Andrew Millet of Wisteria Formations explains the rules about single member companies
What is a single member company?
A private company, limited by shares or by guarantee, formed with one member or one whose membership is reduced to just one.
How can a sole member hold general meetings?
A single member - present in person or by proxy - constitutes a quorum, in such circumstances. If you hold such a meeting, you must record it in the minutes.
If, as a sole member, you take a decision, except by written resolution of the company, you must give a written record of the decision to the company. This ensures continuity of records, if you sell some or all of your interest in the company.
How should a company record an unwritten contract with a sole member?
If the company enters into an unwritten contract with the sole member who is also a director of the company, and the contract is not in the ordinary course of the company's business, the company must ensure that the terms of the contract are set out in a memorandum or are recorded in the minutes of the next director's meeting.
What about the register of members?
A company's register of members must accurately record its members. The register of members of a single-member company must contain an express statement to the effect that the company has only one member and state the date upon which the company became a single member company.
What if the company originally had more than one member?
If the membership decreases to one, the register must contain an express statement to the effect that the company has only one member and state the date upon which the business became a single-member company.
And if I want my company to increase its members?
You must record the details of the new member(s) in the register of members. You should enter an express statement to the effect that the company is no longer a single-member company and give the date on which that event occurred.
Written with expert input from Andrew Millet of Wisteria Formations.
Andrew is a Director of Wisteria Formations, the UK's leading company formation agent which offers a high quality and professional company formation service. Andrew is a Chartered Accountant and as well as providing advice on company formation matters, Andrew runs Wisteria Chartered Accountants, ...