Chapter 9 Flashcards
What is the major company law statute ?
Companies Act 2006
Two principal forms of business organizations
Unincorporated businesses
Corporate bodies
A corporation is the legal personification in its own right of
A public position such as the Crown
A registered company or LLP
An association of individuals
How are corporations created ?
By royal charter
Private act of parliament
Registration under statutory authority
A registered company is a form of
Corporation aggregate and is created by registration under CA06
Resolutions
Formal decisions if members who collectively govern the company
Main types of resolutions
Ordinary resolutions - passed by a simple majority over 50% in favor
Special resolutions - requires a 75% majority in favor
Public limited companies
Are allowed to make shares available to the public at large by advertising new issues and having their shares dealt on the public market
Private company
Not permitted to make shares available publicly but enjoy relaxed legal regulations
Limited by guarantee
Members undertake to pay a fixed amount in the event of a winding up to help meet debts. Liability may be unlimited
Does a company limited by guarantee have share capital ?
No
Why would a company by guarantee be formed ?
Most likely for pursuing non profit making activities
What document outlines the rights or not for the distribution of dividends ?
Articles of association
Company interest company
Established to commit profits or apply assets for social objectives. It cannot be a charity but may be an operating company of a charity
Micro company
Has a staff headcount of less than 1
A turnover or balance sheet not exceeding the micro business threshold
Small company
Company other than a micro company that has a staff headcount of less than 50
A turnover or balance sheet not exceeding the small business threshold
A group of companies consists of
Parent company
One or more subsidiary companies
How is control exercises ?
A majority holding of voting rights (more than 50%)
Veil of incorporation
The separation of identity of the company from its members
Advantages of incorporation as a company
Perpetual succession
Security for loans
Suing and being sued
Disadvantages of corporations
Accounts and documents are open to public inspection
A registered company has regular, compulsory expenses
Must comply with CA06 and related legislation
Companies pay corporation tax; this may operate as an advantage or disadvantage
Members lose their personal interest in the companies affairs and assets
