Whether the idea of Single Member Company (SMC), is a device to exploit and to avoid the corporate liability by the Capitalist? A critical Analysis of Section 160 of (Pakistan) Companies Ordinance, 1984

Abstract

The concept of Single Member Company (the “SMC”) was introduced in Company law of Pakistan in 2002. However, besides having created anomalies within the existing legislation that have already been analyzed by different academics, there remains potential for abuse of the concept of separate legal entity and/or the doctrine of limited liability at the hand of the single member of the SMC. In this view of matter, this article proposes to review the Section 160 of Companies Ordinance, 1984 to argue that there is no provision in the law in Pakistan to effectively place a mechanism of checks and balances so as to reduce the risk of escaping the corporate liability by the SMC in Pakistan. In the same context, this article also dilates upon the inadequacies of SMC legislation in relation to the concept of social, economic and environmental responsibilities of corporate entities.