ISLAMABAD: The Securities and Exchange Commission of Pakistan (SECP) has proposed certain amendments in the Single Member Companies (SMC) Rules, 2003. A statement issued by the Commission here on Thursday said that, to facilitate the corporate sector, the requirements of nominee and alternate nominee directors as well as particulars and documents of the legal heirs of the Single Member have been proposed to be deleted from the SMC rules.
The SECP introduced the concept of SMC in 2002. The detailed frameworks for registration of `Single Member Companies’ was provided vide Single Member Companies Rules, 2003. These rules allow single persons to convert their non-corporate entities into companies with limited liability of the members and enabling them to deal with public entities as companies rather than individuals.
However, it was observed that the concept of the Single Member Company could not flourish as per expectations because of cumbersome pre-incorporation procedures. At present, SMCs have to provide particulars and documents pertaining to legal heirs as well as details of nominee and alternate nominee directors along with their consents. These requirements were considered hurdles in promoting the SMCs therefore, have been proposed to be abolished in the amended Rules.
In the amended Rules, a provision regarding incorporation of SMC by corporate legal person has been added. Additionally, in case of death of single member, the role of secretary has been strengthened. A provision has also been added regarding penalty in case of violation of SMC Rules. It is envisaged that the amended Rules shall provide a hassle free regulatory mechanism and shall help flourish growth of SMCs.
