HOW TO REGISTER SMC PRIVATE LIMITED COMPANY IN PAKISTAN
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We have lately encountered a lot of questions asking can a single person own a private limited company? What is SMC Private Limited? To answer such questions, today’s video will focus on how to register SMC Private Company, its benefits, why should you register, who can register it and how much time does it take. This video has 2 parts. The first will focus on SMC Private Company. Normally, we believe that if we are an individual stakeholder, we can have sole proprietor company. But, what if we form a private limited company and get it registered via SECP, will we get benefits? So, first we will talk about that. Then, we will talk about how it can be formed, its requirements also if foreigners can form it or avoid? Usually we have friends who are foreigners or individuals having dual nationality or having NICOP, are they eligible? So, this video will focus on all these bullet points.
Benefits SMC Private Limited Company
The liabilities are limited. This means the director’s or shareholder’s capital is the only liability. Other than that, all the personal assets including bank balance, house or car are secured. SMC Private Limited Company is a separate legal entity from its members. In case of sole proprietor, you are the sole responsible person. In this case, you are indifferent to company which is a separate entity.
You can enjoy corporate tax benefits. Tax can be reduced to a greater extend by these policies. A link will be shared in description to further guide you in this respect.
In case of any death, the company doesn’t shuts down. The company is taken over by the next in kin at this stage. During registration, you appoint an alternate director who takes charge in case of any death on a temporary stage. Following that, the legal heirs can take over using the succession certificate made by the Court. In this case the company is run by directors and is now converted to private limited company. There are other instances as well when a SMC can be changed to private limited company for example when a director resigns and they do not have any other alternative
The decision power lies in your hands. You do not need to ask for permissions. There are boards of director meetings, discussions are done, minutes are made and decisions taken. So, it’s a significant benefit that power lies in your hands.
You possess all the shares. Whatever the company earns, it goes in your pocket. Whenever you wish to discontinue, you can transfer it to another member. You can exit anytime and the company remains the same. In case of sole proprietor using an NTN, it cannot be transferred. So, the company is also transferable.
Requirements for Registration of SMC Private Company:
Firstly, you need to decide a name to your company and check its availability. At least have a couple of options in your mind. Once you finalize your name, you should have biometric verified sim card that is on your personal name. Additionally, you need an email address, color copy of cnic of yourself and alternate director. In cases of death, temporarily the alternate director takes over the charge. Once the family is settled, all the stakeholders take charge or they delegate one member through power of attorney to take care of business.
Once that is done, a file has to be prepared which includes, memorandum of association and article of association. Memorandum has company objectives and article has company rules, bylaws and how to run the company. The article can be a single pager in case of SMC. Also, you have to fill some other forms. Company capital is very important. For Security Company, capital should be minimum 1 million. For Hajj/Umrah Company, authorized capital is 7.5 million and paid off capital should be 5 million. This is a basic requirement.
Once your name gets approved and file is prepared, the company gets incorporated in 5-8 working days. If any queries arise during the process, you are asked to clarify. Time elapsed will depend on that. If you are a foreigner, you should have passport copy, any national identity, 3 photographs, resume, and an affidavit mentioning that if your verifications fail you will resign from the company and transfer your shares. Previously, the foreigners were first verified and then registered. This process took 6 months to 1 year. Now registration is done similar to local citizens and then verification is done via Pakistan Embassy in relevant country. In case you are Pakistani with a NICOP, the requirements are same as foreign directors. You follow the same protocol. Dual Nationality or foreign passport holders also need to undergo the same protocol.
Once all requirements are met and registration is successful, SECP and FBR have started one window operations which directly receives your data and issues company NTN. Get attested copies from SECP of all the documents submitted along with Board Resolution Minutes and submit them in the bank to open company bank account.
Further, if you are in service industry in Sindh, you need registration in SRP, if in Punjab you need PRA registration. If you importer or exporter, you need registration in Chambers of Commerce, General Sales Tax and Weboc. For all these we have separate videos, link of which are shared in description below. If you are wholesellar, distributor, importer or exporter, you need sales tax registration.
We hope that after this video, you have received adequate information. If you have any further questions, feel free to call, whatsapp or email.
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