Guide Incorporating a Single Member Company (Pakistan):

Single Member Company is incorporated with only one member and consequently has only one owner. It’s a private company having share capital limited by shares.

The following documents are required to form Single member company are as follows:

• Name of Company or Business.
• Copy of CNIC OF Director or CEO or passport in case of a foreign director or CEO.
• Memorandum and Article of Association.
• Address of the Company.
• Authorized Share Capital of SMC.
• Power of Attorney.

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

DIFFERENCE BETWEEN N PRIVATE LIMITED COMPANY AND A SINGLE-MEMBER COMPANY:

A company registered as a single-member company should have only 1 member. In the case of a company registered as a Private Limited company, the maximum number of members is limited to fifty. However, the employee members are not counted to decide the upper limit and joint shareholders are counted as one.

 CHANGE THE STATUS OF A SINGLE MEMBER COMPANY:

A Single Member Company may also convert into a Private Company on an increasing number of its members to more than one due to further allotment of shares or death of a single member (transfer of share) or on the operation of law single-member company converting into a private limited company. The following are the requirements for conversion.

1. Pass a special resolution for a change of status from a single-member company to a private company and alter its articles accordingly within thirty days of the transfer of shares or allotment of shares.
2. Appoint selected one or more additional directors within 15 days of passing the special resolution.
3. May in case of death single-member company either be wound up or be converted to a private company for which.

• The nominee director shall transfer the shares in the name of the legal heirs of a single member company in 7 days.
• The company shall pass a special resolution for a change of status from a single-member company to a private company and alter its articles accordingly within 30 days of the transfer of shares.
• The members shall appoint and elect one or more additional directors within 15 days of passing these special resolutions and notify the appointment within fourteen days of such appointment.

Shall in the case of operation of law:

• Transfer the shares within seven days in the name of relevant persons to give effect to the order of the court or any other authority.
• Pass a special resolution for the change of status of a single-member company to a private company and alter its articles accordingly within 30 days of the transfer of its shares.
• Appoint an additional director within 15 days of passing of the special resolution and notify the appointment within 14 days of such appointment single-member-member Company. originally incorporated or converted fa from a private company may convert to a private company.

A single-member company originally incorporated or converted from a private company as such may convert a private company into.

The persons becoming members due to transfer or transmission or further allotment of shares shall pass a special resolution to make alterations to the Articles and appoint one or more additional directors.

COMPANY SECRETARY:

A single-member company shall appoint a company secretary within 15 days of incorporation becoming a single member. Additionally, the e-director shall not be the company secretary.

TRANSFER OF MANAGEMENT TO NOMINEE DIRECTOR:

The single-member company shall nominate 2 individuals, one of whom shall become the nominee director in case of the death of a single member and the other shall become the alternate nominee director to work as the nominee director in case of non-availability of the nominee director.

The nominee director shall manage the affairs of the company in case of the death of a single member till the transfer of shares to legal heirs of the single member and inform the registrar concerned of the death of the single member, provide particulars of legal heirs and transfer the shares to the legal heir of a single member.

The nominee director shall also call the general meeting of members to elect directors. Also, the company secretary must inform the registrar about the death of a single member.

ADVANTAGES OF SMC:

• Has a separate legal entity as there is only one single owner.
• The liability of SMC is limited to the amount invested.
• Lower Corporation tax.
• Ownership of SMC easily transfers to another person without too much work.
• SMC does not cease in case of the death of a single owner.
• The owner of SMC takes decisions independently and receives the full share of distributed profit alone.
• Specific to a single-member company, the sole member can dispense with holding general meetings, including Annual General Meetings. When a decision is made to dispense with the AGM, the accounts and reports that would usually be laid before the AGM by the Companies Act 2013, must instead be forwarded to a single member company.