrar, he shall examine the same and determine if all relevant documents are complete and all requirements have been complied with. Once the registrar is satisfied, he shall register the memorandum and other documents, and will issue a certificate for incorporation of company under his signatures and authenticated by his official seal.
REGISTRATION WITH FEDERAL BOARD OF REVENUE (FBR)
Previously a separate application had to be made to the FBR for issuance of BNTN number, however the SECP has introduced a one window facility, whereby which the data collected by the SECP is sent to the FBR for registration of NTN number.
OTHER COMPULSORY REGISTRATION RELATING TO NATURE OF BUSINESS
The Government of Punjab requires compulsory registration in its relevant departments depending on the nature of business conducted by the agricultural companies. The nature of businesses requiring compulsory registration includes:
- Seed Companies
- Pesticide Companies
It is mandatory for agricultural seed companies to register with the Government of Punjab under Federal Seed Certification & Registration (FSC & CD) to enhance the relationship of companies with the Government, to control the sale of substandard/uncertified seed and to settle legal disputes. The documents needed to complete the procedure includes:
- A Business Plan
- Introduction of the Company along with the Objectives
- Number and Names of Seed Crops to be handled
- Seed Production Programme
- Phasing of Seed Production Programme
- Arrangement for production of basic and certified seed, etc. (Applicable to those companies who multiply seed.)
- Seed availability Certificate
- Seed Certification Arrangements
- Tentative Network of Seed Marketing
- Capital Costs
- Expenditure Statement
- Income Statement
- Company Registration Certificate
- Copy of Memorandum & Articles of Association
- Copies of CNIC of Directors
- Specimen Signatures of Directors
- Registration Certificate of Brand Name from Intellectual Property Organization (IPO) in the name of Company
- Lease Agreement of land along with copies of CNIC of the owners
- Agreement with registered growers with copies of CNIC’s
- Seed processing facility
- In case of cotton seed company, agreement with Ginning factory(s) with copies of CNIC’s of owners
- Purchase receipt of seed processing plant
- List of Staff including at least 2 MSc Agricultural Graduates
- Degrees, Copies of CNICs, Appointment letters, Joining Reports and Affidavits of Staff
- Tax payer Certificate
- Bank Certificate and Bank Statement
The process takes up to 3-6 months for approval and presently no governmental fee is chargeable.
AGRICULTURAL PESTICIDE DISTRIBUTOR REGISTRATION
It is compulsory for pesticide distributors in Punjab to register themselves with the Punjab Government, under the Punjab Agricultural Department. The documents required for the process are as follow:
- Application for Registration – Form 12 as per Rule 11A of Agricultural Pesticides Rules 2018
- Name and Address of Company with Name and Cell No. of Chief Executive Officer
- Attested Copy of Memorandum of Associations and Registration Certificate
- Income Tax Certificate
- Bank Statement of Company showing minimum paid up capital of PKR 1 million
- Registration Certificate of Pesticides registered under the company
- Complete address/location of stores with name of in-charge and cell number
- Rental Agreement of Pesticide stores
- Location of major/zonal pesticides stores in Punjab to be compliant with the specifications given.
- Location of formulation plants if available
- List of Staff accompanied with Appointment Letters, Joining Reports, Photographs, I.D cards.
- List of Vehicles
- Specification of Pesticide Refilling and Repacking Unit Arrangement of The Company
- Copy of the Bank Draft/Pay Order for Fresh Registration processing fee of PKR 300,000, attested by the CEO.