The Companies (Single Member Private Limited Companies) Regulations 1992

Explanatory Note

(This note is not part of the Regulations)

1.  These Regulations implement Council Directive No. 89/667/EEC on single-member private limited-liability companies (OJ No. L395, 30.12.89, p.40). The directive requires Member States to provide for the formation of a company having one member and to permit a company to be a single member company, subject to certain safeguards. In relation to the UK, it applies to private companies limited by shares or by guarantee.

2.  Regulation 2(1) provides that a private company limited by shares or by guarantee may be formed by one person (in so far as permitted by section 1 of the Companies Act 1985 as amended by the Regulations) and may have one member. It also provides that any enactment or rule of law applying to a private company limited by shares or by guarantee shall, in the absence of any express provision to the contrary, apply with any necessary modification to such a company which has been formed by one person or which has only one member.

3.  Without prejudice to the generality of Regulation 2(1), Regulation 2(2) also makes specific amendments to the Companies Act 1985 and the Insolvency Act 1986 as set out in the Schedule to the Regulations. The following sections of the Companies Act 1985 are amended: section 1 (mode of forming an incorporated company), section 24 (minimum membership for carrying on business) and section 680 (companies capable of being registered under Chapter II of Part XXII). The following new provisions are inserted into the Companies Act 1985: section 322B (contracts with sole members who are directors), section 352A (statement that company has only one member), section 370A (quorum at meetings of the sole member) and section 382B (recording of decisions by the sole member). Consequential amendments are made to section 741 of the Companies Act 1985 and to Schedule 24 to that Act. Section 122 of the Insolvency Act 1986 (circumstances in which company may be wound up by the court) is also amended.

4.  Regulation 3 contains a transitional provision.