Chapter 12 - Corporation & Legal Personality Flashcards
A promoter is a type of:
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Agent
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A person who merely acts ___________ can not be a promoter for the company.
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acts in a professional capacity such as an accountant or a solicitor.
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Some of the duties of a promoter are:
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- reasonable skill and care
- avoiding conflict of interest
- account for any benefits obtained
- providing full information of transactions
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What is a legitimate profit in the context of a promoter?
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a disclosed profit from a business arrangement started BEFORE start of promoting a company
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What is wrongful profit in the context of a promoter?
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profit from a business dealing started after the promotion of a company has started.
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What are the different types of business organizations?
1)soletrader
2)partnership
3)company
Is there perpetual succession in soletrader and partnership?
No,because death of an owner or partner or change in ownership or partnership will brought the business to an end
In soletrader who is responsible for breach of law by the business?
The soletrader(owner)
Who are responsible for debts of a partnership?
Individual partners are personally liable,jointly with the other partners
What is a company limited by guarantee?
A company which has no shares but members guarantee certain amount to pay in case of liquidation
In limited liability company,Company has an unlimited liability.
True(shareholders have limited liability,not company)
What is an unlimited liability company?
Where shareholders or members liability is not limited.
Can an unlimited liability company be a public company?
No,it is a form of private company
What are the conditions to trade as a public company?
1)trading certificate
2)minimum capital of £50000
What is the period of time after which general meeting of public companies must be held?
Must hold within 6 months of financial year
What is a parent company?
Which holds a majority of voting rights in the subsidiary and has right to exercise dominant influence over the subsidiary
Is a parent company treated as parent of the subsidiaries of its subsidiaries?
Yes
What is another name for a listed company?
Quoted company
What is an unquoted company?
Which can not trade its shares on the stock exchange
How many directors and members should be in a public company?
One member, two directors
What are the reasons for lifting the veil of incorporation?
1)by statute to enforce the law
2)to prevent evasion of obligation
3)in group situations(parent subsidiary)
How many members and directors should be in a private company?
One member,one director
What is a fraudulent trading?
Where the directors have carried out business with an intent to defraud the creditors
Is fraudulent trading a criminal offence or civil wrong?
Criminal offence under Companies Act and civil litigation under Insolvency Act
What is wrongful trading?
Directors continuing a business,when it might be insolvent(because they believe that may be after taking certain reasonable steps business can continue)
Is wrongful trading intentional?
No
Wrongful trading is a criminal offence.
False,it is a civil offence
