Ch 11 - Company Formation

Question 1

List the documents that must be submitted to the Companies Registrar in order to register a
company.

Answer 1

Documents to be submitted to register a company:

(1) Application for registration;
(2) Memorandum of Association;
(3) Articles of Association;
(4) Statement of capital and initial shareholdings;
(5) Statement of proposed officers;
(6) Statement of compliance.

Question 2

Explain what a certificate of incorporation is and identify the details contained in this document.

Answer 2

A certificate of incorporation (Section 15 CA 2006) allows a private company to begin to trade.
It proves that the company is validly and legally constituted. It is given to the company by the Registrar
provided (s)he is satisfied that all registration documents are in order and that the company complies with the
registration requirements.
The certificate will contain the following information:
(1) name and registered number of the company;
(2) date of incorporation;
(3) limited by shares or guarantee;
(4) location of company’s registered office;
(5) company private or public;
(6) signature of registrar and official seal.

Question 3

Explain the purpose of Articles of Association. List the provisions that could be contained in the
Articles of Association.

Answer 3

Articles of Association regulate the internal activities of a company.
This document contains the internal rules and regulations regarding the governance of the company.
A company may adopt standard model articles (which are contained in CA 2006).
It deals with issues such as share capital, meetings, directors, secretaries, auditors and accounts, dividends,
and liquidation.

Question 4

Outline the information to be included in a company’s annual return.

Answer 4

General information included in the annual return:

(i) the company name, address, registered number;
(ii) the location where the register of members is kept;
(iii) details pertaining to shares and company debt;
(iv) details of company members and their particular shareholdings; and
(v) particulars of the directors and secretary.

Question 5

Outline the characteristics of a fixed charge.

Answer 5

Characteristics of a fixed charge:
(i) this is where a company borrows money and secures that borrowing on a fixed asset;
(ii) this charge attaches to a fixed asset from the moment of creation;
(iii) thereafter the borrowing company cannot deal in the asset (sell, alter, use to create a further charge) without
the consent of the charge-holder;
(iv) this charge ranks in priority to other charges; and
(v) it is usually created by means of either a legal or equitable mortgage (lender’s beneficial interest in the
property is registered on the title documents/or the lender takes possession of the title documents until the
debt is repaid).

Question 6

Explain the consequences of a separate legal entity.

Answer 6

This concept means that a company has a separate legal status from its members has a distinct personality
from the natural persons who set up the company.
This was first recognised in the case of Salomon v Salomon & Co Ltd (1897).
This separate personality means that a company can:
(i) own its own property;
(ii) enter in contractual relations with either natural persons or other companies;
(iii) commit crimes and be held responsible for such crimes;
(iv) have perpetual existence;
(v) be sued or sue other persons.
In addition, this separate personality also gives the shareholders of the company limited liability.