smc

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. Single Member Company is basically jointly own some advantages of Sole Proprietorship and some of Private Limited Company.

Advantages 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.

Step by Step procedure 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. Following clauses are the part of the memorandum of Association during the formulation of company.

1. Objects Clause: The objects for which the Company is established are:
   • To carry on the business of [describe business activities].
   • To engage in any lawful business or activity that the Board of Directors may deem fit and proper.
2. Liability of Members: The liability of the members is limited.
3. Capital Clause:
4. The authorized capital of the Company is [Amount in Currency] divided into [Number] of shares of [Currency and Nominal Value] each.
5. Subscription Clause:
6. Sole member agrees to take number of shares in the Company.
7. Association Clause:
8. [Name of the sole member] desires to form a company in pursuance of this Memorandum of Association and has agreed to take [Number] of shares in the Company.
9. Witness Clause:

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.