Pakistan Draft Law: Rs. 100M Fine for Unlicensed VC Firms

Pakistan's newly proposed Venture Capital Act, 2026 would impose a fine of up to Rs. 100 million, along with imprisonment of up to three years, on businesses that conduct venture capital activities without the required license or registration, according to ProPakistani. The draft law, prepared by the Securities and Exchange Commission of Pakistan (SECP), is under consultation with the Board of Investment (BOI) and other stakeholders and remains draft legislation.

On August 24, 2026, the SECP shared the draft Venture Capital Bill with the BOI for public consultation, Mettis Global reported.

Contents

01

A Standalone Framework for Venture Capital

02

Who Qualifies as a Startup

03

Licensing Costs and Investor Thresholds

04

Penalties and Transition for Existing Operators

A Standalone Framework for Venture Capital

The Bill was prepared under a Federal Government initiative that tasked the SECP with developing a standalone regulatory framework for venture capital and improving funding access for startups and high-growth businesses. SECP Chairman Dr. Kabir Ahmed Sidhu said the proposed law would help channel private capital into emerging businesses in Pakistan.

Mettis Global reported that Pakistan's startup, technology and innovation sectors face limited access to formal venture capital, with a substantial portion of investment activity structured offshore or outside the domestic regulatory framework.

Who Qualifies as a Startup

The draft law defines a startup as a company in existence for no more than 10 years, with annual turnover not above Rs. 500 million in any financial year since incorporation, meeting innovation, scalability or employment and wealth-creation criteria. The framework establishes a two-tier system: venture capital fund management companies would require licenses while individual funds would require separate registration, and venture capital business could not be conducted without a license.

Licensing Costs and Investor Thresholds

A venture capital fund management company would require minimum equity or capital of Rs. 15 million, and the proposed license application fee is Rs. 200,000, with the SECP required to decide a complete application within 45 working days. Eligible individual Pakistani or foreign investors would need annual income of at least Rs. 5 million and net assets of at least Rs. 15 million, excluding their personal residence.

Penalties and Transition for Existing Operators

The draft proposes fines of up to Rs. 50 million for violations including breaches of the law or regulatory directions, failure to provide information, false or misleading disclosures and misappropriation of assets. Existing unlicensed venture capital activities covered by the law would receive 12 months after its commencement to obtain approval, after which non-compliant operators would be barred from accepting new investments and must wind down within 30 days.

The SECP and BOI will consult including startups, fund managers, legal and financial experts, the State Bank of Pakistan, the Pakistan Stock Exchange and industry associations, after which the draft will proceed through the legislative process.