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LPC Law Notes Business Law and Practice Notes

Registration Of A Company Notes

Updated Registration Of A Company Notes

Business Law and Practice Notes

Business Law and Practice

Approximately 649 pages

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Company Law – Private Limited Companies

Topic One: Formation of companies

ONE: Corporate Personality

1. A company has a ‘separate legal personality’:

  1. It has rights and obligations distinct from those of its owners (i.e. shareholders)

Salomon v Salomon [1897]: “veil of incorporation” – courts only look behind the veil in cases of fraud or deliberate breach of trust.

  1. It can own property (the company owns the business assets)

  2. It is liable for debts

  3. Can sue / be sued – contracts are conducted / defended in the company’s name.

  4. Perpetual succession – the company continues to exist until it is formally wound up. It does not end with a change of ownership.

  5. Transferability of ownership – shares can be bought and sold

  6. Owners have limited liability: limited to the agreed price of member’s share. This includes any amount that is unpaid on shares.

  7. Separation of ownership (shareholders / ‘members’) and control (directors)

  8. It can raise money by borrowing (debt and equity finance)

  9. It can create “floating” charges over the company’s assets

2. Power in the company

Directors Shareholders

  • Day to day matters

  • Attend Board meetings

  • Written resolutions

  • Decisions by majority

  • One director = one vote

  • Pass resolutions on matters reserved to them in company’s articles or by Companies Act

  • Attend General meetings

  • Vote by show of hand or poll vote

  • Written resolutions

  • Ordinary resolution = 50%+

  • Special resolution = 75%+

3. Advantages and disadvantages of incorporation:

Advantages Disadvantages

  1. Limited Liability

  2. Tax? – can be +ve / -ve

  3. Status

  4. Ability to raise money

  5. Change participants

  6. Permanence - perpetual succession

  1. Formalities and expense of compliance

  2. Publicity – no privacy. Accounts and other company documents have to be published

TWO: Formation of a company: Pre-Incorporation matters

Formalities

  • Companies Act 2006 [CA]

  • Must be complied with before company enters into a contract.

    • S.7 CA: at least one shareholder needed to form a company

    • S.8 CA: Memorandum of Association [upon incorporation] sets out that subscribers agree to become members of the company and hold at least one share.

The Companies (Registration) Regulation 2008, Schedule 1 = subscribers must agree “to take at least one share”

  • S.9 CA : sets out registration documents to be sent to Companies House

  • S.10: Requirements for registration – statement of capital and initial shareholdings.

  1. Application for Registration:

  • Form IN01 [S.9(2) CA details what this must include]:

Proposed name

Company type (private or public)

Situation and intended address...

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