Company Law Overview

caller-out Law OverviewTable of ContentsAdvantages of forming a incorporating troupe..Differences betwixt snobbish restrict follow and public special smart set..Disadvantages of forming a followA association limited by sh ars, limited by insure or oceanicThree ways the federation Act 2006 has affected confidential companiesDocuments essential for registration..Role of fipple flute of companiesWhat is the resolution of section 33 of Companies Act 2006. merged personality and effect on shucks and Jill..Bibliography..Advantages of forming a incorporating companyThe attend to of formation (registration) incorporated company is regulated by law in the Companies Act 2006. Summarised below the chief(prenominal) advantages of incorporating the company. particular(a) LiabilityThe most classical of the advantages of incorporation is its limited pecuniary obligation, what meaning that the legal certificate of indebtedness of plowholders is limited to the heart paid on their allots. The most important thing for Jack and Jill dexterity be that their personal as points exit non be put at risk.Separate Legal IdentityThe limited liability company is a legal entity separate from the board and its members ( tractholders). And again, any debts made by the company depart non be borne personally.Protection of smart set NameThe conjure up of the company mustiness be unique and no adept else potentiometer non accustom it. However the choice of company work is restricted and complies with the rules.ContinuityIn case that Directors, management and employees leave, retire, die it doesnt mean that the company go forth be winding up. Once the company is formed it will be go till insolvency, bankruptcy, liquidation or other cause of the courts or Registrar of Companies.TaxationSole traders and partnership companies indemnify income tax except the companies pay corporation tax which has currently lower rate than income tax. There are to a fault wi der range of allowances and tax deductible costs which decreases the taxable profit.Differences amidst nonpublic limited company and public limited companyDIFFERENCES humankind COMPANIESPRIVATE COMPANIESNAMEMust end with Public Limited society or PLCMust end with Private Limited Company or LTD (unless the company is unlimited)SHARE CAPITALMust defy a lower limit subscribed share capital of 50,000 and this must be paid up to at least 25% (at least 12,500 must already vex been raised by the issue of shares)No limit on share capitalSHARESThe company may offer its shares and debentures to the public (stock exchange)Cannot be hail for sale or listed on the stock exchangeDIRECTORSAt least 2One directorCOMPANY SECRETARYMust take for suitably qualified company secretaryThere is no compact to have a secretary, if thither is nonpareil does not need to be qualifiedANNUAL GENERAL MEETINGMust hold all calendar yearNo obligation, of AGM, unless there is the decision to have oneDisadvan tages of forming a companyIn the first stage of the formation of a company must be prepared various paperss, such(prenominal) as memorandum of association and articles of association, a statement of capital and declaration of compliance, which must be delivered to the registrar of companies at Companies support. This stage is more laborious and mixed in comparison to the partnership and therefore incorporated companies will take in ampleer to set up. The company in any case must have a unique name and gain unique number from Registrar of Companies.To set up the company there must be paid fees which take in this type of company more expensive to set up. Also, there are extensive legal issues that have to be complied with. The various ongoing formalities must fill and publicity include the companys directors, secretary, also the financial accounts (which can be viewed by individual or other companies), the annual light of the company, and arrangement.A company limited by sha res, limited by guarantee or unlimitedLimited by shares what means that the liability of the members ( shareholders) of the company is limited by the memorandum to the amount capital originally invested. That will protect the shareholders private assets in the event of the company will announce bankruptcy. This kind of liability I would advice to Jack and Jills company as their private assets will not be involved in case of insolvency.Limited by guarantee means that the liability of shareholders is limited to the amount which they have undertaken or guaranteed to pay if company winding up. This kind of liability has commonly been formed for educational or charitable purposes, and may or not have a share capital. If there is a share capital, the shareholders liability is for the amount of his shares and also to the amount of guarantee. Companies with no share capital commonly gain funds by subscription or endowments.Unlimited means that there is no limit of the liability of the sha reholders. Unlikely to the partnership the shareholders are not directly liable to creditors, simply they are liable to the company. However, their liability is the equivalent as partners.Three ways the Company Act 2006 has affected private companiesIn the Company Act 2006 many of the changes has applied to small private companies and its one of the most important rules is a simplification of the corporate regime. some of these rules will be presented belowThe company educates the decision if they wish to describe the company secretary, as they are no longer obligated to do so.The shareholders written resolutions are no longer has to be unanimity. The simple majority of the eligible shares for ordinary resolutions, hardly 75% for special resolutions.The Act gives a possibility of reducing share capital by a company without obtaining the court order. Also reduces the period of filing the accounts from 10 to 9 from the financial year end.Documents required for registration1. T he memorandum of associationThis document is also known as an external constitution of the company, and determines key features of the companys status. From 1st of October 2009 the document was simplified and does not contain too much information, but it has to be prepared by those who wants to form an incorporation company under Company Act 2006. This must contain the proofreaders names and mutual oppositionatures and if the company has a share capital, each of the member must have at least one share.2. The articles of association (CA 2006 s. 18)The article of association (also known as internal constitution of the company) is the most important because it determines how company will be operate and regulates the rights surrounded by members, directors and company. The company has a right to strain a changes to articles but it has to be done during the general meeting and the copy should be delivered, within 15 days from the day the changes were enacted, to the Registrar of Comp anies. The articles of association must be signThis document must be signed by each subscriber of the memorandum in the presence of a one witness and unremarkably areas such asRights, duties and responsibilities of the directorsGeneral meetings organizationCompanys members choose rightsShares issues and transfers, shares classes, share certificatesPaying dividends and etc.To make easier preparation of this document for the companies, Companies rear has prepared standard article of association and dexterity be equal by this company.All of these documents are available to download from Companies House website http//www.companieshouse.gov.uk/ but also can be received from company formation agents, accountants or legal stationers.3. IN01 form The registration application (which contains the statement of compliance)The name of the company might be elect, by those of setting up the company, of any name they wish, however there is certain rules which must be kept.The situate of the authority of the companyA statement of the objects of the companyA statement of the limitation of liability of the companyA capital clause stating the amount of the share capital which is authorised and the division of the share capital into shares of a verbalize amountRole of Registrar of companiesThe Companies Act 2006 makes the rules how the documentation should be fill up in Companies House. The Registrar of Companies is responsible to record and control from companies either revolutionary or existing, to incorporate and dissolve companies, regulates formation of new companies and changes of existing companies, and also deals with any breaches of Companies Act. The section 1117 Companies Act covers where is stated the form, deliverys manner, order of authentication, whether delivered electronically or as a paper document. The one of responsibility isto make the information available to the public.The names can be check on Companies House website before formation, but also Registrar of Companies will check that if it is consistent with rules.The name of the company must be chosen very carefully, and the best(p) way to make it easy to memorise is to make it as logical to the company activity as it possible. The name cannot be similar to other companies and should be too long as the long names are difficult to memorise.The words cannot be utilize but might be if the company will receive a written permission from the Department of Constitutional Affairs. These words are Royal, Queen, King. The words employ by a company without a permission such as Solicitor or Patent Agent might be tempered as criminal offence. There is also words that company will need to get a written specified bodys permission, and they are British, English, International, root or Association.What is the effect of section 33 of Companies Act 2006In the member 33 of Companies Act 2006 that is provided information for a statutory contract between the company and its members each me mber of the company and other companies. Over the long time this contract have made a lot of controversy and confusion. The main question is if the contract might be enforced by members, to make sure that the right associated with them in some other role such as the right given to a director who is also a member.In the members rights were breached, the company can be sued by them.Corporate personality and effect on Jack and JillCorporate personality means that the company is case-hardened as a legal entity and its personality exist independently from its owners, directors and shareholders. That means also that the company is liable for its own debts and can sue but it can be sued in its own name and also a company can buy and sell properties in its own name. The limited liability of the company means that the shareholders are not liable on its private assets for the debts belongs to the company (as the company and the owners are two separate entity).This might be one of main advan tages to register the company by Jack and Jill with Companies House. In case of any problems with liquidity of the company, problems with paying companys liability such as loans or debenture, Jack and Jill private assets will be preventive from creditors of the company.The case Salomon v A. Salomon Co. Ltd (1887) will illustrate and will be the best example the separate entityMr Salomon owned a boot-making duty which was sold to another company A. Salomon Co. Ltd, which had been formed by the same Salomon. There were seven members in the business his wife, daughter and four sons who took one share each and Salomon himself who took 20,000 shares. The bell paid by the company to Salomon was 30,000 but instead of giving him cash, the business gave him 20,000 fully paid shares and 10,000 in the secured debentures i.e. he lent the company 10,000 which was owed to Salomon and 7000 to unfastened creditors. The unsecured creditors claimed that as Salomon Co Ltd was really the same pers on, he could not owe money to himself and that they should be paid their 7000 first.Held The House of Lords stated that Salomon was empower to the 6000 and the unsecured creditors got nothing. The reason for this decision was that the company was to be regarded as a completely separate person in the eyes of the law from its members and its officers. The House of Lords thought it a completely irrelevant argument that Salomon was the leading shareholder in the company and that he could effectively control the destiny of the business.1Salomon v Salomon Co Ltd has been taken from book Nicholas Grier, Company Law, Second Edition, Scotland W. greenish Son Ltd, 2005)BibliographyNicholas Grier, Company Law, Second Edition, Scotland W. Green Son Ltd, 2005Websites usedhttp//www.bridgewest.eu/http//startups.co.uk/http//www.companieshouse.gov.ukhttp//www.companylawclub.co.uk/11 Case Salomon v Salomon Co Ltd has been taken from book Nicholas Grier, Company Law, Second Edition, Scotland W. Green Son Ltd, 2005)