Single Member Company

Single Member Company
A new concept of single member private company (SMC) was introduced to admit the individual
businessmen in the corporate sector as a company having limited liability. 1 The main purpose to
introduce the concept of SMC was to encourage entrepreneurship and invite the individual sole
proprietor of Pakistan in a more regulated corporate circle. A single member company enjoys the
tax benefits just like other private companies.
In a Single Member Company entire issued share capital is held or owned by one sole person
i.e. a single member of the company. A member is a shareholder of the company. This sole
person is the sole beneficiary of the company and is the company's only member or shareholder.
It is not necessary that a single member private limited company can have only one director.
The single member shall nominate two individuals.
Nominee Director: The Single Member Companies Rules, 2003 defines a nominee
director as an individual nominated by a single Member to act as director in case of his
death.
2. Alternate Nominee Director: The Single Member Companies Rules, 2003 defines an
alternate nominee director as an individual nominated by a single member to act as
nominee director in case of non-availability of nominee director.
1.
Change in status of a single member company 2

A single member company may be converted into a private company on increase of the
number of its members to more than one due to transfer of shares or further allotment of
shares or death of the single member or operation of law.
Issuance of shares 3
A single member company cannot issue shares to public.
The company may, upon passing of a special resolution, issue further shares or transfer
existing causing the number of members to become two or more in accordance with the
Rules but it shall become a private company afterward.
The single member may transfer all of his shares to a single person under the authority of
an ordinary resolution whereby the company shall remain a single member company as it
was before such transfer.
Companies (Amendment) Ordinance 2002, Circular No. 14, Ref No. CLD Co./ Amend/2001 Nov 11, 2002.
Rule 4 (1), Single Member Companies Rules, 2003
3
Form S8(6)(8), Single Member Companies Rules, 2003
2
Seal of the Single Member Company 4

The director(s) shall provide for the safe custody of the seal and the seal shall not be
affixed to any instrument except by the authority of a resolution of the board of
director(s).
The member director and the secretary or other person as aforesaid shall sign every
instrument to which the seal of the company is affixed in their presence.
Company Secretary 5
A single member company shall appoint a company secretary within fifteen days of
incorporation or of becoming a single member company or of the office of company
secretary falling vacant and notify such appointment on Form 29 within fourteen days of
the date of such appointment.
The sole director cannot be the company secretary.
Transfer of Management to Nominee Director 6
The nominee director shall,- Manage the affairs of the company in case of death of single member till the
transfer of shares to legal heirs of the single member.
- Inform the registrar concerned of death of the single member; provide particulars
of the legal heirs.
- Transfer the shares to legal heirs of the single member.
- Call the general meeting of the members to elect directors.
- It shall also be mandatory for the company secretary to inform the registrar
concerned about the death of the single member.
Contracts with Single Member Company 7
Where a single member company enters into a contract with the single member of the company,
the single member company shall, unless the contract is in writing, ensure that the terms of the
contract are straightaway set out in a written memorandum or are recorded in the minutes of the
first meeting of the directors of the company following the making of the contract.
Company becoming a Single Member Company 8
No private company having two or more members shall become a single member company
unless it passes a special resolution for change of its status and makes necessary modification in
its articles and acquires approval of the Commission.
Form S8 (34), Single Member Companies Rules, 2003

Rule 6(1), Single Member Companies Rules, 2003
6
Rule 7(2a, 2b, 2c,2d) & (3) Single Member Companies Rules, 2003
7
Rule 8, Single Member Companies Rules, 2003
8
5
Pattern and Name style of the Single Member Company 9

XYZ (SMC-Private) Limited shall be the pattern and style of the name of a single member
company and the parenthesis, letters, hyphen and words (SMC-Private) Limited, shall from
part of the name of every single member company.
Accounts of the Single Member Company 10
Single member companies must keep proper accounting records according to law and to file the
audited accounts with Securities & Exchange Commission of Pakistan (SECP).
Winding up of the Single Member Company 11
The company shall follow, in case of its winding up, the relevant provisions of the Companies
Ordinance, 1984.
Important Forms used for the purpose of Single Member Company.
Sr. No
Form
Name
S1
S2
3
4
S3
S4
S5
S6
S7
S8
Purpose of Form
Notice of the nomination of Nominee Director by Single Member of a
Single Member Company.
Notice to change the status of a Single Member Company into a Private
Company.
Notice of Death of a Single Member.
Application to SECP for the approval to change the status of a Private
Company to a Single Member Company.
Notice for change of status of Private Company into a Single Member
Company.
Certificate on change of status of a Private Company into a single member
company.
Certificate on change of status of a single member company into a Private
Company.
Regulations for management of a Single Member Private Company Limited
By Shares.

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Single Member Company

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Single Member Company

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Single Member Company

Change in status of a single member company 2

Seal of the Single Member Company 4

Form S8 (34), Single Member Companies Rules, 2003

Pattern and Name style of the Single Member Company 9

Rule 10(1), Single Member Companies Rules, 2003

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