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Legal matters associated with company form & formation (Implications…
Legal matters associated with company form & formation
Implications of corporate
Companies act 2006
Veil of incorporation
A company is a legal person separate from individuals (owners)
Salomon v Salomon 1897 = transfer his business to a ltd company so he was not liability for the money owed.
if went into Liquidation
Other results of incorporation
Separate legal personality
Contracts in is own name & can sue or be sued, liable injuries sustained
Injury is done to company must take remedial action Foss v Harbottle 1843
Salomon v Salomon company is responsible own debts (if it insolvent)
Company can own property in own name
Company does not cease to exist if shareholder dies. Winding up the procedure
Companies are subjected to companies act 2006 rules
Lifting the veil of incorporation
Lifting/ piercing = shareholders or directors liable companies debts
By case law
By statute = plc must have trading certificate to companies act 2006, disqualification directors (company directors act 1986), wrongful or fraudulent trading insolvency act 1986
Case law = Sham companies, times of war = illegal to with the enemy, Groups = such as groups of companies; holdings
Pre-formation activities
Promotes
Twycross v Grant = person under go a promotion contract
Disclose any interest in transactions to the company
Company may obtain damages, if goes against company
Pre-incorporation contracts
Contract made by person on behalf of a company
Common law & CA, person making contract is liable
Protect themselves from legal action, the company agrees no liable
Contracts act 1999
Off the shelf companies
Company that already formed
Can trade & make contracts to prevents problems above
Quite cheap & simple solution
Forming a company
Registration with companies house
Memorandum of association
Application form
Articles of association = model articles
Statement of cap & shareholdings
Statement of guarantee
Statement of proposed officers = directors
Statement of compliance in line with CA
Registration fee
Trading certificate - pc
Share capital is = or + than £250000
share premium have been paid
Preliminary expenses who has paid
Any benefits given
Criminal offence to trade before hand
Company name
Public limited must have plc
Private must have limited or ltd
Cannot share names
Cannot use certain words
Permission to use certain words
Passing off the same goods
Articles of association
Companies act 2006 applies
Voting in favour
Common law articles must be made in good faith
Enforceable contract between company & members
Company member
Statutory books, returns & records
Statutory books
Register of members = names & address
Register of directors = names, address, DOB
Register of company secretaries
Register of directors interest in shares & debentures
Directors services contracts
Register of charges = name of the charge, property charged
Minute books = from meetings must be viewed by public
Accounting records must be viewed by public
Annual return
Following details
Address of reg office
Type of company
Principal business activities
Companies directors & secretaries
Issued shares & who holds them
Was the company a trading company
Statement of capital
Where the companies records are kept
Private company elections