If a company has only one shareholder it is classified as a single member company. A company can be incorporated as a single member company or can become one at a later date if the membership of the company falls to one. Private limited companies and public limited companies need only have one shareholder since the introduction of the Companies Act 2006.
If a company is incorporated as or becomes a single member company a note must be placed on the register of members stating that the company only has one member and the date on which this became the case. Equally, if the membership of the company increases and the company is therefore no longer a single member company a note must be placed on the register stating that this is the case and the date on which this occurred. If these declarations are not placed on the company’s register the company and every officer in default has committed an offence, punishable by a fine.A single member can also be the sole director of a company. In such circumstances a single member can take decisions that are normally needed to be made within a formal company meeting, as long as they are recorded in writing. When a decision needs to be made a single member can constitute a quorum provided that there are not provisions that are contradictory to this in the company’s Articles of Association. The danger of having a sole member and director is that should anything happen to that individual issues can arise concerning who has control of the company in the short term. Company Formations, alternatively if you have any questions please contact us at [email protected] or on 0208 952 0140.