Sole shareholder checklist

It’s common for small companies to have a sole shareholder. Our checklist takes you through the special rules that apply.

Special rules

It may seem artificial to separate out the identities of a company and its sole shareholder, but this is essential to preserve the company’s legal personality. Making sure that decisions and contracts are recorded properly helps to ensure that the company is not taken advantage of by its sole shareholder, particularly where they are also a director. The provisions dealt with in the checklist have priority over the company’s articles, so there is no need to alter the articles if they contradict the statutory requirements, e.g. articles usually impose a quorum requirement of two shareholders for shareholder meetings.

Decision making

Even decisions made by a sole shareholder should be properly recorded. If a sole shareholder makes a decision that would require a resolution if there were more than one shareholder, that decision should be recorded in writing and kept with the company books. That way, there is evidence of the decision should there be any challenge or uncertainty in the future, and copies of some resolutions have to be filed at Companies House (see our Shareholder Resolutions Summary). See our model Written Record of Decision by Sole Shareholder.