Formation of Companies

Question 1

Companies Act 2006 provides guidance on

Answer 1

1. Promoters
2. Pre-incorp contracts
3. Registration
4. Re-registration
5. Constitution
6. Company name, reg offices
7. Articles of association

Question 2

Limited company

Answer 2

A company is a separate legal entity
Companies exist perpetuity unless specified
Can be civilly and criminally liable for breaches of law

Question 3

Limited liability

Answer 3

Shareholders are liable only to extent of capital contribution
Don’t have liability for companies debts

Question 4

Centralised management of company

Answer 4

Board of directors makes policy decisions
Shareholders appoint directors
Directors appoint officers, employees to run day-to-day

Question 5

Corporate governance

Answer 5

Is system by which companies are directed and controlled

Controls relationship between part of company: directors, board, shareholders

Question 6

Doctrine of separate personality

Answer 6

A comp is a separate legal entity

Companies are treated as artificial persons when registered under the statue (Salmon v Salmon and Co Ltd 1897).

Question 7

Debenture

Answer 7

Type of debt instrument that is not backed by any collateral and usually has a term greater than 10 years.

Question 8

Ways of issuing debentures

Answer 8

1. Single debentures
2. Debentures issued in series
3. Debenture stock

Question 9

Debenture v Shares

Answer 9

1. Not shareholders/members of company
2. Receive a fixed return
   Debentures may be issued at a discount

Question 10

Useful case studies

Answer 10

Lecture slide 4