Pakistan

The principal structures for M&A transactions in Pakistan, applicable to both listed and unlisted companies, are:

• share purchases or share subscriptions;
• asset (or business) transfers; and
• statutory mergers or demergers pursuant to a scheme of arrangement (SOA).

These structures can be adopted as standalone methods, or in any combination thereof, including as part of joint ventures, to achieve specific strategic, financial, legal, and tax objectives. They may also be leveraged as modes for executing privatisation initiatives and government-to-government (G2G) transactions. In transactions involving government divestment and/or private sector participation in state-owned assets, compliance with additional laws and procedures is typically required.

While all structures are subject to regulatory approvals and other forms of legal compliance (for example, mandatory tender offer (MTO) for listed companies), they may differ in key respects, including procedural complexity, tax and stamp duty implications (at the federal and provincial levels), and instruments used to effectuate the transaction.

Share purchases or share subscriptions are primarily used for the transfer of or investment in the equity of the target, with ownership shifting at the shareholder level and the target’s legal identity continuing unchanged. As a result, all assets, contracts, employees, and liabilities (including unknown or contingent) are “inherited” by the transferee. By contrast, asset (or business) transfers relate to transfers of identified assets and/or liabilities and can be effected through asset purchase agreements or schemes of arrangements.

An asset transfer, effected through an asset purchase agreement, is a contractual transaction whereby specified assets and/or liabilities can be individually transferred through independent transfer instruments, subject usually to third-party consents. By contrast, an SOA is usually a court-sanctioned statutory process through which reorganisation, acquisition, or transfer is effected by operation of law, once approved by majority shareholders, creditors, and the court. An SOA can bind dissenting stakeholders and can permit the transfer of assets, liabilities, shares, or the entire undertaking. SOAs are more time intensive than share or asset transfers, but provide additional procedural safeguards, including mandatory public notices and the calling of shareholder and creditor meetings, ensuring a clean, bona fide transaction, and limiting the risk of legal challenge.

Generally stated, SOAs involving public interest or medium to large-sized companies require court sanction, whereas the Securities and Exchange Commission of Pakistan (SECP) oversees and sanctions parent-subsidiary reorganisations as well as SOAs for all other companies and government-owned entities (for example, the SECP sanctioned the SOA in the recent privatisation of Pakistan International Airlines (PIA)). For banking companies, the State Bank of Pakistan (SBP) sanctions amalgamations and SBP consent is required prior to court sanction in all non-amalgamation SOAs.

The Pakistani M&A market continues to demonstrate resilient deal flow. Small to mid-market transactions — including strategic carve-outs, group restructurings, and consolidations — in industrial and manufacturing, consumer goods and retail, e-commerce, and financial services and fintech sectors, have dominated the market. In contrast, there have been a few megadeals concentrated in specific sectors, namely the energy, mining and minerals, oil and gas, and telecommunications sectors.

Presently, there is an increase in foreign investor outgoing activity, concurrent with an uptick in acquisitions by domestic groups. Local interest is particularly evident among large conglomerates and family-owned businesses looking to diversify or expand their holdings beyond their traditional revenue streams.

Foreign investor participation remains selective and sector-focused, typically structured through direct equity and/or quasi-equity investments, joint ventures, or credit and financing arrangements, including investments or financing by development finance institutions and multilateral or bilateral financial institutions.

The Pakistani M&A market saw consolidation among telecom operators, driven by synergy-seeking transactions, including Engro Corporation’s acquisition of PMCL’s telecom tower infrastructure and PTCL’s acquisition of Telenor Pakistan (Private) Limited and related tower assets.

In the oil and gas sector, particularly downstream, foreign strategic investment continued to play a sizeable role. Notable examples include Gunvor Group’s acquisition of equity stake in the joint venture Total PARCO Pakistan Limited, Saudi Aramco’s equity investment in Gas & Oil Pakistan, and Wafi Energy Holding Limited’s acquisition of a majority stake in Shell Pakistan Limited.

Government policies and regulatory intervention also shaped transaction structures and deal activity, leading to amalgamations driven by capital adequacy requirements in the banking and finance sector, and the privatisation of state-owned enterprises pursuant to government privatisation programs and regulatory directives.

In recent months, the minerals and mining sector has attracted growing interest from foreign investors, particularly from the United States and Saudi Arabia. To sustain this momentum, federal and provincial legislative reforms are underway. These reforms aim to modernise the regulatory framework, streamline licensing and approvals, strengthen investor protections, and facilitate foreign participation, particularly in large-scale projects.

The Pakistani government has implemented a robust G2G framework to attract foreign investors, including sovereign entities from the Middle East seeking to strengthen commercial and strategic ties. This framework has been tested in the ports sector through long-term concession arrangements with Abu Dhabi Ports Group for the development and operation of specific terminals at Karachi Port.

Growth-stage companies across several sectors, including information technology, fintech, and healthcare, have attracted equity investments from both domestic and international venture capital and private equity funds. Additionally, the real estate sector has seen increased activity in development, rental, and investment-focused transactions, commonly executed through structured vehicles such as Real Estate Investment Trusts (REITs).

In the financial, fintech, and payment sectors, supported by a favourable regulatory environment, joint venture consortia between foreign and local players have emerged, in turn facilitating the launch of fully licensed digital banks and investments in payment service providers/operators.

There is heightened sensitivity around incorporating climate resilience into transactions, with particular focus on carbon markets and climate-based financing. Existing assets, particularly in the energy sector, are increasingly leveraged to facilitate these climate-focused initiatives, including through public-private partnerships.

Macroeconomic conditions continue to materially affect dealmaking, with foreign exchange availability constraints and related regulations impacting transaction structures, political and regulatory uncertainty leading to a tighter conditions precedent, heightened tax sensitivity in negotiations, and a litigious environment influencing risk allocation.

M&A activity in Pakistan is expected to remain robust, with continued momentum across key sectors including telecommunications, financial services and fintech (particularly crypto-related), minerals and mining, and ports. In telecommunications, equity investments, joint venture arrangements (particularly in the context of the 5G landscape), and further consolidation among operators are likely.

Deal activity is expected to feature frameworks such as G2G transactions and privatisation initiatives. Investor sentiment has been positively influenced by the recent privatisation of PIA, demonstrating the government’s ability to close large-scale strategic transactions. This is expected to spur further strategic transactions through privatisation initiatives across state-owned enterprises. Foreign investors, especially from the Gulf Cooperation Council and the People’s Republic of China, are anticipated to continue pursuing opportunities, particularly in the regulated sectors and through G2G frameworks or concession-based arrangements.

A rise in group restructurings and increased use of conditional agreements and schemes of arrangement is anticipated. Strategic equity investments and joint ventures are likely to remain a key focus for foreign investors.

Continued investments in the private equity and real estate sectors through structured investment vehicles such as REITs and local and foreign private equity funds are also expected.

ESG-driven transactions, particularly those targeting carbon markets, are expected to continue gaining traction. Government-backed financing instruments incentivising private sector players to invest in social and development initiatives, such as Pakistan’s first social impact bond (the Skills Impact Bond), may also attract investments.

Key laws and regulations governing M&A activity in Pakistan include:

• Companies Act, 2017, as certain proposed transactions may trigger statutorily prescribed consents, approvals, or processes, including, in some cases, approval of SECP;
• Competition Act, 2010, as well as the Competition (Merger Control) Regulations, 2016 (“Regulations”), as certain proposed transactions may require pre-merger clearance from the Competition Commission of Pakistan (CCP) if prescribed thresholds are met and the transaction is not otherwise exempt under the Regulations; and
• Securities Act, 2015 (“Securities Act”), Listed Companies (Substantial Acquisition of Voting Shares and Takeovers) Regulations, 2017 (“Listed Companies Regulations”), and the Rulebook of the Pakistan Stock Exchange (updated 21 October 2025) (“PSX Regulations”), as certain transactions involving listed companies may attract SECP or PSX approval and compliance with disclosure and procedural requirements.

In addition to the above, cross-border transactions must:

• comply with Pakistan’s foreign exchange laws, primarily, the Foreign Exchange Regulation Act, 1947 and the Foreign Exchange Manual, 2019, which empower SBP to regulate foreign exchange dealings; and
• satisfy the security clearance requirement for foreign investors and directors under the SECP Companies Regulation, 2024, for which necessary filings are made to the Ministry of Interior (MoI) through SECP.

Sector-specific regulators, including:

• SBP for the financial services and banking sector;
• the Oil and Gas Regulatory Authority for the oil and gas sector;
• the National Electric Power Regulatory Authority for the power sector;
• the Pakistan Telecommunication Authority for the telecommunications sector; and
• the Drug Regulatory Authority of Pakistan in the pharmaceutical sector.

Accordingly, transactions may require change-of-control, transfer of licence, or other approvals from the relevant sector regulator.

M&A transactions involving the sale of a state-owned entity or its assets to a private person are also subject to applicable privatisation laws, such as the Privatisation Commission Ordinance, 2000 and Privatisation (Modes and Procedures) Rules, 2001. These laws and procedures generally require prequalification followed by open and competitive bidding processes.

Common forms of consideration in Pakistan include:

• cash, which is the most common form of consideration in domestic and cross-border deals;
• deferred consideration/earn-outs, which are used to bridge valuation gaps or manage outward remittance risks; and
• shares, which may be less common in the context of share purchases or share subscriptions and asset transfers as opposed to statutory mergers and demergers.

Non-cash consideration is subject to additional compliance requirements, including independent third-party valuation, SECP approvals, shareholder consent, and regulatory filings.

All forms of consideration involving foreign elements may also be subject to foreign exchange controls and/or require special approval from SBP, unless expressly permitted under relevant laws.

The typical scope of due diligence encompasses several core legal areas, including corporate and title verification, regulatory and licensing compliance, employment matters, ongoing or threatened litigation, regulatory compliance, financing arrangements and other material contracts, change-of-control consent requirements, indebtedness, and immovable property ownership.

The standard focus of due diligence is to mitigate risks and determine the necessary coverage required under contractual arrangements, such as addressing commercial risks and securing regulatory consents and approvals.

Practical constraints impacting the due diligence process include a lack of organisational structure to support comprehensive data rooms during transactions involving smaller or family-owned businesses. Certain categories, such as indebtedness and property records, may be difficult to access publicly, requiring heavy dependence on the target to supply information. For listed companies, insider trading and price sensitivity concerns necessitate strict non-disclosure agreements and a limited diligence team.

While Pakistan does not have a comprehensive data protection law, certain sector-specific rules apply. For example, in the telecommunications sector, regulations govern the privacy of consumer data and restrict the processing, use, and disclosure of such information. Likewise, in the banking and finance sector, access to sensitive customer and commercial information is subject to confidentiality obligations under SBP’s prudential regulations and information sharing can require prior approval.

W&I insurance policies are not common in Pakistan and are typically requested only in a limited number of cross-border transactions. Parties generally manage risk through alternative mechanisms, such as personal or sponsor guarantees, escrow or holdback arrangements, and by placing greater emphasis on the quality and completeness of disclosure.

All sectors in Pakistan are generally open to foreign investment unless specifically prohibited or restricted on grounds of national security or public safety. Restricted industries include arms and ammunition, high explosives, radioactive substances, security printing, currency and minting, and consumable alcohol, which are subject to heightened regulation and may require prior governmental approvals or may be permitted only in limited circumstances.

There is generally no minimum foreign equity requirement, and up to 100% foreign ownership is permitted in most sectors, although certain industries, such as airlines, banking, agriculture, engineering, and media, are subject to sector-specific ownership caps.

Land ownership by foreign investors is subject to specific, prescribed parameters.

While not a restriction, routine registration with the State Bank of Pakistan is required to remit dividends and other returns abroad on a fully repatriable basis.

Please see Question 5, above, for additional clearance requirements or sector-specific laws that may apply to foreign investors and directors.

Listed companies are required to make immediate disclosure of price-sensitive or material information to the PSX and are obligated to address market rumours where these may affect trading.

Where a proposed acquisition meets prescribed thresholds (i.e. more than 30% of the voting shares or control), public announcement of intention and public announcement of offer (as applicable) may be triggered under the Securities Act and the Listed Companies Regulations. Associated disclosures or notifications to PSX and SECP are also mandatory on the target.

Public takeovers in Pakistan are primarily regulated by the Securities Act and the Takeover Regulations and are overseen by PSX.

An MTO is triggered when an acquirer acquires control or crosses prescribed ownership thresholds in a listed company. Once triggered, the acquirer must make public announcements of intention and subsequently launch an offer in accordance with prescribed timelines, pricing rules, and procedural requirements.

Public offers may be made conditional upon a minimum level of acceptances, subject to certain limitations. Fixed timelines apply throughout the offer process, and pricing is determined based on statutory criteria, leaving limited flexibility once an offer is announced. Tender offers must be conducted through licensed brokers and settled through the National Clearing Company of Pakistan. While competitive bids are permitted under applicable laws, these are not common.

Deal protection measures include separating conditions to offer and conditions to completion as distinct categories, and usually making the launch of the MTO conditional upon receipt of regulatory approvals, third-party consents, and so on.

In certain circumstances, transactions may be structured to include break fees or put options in favour of the acquirer where the transaction cannot be completed following the satisfaction of MTO requirements.

Minority shareholder protection is given effect by statutory pricing rules and opportunities through the MTO process. While squeeze-out provisions exist under Pakistani law, they remain largely untested in practice.

For domestic transactions, common dispute resolution forums include arbitration under the Arbitration Act, 1940 (“Arbitration Act”) and litigation before Pakistani courts. For transactions involving one or more foreign parties, disputes are often resolved through international arbitration, frequently seated at the Dubai International Arbitration Centre (Dubai, United Arab Emirates) or the London Court of International Arbitration (London, United Kingdom), or before foreign courts with appropriate jurisdiction.

Domestic arbitral awards are enforced through Pakistani courts under the Arbitration Act, whereas foreign arbitral awards, issued from jurisdictions that are signatory to the Convention on the Recognition and Enforcement of Foreign Arbitral Awards, 1958, are enforceable under the Recognition and Enforcement (Arbitration Agreements and Foreign Arbitral Awards) Act, 2011.

Pakistani law generally governs domestic transactions, while the law of England and Wales is frequently chosen for cross-border transactions.

Presently, AI-driven tools are available in Pakistan; however, their impact remains limited because available solutions are costly and adoption is still at an early stage.

Certain jurisdiction-specific factors materially influence corporate M&A transactions in Pakistan. Regulatory risk allocation is often deal critical due to stringent approval regimes and regulatory oversight. Furthermore, timing uncertainty around regulatory clearances is commonly priced into transactions, and effective relationship management with regulators remains essential. Structuring flexibility is more important relative to pure valuation metrics, and the careful assessment of litigation risk arising from minority shareholders, regulators, creditors, and other stakeholders is a key factor in transaction planning.