Formulate the guiding elements and draft the rules that would help to introduce single member companies in Ethiopia (PDF)

Since Liechtenstein, as the first country in the world, acknowledged the legal position of Single Member Liability Companies by statute law, this type of company has been legally recognized in an increasing number of countries. But in practice, England is the first country which paved the way to one man company practice with the Solomon case. Single Member Company emerged and developed rapidly in recent years, for the reason of their strong economic, political and legal theoretical basis. As a result, we can dig into their emergence and development from a social and historical point of view. It is helpful to encourage investment, develop economy and facilitate employment, and more freedom to the owner of the company. When compared with ordinary types of companies, Single Member Companies' legal character lies in the singularity of shareholder and the particularity of its corporate governance structure. Thus it increases the possibility for the single shareholder to abuse the rights and damage the interests of companies' creditors and tax authority. In order to protect the company's creditors, it is necessary to regulate single member company strictly and set up integrated creditors protection rules. Therefore, the legal status for Single Person Companies should be authorized and as well positively standardized in order to seek advantages and avoid disadvantages. Ethiopia has suitable conditions when we analyse the factual situation of a country to introduce and to benefit from the advantage of one man companies.