So, from the legal point of view, I am going to briefly explain to you how to identify a one-man company...

1.     Look at the legal structure.

By legal structure here, I mean how the Company or business was registered.

Is it a business name or a Ltd Liability Company?

A business name or an enterprise is mostly owned by one person.

A business name is not a legal entity and the owner bears all the risks and liabilities. He is not accountable to anyone.

A limited liability Company is an actual legal entity.

It is an artificial person (corporate body) with all the powers of a natural person.

Although one person can now set up a Company, it is usually owned by two or more persons.

Now here is how to spot a one-man company before you invest your hard-earned money.

1. Request to see their incorporation documents (CAC Certificate of Registration).

This will let you know whether it's a business name or a Ltd Liability Company to start with.

2. If it's a Limited liability Company, request to see the current list of the board members. (Directors and advisors)

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Essentially, what makes a company a one-man company regardless of how it is registered is the decision-making power of the founder/CEO.

The founder is accountable to the board.

If he makes all the decisions by himself and he does not answer to anyone, then chances are that he is a one-man company.

He doesn't need to consult a board for anything, he can decide to wake up one day and change the object clauses or nature of the business of the Company and no one will question him, because no one holds him accountable.

3.     Look critically at the composition of the board, if they have one.

Sometimes you may request the board list and they may provide one.

Look at the composition of the board very well.

Sometimes the board may comprise all family members, mother, father, siblings, wife, husband, etc.

This is not a functional board and, in most cases, those other family members have little or no say in the company.

They just exist as board members on paper some of them are not even aware that they have been made directors in their brother's company.