Company Law - Types of Companies Flashcards
What are the different types of companies?
Registered, chartered, statutory and european
What is a registered company?
A corporation and, as such, has an existence, rights and duties which are distinct from those persons who are, from time to time, its members and those who manage it, the directors
What are the main effects of incorporation?
That the registered company is a persona at law, that it has perpetual succession, and limited liability
What is perpetual succession?
When the company’s existence is independent of its members who may be replaced due to death or for some other reason
What does ss 7-16 in Companies Act 2006 include?
That a company is formed by registration at Companies House and is incorporated when the Registrar has issued a Certificate of Incorporation
What does s 16 state?
That a company is a body corporate (in contract to a partnership or sole trader)
In the case of limited liability companies, members are referred to as what?
Shareholders
What does s 3(2) state?
It limits the shareholders liability to any value remaining unpaid on their shares
What does the company and shareholders have to agree on?
The level of guarantee in the memorandum of association and this amount is stated in the application to have the company registered
What does s 755-760 state?
A private limited company is prohibited from offering shares or debentures to the public
What does s 271 state?
A public limited company must appoint a company secretary but a private limited company may choose whether to
What does s 154 state?
A private company need only have one director while a public limited company must have two
What must the name of a public company have?
Must end in the words “public limited company” or Plc
What must the name of a private company have?
Must end in the words “limited” or Ltd
What is an unlimited company?
They have separated legal identity - however, if the company assets are insufficient to meet its liabilities, all members are liable to contribute without limit towards paying its debts and the costs of liquidation - they also do not need to be audited
What are chartered companies?
Charter granted by the Crown under certain provisions e.g. BBC
What are statutory companies?
Formed by Act of Parliament, e.g. utilities companies prior to privatisation
What are European companies?
Implementation into UK law - The European Public Limited Company Regulations 2004
What does separate legal person mean?
It means the company is a separate legal entity from its shareholders, directors and managers
What does limitation of liability mean?
The company, as a persona at law, is liable, without limit, for its debts
What does the phrase “lifting the veil of incorporation” mean?
In certain circumstances the courts may look through the company to identity of the shareholders and office bearers
What is the result of lifting the veil of incorporation?
Members and directors become personally liable for the company’s debts (through statute or decisions of the court)
What are some statutes that will allow intervention to lift the veil?
The Company Directors Disqualification Act 1986, s 15, the Insolvency Act 1986, s 213 and The Company Act 2006, s 399
What does The Company Directors Disqualification Act 1986, s 15 state?
A person who acts in contravention of the Act by taking part in the management of a company following disqualification will be personally liable for the debts of the company?
What does The Company Act 2006, s 399 state?
It sets out the duty to prepare group accounts and the form and content of such accounts
What does the Insolvency Act 1986, s 213 cover?
Fraudulent trading rule
What does judicial lifting mean?
Where the courts may decide to lift the veil
When can the veil be lifted?
Sham companies: Only where “special circumstances exist indicating that it is a mere facade concealing the true facts
Trading with the enemy/public policy: in times of war
Groups: each company within group is separate legal entity
