Section 224 — Classification of Companies
At a glance
- Classifies every company into one of four tiers — Public Interest, Large, Medium, or Small Sized — under the criteria set out in the Third Schedule.
- The tier determines which accounting framework (IFRS, IFRS for SMEs, or Revised AFRS for SSEs) and which Schedule (Fourth or Fifth) applies when preparing financial statements under Section 225.
- Classification is based on the previous year's audited financial statements and only changes after two consecutive years outside the previous tier.
- The Commission may amend these categories by notification — the current criteria (as at 29 Dec 2025) are on the Third Schedule page.
Statute text
For the purpose of this Act, the
companies may be classified in such categories as may be specified in the Third
Schedule.
Related law
Practical compliance checklist
- Check the Public Interest Company test first (listed, public sector, SECP-regulated financial entity, bank/DFI, or sugar producer) — it overrides the size tests.
- If not a PIC, test against the Large Sized Company thresholds: paid-up capital, turnover, or employee count.
- If below LSC thresholds, test against Medium Sized Company thresholds (different tests for public vs private companies).
- A private company below the MSC thresholds is Small Sized — there is no Small tier for a non-listed public company.
- Confirm the applicable accounting framework and Schedule (Fourth/Fifth) before preparing this year's financial statements.
- Re-check the classification each year against the prior year's audited accounts; don't reclassify off a single off-year.
Plain-language explainer
Think of this as a sorting rule for how much paperwork and scrutiny your company's financial reporting attracts. Every company lands in one of four buckets — Public Interest, Large, Medium, or Small — based mostly on how big it is (paid-up capital, turnover, and headcount) and, for certain regulated businesses like banks, insurers, and stock exchanges, on what kind of business it runs rather than its size. The bucket you're in decides which accounting rulebook you must use to prepare your financial statements. Bigger and more sensitive companies (listed companies, banks, insurers) follow full international standards (IFRS); small private companies get a lighter-touch standard built for their scale. Section 224 is the one-line rule that says "the Third Schedule decides your category" — the actual thresholds live in that Schedule, not in this section.
Professional notes
The Third Schedule (reproduced in full on the Third Schedule page) attaches to both Section 224 (classification) and Section 225 (financial statement content), and is cross-referenced by Section 2(53) (definition of “public interest company”) and Section 216 (deemed public interest company). Key figures currently in force were last revised by S.R.O. 602(I)/2022 (14 May 2022), which raised the LSC/MSC turnover threshold from Rs. 1 billion to Rs. 800 million and the SSC turnover ceiling from Rs. 100 million to Rs. 150 million, and by S.R.O. 921(I)/2024 (25 June 2024), which added sugar-production/sale companies as a new PIC sub-category.
Note the asymmetry in the MSC test: the private-company MSC band starts at paid-up capital > Rs. 10 million, while the non-listed public-company MSC band has no stated floor — a non-listed public company below the LSC thresholds is Medium Sized by default, with no Small Sized tier available to it (SSC applies only to private companies). Practitioners should also note the two-year persistence rule (Note 2 to the Schedule): a company does not reclassify on a single year’s dip or spike — the new criteria must be failed or met for two consecutive financial years.
SECP updates linked to this section
The circulars, S.R.O.s, and notifications that shaped this section over time.
Inserted a new sub-category into the non-listed Public Interest Company (PIC) classification under the Third Schedule: securities brokers licensed in the Trading and Self-Clearing or Trading and Clearing category and holding custody of customer assets, and Professional Clearing Members, are now classified as Public Interest Companies. This brings them into the same tier as NBFCs, modarabas, insurers, exchanges, and depositories for financial-reporting purposes — International Financial Reporting Standards under the Fifth Schedule, rather than whatever lighter framework their size alone would otherwise have qualified them for.
Raised the turnover thresholds used to classify a non-listed company's size under the Third Schedule (Sections 224/225), across all three tiers below Public Interest Company level:
- Large Sized Company (non-listed, clause (a)(ii)): the trigger changed from turnover of "Rs. 1 billion or more" to turnover "greater than Rs. 800 million".
- Medium Sized Company — non-listed public company (clause (a)(ii)): from "turnover less than Rs. 1 billion" to "turnover upto Rs. 800 million".
- Medium Sized Company — private company (clause (b)(ii)): from "turnover greater than Rs. 100 million but less than Rs. 1 billion" to "turnover greater than Rs. 150 million but not exceeding Rs. 800 million".
- Small Sized Company (clause (ii)): the ceiling moved from "turnover not exceeding Rs. 100 million" to "turnover not exceeding Rs. 150 million".
Net effect: more companies now qualify for a smaller-tier, lighter reporting framework than before this SRO, since the Rupee bar for moving up a tier was raised across the board.
Inserted a further sub-category into the non-listed Public Interest Company (PIC) classification under the Third Schedule: all companies engaged in the production and sale of sugar are classified as Public Interest Companies, regardless of their size, and must report under International Financial Reporting Standards per the Fifth Schedule.