Only proprietary company can be formed with a single person acting as a director and member of the Company provided that person is resident in Australia. A proprietary company is not required to have a company secretary but if the company wants to appoint a company secretary, said director can also act as a company secretary.

Such sole director / member company is even known as 'One Person Company'. Such company is formed with one and the same person as the company's –

• sole director;

• sole member i.e. shareholder;

• sole company secretary; and

• public officer.

Since when have companies been able to have sole person acting as a director and member?

In 1995, the Government introduced the Corporate Law Simplification Act 1995, which made it possible for companies to operate with only one individual (who could be the member/shareholder, director, secretary and public officer).

Special rules for sole director/member proprietary companies:

• A sole director / member proprietary company is not required to have a formal set of rules governing its internal relationships or adopt a constitution although they may do so if they wish.

• A sole director / member company need not have formal Board Meeting or Annual General Meeting. Decisions have to be recorded, signed and kept for record.

• Corporations Law permits a sole Director company to not have a Company Secretary. However, Section127 of the Corporation Act requires that when a sole Director executes a legal document without a common seal; the sole Director of the Company must also be a Company Secretary and when a sole Director witnesses execution of a legal document fixing a common seal; the sole Director of the Company must also be a Company Secretary.

• The business of one person company is managed by or under the direction of the sole director. For example, the director can borrow money, issue shares and issue debentures.

• The sole director of such company may sign, draw, accept, endorse or execute a negotiable instrument on behalf of the company or in a different way that director decides.

• Sole director / member of a proprietary company can be paid any remuneration for being a director that the company determines by resolution. The company may also pay the director's travelling and other expenses incurred by the director in connection with the company's business.

What happens if another director is appointed or another member is introduced in One Person Company?

The director of a one person company may appoint another director by recording the appointment and signing the record. In case another director is appointed or another person becomes a member, the replaceable rules will automatically apply to the company, unless they are replaced by a constitution adopted by the company.

What happens when sole director / member of the company dies or becomes bankrupt or suffers from mental incapacity?

If a sole director / member of one person company die or is unable to manage the company because of mental incapacity, a personal representative or trustee is appointed to administer the person's estate or property and the personal representative or trustee may appoint themselves or another person as the director of the company.

If the director of a proprietary company becomes bankrupt, a trustee in bankruptcy is appointed to the person's property and the trustee may appoint themselves or another person as the director of the company.