In 2003, SECP introduced the concept of SMC which is Single Member Company Private Limited in Pakistan. It enables the businessmen to start a company without any partners. Currently, more than four thousand and five hundred SMC’s are operating in Pakistan.
What is a Single Member Company (SMC)?
A Single Member Company or SMC is a business that is set up as separate legal entity from its owner and has only one shareholder. 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 control of the company and can remove or appoint any officer.
|Number of Person (Required)||1||1|
|Taxation||Single Taxation||Double Taxation|
|Business Type||Individual Business||Corporate|
|Life||Limited Life||Unlimited Life|
|Liability||Unlimited Liability||Limited Liability|
|Legal Identity||Not||Legal Identity|
|Bank Loan||On Name of Owner||On Company Name|
|Preference in Tenders||No||Yes|
|Owner on Salary||No||Yes|
— a distinct legal entity, separate from single member;
— limited liability of the member;
— elevated entity status, long life of enterprise having perpetual succession;
— compact organisational structure;
— defined legal frame work;
— part of documented and regulated sector;
— simple corporate record;
— enhanced authority, responsibility and accountability leading to high level of credibility;
— protection of personal assets;
— transferability of ownership/shares;
— agency relationship, relation between company and single members would be that of principal and agent;
— better access to capital markets;
— easy to raise funds;
— receive tax advantages on certain payments, such as insurance, lease rentals and other expenses being tax-deductible.
Advantages of Single Member Company
Regulations on Single Member Company / Law on Single Member Company
Example of Single Member Company in Pakistan
Company name + Parenthesis Start + SMC + Hyphen + PVT + Parenthesis Closed + Ltd
E.g. ABC (SMC-PVT) LTD
List of SMC Companies in Pakistan
Incorporation Certificate of SMC