Company Law 1 - Week 1 Flashcards
What is required to incorporate a private company limited by shares?
Form IN01 submitted to Companies House
Company name (must include ‘Ltd’ or ‘Limited’ and avoid duplicates)
Registered office specifying jurisdiction
At least one director
Share capital
Articles of Association
Memorandum of Association
What is an agency relationship?
An agency is a fiduciary relationship where an Agent acts on behalf of a Principal to form contracts with a Third Party
What are the duties of an agent?
To act in person (Black v Cornelius)
To obey instructions
To exercise reasonable care & skill
To account to principle & to keep accounts
To act in good faith (Lothian v Jenolite Ltd 1969)
What are the rights of an agent?
Right to remuneration (Dudley Bros v Barnet)
Right to relief against the principal
Right of lien (retaining company property until paid)
What is the veil of incorporation and why is it important?
The veil of incorporation means that a company is legally separate from its owners, protecting them from personal liability
What case established the principle of separate legal personality?
Salomon v A. Salomon Co Ltd
Can the veil of incorporation be lifted?
Yes, in cases of:
Statutory exceptions:
- Insolvency Act 1986
- Companies Act 2006
Common law exceptions:
- Fraud/evasion (Gilford Motor Co Ltd v Horne)
- Illegality (Daimler Co Ltd v Continental Tyre)
What are the different types of directors?
De facto – Acts as a director without formal appointment (Re Sykes Butchers Ltd [1998])
Shadow – Influences board decisions (Sec. of State v Deverell [2000])
Executive – Actively involved in management
Non-Executive – Oversight role, not involved in daily operations
Alternate
Nominee
Managing
What are the minimum number of directors required?
Private company – At least 1 director
Public company – At least 2 directors
How are directors appointed?
First directors listed in Form IN01
Normally appointed through Articles of Association
If silent, members appoint by ordinary resolution
How are directors removed?
Ordinary resolution – Requires 28 days’ special notice
No written resolution allowed (Bushell v Faith [1969])
Other reasons: resignation, retirement, disqualification, death
What are the key duties of directors under the Companies Act 2006?
Duty to act with powers
Duty to promote the success of the company
Duty to exercise independent judgement
Duty of care, skill & diligence:
- Objective Test: Standard of a ‘reasonable director’
- Subjective Test: Actual knowledge & experience (Re D’Jan of London Ltd [1994])
Duty to avoid conflicts of interest (IDC v Cooley [1972])
Duty to not accept benefits from third parties
Duty to declare interest in transactions
