The State Bank of Pakistan (SBP) has streamlined the procedures governing the registration of shares and units issued or transferred to non-resident investors on a repatriable basis.
Under F.E. Circular No. 02 of 2026, dated 25 May 2026, specified regulatory functions relating to the registration of non-resident shareholdings and the designation of Authorized Dealers (ADs) have been delegated to banks authorized to deal in foreign exchange. The framework also simplifies certain documentary requirements and establishes standardized operating procedures.
These arrangements, effective from 25 June 2026, have important implications for foreign investors, multinational groups and Pakistani companies with non-resident shareholders, particularly in relation to share registration, dividend repatriation and disinvestment transactions.
Previous Regulatory Framework
Under Pakistan’s foreign exchange regulations, shares issued or transferred to non-residents on a repatriable basis must be registered in accordance with the Foreign Exchange Manual. Such registration is important for facilitating the subsequent remittance of dividends and disinvestment proceeds abroad.
Previously, Pakistani companies were required to submit prescribed documentation through their designated Authorized Dealers for onward registration with the SBP. The designation of Authorized Dealers, selected from banks authorized to deal in foreign exchange, also required SBP authorization. As applications were routed through Authorized Dealers for processing by the SBP, these arrangements involved additional regulatory procedures and documentation.
Key Regulatory Changes
1. Delegation of Registration and Designation Functions
The principal change is the delegation of responsibility for registering eligible non-resident shareholdings to Authorized Dealers.
Under the amended paragraph 7(v) of Chapter 20 of the Foreign Exchange Manual, a Pakistani company or fund may approach an Authorized Dealer of its choice for designation. Once designated, the bank is responsible for registering shares or units issued or transferred to non-residents on a repatriable basis and processing the related dividend and disinvestment remittances.
Unlike the previous framework, eligible share registrations may be completed by the designated Authorized Dealer without separate registration by the SBP. The bank may also issue its own designation letter, subject to notifying the SBP within three working days.
The procedures further provide a mechanism for changing the designated Authorized Dealer, requiring the company’s board approval, the existing designation letter and a no-objection certificate from the previously designated bank.
Authorized Dealers must maintain centralized Share Registration Units to undertake these functions, subject to continuing regulatory oversight by the SBP.
2. Simplification of Documentary Requirements
The SBP has simplified certain documentary requirements applicable to the registration of shares on a repatriable basis.
For instance, the previous procedure for registering bonus shares issued to non-residents expressly required an auditor’s certificate confirming compliance with applicable laws, in addition to the relevant board resolution and audited accounts. The revised minimum documentary requirements specify the board resolution and audited accounts without separately requiring such a certificate.
Similarly, the earlier procedure for registering transfers of shares between non-residents against payment outside Pakistan expressly required a prescribed transferee’s certificate. This certificate is no longer included in the revised minimum documentary requirements.
Certain prescribed registration forms and supporting documents previously required for other categories of transactions have also been omitted from the revised minimum list.
Nevertheless, transaction-specific documentation continues to be required, including evidence of inward foreign remittances, relevant corporate approvals, financial statements and valuation certificates, where applicable.
Authorized Dealers retain the discretion to request additional information or documentation to verify transactions. The simplification of documentary requirements does not dispense with independent obligations under applicable corporate, securities or tax laws.
3. Ownership Disclosure Requirements
While simplifying certain documentary requirements, the procedures expressly prescribe verification obligations concerning the beneficial ownership of non-resident investing entities.
Applicants must provide an undertaking executed by the company secretary confirming that no resident Pakistani directly or indirectly holds a beneficial ownership interest in the relevant non-resident entity.
Where a person of Pakistani origin or a non-resident Pakistani holds a direct or indirect ownership interest in the foreign investing entity, additional verification requirements apply. These include documentary evidence and an undertaking confirming that the relevant ownership interest was acquired from earnings derived outside Pakistan, without using funds originating in Pakistan, and while the person held non-resident status.
The prescribed registration letter also provides that if resident Pakistani beneficial ownership is subsequently discovered, the registration on a repatriable basis will be treated as null and void, with the applicant being responsible for repatriating any dividends or disinvestment proceeds previously remitted to the non-resident entity.
Foreign investors, particularly those using intermediate holding companies or multi-tiered ownership structures, should therefore carefully assess the applicable beneficial ownership requirements before undertaking investments.
Implications for Foreign Investors
The framework is particularly relevant to multinational companies establishing or capitalizing Pakistani subsidiaries, foreign investors acquiring shares in existing companies and international groups undertaking corporate restructurings.
By transferring routine registration and designation functions to Authorized Dealers and simplifying certain documentary requirements, the arrangements are intended to improve processing efficiency and reduce administrative coordination with the SBP.
However, the anticipated efficiency gains may depend on the operational readiness and internal procedures of individual Authorized Dealers. Differences in banking practices, documentary verification and internal processing timelines may result in varying processing times, particularly for complex transactions.
Foreign investors and Pakistani companies should therefore engage with their designated Authorized Dealers at an early stage to confirm applicable documentation requirements and anticipated processing timelines, particularly for time-sensitive transactions.
The framework also facilitates the existing arrangements for remitting dividends and disinvestment proceeds through designated Authorized Dealers. Such remittances remain subject to applicable foreign exchange requirements, including verification of repatriable shareholding status and relevant tax documentation.
Foreign investors should ensure that their investments are appropriately structured and supported by the requisite corporate approvals, banking records, beneficial ownership information and tax documentation. Particular attention should be given to transactions involving indirect Pakistani ownership, transfers of unlisted shares and investments requiring additional regulatory approvals.
Conclusion
The delegation of registration and designation functions to Authorized Dealers, together with simplified documentary requirements, represents an important procedural improvement in Pakistan’s foreign investment regulatory framework.
While these arrangements are intended to facilitate foreign investment transactions, the substantive requirements governing foreign investment, beneficial ownership and repatriation remain applicable. Foreign investors should therefore approach the revised procedures with appropriate attention to regulatory compliance and transaction planning.