Single Member Company:
It is a company which is formed by a single individual, limited by shares with one member.
It is a subclass of a private company. In SMC there is one owner and also a single director which is owner. They required auditor under role of 1984. The secretary can be a member other than the secretary. They have various governmental facilities. A SMC converted into private company in accordance with the provision of sub-role.
SECP Chairman Khalid A. Mirza said 57 sections of the Companies Ordinance had been amended for allowing registration of the single member companies. …show more content…
Having abnormality in already existing legislation that have already analyzed by different departments, there is still potential for the misuse of the idea of SMC having limited liability at the hand of single member. In Pakistan there is no proper mechanism of checks and balances to reduce the risk of the corporate liability by the SMC in Pakistan. SMC seems to make an environment for business activities without of its proper sense and in Pakistan this idea has been put in a way that it created legislative misconceptions including defects in it. Pakistan took 38 years to introduce Companies Ordinance, 1984 with only one commission for legislation of company law. Company’s law in Pakistan is not the result of trials and errors; it’s just taken from India and U.K that can lead to various misleading for companies as corporate environment in Pakistan is very different in India and U.K also in case of SMC too. It is also come in Pakistan without public …show more content…
Hence, in SMC law, the question is what kind of duties can be played by SMC in society?
The seams object behind SMC is to increase or to grow the economic activities with controllable risk. However, as SMC is made up of single member it will not be responsible to anyone in the firm management as opposed to other member of company. Lack in accountability of single directors causes various issues to social, economical and environmental responsibilities in Pakistan by SMC that are affecting our corporate sector. As in SMC a single member is owner he can conduct meetings at any time and there is no one in the company to check mismanagement that affects the firm activity.
Pakistan used to follow English courts and we borrow corporate law from them. In England there are totally different corporative practices, totally different. Introducing SMC in Pakistan are not affecting its economy because there is no proper checks and balances in Pakistan legislative system toward SMC. Converting sole proprietorship into SMC help in documentation of economy but it’s not compatible for existing company laws. The solution is to make separate law for single member corporation in a way that lead to the contribution the Pakistan economy and development in corporate sector. They should be given incentives and assures