Business Law unit 1 Flashcards
What is limited liability?
An incorporated business has its own separate legal personality. As a separate legal person, an incorporated business is responsible for its own debts. If the company fails, the members lose the money which they have invested in the company, but no more. However, limited liability does not mean that shareholders never have to pay anything – they are still liable up to the amount which they have agreed to invest in the company. This is known as limited liability.
what consists of the company’s constitution?
A company’s constitution consists of its memorandum of association, articles of association, certificate of incorporation, current statement of capital, shareholder resolutions and agreements, court orders and legislation which affect the company’s constitution.
Unincorporated company example
Slaughter and May is not a separate legal entity. It is a partnership, an unincorporated business entity, comprising over 100 individual partners. You will note that size is not relevant. Slaughter and May is an international firm with over 100 partners but has never been incorporated as either a limited liability partnership or a company.
Which of the following statements best describes the position in relation to the articles of association of private, public and listed companies?
A private limited company set up under the Companies Act 2006 will automatically have the Model Articles for private companies limited by shares unamended if it does not submit its own articles.
