In an increasingly universalizing world operating business in the form of companies is
apparently becoming an indispensable aspect of modern commercial life. The major reason that
led to the corporate form as the principal method of organization of commercial activity among
other things is its advantage of limited liability. Limited liability in its classical sense
implies the insulation of individual shareholders composing the company from the liability of
company debts. Yet the traditional corporate legal theory has confined the advantage of
limited liability within the purview of multimember corporations making it inaccessible to
solo investors. However quite recently the historical relic of corporate theory that views
corporations as a legally personified body of numerous subscribes of shares has undergone a
sharp evolution as have many other business practices and their legal bases. The purpose of
this thesis is to look into notable literature on major corporate theories and analyze whether
it would be applicable to single member companies (SMC). It also seeks to compare major legal
frameworks governing SMC's in comparative jurisdictions to show the legal and theoretical
implications of introducing SMC's into the Ethiopian corporate legal system.
