Procedure for Conversion of status of Private Company (Multi-Members) into Single Member Company

This blog is written by Mr. Shahwazir Safi, Senior Associate Taxation and Corporate Services. Please read this blog and provide your valued comments.

Procedure for Conversion of status of Private Company (Multi-Members) into Single Member Company

Following procedure is required to be adopted for conversion of private company (multi-members) into single member company:-

Step 1:

Approval of the Board of Directors for change of status of private company into single member company is sought.

Step 2:

21 days notice accompanied with the proposed special resolution is issued for convening the general meeting of the shareholders of the company.

Step 3:

Resolution for conversion of the status from Private Company into Single Member Company and alteration in Articles of Association is placed before the members which is carried as special resolution. There is significant difference in the Articles of both the types of companies. Therefore; the Articles are required to be amended on change of the status; therefore the same must be amended to change the status especially the imposition of restrictions meant for single member private companies. The regulations in S-8 of the SMC Rules may be adopted for this purpose.

Step 4:

Special Resolution on Form – 26 along with bank challan evidencing the deposit of filing fee in any of the designated branches of MCB (as per schedule given in Annexure-A), is filed with the registrar concerned within 15 days of passing of the special resolution. A special resolution is to be passed by the majority of not less than three-fourth, of such members entitled to vote as are present in person or by proxy at a general meeting.

Step 5:

Application is sent to the Commission within 30 days of the date of passing of the special resolution. Such application is accompanied with the following documents:-

  1. Form S – 4 prescribed under the SMC Rules.
  2. Copy of Form – 26 (Special Resolution) – see section 172.

iii. Copy of the Memorandum and Articles of Association, duly amended.

  1. Certified copy of the existing Memorandum and Articles of Association.
  2. Minutes of the General Meeting.
  3. Bank challan evidencing the deposit of fee in any of the designated branches of MCB, as per schedule given in Annexure-A, on account of application fee (Form S-4).

vii. Affidavit that the contents of the application are true.

viii. Application must be in duplicate and a copy is required to be sent to the registrar concerned under Rule 32 of the Rules.

Step 6:

The Commission gives approval for conversion of private company into single member company through an Order.

Step 7:

Certified copy of the order along with Form S-1, Form S-5 and amended copy of the Memorandum and Articles of Association are filed with the registrar concerned with bank challan evidencing the deposit of filing fee of all the aforesaid documents in any of the designated branches of MCB, as per schedule given in Annexure-A.

Step 8:

The registrar issues filing certificate of Special Resolution and Order of the Commission.

Step 9:

The Company shall transfer the shares to Single Member within 15 days of the order of conversion by the Commission.

Step 10:

The Company shall also file the particulars of out going directors (being more than one Director) on Form – 29 within 14 days of the change, to the registrar concerned.

Step 11:

In terms of section 204-A of the Ordinance and rule 6 of SMC Rules, a single member company is required to appoint a company secretary within fifteen days of incorporation or of becoming a single member company. The appointment of company secretary is to be reported to the registrar concerned on prescribed Form-29 within 14 days from the date of appointment.

Step 12:

In terms of 7 of SMC Rules, the single member shall nominate two individuals; one of whom shall be the nominee director to work in case of death of single member. The other shall be alternate nominee director to act as nominee director in case of non-availability of nominee director.

The nominee director is required to:

(a) manage the affairs of the company in case of death of single member till the transfer of shares to legal heirs of the single member;

(b) inform the registrar concerned of the death of single member, provide particulars of the legal heirs and in case of any impediment, report the circumstances, if any, seeking the directions, in the form as set out in Form S-3 within seven days of the death of the single member;

(c) transfer the shares to legal heirs of the single member; and

(d) call the general meeting of the members to elect directors.

Shahwazir Safi