"\u003chtml xmlns:o=\"urn:schemas-microsoft-com:office:office\"\r\nxmlns:w=\"urn:schemas-microsoft-com:office:word\"\r\nxmlns=\"http://www.w3.org/TR/REC-html40\"\u003e\r\n\r\n\u003chead\u003e\r\n\u003cmeta http-equiv=Content-Type content=\"text/html; charset=windows-1252\"\u003e\r\n\u003cmeta name=ProgId content=Word.Document\u003e\r\n\u003cmeta name=Generator content=\"Microsoft Word 11\"\u003e\r\n\u003cmeta name=Originator content=\"Microsoft Word 11\"\u003e\r\n\u003clink rel=File-List href=\"2015J3_files/filelist.xml\"\u003e\r\n\u003ctitle\u003eSINGLE MEMBER COMPANY (SMC)\u003c/title\u003e\r\n\u003c!--[if gte mso 9]\u003e\u003cxml\u003e\r\n \u003co:DocumentProperties\u003e\r\n  \u003co:Author\u003eOratier\u003c/o:Author\u003e\r\n  \u003co:Template\u003eNormal\u003c/o:Template\u003e\r\n  \u003co:LastAuthor\u003eOratier\u003c/o:LastAuthor\u003e\r\n  \u003co:Revision\u003e2\u003c/o:Revision\u003e\r\n  \u003co:TotalTime\u003e0\u003c/o:TotalTime\u003e\r\n  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Section1\r\n\t{size:8.5in 11.0in;\r\n\tmargin:1.0in 1.25in 1.0in 1.25in;\r\n\tmso-header-margin:.5in;\r\n\tmso-footer-margin:.5in;\r\n\tmso-paper-source:0;}\r\ndiv.Section1\r\n\t{page:Section1;}\r\n--\u003e\r\n\u003c/style\u003e\r\n\u003c!--[if gte mso 10]\u003e\r\n\u003cstyle\u003e\r\n /* Style Definitions */\r\n table.MsoNormalTable\r\n\t{mso-style-name:\"Table Normal\";\r\n\tmso-tstyle-rowband-size:0;\r\n\tmso-tstyle-colband-size:0;\r\n\tmso-style-noshow:yes;\r\n\tmso-style-parent:\"\";\r\n\tmso-padding-alt:0in 5.4pt 0in 5.4pt;\r\n\tmso-para-margin:0in;\r\n\tmso-para-margin-bottom:.0001pt;\r\n\tmso-pagination:widow-orphan;\r\n\tfont-size:10.0pt;\r\n\tfont-family:\"Times New Roman\";\r\n\tmso-ansi-language:#0400;\r\n\tmso-fareast-language:#0400;\r\n\tmso-bidi-language:#0400;}\r\n\u003c/style\u003e\r\n\u003c![endif]--\u003e\r\n\u003c/head\u003e\r\n\r\n\u003cbody lang=EN-US style=\u0027tab-interval:.5in;text-justify-trim:punctuation\u0027\u003e\r\n\r\n\u003cdiv class=Section1\u003e\r\n\r\n\u003cp class=MsoNormal align=center style=\u0027text-align:center;mso-pagination:none;\r\nmso-layout-grid-align:none;text-autospace:none\u0027\u003e\u003cb\u003eSINGLE MEMBER COMPANY (SMC)\u003co:p\u003e\u003c/o:p\u003e\u003c/b\u003e\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal align=center style=\u0027text-align:center;mso-pagination:none;\r\nmso-layout-grid-align:none;text-autospace:none\u0027\u003e\u003cb\u003e[A critical analysis with\r\ncommon law background]\u003co:p\u003e\u003c/o:p\u003e\u003c/b\u003e\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal align=center style=\u0027text-align:center;mso-pagination:none;\r\nmso-layout-grid-align:none;text-autospace:none\u0027\u003e\u003cb\u003e\u003co:p\u003e\u0026nbsp;\u003c/o:p\u003e\u003c/b\u003e\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal align=center style=\u0027text-align:center;mso-pagination:none;\r\nmso-layout-grid-align:none;text-autospace:none\u0027\u003e\u003cb\u003eBy\u003co:p\u003e\u003c/o:p\u003e\u003c/b\u003e\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal align=center style=\u0027text-align:center;mso-pagination:none;\r\nmso-layout-grid-align:none;text-autospace:none\u0027\u003e\u003cb\u003e\u003co:p\u003e\u0026nbsp;\u003c/o:p\u003e\u003c/b\u003e\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal align=center style=\u0027text-align:center;mso-pagination:none;\r\nmso-layout-grid-align:none;text-autospace:none\u0027\u003e\u003cb\u003eRehmat Ali\u003co:p\u003e\u003c/o:p\u003e\u003c/b\u003e\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal align=center style=\u0027text-align:center;mso-pagination:none;\r\nmso-layout-grid-align:none;text-autospace:none\u0027\u003e\u003cb\u003eCivil Judge, Lahore\u003co:p\u003e\u003c/o:p\u003e\u003c/b\u003e\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027text-align:justify;mso-pagination:none;mso-layout-grid-align:\r\nnone;text-autospace:none\u0027\u003e\u003co:p\u003e\u0026nbsp;\u003c/o:p\u003e\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027text-align:justify;mso-pagination:none;mso-layout-grid-align:\r\nnone;text-autospace:none\u0027\u003e\u003cb\u003eIntroduction\u003co:p\u003e\u003c/o:p\u003e\u003c/b\u003e\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027text-align:justify;mso-pagination:none;mso-layout-grid-align:\r\nnone;text-autospace:none\u0027\u003e\u003co:p\u003e\u0026nbsp;\u003c/o:p\u003e\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027text-align:justify;mso-pagination:none;mso-layout-grid-align:\r\nnone;text-autospace:none\u0027\u003e\u003cspan style=\u0027mso-tab-count:1\u0027\u003e            \u003c/span\u003eThe\r\nword \u0026quot;company\u0026quot; has no strict legal meaning;\u003csup\u003e1\u003c/sup\u003e however, in\r\nlegal theory, the term implies an association of a number of people, for some\r\nbusiness purpose or similar objects.\u003csup\u003e2\u003c/sup\u003e English law provides two main\r\ntypes of organizations for such associations: partnership and companies,\r\nalthough the term \u0026quot;company\u0026quot; is colloquially applied to both, the\r\nmodern lawyer regards companies and company law as distinct from partnership\r\nand the law of partnership. Partnership law, which is now largely codified in\r\nPartnership Act, is based on law of agency; each partner becoming an agent of\r\nothers, and it therefore affords a suitable framework for an association of a\r\nsmall body of persons having trust and confidence in each other.\u003csup\u003e3\u003c/sup\u003e\r\nCompany is described as a body of persons associated for the purpose of\r\nbusiness.\u003csup\u003e4\u003c/sup\u003e Since the inception of corporations, it is synonymous to\r\nmulti-members, working on behalf of the company. Thus, keeping in view this\r\nrule, a \u0026quot;partnership\u0026quot; and an \u0026quot;individual\u0026quot; can be termed as\r\ncompany, so the concept of polarity in company has no meaning. Idea of a Single\r\nMember Company (SMC) seems to create a special atmosphere for business\r\nactivities irrespective of its proper sense. If a single member wants to form a\r\ncompany, it means that he is creating an artificial person, in order to share\r\nthe responsibility of risk(s), if any. Why there is need for creation of an\r\nartificial person in presence of a natural person? This object can be\r\nconsidered as the entire theme of incorporation and limited liability. It is\r\ngeneral law that if any person commits wrong he will be responsible for that,\r\nbut in case of incorporation the management of the company is carried out by\r\nnatural persons and liability is shifted to company being separate legal\r\nentity. This principle may be considered to be against natural law.\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027text-align:justify;mso-pagination:none;mso-layout-grid-align:\r\nnone;text-autospace:none\u0027\u003e\u003co:p\u003e\u0026nbsp;\u003c/o:p\u003e\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027text-align:justify;mso-pagination:none;mso-layout-grid-align:\r\nnone;text-autospace:none\u0027\u003e\u003cspan style=\u0027mso-tab-count:1\u0027\u003e            \u003c/span\u003eThe\r\nconcept of an SMC\u003csup\u003e5\u003c/sup\u003e has been introduced in the Companies Ordinance\r\n(XLVII) 1984, in the year 2002 by amendment. We have to consider whether these\r\namendments are in light of evolutionary growth of company law in Pakistan?\r\nAfter creation of Pakistan the old Companies Act, 1913 was implemented in\r\nletter and spirit. This Act remained in force till the enforcement of Companies\r\nOrdinance, 1984. This Ordinance is off shoot of the Law Commission headed by\r\nthe I. I. Chundrigar\u003csup\u003e6\u003c/sup\u003e and after his death headed by the Sharif Ud\r\nDin Pirzada. But at same time India succeeded to make company law in 1956.\u003csup\u003e7\u003c/sup\u003e\r\nIn India one committee called Bhaba Committee and three commissions\u003csup\u003e8\u003c/sup\u003e\r\nwere setup to look into corporate affairs and to make recommendations for\r\nreformation in company law in country. In UK, Board of Trade, Committees and\r\ncommissions have contributed a lot for development of company law\u003csup\u003e9\u003c/sup\u003e.\r\nIn Pakistan we see only one commission for legislation of company law. Company\r\nlaw in Pakistan is not a result of trials and errors in the field of corporate\r\npractice, but it is fixed type of statute with borrowed principles, that is why\r\nthere is no separate corporate practice. On same lines the idea of SMC has been\r\nintroduced in Companies Ordinance, 1984, without any public awareness and\r\nproper discussion.\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027text-align:justify;mso-pagination:none;mso-layout-grid-align:\r\nnone;text-autospace:none\u0027\u003e\u003co:p\u003e\u0026nbsp;\u003c/o:p\u003e\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027text-align:justify;mso-pagination:none;mso-layout-grid-align:\r\nnone;text-autospace:none\u0027\u003e\u003cspan style=\u0027mso-tab-count:1\u0027\u003e            \u003c/span\u003eThe\r\nobject of this article is to analyze the scheme of the existing statute and new\r\namendments; Whether SMC is another tool to escape from risk by the capitalists?\r\nWhat can be the maximum benefits by SMC to individual and society as well?\r\nWhether the new amendments are in disagreement with existing corporate law?\r\nWhether this notion is misuse of separate entity of the company? Whether idea\r\nof SMC is more useful and beneficial for the promotion of small industries and\r\nfor documentation of economy?\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027text-align:justify;mso-pagination:none;mso-layout-grid-align:\r\nnone;text-autospace:none\u0027\u003e\u003co:p\u003e\u0026nbsp;\u003c/o:p\u003e\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027text-align:justify;mso-pagination:none;mso-layout-grid-align:\r\nnone;text-autospace:none\u0027\u003e\u003cspan style=\u0027mso-tab-count:1\u0027\u003e            \u003c/span\u003eSince\r\n1998, UK has implemented the Council Directive 89/667; the Company law was\r\namended to enable the use of companies for small, one-person, businesses. Since\r\n1 July 1998 it has been possible to form a company having single\r\nmember/director. Likewise in Australia law regarding SMCs has been introduced.\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027text-align:justify;mso-pagination:none;mso-layout-grid-align:\r\nnone;text-autospace:none\u0027\u003e\u003co:p\u003e\u0026nbsp;\u003c/o:p\u003e\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027text-align:justify;mso-pagination:none;mso-layout-grid-align:\r\nnone;text-autospace:none\u0027\u003e\u003cspan style=\u0027mso-tab-count:1\u0027\u003e            \u003c/span\u003eIn\r\nPakistan, a single person can form a private limited company which may be\r\nlimited by shares or guarantee\u003csup\u003e10\u003c/sup\u003e. Such single-member companies need\r\nto have only one director.\u003csup\u003e11\u003c/sup\u003e Before going ahead it is necessary to\r\nhave glance at the history of development of company law on this subject.\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027text-align:justify;mso-pagination:none;mso-layout-grid-align:\r\nnone;text-autospace:none\u0027\u003e\u003co:p\u003e\u0026nbsp;\u003c/o:p\u003e\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027text-align:justify;mso-pagination:none;mso-layout-grid-align:\r\nnone;text-autospace:none\u0027\u003e\u003cspan style=\u0027mso-tab-count:1\u0027\u003e            \u003c/span\u003eIn\r\nUnited Kingdom (UK) the concept of company law, developed in order to\r\nfacilitate the ancient mode of trade called partnership\u0026quot;. Indeed the\r\nconcept of partnership is very old phenomena developed over the centuries by\r\ntrader(s)/merchant(s). The most important point is that why company law\r\ndeveloped and on what foundation it was laid down? In the case of partnership\r\nconcerns the liability of partners is unlimited, so in order to avoid the\r\nunlimited liability the concept of limited liability emerged. Generally this\r\naspect was favorable to the business community. In 1844 the provision of\r\nunlimited liability was introduced in Joint Stock Company Act 1844. Soon after\r\nthat Companies Limited Liability Act 1855 was passed and word\r\n\u0026quot;Limited\u0026quot; became part of company\u0027s name. In case of Salomon v A.\r\nSalomon Co.\u003csup\u003e12\u003c/sup\u003e the matter was, whether Salomon was personally liable\r\nto creditor or the company. The matter was resolved by mouse of Lords that company\r\npossesses a separate legal identity distinct from its members, so liability is\r\nnot against Salomon but it is against the company. Emphasis was made on\r\nincorporation and its legal formalities. Company was declared as separate legal\r\nperson as against natural person, having rights and liabilities under the law,\r\nthough its management is carried out by the natural persons. Moreover\r\nattribution of separate legal entity has been recognized by the courts of law\u003csup\u003e13\u003c/sup\u003e,\r\nwhich can never be equal to a natural person e.g. some courts have the view\r\nthat directors are trustees towards the creditors, shares-holder, etc and some\r\nconsidered their duties as of care and skill under common law. In this context\r\nProfessor Gower has divided the duties of directors in to two categories\r\nfirstly \u0026quot;Fiduciary duty\u0026quot; and Secondly, duty of \u0026quot;care and\r\nskill\u0026quot;.\u003csup\u003e14\u003c/sup\u003e It is worth mentioning here that business community\r\nalways prefer common law duties of directors, rather duties under equity\r\n(fiduciary duty). Rationale behind is that in case of Equity the principles of\r\ntrust, followed by the Chancery Courts will be applicable. These principles\r\nlaid down that, directors are the trustees of company and the members etc.\r\nThese rules are not favorable to business community. That is why; they are not\r\nready to discharge their duties under equitable principles.\u003csup\u003e15\u003c/sup\u003e\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027text-align:justify;mso-pagination:none;mso-layout-grid-align:\r\nnone;text-autospace:none\u0027\u003e\u003co:p\u003e\u0026nbsp;\u003c/o:p\u003e\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027text-align:justify;mso-pagination:none;mso-layout-grid-align:\r\nnone;text-autospace:none\u0027\u003e\u003cspan style=\u0027mso-tab-count:1\u0027\u003e            \u003c/span\u003eIn\r\nSalomon v Salomon and Co. Ltd. (1897), although Salomon\u0027s case is cited in\r\ncourts to this day, but this rule is not of universal nature, yet it is subject\r\nto criticism from some quarters. For example, Kahn-Freund called the decision\r\nas \u0026quot;calamitous\u0026quot;(catastrophic) in his article.\u003csup\u003e16\u003c/sup\u003e Later in\r\nthat same article, the author also called for the abolition of private\r\ncompanies. Lord Denning has righty said \u0026quot;Our system of company law has\r\nonly been in existence for some 120 years. It is the universal medium of\r\nbusiness. Most merchants and most traders are now limited liabilities\r\ncompanies. Not in England but also in countries overseas. The law, however, has\r\nlet down a curtain which conceals the going on of the directors and managers of\r\nthe company. Beneath this curtain all sorts of fraud can be perpetrated---on\r\nthe customers, on creditors, and on shareholders.\u0026quot;\u003csup\u003e17\u003c/sup\u003e\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027text-align:justify;mso-pagination:none;mso-layout-grid-align:\r\nnone;text-autospace:none\u0027\u003e\u003co:p\u003e\u0026nbsp;\u003c/o:p\u003e\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027text-align:justify;mso-pagination:none;mso-layout-grid-align:\r\nnone;text-autospace:none\u0027\u003eLimited liability, single member company and social\r\nresponsibility of SMC\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027text-align:justify;mso-pagination:none;mso-layout-grid-align:\r\nnone;text-autospace:none\u0027\u003e\u003co:p\u003e\u0026nbsp;\u003c/o:p\u003e\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027text-align:justify;mso-pagination:none;mso-layout-grid-align:\r\nnone;text-autospace:none\u0027\u003e\u003cspan style=\u0027mso-tab-count:1\u0027\u003e            \u003c/span\u003eDefining\r\nLimited Liability; simply stated, limited liability means that shareholders are\r\nnot liable for debts incurred in the operation of a company and at winding up\r\nstage. Thus, shareholders\u0027 losses are limited to the amounts invested and\r\nguarantees given by them i.e. the amounts originally invested in the company at\r\nthe time of the stock purchase. In other words limited liability means\r\nliability of the members only to the extent of their unpaid share. When the\r\nbusiness was carried out in shape of partnership then liability of the partners\r\nwere unlimited, all their personal assets were held liable to the satisfaction\r\nof claim of third party. This situation was not favorable to the business\r\ncommunity, and then a device, in shape of limited liability, was introduced to\r\nprovide opportunity for conducting risk-free business without fear of personal\r\nliability. The company being a separate legal person is also under other\r\nobligations to perform its environmental, social and economic responsibilities.\r\nThe object of the company should be to promote business, contribution to\r\nsustainable development and called for a new, social and environmental role for\r\nbusiness in a global economy.\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027text-align:justify;mso-pagination:none;mso-layout-grid-align:\r\nnone;text-autospace:none\u0027\u003e\u003co:p\u003e\u0026nbsp;\u003c/o:p\u003e\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027text-align:justify;mso-pagination:none;mso-layout-grid-align:\r\nnone;text-autospace:none\u0027\u003e\u003cspan style=\u0027mso-tab-count:1\u0027\u003e            \u003c/span\u003eA\r\ncompany for all intents and purposes is very easily defined \u0026quot;it is the\r\nkind of legal entity or corporate body which is brought into being by the\r\nregistration procedures laid down by the company law.\u0026quot; Its creation is\r\nevidenced by the issuance of certification of incorporation the registrar\r\ncompanies.\u003csup\u003e18\u003c/sup\u003e Just like natural person, after fulfilling the mandate\r\nof law. Rights and liabilities of a person are determined in context of his\r\nstatus, qualification and role, which he is under obligation to perform towards\r\nthe society. Same case is with the corporation, which, being operational, has\r\nto take profit from the people. In this view of the matter corporations also\r\nhave social, economic and environmental responsibility towards the society. The\r\nissue is what sort of duties can be performed by the SMC in the society? In\r\ncase of listed company having seven or more directors along with other\r\nmanagement has more social linkage with reference to its volume of business and\r\nnumber of persons as compared to SMC. The visible object behind the SMC is to\r\nboost the economic activities in the country with manageable risk. In this way\r\nsingle member will not be responsible to anybody in the company management.\r\nThere is no question of quorum of meeting single man is performing one man\r\nshow. The culture of one man show is mostly disliked by the majority of people.\r\nThis lack of accountability of single director may cause serious issues with\r\nreference to his social, economic as well as environmental responsibilities. It\r\nis worth mentioning that in order to monitor the activities of the SMC more\r\nofficials are required for this purpose. It may be stated that SMC have limited\r\nrole in developing the healthy corporate activities.\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027text-align:justify;mso-pagination:none;mso-layout-grid-align:\r\nnone;text-autospace:none\u0027\u003e\u003co:p\u003e\u0026nbsp;\u003c/o:p\u003e\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027text-align:justify;mso-pagination:none;mso-layout-grid-align:\r\nnone;text-autospace:none\u0027\u003eScheme of Companies Ordinance, 1984 and new\r\namendments\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027text-align:justify;mso-pagination:none;mso-layout-grid-align:\r\nnone;text-autospace:none\u0027\u003e\u003co:p\u003e\u0026nbsp;\u003c/o:p\u003e\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027text-align:justify;mso-pagination:none;mso-layout-grid-align:\r\nnone;text-autospace:none\u0027\u003eSection 15 of Companies Ordinance, 1984 provides;\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027text-align:justify;mso-pagination:none;mso-layout-grid-align:\r\nnone;text-autospace:none\u0027\u003e\u003co:p\u003e\u0026nbsp;\u003c/o:p\u003e\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027text-align:justify;mso-pagination:none;mso-layout-grid-align:\r\nnone;text-autospace:none\u0027\u003e\u003cspan style=\u0027mso-tab-count:1\u0027\u003e            \u003c/span\u003eMode\r\nof forming a company;---(1) \u0026quot;Any 2[three] or more persons associated for\r\nany lawful purpose may, by subscribing their names to a memorandum of\r\nassociation and complying with the requirements of this Ordinance in respect of\r\nregistration, form a public company and any 3[one,] or more persons so\r\nassociated may, in like manner, from a private company\u0026quot;.\u003csup\u003e19\u003c/sup\u003e\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027text-align:justify;mso-pagination:none;mso-layout-grid-align:\r\nnone;text-autospace:none\u0027\u003e\u003co:p\u003e\u0026nbsp;\u003c/o:p\u003e\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027text-align:justify;mso-pagination:none;mso-layout-grid-align:\r\nnone;text-autospace:none\u0027\u003e\u003cspan style=\u0027mso-tab-count:1\u0027\u003e            \u003c/span\u003eThe\r\nabove mention section amended to extent of number of members from two members\r\nto one member without any specific name of the company. It is also worth\r\nmentioning here that there is no definition of SMC in the definition clause of\r\nCompanies Ordinance, 1984.\u003csup\u003e20\u003c/sup\u003e\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027text-align:justify;mso-pagination:none;mso-layout-grid-align:\r\nnone;text-autospace:none\u0027\u003e\u003co:p\u003e\u0026nbsp;\u003c/o:p\u003e\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027text-align:justify;mso-pagination:none;mso-layout-grid-align:\r\nnone;text-autospace:none\u0027\u003eSection 47 of Companies Ordinance, 1984 provides;\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027text-align:justify;mso-pagination:none;mso-layout-grid-align:\r\nnone;text-autospace:none\u0027\u003e\u003co:p\u003e\u0026nbsp;\u003c/o:p\u003e\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027text-align:justify;mso-pagination:none;mso-layout-grid-align:\r\nnone;text-autospace:none\u0027\u003e\u003cspan style=\u0027mso-tab-count:1\u0027\u003e            \u003c/span\u003eLiability\r\nfor carrying on business with less than \u003csup\u003e21\u003c/sup\u003e[three] or, in the case of\r\na private company, two members;---If at any time the number of members of a\r\ncompany is reduced, in the case of a private company\u003csup\u003e22\u003c/sup\u003e [other than a\r\nsingle member company], below two, or in the case of any other company, below\u003csup\u003e23\u003c/sup\u003e\r\n[three], and the company carries on business for more than six months while the\r\nnumber is so reduced, every person who is a member of the company during the\r\ntime that it so carries on business after those six months and is cognizant of\r\nthe fact that it is carrying on business with fewer than two members or \u003csup\u003e24\u003c/sup\u003e[three]\r\nmembers, as the case may be, shall be severally liable for the payment of the\r\nwhole debts of the company contracted during that time, and may be sued there\r\nfor without joinder in the suit of any other member.\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027text-align:justify;mso-pagination:none;mso-layout-grid-align:\r\nnone;text-autospace:none\u0027\u003e\u003co:p\u003e\u0026nbsp;\u003c/o:p\u003e\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027text-align:justify;mso-pagination:none;mso-layout-grid-align:\r\nnone;text-autospace:none\u0027\u003eThe idea of misuse of the concept of separate entity\r\nand device to exploitation and to avoid the risk\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027text-align:justify;mso-pagination:none;mso-layout-grid-align:\r\nnone;text-autospace:none\u0027\u003e\u003co:p\u003e\u0026nbsp;\u003c/o:p\u003e\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027text-align:justify;mso-pagination:none;mso-layout-grid-align:\r\nnone;text-autospace:none\u0027\u003e\u003cspan style=\u0027mso-tab-count:1\u0027\u003e            \u003c/span\u003eThe\r\nabove mention section 47 explains the situation in case of reduction of member\r\nof the company; it may be able to continue its function to certain time. After\r\nexpiring of the time, the members will be severally responsible for the payment\r\nof whole debs of the company contracted during that time. It is some sort of\r\ncheck on the management of the company against the misuse of authority. This\r\nwas the proper time to set forth the method for SMC. Despite of this fact SMC\r\nhas been excluded from this mechanism. Furthermore, no method has been evolved\r\nfor this purpose, which shows the intention of legislature. In this way this\r\namendment seems to be transplanted in the Ordinance. It is to some extent\r\nmiss-matching with scheme of existing company law. Nomenclature of company law\r\nand practical managerial functions depicts the plurality of company rather\r\nsingularity. It is also a fact that nobody can oppose the single director, in\r\nany meeting so it is like sole proprietorship but in guise of legal person\r\nalong with risk free venture. In Pakistan still we have no corporate litigation\r\nas a separate field because banking and corporate practices have no visible\r\ndistinction. At the same time from other point of view, it is considered as\r\ndocumentation of the economy and may help the small local industry to be\r\nflourished. The basic problem we are facing in the country is deficiency of\r\nsmall industry which is considered as the back bone of economy of any country.\r\nIf the government wants to flourish the economic activities then it has to make\r\nall-out efforts for creating and developing corporate culture in the country,\r\nso this purpose can be achieved through small industries and healthy corporate\r\nactivities in shape of regulation of SMC.\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027text-align:justify;mso-pagination:none;mso-layout-grid-align:\r\nnone;text-autospace:none\u0027\u003e\u003co:p\u003e\u0026nbsp;\u003c/o:p\u003e\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027text-align:justify;mso-pagination:none;mso-layout-grid-align:\r\nnone;text-autospace:none\u0027\u003eProcedure of meeting and voting by the members under\r\nsection 160 of Companies Ordinance, 1984.\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027text-align:justify;mso-pagination:none;mso-layout-grid-align:\r\nnone;text-autospace:none\u0027\u003e\u003co:p\u003e\u0026nbsp;\u003c/o:p\u003e\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027text-align:justify;mso-pagination:none;mso-layout-grid-align:\r\nnone;text-autospace:none\u0027\u003e\u003cspan style=\u0027mso-tab-count:1\u0027\u003e            \u003c/span\u003eThis\r\nsection provides the holding of general meetings of the companies and the\r\nquorum. In case of SMC it is amended and quorum of single member made\r\nsufficient to carry on routine company affairs.\u003csup\u003e25\u003c/sup\u003e In case of SMC,\r\nany company official can be associated, in conducting of general meeting or\r\nother legal activities without any material powers, affecting the business\r\ninterest of the director (owner) of company but just to witness the\r\nproceedings. It means that there should be a person who may object the\r\narbitrary acts of single member. If there is mismanagement in company it cannot\r\nbe checked by the same person. There is a famous rule of natural justice\r\nthat\u0026quot; no one is judge in his own cause\u0026quot;. Same is case with single\r\nmember who have to take decisions for running of corporate affairs. Who will\r\njudge the honesty and transparency of single member company? It is fact that\r\nsingle member has its own capital and energy for flourishing his business, but\r\nit should be kept in mind that he is a member of family, society and country as\r\nwell and he has some environmental, social and economic responsibilities. With\r\nthis point of view he cannot be allowed to get undue benefits in guise of\r\nseparate legal entity. Whatever the case may there should be mechanism for\r\nchecking the corporate affairs of single member company. The possible method\r\ncan be, the official website having all the information regarding the corporate\r\nactivities of SMC. It should be monitored only by authorized official of the\r\nconcerned department. This object can also be fulfilled by using the video link\r\nconferences as to monitor the activities of the companies. The apprehension is\r\nthat, in absence of positive and active monitoring of the activities of SMCs,\r\nthere will be deterioration in the development and economic growth in the\r\ncountry.\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027text-align:justify;mso-pagination:none;mso-layout-grid-align:\r\nnone;text-autospace:none\u0027\u003e\u003co:p\u003e\u0026nbsp;\u003c/o:p\u003e\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027text-align:justify;mso-pagination:none;mso-layout-grid-align:\r\nnone;text-autospace:none\u0027\u003eSection 174 of Companies Ordinance, 1984 provides;\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027text-align:justify;mso-pagination:none;mso-layout-grid-align:\r\nnone;text-autospace:none\u0027\u003e\u003co:p\u003e\u0026nbsp;\u003c/o:p\u003e\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027text-align:justify;mso-pagination:none;mso-layout-grid-align:\r\nnone;text-autospace:none\u0027\u003e\u003cspan style=\u0027mso-tab-count:1\u0027\u003e            \u003c/span\u003e[174.\r\nMinimum number of directors of a company.---(1) Notwithstanding anything\r\ncontained in any other law for the time being in force,-\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027text-align:justify;mso-pagination:none;mso-layout-grid-align:\r\nnone;text-autospace:none\u0027\u003e\u003co:p\u003e\u0026nbsp;\u003c/o:p\u003e\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027text-align:justify;mso-pagination:none;mso-layout-grid-align:\r\nnone;text-autospace:none\u0027\u003e(a)\u003cspan style=\u0027mso-tab-count:1\u0027\u003e        \u003c/span\u003eEvery\r\nsingle member company shall have at least one director;\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027text-align:justify;mso-pagination:none;mso-layout-grid-align:\r\nnone;text-autospace:none\u0027\u003e\u003co:p\u003e\u0026nbsp;\u003c/o:p\u003e\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027text-align:justify;mso-pagination:none;mso-layout-grid-align:\r\nnone;text-autospace:none\u0027\u003e(b)\u003cspan style=\u0027mso-tab-count:1\u0027\u003e        \u003c/span\u003eevery\r\nother private company shall have not less than two directors, and\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027text-align:justify;mso-pagination:none;mso-layout-grid-align:\r\nnone;text-autospace:none\u0027\u003e\u003co:p\u003e\u0026nbsp;\u003c/o:p\u003e\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027text-align:justify;mso-pagination:none;mso-layout-grid-align:\r\nnone;text-autospace:none\u0027\u003e(c)\u003cspan style=\u0027mso-tab-count:1\u0027\u003e        \u003c/span\u003eevery\r\npublic company other than a listed company shall have not less than three\r\ndirectors, appointed and elected in the manner provided in this Ordinance.\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027text-align:justify;mso-pagination:none;mso-layout-grid-align:\r\nnone;text-autospace:none\u0027\u003e\u003co:p\u003e\u0026nbsp;\u003c/o:p\u003e\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027text-align:justify;mso-pagination:none;mso-layout-grid-align:\r\nnone;text-autospace:none\u0027\u003e(2)\u003cspan style=\u0027mso-tab-count:1\u0027\u003e        \u003c/span\u003eevery\r\nlisted company shall have not less than seven directors to be elected in a\r\ngeneral meeting in the manner provided in this Ordinance.]\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027text-align:justify;mso-pagination:none;mso-layout-grid-align:\r\nnone;text-autospace:none\u0027\u003e\u003co:p\u003e\u0026nbsp;\u003c/o:p\u003e\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027text-align:justify;mso-pagination:none;mso-layout-grid-align:\r\nnone;text-autospace:none\u0027\u003e\u003cspan style=\u0027mso-tab-count:1\u0027\u003e            \u003c/span\u003eThis\r\nsection provides the numbers of directors which are requirement of law for\r\nincorporation of company. Now in Pakistan a single member can incorporate a\r\ncompany.\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027text-align:justify;mso-pagination:none;mso-layout-grid-align:\r\nnone;text-autospace:none\u0027\u003e\u003co:p\u003e\u0026nbsp;\u003c/o:p\u003e\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027text-align:justify;mso-pagination:none;mso-layout-grid-align:\r\nnone;text-autospace:none\u0027\u003eSection 204-A of Companies Ordinance, 1984 provides; \u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027text-align:justify;mso-pagination:none;mso-layout-grid-align:\r\nnone;text-autospace:none\u0027\u003e\u003co:p\u003e\u0026nbsp;\u003c/o:p\u003e\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027text-align:justify;mso-pagination:none;mso-layout-grid-align:\r\nnone;text-autospace:none\u0027\u003e\u003cspan style=\u0027mso-tab-count:1\u0027\u003e            \u003c/span\u003e204-A.\r\nCertain companies to have secretaries\u003csup\u003e26\u003c/sup\u003e [and share registrars]\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027text-align:justify;mso-pagination:none;mso-layout-grid-align:\r\nnone;text-autospace:none\u0027\u003e\u003co:p\u003e\u0026nbsp;\u003c/o:p\u003e\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027text-align:justify;mso-pagination:none;mso-layout-grid-align:\r\nnone;text-autospace:none\u0027\u003e(1)\u003cspan style=\u0027mso-tab-count:1\u0027\u003e        \u003c/span\u003eA\r\nlisted company shall have a whole time secretary and a single member company\r\nshall have a secretary possessing such qualification as may be prescribed]\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027text-align:justify;mso-pagination:none;mso-layout-grid-align:\r\nnone;text-autospace:none\u0027\u003e\u003co:p\u003e\u0026nbsp;\u003c/o:p\u003e\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027text-align:justify;mso-pagination:none;mso-layout-grid-align:\r\nnone;text-autospace:none\u0027\u003e[(2)\u003cspan style=\u0027mso-tab-count:1\u0027\u003e      \u003c/span\u003eListed\r\ncompanies shall have an independent share registrar possessing such\r\nqualifications and performing such functions as may be specified by the\r\nCommission\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027text-align:justify;mso-pagination:none;mso-layout-grid-align:\r\nnone;text-autospace:none\u0027\u003e\u003co:p\u003e\u0026nbsp;\u003c/o:p\u003e\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027text-align:justify;mso-pagination:none;mso-layout-grid-align:\r\nnone;text-autospace:none\u0027\u003eSection 305 of Companies Ordinance, 1984 provides;\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027text-align:justify;mso-pagination:none;mso-layout-grid-align:\r\nnone;text-autospace:none\u0027\u003e\u003co:p\u003e\u0026nbsp;\u003c/o:p\u003e\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027text-align:justify;mso-pagination:none;mso-layout-grid-align:\r\nnone;text-autospace:none\u0027\u003e\u003cspan style=\u0027mso-tab-count:1\u0027\u003e            \u003c/span\u003eCircumstances\r\nin which company may be wound up by Court.---A company may be wound up by the\r\nCourt [(i) if the company ceases to have a member.]\u003csup\u003e27\u003c/sup\u003e\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027text-align:justify;mso-pagination:none;mso-layout-grid-align:\r\nnone;text-autospace:none\u0027\u003e\u003co:p\u003e\u0026nbsp;\u003c/o:p\u003e\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027text-align:justify;mso-pagination:none;mso-layout-grid-align:\r\nnone;text-autospace:none\u0027\u003eAmendments in law and their compatibilities with\r\nexisting scheme of Enactment.\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027text-align:justify;mso-pagination:none;mso-layout-grid-align:\r\nnone;text-autospace:none\u0027\u003e\u003co:p\u003e\u0026nbsp;\u003c/o:p\u003e\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027text-align:justify;mso-pagination:none;mso-layout-grid-align:\r\nnone;text-autospace:none\u0027\u003e\u003cspan style=\u0027mso-tab-count:1\u0027\u003e            \u003c/span\u003eThe single\r\nmember shall now be able to enjoy the privilege of limited liabilities as\r\nenvisaged under the provision of the Companies Ordinance. Moreover, the benefit\r\nof having a status of a company shall also be availed by such a single member.\r\nFor the purpose of having a second person in a meeting and have sound\r\ndocumentation, an SMC shall be under obligation to appoint a company secretary.\r\nThe SMC shall have all the rights and privileges as well as obligations and\r\nliabilities as other private company has. The transformation of sole\r\nproprietorship into SMC will, of course, help in documentation of economy. At\r\nthe same time, the most important issue is the concept of. company is attached\r\nwith more than one member, not with the single person. Entire scheme of law is\r\nrevolving around this idea of plurality but the introduction of SMC in the\r\nOrdinance is not compatible with the entire existing scheme of company law\r\nbecause there are serious issues regarding meetings, quorum, management and\r\nother plural functions of company cannot be performed properly. The best\r\nsolution is to make separate legislation keeping in view single member\r\nresponsibility.\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027text-align:justify;mso-pagination:none;mso-layout-grid-align:\r\nnone;text-autospace:none\u0027\u003e\u003co:p\u003e\u0026nbsp;\u003c/o:p\u003e\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027text-align:justify;mso-pagination:none;mso-layout-grid-align:\r\nnone;text-autospace:none\u0027\u003eBenefits of SMC to individual and the country\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027text-align:justify;mso-pagination:none;mso-layout-grid-align:\r\nnone;text-autospace:none\u0027\u003e\u003co:p\u003e\u0026nbsp;\u003c/o:p\u003e\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027text-align:justify;mso-pagination:none;mso-layout-grid-align:\r\nnone;text-autospace:none\u0027\u003e\u003cspan style=\u0027mso-tab-count:1\u0027\u003e            \u003c/span\u003ePakistan\r\nbeing a developing economy is mostly dependent upon the agriculture sector.\r\nWith this background it is need of the day to promote the\r\nsmall/cottage-industry in the country. It has multi-fold benefits on overall\r\neconomy and well-being of the people. Following are some of the benefits of the\r\nsame;\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027text-align:justify;mso-pagination:none;mso-layout-grid-align:\r\nnone;text-autospace:none\u0027\u003e\u003co:p\u003e\u0026nbsp;\u003c/o:p\u003e\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027text-align:justify;mso-pagination:none;mso-layout-grid-align:\r\nnone;text-autospace:none\u0027\u003e(1)\u003cspan style=\u0027mso-tab-count:1\u0027\u003e        \u003c/span\u003eIt\r\nwill provide solid support to other indigenous industries in the country in\r\nshape of raw material and furnished goods.\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027text-align:justify;mso-pagination:none;mso-layout-grid-align:\r\nnone;text-autospace:none\u0027\u003e\u003co:p\u003e\u0026nbsp;\u003c/o:p\u003e\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027text-align:justify;mso-pagination:none;mso-layout-grid-align:\r\nnone;text-autospace:none\u0027\u003e(2)\u003cspan style=\u0027mso-tab-count:1\u0027\u003e        \u003c/span\u003eIt\r\nwill, fulfil the local needs of the people and there would be less imports and\r\nmaximum exports, which is considered best tool for foreign exchange.\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027text-align:justify;mso-pagination:none;mso-layout-grid-align:\r\nnone;text-autospace:none\u0027\u003e\u003co:p\u003e\u0026nbsp;\u003c/o:p\u003e\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027text-align:justify;mso-pagination:none;mso-layout-grid-align:\r\nnone;text-autospace:none\u0027\u003e(3)\u003cspan style=\u0027mso-tab-count:1\u0027\u003e        \u003c/span\u003eThere\r\nwould be maximum jobs opportunities in the country and also utilization of\r\nlocal resources.\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027text-align:justify;mso-pagination:none;mso-layout-grid-align:\r\nnone;text-autospace:none\u0027\u003e\u003co:p\u003e\u0026nbsp;\u003c/o:p\u003e\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027text-align:justify;mso-pagination:none;mso-layout-grid-align:\r\nnone;text-autospace:none\u0027\u003e(4)\u003cspan style=\u0027mso-tab-count:1\u0027\u003e        \u003c/span\u003eLocal\r\nmanufacturing will be encouraged and country will be on the way to prosperity\r\nand self-reliance.\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027text-align:justify;mso-pagination:none;mso-layout-grid-align:\r\nnone;text-autospace:none\u0027\u003e\u003co:p\u003e\u0026nbsp;\u003c/o:p\u003e\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027text-align:justify;mso-pagination:none;mso-layout-grid-align:\r\nnone;text-autospace:none\u0027\u003e(5)\u003cspan style=\u0027mso-tab-count:1\u0027\u003e        \u003c/span\u003eThere\r\nare chances of disputes inter se the members, directors in private companies.\r\nBut in case of SMC there will be no stranger in company and there would be no\r\ndispute. Business of a sole proprietor should not be disturbed with his death\r\nas employees would continue operating it while heirs settle their claims for\r\ntaking over the firm\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027text-align:justify;mso-pagination:none;mso-layout-grid-align:\r\nnone;text-autospace:none\u0027\u003e\u003co:p\u003e\u0026nbsp;\u003c/o:p\u003e\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027text-align:justify;mso-pagination:none;mso-layout-grid-align:\r\nnone;text-autospace:none\u0027\u003e(6)\u003cspan style=\u0027mso-tab-count:1\u0027\u003e        \u003c/span\u003eThere\r\nwould be no restrictions on the business of a single-member company. All the\r\nindividuals having their own business in the form of trade, industry,\r\nagriculture, advisory role or any other provisions could form a company and\r\ncould be benefited from the new concept. Despite of all above mentioned\r\nbenefits of SMC, there was no awareness of merits of the single-member company.\r\nIt is the need of the day to introduce and popularize the concept in the larger\r\ninterest of business and trade. The single-member firms would also be allowed\r\nto be listed on the stock exchanges as SMC.\u003csup\u003e28\u003c/sup\u003e One could get the\r\ncertificate of incorporation after filing the prescribed registration documents\r\nwith the Registrar of Companies. This concept is more beneficial in the\r\ndeveloped countries, but in Pakistan it would probably take time to become\r\nhelpful for uplifting the economy.\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027text-align:justify;mso-pagination:none;mso-layout-grid-align:\r\nnone;text-autospace:none\u0027\u003e\u003co:p\u003e\u0026nbsp;\u003c/o:p\u003e\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027text-align:justify;mso-pagination:none;mso-layout-grid-align:\r\nnone;text-autospace:none\u0027\u003e\u003cb\u003eConclusion\u003co:p\u003e\u003c/o:p\u003e\u003c/b\u003e\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027text-align:justify;mso-pagination:none;mso-layout-grid-align:\r\nnone;text-autospace:none\u0027\u003e\u003co:p\u003e\u0026nbsp;\u003c/o:p\u003e\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027text-align:justify;mso-pagination:none;mso-layout-grid-align:\r\nnone;text-autospace:none\u0027\u003e\u003cspan style=\u0027mso-tab-count:1\u0027\u003e            \u003c/span\u003ePakistan\r\ncame into existence in 1947 and prior to that, we used to follow law laid down\r\nby the British. There is great evolutionary development in UK but in Pakistan\r\nwe borrow the principles of corporate laws from different countries\r\nparticularly England. In India, there is separate corporate practice, entirely\r\ndifferent from banking. It provided a method of feedback regarding the\r\npractical hardships in the corporate field. It further motivated the\r\nlegislature to make amendments in law. Now at this time the mother statute of\r\nIndian Companies Act, 1956 is amended at large scale. Apart from all there is\r\nno doubt that Companies Ordinance cover most of corporate aspects but it is not\r\na complete and updated law as compare to other countries. In case of SMC law\r\nhas been legislated to provide that a single individual or person may form a company\r\njust by subscribing to memorandum of association but at the same time it is\r\nalso necessary to provide certain mechanism for the proper implementation of\r\nlaw, checks and balances on the SMC and there maximum benefits for country. The\r\ntransformation of sole proprietorship into SMC will, of course, help in\r\ndocumentation of economy. The most important issue is the concept of company is\r\nattached to more than one member not with any single person. The entire scheme\r\nof law is revolving around this idea but introduction of SMC in the Ordinance\r\nis not compatible to the entire existing scheme of company law. Meetings,\r\nquorum, management and other plural functions of the company cannot be\r\nperformed properly. The best solution is to make separate legislation keeping\r\nin view single member responsibility and joint businesses. It is another aspect\r\nthat SMC be given certain privileges and incentives, keeping in view the\r\nbetterment of small industry. There should be assurance of non-exploitation in\r\nthe name of any company whatsoever. SMC should be treated as separate legal\r\nentity but liability of single member should be under certain qualifications.\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027text-align:justify;mso-pagination:none;mso-layout-grid-align:\r\nnone;text-autospace:none\u0027\u003e\u003co:p\u003e\u0026nbsp;\u003c/o:p\u003e\u003c/p\u003e\r\n\r\n\u003c/div\u003e\r\n\r\n\u003c/body\u003e\r\n\r\n\u003c/html\u003e\r\n"