Foundations for the Formation of Single-Member Companies in U.S. and Iranian Law
Keywords:
Sole proprietorship, Limited Liability Company, Iranian law, US lawAbstract
A single-member company is the simplest form of business, exclusively owned and controlled by one person. In this structure, all benefits and liabilities arising from the business are directly attributed to that same person. This study aims to examine the possibility of forming single-member companies under Iranian law and to conduct a comparative analysis with U.S. law in order to clarify the legal necessities and challenges of this emerging institution. The study adopts a descriptive-analytical method and, using library-based sources, compares the legal foundations for the formation of such companies in the two legal systems of Iran and the United States. The findings indicate that recognizing these companies in Iran requires redefining the concept of a commercial company in the Commercial Code and distinguishing it from the concept of partnership. Moreover, authorizing this institution without enacting comprehensive rules on management and transactions may lead to personal abuse. By contrast, U.S. law, particularly the limited liability company (LLC), and the Twelfth European Directive have provided more flexible frameworks for this purpose. Based on the analysis conducted, it is recommended that, in order to address existing legal gaps, the new Commercial Bill be supplemented with precise regulations concerning decision-making procedures and the separation of assets, so that the economic advantages of these companies can be utilized while also protecting the rights of third parties.
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Copyright (c) 2025 Bagher Narimani (Author); Alireza Lotfi; Mozaffar Bashokooh (Author)
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