Definition of Single Member Company
A Single Member Company (SMC) is a class of private company, limited by shares, which is incorporated with one member.
Benefits of Single Member Company (SMC) registration in Pakistan
- Single Member Company has a separate legal entity from its member;
- Liability of the member is limited to the amount of its investment;
- The existence of the company does not cease on the death of a member;
- SMCs are subject to lower corporation tax as compared to Private limited company or Public limited company;
- Single member of a SMC has complete control over how the business is operated which explain ful
- The single member may make all business decisions independently and receive the full share of distributed profits;
- Single member does not have to deal with shareholders or a board of directors as a company would be required to do;
- SMC is less formal than a corporation;
- Ownership of a SMC can be easily transferred to another person without much paper work and complying with legal formalities; and
- The transformation of sole proprietorship into SMC will, help in documentation of economy.
Registering a Single Member Company (SMC) in Pakistan involves several steps and requires adherence to the regulations set forth by the Securities and Exchange Commission of Pakistan (SECP). Here’s a step-by-step outline of the process:
Step by Step outline of the registration of SMC
Step 1: Name Reservation:
Name Availability Check:
Check the availability of the proposed company name through SECP’s online portal.
Name Reservation Application:
Submit Form 1A (available on SECP’s website) for name reservation along with the prescribed fee.
Step 2: Preparation of Documents
Memorandum of Association (MoA):
Draft the MoA, which defines the company’s constitution and scope of activities.
Articles of Association (AoA):
Prepare the AoA, which outlines the rules for internal management of the company.
Declaration of Compliance:
Prepare Form 1 (declaration of compliance with legal requirements) signed by the sole member.
Step 3: Registration Process
Form Filing:
Complete and submit the following forms electronically on SECP’s eServices portal:
- Form 1: Declaration of compliance
- Form 21: Notice of situation of registered office of the company
- Form 29: Particulars of directors, CEO, secretary, and chief accountant (if applicable)
Payment of Fees:
Pay the registration fee, stamp duty, and filing fee online through the SECP portal. The fees vary depending on the authorized share capital.
Step 4: Post-Registration Formalities
Issuance of Certificate of Incorporation:
Upon verification of documents and payment of fees, SECP will issue a Certificate of Incorporation.
National Tax Number (NTN) and Sales Tax Registration:
Register for NTN with the Federal Board of Revenue (FBR) and for Sales Tax with the relevant Regional Tax Office (RTO).
Opening Bank Account:
Open a bank account in the company’s name using the Certificate of Incorporation and NTN.
Additional Considerations:
- Registered Office: Ensure the company has a registered office in Pakistan from the date of incorporation.Compliance Requirements: Comply with ongoing statutory requirements such as filing annual returns, holding meetings, etc.
- Professional Advice: Consider seeking legal or professional advice to ensure compliance with all regulatory requirements and to properly execute the registration process.