Succession mechanism: SECP proposes amendments to SMC Rule
Currently 1,672 single-member companies are registered with the SECP.
The proposed amendments to the rules will pave the way towards corporatisation and documentation of the SME sector. PHOTO: FILE
ISLAMABAD:
In order to facilitate the corporate sector, especially entrepreneurs, the Securities and Exchange Commission of Pakistan (SECP) has proposed amendments to the 2003 Single-Member Companies (SMCs) Rules.
Currently 1,672 single-member companies are registered with the SECP, which represent 2.6% of the total corporate portfolio. The concept of SMC was introduced in 2003 to encourage transformation of sole proprietorships into corporate entities. An SMC can be formed with just one-member compared with the requirement to have at least two members for a private limited company.
An explicit provision regarding nominee of single member has been proposed in the rules in place of a nominee director, the role of the nominee has been defined in case of death of single member, by defining an elaborate succession mechanism.
It is envisaged that the proposed amendments to the rules will pave the way towards corporatisation and documentation of the SME sector.
Published in The Express Tribune, September 19th, 2013.
In order to facilitate the corporate sector, especially entrepreneurs, the Securities and Exchange Commission of Pakistan (SECP) has proposed amendments to the 2003 Single-Member Companies (SMCs) Rules.
Currently 1,672 single-member companies are registered with the SECP, which represent 2.6% of the total corporate portfolio. The concept of SMC was introduced in 2003 to encourage transformation of sole proprietorships into corporate entities. An SMC can be formed with just one-member compared with the requirement to have at least two members for a private limited company.
An explicit provision regarding nominee of single member has been proposed in the rules in place of a nominee director, the role of the nominee has been defined in case of death of single member, by defining an elaborate succession mechanism.
It is envisaged that the proposed amendments to the rules will pave the way towards corporatisation and documentation of the SME sector.
Published in The Express Tribune, September 19th, 2013.