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.

Single member company vs sole proprietorship

Features of Single Member Company

— 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.

Requirements for Single Member company Registration:

• Name of the company
• Copy of CNIC (computerized national identity card)
• Memorandum and article of association (Objectives of the company)
• Relevant forms for company registration
• Registration/filing fee
• CNIC copy of Company Secretary

Advantages of Single Member Company

• 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.

Regulations on Single Member Company / Law on Single Member Company

SMC Rules 2003

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

1. KK Consultant (SMC-Pvt) Limited
2. Super Cargo Services (SMC-Pvt) Limited
3. Resource Optimization and Development Consultants (SMC-PVT) Limited
4. Madolie Traders (SMC-PVT) Limited
5. SS Telemarketing (SMC-PVT) Limited
6. Hameed Foods (SMC-PVT) Limited
7. Telegency (SMC-PVT) Limited
8. Lasharian Import & Export (SMC-PVT) Limited
9. Adnan Impex (SMC-PVT) Limited
10. Spark Game Studios (SMC-PVT) Limited
11. PMEYE Management Professionals (SMC-PVT) Limited
12. Next Solutionz (SMC-PVT) Limited
13. Zealous Solar (SMC-PVT) Limited
14. RD Foreign Education Consultants (SMC-PVT) Limited
15. De Shazy Events (SMC-PVT) Limited
16. Sultan Estate (SMC-PVT) Limited
17. Raptor Center for Conservation & Rehabilitation Pakistan (SMC-PVT) Limited

Incorporation Certificate of SMC

Single Company – Incorporation Certificate