Journal of Legal Research

Journal of Legal Research

A Feasibility Study of Establishing Single-Shareholder Companies under the Iranian Legal System

Document Type : Original Article

Author
Associate Professor, Department of Law, Faculty of Theology, Azarbaijan Shahid Madani University, Tabriz, Iran.
Abstract
Traditionally, in various legal systems, the establishment of a corporate legal personality has been conditioned upon the presence of at least two shareholders. On this basis, the formation of a company with a single shareholder has, as a general rule, not been recognized. The foundations of such an approach have commonly been attributed to the contractual nature of the company, the principle of the unity of assets and liabilities, and the possibility of abuse of the single-shareholder company structure to the detriment of creditors. Over time, however, legislators in various jurisdictions, including Iran, have gradually moved toward recognizing the concept of the single-shareholder company. The recognition of a single-shareholder limited liability company in the proposed amendment to the Iranian Commercial Code, which has not yet entered into force, raises the fundamental question of whether recognition of such an institution is reconcilable with the foundations and structure of the Iranian legal system. This study, employing a descriptive-analytical methodology and adopting a comparative approach, seeks to answer this question. The preliminary conclusion of the research indicates that recognition of the single-shareholder company is not only reconcilable with the structure of the Iranian legal system, but that the limited liability company stands the most appropriate legal framework for the establishment and operation of such entities.
Keywords

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