Corporations and Legal Personality Flashcards
What must someone have to form a registered company under the company’s act 2006
To form a registered company under the Companies Act 2006, a person must have:
- At least one person to form the company.
- A lawful purpose for the business
- Submission of basic documentation to the Registrar of Companies
- The Registrar issues a Certificate of Incorporation
What happens to a company upon incorporation
Upon incorporation, a company becomes a separate legal entity
What was established in Salomon v Salomon & Co Ltd [1897] AC 22 (HL)
Salomon v Salomon & Co Ltd [1897] AC 22 (HL) established:
- A company must be treated as its own person with rights and liabilities
- Shareholders aren’t liable for company debts beyond what they invested
What was established in Adams v Cape Industries plc [1990] Ch 433 (CA)
Different effects of corporate personality are:
- The company can be sued in its own name
- The company can enter contracts
- The company can continue after the death of shareholders
What is “lifting the veil”
Lifting the veil is where courts may disregard the companies separate personality
What is lifting the veil typically used to do
Lifting the veil is typically used to prevent fraud or abuse
What might lead the court to ignore the veil of incorporation
Things that may lead the court to ignore the veil of incorporation are:
- Wrongful trading
- ‘Sham’ or ‘facade’ companies
- Fraudulent trading
What is the role of the company secutory
The role of a company secretary is:
- Ensures compliance with regulatory and statutory requirements
- Implements board decisions
Is a private limited company required to appoint a company secretary
A private limited company is not required to appoint a company secretary unless their Articles of Association demand it
What are the different types of shares in a company
the different types of shares in a company are:
- Ordinary shares
- Preference shares
- Cumulative preference shares
- Redeemable shares
- Redeemable preference shares
- Deferred ordinary shares
Do preference shares have voting rights
Preference shares do not have preference shares
What is the most common type of share
The most common type of share is ordinary shares
What does having different classes of shares allow flexibility in
Different classes of shares allows flexibility in:
- Dividends
- Voting rights
- Capital Entitlement
What does changing share structure require
Changing share structure requires a special resolution (75% of votes)
