LAHORE, Dec 22: The Pakistan Securities and Exchange Commission (SECP) has introduced a single-member company concept on the European pattern, through an amendment in the Companies Ordinance 1984.
SECP Chairman Khalid A. Mirza disclosed this while speaking to newsmen after delivering a registration certificate to the first single-member company here. Another single-member company was issued the certificate in Islamabad earlier in the day.
He said 57 sections of the Companies Ordinance had been amended for allowing registration of the single-member companies.
Previously a private company could only be incorporated by at least two persons. But a single-member private company could now be incorporated, enabling entry of any individual businessmen into corporate sector. Any trader or manufacturer will now be able to form a company having its own corporate entity enjoying the privilege of limited liability.
The SECP chief said this concept would benefit the investors and go a long way in the expansion of disciplined private sector.
He said procedure for the registration of a single-member company was very simple. One could get the certificate of incorporation after filing the prescribed registration documents with the Registrar of Companies, he explained.
The chief told the newsmen that previously there used to be two main classes of companies known as a public company or a private company. The single-member company was a sub-class of a private company. There was no strict regulation except that the company through which an individual would be carrying out business should be a legal entity quite separate from the individual owner.
He said the single-member companies would have the following five advantages:
1- 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.
2-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.
3-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.
4-Disputes among the heirs would not have any negative impact on the business or legacy of the company.
5- 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.
He said that the masses were not aware of merits of the single-member company. The commission was trying to introduce and popularize the concept in the larger interest of business and trade, he added. The single-member firms would also be allowed to be listed on the stock exchanges.
