Decisions by a sole director

Under the model articles for private companies limited by shares, a company with only one director, whose articles do not require it to have more than one, can take board decisions alone: article 7(2) switches off the usual rules on meetings, quorum and voting. The decision still has to be recorded in writing and kept for at least ten years under article 15, and some decisions trigger separate statutory recording duties, particularly where the sole director is also the sole shareholder.

Can one person really run a company as its only director?

Yes. Section 154 of the Companies Act 2006 requires a private company to have at least one director (a public company needs at least two), and section 155 requires at least one director to be a natural person. Section 157 sets a minimum age of 16 for appointment. A private company does not need a company secretary at all (section 270), and section 7 allows a company to be formed by one person. So the one person company, with the same individual as sole director and sole shareholder, is entirely normal.

What changes is how decisions are made and evidenced, and the paperwork has to show which hat the person was wearing for each decision. For the general position on appointments, see appointing a director.

What does article 7(2) of the model articles say?

The general rule in article 7(1) of the model articles for private companies limited by shares (Schedule 1 to SI 2008/3229) is that any decision of the directors must be either a majority decision at a meeting or a unanimous decision taken under article 8. Article 7(2) then provides that if the company only has one director, and no provision of the articles requires it to have more than one, the general rule does not apply and the director may take decisions without regard to any of the provisions of the articles relating to directors’ decision making.

This exception does real work. Without it, article 11(2) would bite: the quorum for directors’ meetings must never be less than two and, unless otherwise fixed, it is two. Article 11(3) adds that where the number of directors is below the quorum, the directors may only decide to appoint further directors or to call a general meeting so the shareholders can appoint more. Article 7(2) lifts the sole director out of that trap.

The model articles apply automatically under section 20 where a company registers no articles, or registers articles that do not exclude or modify them. The relevant version is the one in force when the company was registered, so the first question for any sole director is which articles the company actually has.

What if the company still has old Table A articles?

Many companies formed under the Companies Act 1985 still run on Table A. As originally made in 1985 (SI 1985/805), regulation 64 says that unless otherwise determined by ordinary resolution, the number of directors shall be not less than two. Regulation 89 fixes the quorum for directors’ business at two unless the directors fix another number, and regulation 90 allows a sole continuing director to act only to fill vacancies or call a general meeting when the number of directors is below the quorum.

A Table A company with one director is therefore exposed unless the members have passed an ordinary resolution under regulation 64 permitting a single director and the quorum has been adjusted, or the articles have been replaced. Articles can be amended by special resolution under section 21. Later amendments to Table A changed some wording, so check the version filed at Companies House for the specific company rather than assuming.

How should a sole director record decisions?

Article 15 of the model articles requires the directors to ensure the company keeps a written record of every unanimous or majority decision taken by the directors, for at least ten years from the date of the decision. Separately, section 248 requires minutes of all proceedings at directors’ meetings to be kept for at least ten years from the meeting, and failure is an offence by every officer in default, with a fine up to level 3 on the standard scale.

GOV.UK guidance on taking money out of a company is blunt about dividends: to pay a dividend you must hold a directors’ meeting to declare it and keep minutes of the meeting, even if you are the only director. In practice a sole director should sign and date a short note of each significant decision, stating what was decided, why, and what was considered. Our guides on board minutes and paying dividends legally cover the content in more detail.

What extra rules apply when the sole director is also the only shareholder?

Three statutory provisions are aimed squarely at one person companies.

• Contracts with the sole member (section 231). Where a company with only one member contracts with that member, the member is also a director, and the contract is outside the ordinary course of business, the company must, unless the contract is in writing, set out its terms in a written memorandum or record them in the minutes of the first directors’ meeting after the contract is made. Breach is an offence punishable by a fine up to level 5, but section 231(6) confirms the contract itself remains valid.
• Decisions as sole member (section 357). Where the sole member takes a decision that could be taken by the company in general meeting, the member must provide the company with details of it, unless it was taken as a written resolution. Failure is an offence (fine up to level 2) but does not affect the decision’s validity.
• Register of members (section 123). When a limited company has only one member, the register must contain a statement to that effect, and if membership falls to one, the date it happened.

Section 318(1) confirms that one qualifying person present is a quorum at a general meeting of a single member company. The informal route also exists: HMRC’s Employment Income Manual at EIM42300 accepts that where remuneration is approved by all the shareholders entitled to vote, that has the same effect as a resolution in general meeting, citing Re Duomatic Ltd. Our page on informal unanimous consent explains the limits, and approving directors’ pay covers remuneration specifically.

Does a sole director still have to declare interests?

The general duties still apply in full; article 7(2) relaxes procedure, not duties. Section 182 requires a director to declare an interest in an existing transaction or arrangement. Section 186 deals with the awkward case of a sole director of a company that is required to have more than one director: the declaration must be recorded in writing, is treated as part of the proceedings at the next directors’ meeting, and section 248 applies as if it had been made there. A company running on model articles that permit a single director falls outside section 186, but recording the interest is still sensible evidence that the duty was considered. See declaring interests in transactions.

What happens if the sole director dies or becomes incapable?

Article 18 of the model articles ends a directorship on events including bankruptcy, and a written opinion from a registered medical practitioner treating the director that the person has become physically or mentally incapable of acting and may remain so for more than three months. If the shareholders survive, they can appoint a replacement by ordinary resolution under article 17(1). Where, as a result of death, the company has no shareholders and no directors, article 17(2) gives the personal representatives of the last shareholder to die the right to appoint a director by written notice. Until someone is appointed, nobody has authority under article 3 to manage the business, so bank mandates and payroll can stall.

How does this work in practice?

Illustration only. Jo is the sole director and sole shareholder of a company with unamended model articles. In one month she:

1. Decides as director to pay an interim dividend, which article 30(1) allows the directors to decide. She signs a dated written decision referring to management accounts showing enough distributable profit, and issues a dividend voucher.
2. Sells her personal van to the company for £8,000, outside the ordinary course of business. With no written contract, section 231 requires the terms to be set out in a memorandum or minuted at the next directors’ meeting. She records the price, date and vehicle details in a signed note.
3. Decides as sole shareholder to change the company’s name. She signs a written special resolution, so section 357 is satisfied, and files it with Companies House.

If Jo later appoints her business partner as a second director, article 7(2) stops applying. The quorum of two in article 11(2) then governs, and decisions need a meeting or unanimous agreement under article 8.

What mistakes come up most often?

• Assuming article 7(2) applies when the company has bespoke articles or Table A requiring two directors.
• Paying dividends with no written decision, leaving nothing to show HMRC or a liquidator that the payment was properly declared.
• Blurring the director and shareholder roles, for example signing a board minute for something only the members can approve.
• Not updating the register of members when the company becomes, or stops being, a single member company.
• Having no plan for who appoints a director if the only director dies or loses capacity.

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Related Accountapedia entries

• Board decisions without a meeting
• Board meetings: procedure and quorum
• Articles of association and model articles
• The chair’s casting vote at board meetings
• Dividend paperwork: vouchers and board minutes
• Do private companies need an AGM
• Section 8 decisions on employment status for NI

Related cover: Directors and officers liability insurance and Management liability insurance.

Sources

• legislation.gov.uk: Act 2006 c. 46, section 154
• legislation.gov.uk: Act 2006 c. 46, section 155
• legislation.gov.uk: Act 2006 c. 46, section 157
• legislation.gov.uk: Act 2006 c. 46, section 270
• legislation.gov.uk: Act 2006 c. 46, section 7
• legislation.gov.uk: SI 2008/3229, schedule 1
• legislation.gov.uk: Act 2006 c. 46, section 20
• legislation.gov.uk: SI 1985/805, schedule made
• legislation.gov.uk: Act 2006 c. 46, section 21
• legislation.gov.uk: Act 2006 c. 46, section 248

Reviewed by Christine Anderson, Broker, Solar Protect. Last reviewed 8 October 2026. Part of Accountapedia, the Solar Protect guide to UK tax and accounting. This page is general information, not personalised advice.