Company Law Part 1- The Veil Of Incorporation

Question 1

The veil of incorporation?

6 points

Answer 1

1. Company is a separate legal entity to members
2. Liable for own debts
3. Liable of their limited amounts unpaid on shares
4. Perpetual succession
5. Management separate from owners
6. Court reluctant to go behind the veil

Question 2

Differences between a company and a partnership

Company

(8 points)

Answer 2

1. Created by registration with written constitution
2. Separate legal person
3. Shares transferred
4. Can create fixed + floating charges
5. Managed by directors
6. Company liable for own debts
7. Financial affairs and ownership on public record
8. Formal dissolution procedure

Question 3

Differences between a company and a partnership?

Partnership

(8 points)

Answer 3

1. No special formality needed
2. Not separate legal person
3. Limits on transfer of shares
4. Create fixed charges only
5. Managed by partners
6. Partners personally liable for debts
7. No public disclosure of results
8. May dissolve by agreement

Question 4

Differences between public and private companies?

Public

(9 points)

Answer 4

1. Registered as public company
2. Min capital of £50 000
3. Must obtain trading certificate before start
4. Min 2 directors
5. Qualified secretary
6. Accounts 6 months before end
7. Need audit
8. Annual general meeting held each year
9. Cannot pass written resolutions

Question 5

Differences between a public company and a private company?

Private company

(9 points)

Answer 5

1. Any company that isn’t a public company
2. No min capital
3. Start trading as soon as certificate of incorporation recorded
4. Min 1 director
5. No secretary needed
6. Accounts 9 months before year end
7. Audit not needed if total overhead < £10.2m
8. AGM not need to be held
9. Can pass written resolutions