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A Intercompany Agreement formally sets out how related companies within a group structure work together and share resources in Pakistan. These contracts spell out essential details like pricing, service terms, and how profits get distributed between affiliated businesses - crucial for both tax compliance and corporate governance.

Under Pakistani company law, these agreements help businesses document their internal dealings properly, especially when moving money or assets between subsidiaries. They're particularly important for multinational companies operating locally through multiple entities, as they need to prove their transactions follow market rates and meet Federal Board of Revenue requirements for transfer pricing.

Put an Intercompany Agreement in place before your Pakistani company starts sharing resources, staff, or services with related businesses. This is especially crucial when setting up new subsidiaries, expanding operations across multiple entities, or restructuring your corporate group to improve efficiency.

The timing matters most when your business starts regular transactions between group companies, like management services or equipment sharing. Pakistani tax authorities closely examine these arrangements, so having clear documentation from day one helps prevent compliance issues. It's particularly important before major financial transactions, cross-border dealings, or when establishing shared service centers.

• Intercompany Loan Agreement: Governs financial lending between related companies, specifying interest rates, repayment terms, and security arrangements under Pakistani banking regulations.
• Inter Company Services Agreement: Covers general business support services between group companies, including management, IT, or administrative assistance with clear pricing structures.
• Intercompany Shared Services Agreement: Focuses specifically on resource sharing arrangements, detailing cost allocation methods and service levels for shared facilities, staff, or technology infrastructure.

• Parent Companies: Direct and oversee the implementation of Intercompany Agreements across their corporate group, ensuring alignment with Pakistani tax and corporate regulations.
• Subsidiary Companies: Execute these agreements as service providers or recipients, maintaining operational documentation and financial records.
• Corporate Legal Teams: Draft and review agreements to ensure compliance with local laws and group policies.
• Finance Directors: Monitor pricing structures and payment terms to maintain tax efficiency and regulatory compliance.
• External Auditors: Review these agreements during annual audits to verify arm's length transactions and proper documentation.

• Company Details: Gather registration numbers, addresses, and authorized signatories for all Pakistani entities involved in the agreement.
• Service Scope: Define exact services, resources, or assets being shared between group companies.
• Pricing Structure: Document market-based rates and payment terms that satisfy transfer pricing requirements.
• Performance Metrics: List specific service levels, delivery timelines, and quality standards.
• Compliance Check: Our platform helps ensure your agreement meets SECP regulations and tax authority requirements while minimizing legal risks.
• Internal Approvals: Secure sign-off from finance, legal, and management teams before finalizing.

• Party Information: Full legal names, registration numbers, and registered addresses of all Pakistani group companies involved.
• Service Description: Detailed scope of services, resources, or assets being exchanged between entities.
• Payment Terms: Clear pricing structure, payment schedules, and currency specifications compliant with SBP regulations.
• Duration and Termination: Agreement period, renewal terms, and conditions for early termination.
• Dispute Resolution: Pakistani jurisdiction clause and specific arbitration procedures.
• Confidentiality: Data protection measures and information handling protocols.
• Regulatory Compliance: References to relevant SECP guidelines and transfer pricing requirements.

An Intercompany Agreement differs significantly from a Business Acquisition Agreement in several key aspects, though both are important for Pakistani corporate transactions. While Intercompany Agreements manage ongoing relationships between related entities, Business Acquisition Agreements handle one-time purchases of entire businesses or their assets.

• Relationship Type: Intercompany Agreements govern continuing operations between affiliated companies, while Business Acquisition Agreements deal with one-off transactions between independent parties.
• Pricing Approach: Intercompany Agreements must use arm's length pricing to satisfy tax authorities, whereas Business Acquisition Agreements typically reflect negotiated market values.
• Duration: Intercompany Agreements are usually ongoing with periodic reviews, while Business Acquisition Agreements conclude once the purchase is complete.
• Regulatory Focus: Intercompany Agreements face scrutiny from transfer pricing regulators, while Business Acquisition Agreements primarily concern SECP merger control rules.