Investment advisory licensing: scope and legal route
An investment adviser in Pakistan is not merely a company that calls itself a consultant. Under rule 2 of the Non-Banking Finance Companies (Establishment and Regulation) Rules, 2003, investment advisory services include managing discretionary or non-discretionary portfolios for individual or institutional clients and advising for remuneration on the value of securities or the advisability of investing in, buying or selling securities. The precise commercial activity, rather than the business name, determines the regulatory analysis.
The Securities and Exchange Commission of Pakistan (SECP) administers a dedicated non-banking finance company (NBFC) investment-advisory licensing route. For a new entity, the regulator identifies three distinct stages: permission to form the NBFC, incorporation, and a subsequent licence to conduct investment advisory services. A name-reservation letter, company incorporation certificate, tax registration or even an NBFC formation permission is not an investment-advisory operating licence.
The proposed mandate must be documented before filing. A research newsletter, a client-specific recommendation, discretionary portfolio management, distribution of collective investment schemes, brokerage execution, custody of client assets and management of a mutual fund may engage different legal permissions and conduct duties. An investment-advisory licence should not be presented as a general authorisation to accept deposits, operate a securities brokerage, launch a collective investment scheme or act as custodian. Where multiple activities are intended, assess each regulatory perimeter and permitted combination under the NBFC Rules and other applicable securities legislation.
Core primary instruments: NBFC Rules, 2003 (SECP consolidated text, September 2023) ; NBFC and Notified Entities Regulations, 2008 (SECP consolidated text, January 2026) ; and SECP investment-advisory licensing route .
Who may apply, and what must be established
Schedule I to the NBFC Rules lists a public limited company incorporated as an NBFC under rule 4, and an existing eligible fund-management NBFC, for investment-advisory licensing. A newly incorporated private company should not assume eligibility merely because the regulator's May 2025 checklist contains a general statement that an NBFC may be private or public; the category-specific Schedule I and any later legally effective amendment must control.
Promoters, proposed directors, chief executive and chairman must satisfy fit-and-proper requirements. The licensing file must demonstrate financial capacity, appropriate experience, governance, management independence, a coherent business plan and the minimum equity required for the particular activity.
Minimum equity: Schedule I to the NBFC Regulations consolidated as of 15 January 2026 states PKR 30 million for Investment Advisory Services. This is a continuing minimum-equity requirement under regulation 4, not a substitute for application fees or an undertaking that the regulator will license the business. The same Schedule contains separate figures for asset management, and the May 2025 advisory checklist appears to reproduce an asset-management minimum-equity table. The advisory applicant should therefore use the enacted Schedule I, not the inconsistent checklist table, and obtain a category-specific written clarification if seeking a digital variant.
Board and experience: Schedule I to the NBFC Rules prescribes one-third independent directors for the investment-advisory category and at least one director with relevant five-year senior-management experience where the board comprises three directors, or two where the board exceeds three. The Companies Act and applicable company-governance requirements must also be checked. The May 2025 SECP checklist requests board classifications, a female director, directors' identity and qualifications, CEO experience and tax status; these should be treated as live filing requests subject to verification against the applicable law and any SECP clarification.
Permitted combinations: Rule 5 distinguishes fund-management NBFC activities from lending-NBFC activities. An investment-advisory applicant should not assume that it can add investment finance, leasing or housing finance under the same company. An existing fund-management NBFC must separately establish its eligibility to add the investment-advisory category and submit the applicable Form II application.
Foreign or public-sector participation: foreign sponsors and directors require identity, source-of-funds and authentication evidence; security clearance may be relevant. Government servants and public-sector enterprises may require specific NOCs or competent-authority approvals. SECP's June 2026 foreign-sponsor circulars and the current checklist should be reviewed for the exact application type; an ordinary local sponsor's document list is not sufficient for every foreign structure.
Documentary requirements: formation and operating licence
Stage A — permission to form: prepare Form I under rule 4, a name-availability letter obtained through the SECP eZfile name-reservation process, proposed memorandum and articles, and evidence of the prescribed processing fee. The formation dossier should identify every promoter, proposed director, CEO and beneficial owner; provide CNIC or authenticated passport evidence as applicable; and include the signed fit-and-proper particulars and affidavit required by the regulator. The SECP advisory checklist calls for a business plan with at least three years of cash-flow projections, strategic forecasts, manpower and capital budgets, and an explanation of the planned advisory clients and services.
The same checklist requests sponsor net-worth certificates supported by tax/wealth statements, generally testing financial capacity against the proposed subscription, and evidence of relevant senior-management experience. Foreign individuals may require embassy-attested or apostilled identity and financial evidence, depending on jurisdiction and the governing circular. The checklist also calls for active-taxpayer status, independent-director particulars and, in appropriate cases, government-service NOCs or public-sector approvals. Do not submit a foreign document without confirming the accepted authentication route and translation requirements.
Stage B — incorporation: following the SECP formation permission, complete the company registration using the appropriate public-company incorporation procedure, the approved objects and constitutional documents. Preserve the incorporation certificate, memorandum, articles, allotment evidence, directors' particulars and bank documentation. Company incorporation fees are separate from the NBFC permission and licence fees and depend on the corporate filing and applicable Seventh Schedule.
Stage C — investment-advisory licence: file Form II under rule 5 with the SECP Licensing Department. The licensing package should include certified constitutional documents, an auditor's confirmation of the applicable minimum equity, bank/proceeds evidence of the subscribed capital, board and senior-management evidence, the updated business plan, and prescribed undertakings by the company and relevant sponsors, shareholders, directors and chief executive. The May 2025 checklist also asks for CDC share-blockage undertakings, any required Ministry of Interior clearance, the compliance framework and a business-plan presentation to SECP. Treat each item as conditional on the actual ownership, board structure and category.
Operational annexures: prepare a specimen advisory engagement letter, client-risk questionnaire, investment-policy mandate, conflict-of-interest register, connected-party transaction controls, personal dealing policy, complaint procedure, record-retention arrangements, information-security and business-continuity controls. Where the adviser will manage portfolios, document the custodian relationship, account segregation, trade authority and performance reporting. These are not replacements for statutory forms; they evidence how the applicant intends to comply after licensing.
Use the SECP May 2025 Investment Advisory Services NOC and licence checklist as the filing index, but reconcile its apparent copied asset-management references with the enacted rules and regulations before making legal or capital representations.
How to obtain an investment-advisory licence — step by step
- 01Define the regulated service and applicant type
Write a precise activity matrix: advisory recommendations, discretionary and non-discretionary portfolios, client type, securities and products, custody, distribution, order execution and any intended group-company relationships. Compare the mandate with rule 2 of the NBFC Rules and the permissions for any adjacent securities business. An existing licensed fund-management NBFC and a newly proposed NBFC do not follow identical formation steps.
- 02Select the correct corporate vehicle and governance
For a new investment-advisory NBFC, plan the public limited company route identified in Schedule I to the NBFC Rules. Determine promoters, direct and beneficial ownership, directors, independent directors, chief executive and management personnel. Assess fitness, overlapping directorships, proposed share-blocking and the fund-management/lending separation under rule 5. Resolve any foreign-sponsor and public-sector approvals before paying filing charges.
- 03Reserve the name through SECP eZfile
Apply for a name that accurately reflects the proposed regulated activity and retain the official name-availability letter. Prepare the draft memorandum and articles consistently with the intended licence. A name reservation does not grant the right to provide investment advice. SECP's current incorporation rules and any activity-specific restrictions govern the name and constitutional objects.
- 04Apply for permission to form the NBFC (Form I)
Submit the signed Form I, supporting documents, affidavits, sponsor financial evidence and business plan to the SECP Licensing Department, with the applicable challan. Schedule II(A) to the NBFC Regulations (January 2026 consolidation) specifies PKR 250,000 for Form I. This is an application fee, not a guaranteed approval or a company-incorporation charge. Address deficiencies and requests for further evidence before treating the permission as granted.
- 05Incorporate within the NOC's validity
Rule 4(3) provides that formation permission is valid for six months; an application made before expiry may obtain an extension of up to three further months in special circumstances. Within the valid permission period, incorporate the company and submit the licence application. Record the exact issue and expiry dates of the NOC, not a generic six-month target measured from an earlier draft application.
- 06Capitalise and prepare the licensed operation
Demonstrate the PKR 30 million investment-advisory minimum equity using auditor and bank evidence. Arrange the qualified board and senior staff, approved constitutional objects, controls for conflicts and connected parties, independent custody where applicable, compliance and internal audit functions, client agreements and technology controls. Rule 5(6) includes promoter-share and CDC blocking conditions, subject to its stated exceptions; obtain documentary confirmation for the proposed ownership structure.
- 07Apply for the operating licence (Form II)
File Form II for the specific Investment Advisory Services category with the SECP Licensing Department and the category checklist. Schedule II(A) of the January 2026 consolidated Regulations specifies PKR 500,000 for a Form II NBFC activity licence. SECP may request clarification, conduct fit-and-proper inquiries, examine the business plan and impose conditions. Do not begin regulated advice merely because the application was accepted or a company was incorporated.
- 08Commence only within the licensed scope and maintain renewal
After the licence is granted, implement the approved client-onboarding, suitability, mandate, portfolio, custody, reporting and complaint controls. Rule 5(8) provides a three-year licence term and a Form IV renewal application at least one month before expiry; Schedule II(A) of the January 2026 Regulations lists the Form IV renewal application fee as nil. Check any later fee notification and the actual licence conditions before filing. Maintain a calendar for periodic SECP returns and regulatory changes.
The May 2025 checklist headed “Investment Advisory Services” contains text referring to Asset Management Services, including an AMC minimum-equity table and a general private-company statement. These do not override the investment-advisory entry in Schedule I to the NBFC Rules and the PKR 30 million investment-advisory equity figure in Schedule I to the January 2026 NBFC Regulations. The filing lawyer should confirm the correct category, corporate form, fee and any digital-business variation with SECP before submission. Do not copy the AMC figures into an advisory application.
Official application sources: SECP advisory licensing chronology and SECP category checklist and Forms I–II .
After licensing: client protection and continuing compliance
Client mandate and suitability: regulation 66B requires the investment adviser to put client interests first, assess the client's objectives, risk tolerance, time horizon, liquidity needs and financial constraints, and agree those matters in writing before providing investment services. Establish a client classification and risk-profile record; document each discretionary or non-discretionary authority, investment restrictions and fee schedule. Regulation 67 requires the adviser to inform SECP before commencing investment-advisory services and to obtain client acknowledgements of portfolio risks. Corporate clients require the appropriate board or trustee undertaking.
Conflicts and custody: the adviser must manage connected-party dealings, avoid mis-selling and misleading performance statements, and must not guarantee a portfolio's outcome. Maintain policies for personal dealing, best execution, client information confidentiality, trade allocation, segregation of duties and complaint handling. Regulation 67 includes independence requirements for custodians, including restrictions on cross-shareholding and common directorship; the custody structure must be checked before assets are placed under management. An advisory licence alone should not be construed as permission to receive client deposits or operate an unlicensed custody business.
Statements and performance: regulation 66B requires portfolio account statements to discretionary clients at least semi-annually, including allocation, gross and net returns, advisory and performance fees, portfolio value and performance since inception. Performance benchmarks and methods of valuation must be appropriate, consistent and not misleading. Maintain supporting investment decisions, client instructions, suitability records, disclosures and valuation evidence in a form that can be produced during an SECP inspection or client dispute.
Corporate and regulatory controls: maintain the minimum equity, qualified directors and executives, an internal audit and compliance function, accounting and regulatory reporting, approved auditors and records in accordance with the NBFC Rules, Regulations and licence conditions. Rule 7 addresses preservation of business records for not less than ten years. Check periodic financial statements, anti-money-laundering and counter-terrorist-financing obligations, applicable cybersecurity requirements and current investor-onboarding instructions. SECP's June 2026 master circular for investment advisory services and its August 2026 consolidated investor-onboarding circular should be included in the compliance register, with each requirement applied only where its scope covers the adviser.
Changes and renewal: seek required SECP approvals before relevant changes to the CEO, directors, major shareholdings, constitutional objects or business activities. Track the three-year licence period and file the Form IV renewal at least one month before expiry. Neither the nil renewal fee stated in the January 2026 Schedule II nor any assumed regulator turnaround period dispenses with the obligation to satisfy renewal conditions. Additional services, such as securities brokerage or launching a collective investment scheme, require their own perimeter analysis and permissions.
Primary-source reconciliation and regulatory developments
Statutory baseline: rule 2 (definition of investment advisory), rules 3–5 (fitness, NOC, licensing and activity separation), rule 7 (ongoing conditions) and Schedule I (investment-advisory corporate eligibility and governance) of the NBFC Rules, 2003 consolidated to September 2023 ; regulation 4 and Schedule I (minimum equity), regulation 66B (conduct), regulation 67 (portfolio-management controls) and Schedule II(A) (fees) of the NBFC Regulations, 2008 consolidated to 15 January 2026 . These are the controlling published instruments used for the numerical figures and legal distinctions above.
Checklist discrepancy: the SECP investment-advisory checklist dated May 2025 is a useful application inventory but contains apparent template carryovers referring to asset management, including an AMC capital table and company-type language inconsistent with the category-specific investment-advisory entries in the consolidated Rules and Regulations. The guide follows the operative category-specific schedules and identifies the discrepancy expressly. A written SECP clarification is prudent where the regulator's intake staff request the conflicting checklist text.
Current circulars: Circular 18 of 2026 — master circular for mutual funds, collective investment schemes and investment advisory services (as of 30 June 2026) and Circular 19 of 2026 — consolidated investor onboarding (27 August 2026) should be assessed for the applicant's actual activity. Circular 10 of 2026 — foreign sponsors and directors is relevant where the ownership or management structure includes foreign individuals or entities. These instruments supplement, rather than replace, the Rules and Regulations.
Proposed changes are not enacted law: SECP's notification list identifies S.R.O. 1638(I)/2026 dated 29 September 2026 as draft amendments to the NBFC Regulations, 2008. No requirement from that consultation is applied here as operative merely because it was published. Before filing, check SECP's subsequent notifications and the regulator's consolidated instruments for any final adoption, amendment or effective date. A regulator checklist, web page or translation may lag behind an enacted notification.
Filing method and timing: name reservation and incorporation use the applicable SECP corporate filing route, while the investment-advisory NOC and Form II applications are directed to the SECP Licensing Department under the official licensing guide and checklist. The regulator may request a presentation, clarifications, additional verification or security clearance. No fixed SECP processing time is represented. Only statutory validity and renewal periods supported by the cited Rules are stated above.
Governing law and official sources
The investment-advisory licence is governed by the NBFC Rules, 2003 and the NBFC and Notified Entities Regulations, 2008, read with the relevant company, securities, anti-money-laundering and SECP instruments. The linked SECP consolidated texts and checklist should be checked for superseding instruments at the time of an actual filing.
How Chambers can assist
Chambers can review the legal route, identify regulatory constraints, prepare or review the supporting corporate and legal documents, manage the prescribed submission and correspond with the competent authority where instructed. The scope of the engagement will be determined by the applicant’s particular circumstances.
For an initial enquiry, identify the proposed activity, applicant entity and current stage, and provide the available documents indicated above. Please avoid sending confidential or identity-sensitive records through an unencrypted first contact.
Common questions about Investment Advisory Services Licence
Does registering a company allow it to provide investment advisory services?
No. A new investment-advisory NBFC requires SECP formation permission, incorporation and a separate operating licence. Incorporation, name reservation and a tax number are not authorisation to advise clients.
What minimum equity and licence fees apply to an investment adviser?
The January 2026 consolidated NBFC Regulations specify PKR 30 million minimum equity for Investment Advisory Services, PKR 250,000 for Form I formation permission, PKR 500,000 for Form II licensing, and a nil Form IV renewal fee. Company-incorporation charges are separate. Verify later notifications before filing.
Can an investment advisory NBFC be a private limited company?
The investment-advisory category in Schedule I to the SECP NBFC Rules identifies a public limited company or an eligible existing fund-management NBFC. A May 2025 checklist contains a broader private-company statement apparently carried over from another category; obtain SECP clarification rather than relying on that statement.
When must the NBFC apply for licensing and renewal?
Formation permission under rule 4(3) ordinarily lasts six months, extendable on timely application for up to three further months in special circumstances. The company must incorporate and apply for its licence during the permission period. Rule 5 provides a three-year licence term and Form IV renewal at least one month before expiry.
What conduct duties apply after licensing?
The adviser must document client objectives and risk tolerance, manage conflicts and custody independence, avoid misleading performance claims and guarantees, maintain records and regulatory reporting, and provide discretionary clients with portfolio statements at least semi-annually under regulation 66B.
This guide is general information, not advice on your facts. Check the applicable law, notifications, updated regulator checklists and jurisdiction before acting. The authority alone determines eligibility, acceptance and approval; no outcome or processing period is guaranteed.