Can the liaison office sell or invoice?
Ordinarily, no. A Pakistani liaison office permitted under the Board of Investment's framework has a promotional and exploratory role. BOI expressly states that liaison offices cannot undertake commercial or trading activities. Its description refers to product promotion, technical advice and assistance, exploration of possible joint collaboration and export promotion. The office is not an unrestricted local sales operation.
Consequently, the practical question is whether the overseas enterprise's proposed actions remain within the permission granted to its office. A staff member describing the product to buyers is performing a different function from accepting binding purchase orders or issuing invoices. Calling the workplace a liaison office does not turn revenue-generating conduct into permitted marketing.
The difference between promotion and contracting
Promotion may involve meetings, demonstrations, product literature, market research and discussions about potential business relationships. A representative might explain technical capabilities and put a Pakistani customer in contact with the overseas headquarters. Those activities correspond to the purpose described by BOI, subject to the particular conditions of the permission.
A quotation may create contractual consequences depending on its language, certainty and how it is accepted. If the local representative is empowered to commit the parent to price, delivery or payment terms, the office may be acting beyond a merely promotional mandate. Internal titles are not decisive. The investor should examine actual messages, authorisations and signed documents, not just an organisation chart.
Does it matter where the invoice is issued?
Yes, but invoicing location alone cannot settle the legal question. A head-office invoice for a genuinely overseas transaction raises different issues from a local liaison office arranging orders, accepting money and managing a domestic distribution business. The entity named on the invoice, the seller under the contract, the flow of goods, the party collecting the payment and the conduct of local staff must be understood together.
An enterprise should not assume that an invoice on foreign letterhead or payment to a foreign bank automatically makes the liaison office's activities lawful. Depending on the transaction, separate tax, customs, exchange-control and sector-specific questions may arise. The BOI permission must be assessed against actual business conduct, not against accounting terminology alone.
What if the liaison representative signs a memorandum?
A signature is not automatically unlawful merely because the signatory is employed by a liaison office. Administrative documents, office leases and correspondence about possible collaboration are not necessarily equivalent to final customer sales contracts. The difficulty is that a document described as a non-binding memorandum may include enforceable obligations about exclusivity, payment, reimbursement or dispute resolution.
Review the complete wording, the signatory's authority and the office permission. If the memorandum commits the foreign enterprise to supply goods at an agreed price or conduct ongoing trading, its legal effect requires closer scrutiny. The fact that the parties call the document preliminary is not conclusive.
Can an independent distributor make the sales?
A genuinely independent Pakistani distributor can act as a separate business that purchases and resells products. Its role should be set out in a clear distribution agreement. The parties should decide who purchases goods, handles imports, maintains inventory, bears customer credit risk and holds any product or sector permissions. The arrangement should reflect what happens in practice.
SECP's foreign-company guidance distinguishes ordinary dealings through a bona fide broker or commission agent from arrangements under which the representative has general authority to conclude contracts or maintain merchandise for the foreign enterprise. The use of a local distributor does not eliminate the need to examine the overseas company's business presence, tax exposure or industry regulation. A title is not a substitute for genuine commercial independence.
Would a branch office be enough instead?
Not for every proposed sales business. BOI's branch-office guidance concerns fulfilment of obligations under specified contracts with public- or private-sector counterparties. The branch's permitted activity is linked to the relevant agreement. BOI also states that branch offices may not undertake commercial or trading activities generally. It is therefore unsafe to treat a branch as a universal trading licence.
A foreign engineering contractor performing a named installation project may have a different case from a manufacturer opening an indefinite local wholesale operation. The permission letter, underlying contract and planned activity must be aligned. A new customer or expanded product line may require reassessment of the authorised structure rather than an assumption that an existing permission covers everything.
When may a subsidiary be a better option?
A Pakistani subsidiary has separate corporate personality and may enter contracts in its own name, subject to applicable corporate and regulatory law. Where the business intends repeated sales, local inventory, direct employment, invoicing and long-term investment, a properly structured subsidiary may provide a clearer operating platform than a liaison office. Incorporation will bring its own accounting, filing, governance and tax obligations.
Foreign ownership is broadly available under BOI's published investment policy, subject to particular sectoral exceptions. A prospective shareholder should separately examine any restrictions and operating licence requirements in the relevant industry. Forming a company does not itself authorise an otherwise regulated activity.
Why do both BOI and SECP appear in the process?
BOI grants permission for branch and liaison offices and publishes the applicable purpose, indicative duration and renewal requirements. SECP addresses the registration of a foreign company's place of business under section 435 of the Companies Act, 2017. SECP's guidance identifies BOI permission as a step before seeking company-law registration. The processes should not be collapsed into one.
The application record will ordinarily need the foreign entity's constitutional documents, evidence of incorporation, a resolution authorising local establishment and identification of the proposed representative. A branch application also calls for the relevant customer contract. Because successive official publications describe different forms and submission routes, current administrative particulars should be confirmed with the authorities rather than copied uncritically from an old checklist.
Example: the office begins accepting orders
Assume an overseas equipment supplier has obtained permission for a liaison office and initially uses it only for product demonstrations and meetings. Later, its representative is instructed to accept Pakistani customers' orders, agree delivery obligations and arrange collection into a local account. Those instructions change the activity from market development towards trading. The existing permission may no longer support what the office is doing.
Management should review the permission and the actual transactions immediately, preserve order records and correspondence and determine which authorised entity should perform future sales. A change of structure may be appropriate, but it does not automatically resolve tax, contractual or regulatory questions arising from earlier transactions.
What should the company's directors review?
Before authorising local sales activity, directors should obtain the BOI permission, SECP registration particulars, corporate resolutions and powers of attorney, proposed sales contracts and invoices, distribution agreements and a clear account of who receives customer payments. They should map the locations and responsibilities of staff, inventory, technical support and the import process.
That record supports a concrete decision: retain a genuinely promotional presence with strict limitations, establish a branch for eligible defined contractual work, or create an operating subsidiary for continuing trade where the law permits. It also allows legal advisers to consider banking, tax and sector regulation on the actual facts. The safest analysis begins before the office changes its conduct, rather than after a dispute with a buyer or public authority.
Legal materials and further reading
See the Board of Investment's office guidance, the SECP's foreign-company guidance and the SECP's incorporation materials. The accompanying Legal Insight on subsidiaries, branches and liaison offices examines the broader entry decision.