Single Member Company

Definition: Single member company [Section 2(65)] “single member company” means a company which has only one member

Single Member Company or “SMC” means a private company which has only one member and will avail privileges of limiting the liability.

Subject to certain modifications, all the provisions of the Companies Ordinance, 1984 which apply to private companies limited by shares will apply to single member companies

A Single Member Company or SMC has only one shareholder that is established as separate legal entity from its owner The creation of SMCs was first allowed by SECP through Single Member Companies Rules, 2003. These rules allow single persons to convert their non-corporate entities into companies with limited liability of the Single Member.

There is one member or shareholder who owns the company. He or she acts as the Director. The Single Member (Director) has all power of the company and can remove or appoint any officer.

Aima management consultant has dealt with registrations of various single member companies in Pakistan like health related single member companies, real estate single member companies, garments related single member companies, furniture related single member companies , electronics related single member companies, IT related companies, service oriented single member companies, travel and tour related single member companies, construction related single member companies, manufacturing related single member Companies, jewellery related services companies, home decoration related companies, event management & wedding decoration related single member companies.

Formation of Single member Company

Any person who want to form a Single member company, should apply all of the requirements to form a Private Company shall apply to form Single member Company.

Private Company shall also be converted into Single member company on complying with the rules and policies made thereunder.

After the Submission of required fee, the relevant CRO (Company Registration Office) takes at least one week to complete the process of registration of Single member company

It is also incumbent on such person to file with the registrar at the time of incorporation a nomination form as indicating as a minimum two individual or persons act as nominee director and alternate nominee director.

Required documents

The following documents are required to form Single member company :

The Name of Company or Business
Copy of CNIC(Computer National Identity Card) of director or Chief Executive Officer or a passport in case of Foreign director or Chief Excecutive Officer
Copy of CNIC(Computer National Identity Card) of Company Secretary
Memorandum and Article of Association of the company
Address of the company
Capital of Single member company
Power of Attorney
Official Registrations Filing Fee
Form for company registration

Advantages of single member company

Single member company has a separate legal entity as there is only single owner.
Liability of Single member company is proscribed to the amount invested.
Lower Corporation tax is charged in case of Single member Company.
Ownership of SMC easily transfer to another person without too much work
SMC does not cease incase of death of Single Owner
Owner of SMC takes decisions independently and receive the full share of distributed profit alone.

In 2003, SECP introduced the concept of SMC which is Single Member Company in Pakistan. It enables the businessmen to start a company without any partners. Currently, more than four thousand and five hundred (4500) Single member company are operating in Pakistan.

There would be no chances of disputes which were common in private companies, as a member would not be having any associate in the company.
The single-member company would enjoy the tax benefits at par with other private companies. The SECP was approaching the Central Board of Revenue for grant of certain individual tax incentives to the single-member companies.

Business of a sole proprietor should not be disturbed with his death as employees would continue operating it while heirs settle their claims for taking over the firm.

Disputes among the heirs would not have any negative impact on the business or legacy of the company.
There would be no restrictions on the business of a single-member company. All the individuals having their own business in the form of trade, industry, agriculture, advisory role or any other provisions could form a company and could benefit from the new concept

Single Member Company