Single-member companies: SECP proposes changes to rules

Entrepreneurs complain about cumbersome procedures.

ISLAMABAD: The Securities and Exchange Commission of Pakistan (SECP) has proposed important amendments to the Single Member Companies Rules, 2003 in an effort to facilitate entrepreneurs.

The rules were introduced in 2002 and a detailed framework for registration of single-member companies was given in the rules notified in 2003. The new law was aimed at allowing incorporation of small businesses, limiting the liability of their members and enabling them to deal with public entities that are required to contract with companies rather than individuals.

Keeping in view the problems of businessmen, the SECP has proposed that the requirement of particulars and documents of legal heirs of the single member as well as nominee and alternative nominee directors should be abolished from the rules.

An explicit provision about the nominee of the single member has been added to the amended rules. Moreover, a provision regarding incorporation of the single-member company by a corporate legal person has been added.

Additionally, the role of nominee has been defined in case of death of the single member, ie succession mechanism. A provision has also been added for penalty in case of violation of rules.

Published in The Express Tribune, April 24^th, 2013.

Like Business on Facebook to stay informed and join in the conversation.