Seperate Legal Personality Flashcards
What is maintenance of capital
Spend distributable profits. Do not spend share capital
What is share capital
Money invested by owners through purchasing shares
Leg regarding share capital
S830 CA 2006 - share capital belongs to the company and is reserved for paying debts
Transparency requirements S1085 CA
Info regarding to company send to registrar of companies and is inspectable by anyone.
ID is shareholders, directors, accounts, constitution etc
What did Salomon v Salomon decide?
Separate legal personality still applies even if company only has one person behind it
What did Adams decide?
When it is possible to Pierce the corporate veil:
Where company is a mere facade
Where the court is interpreting statute or document to reject fairness
Where subsidiary is an agent of the company
Seeking guarantee
What does separate legal personality allow a company to do
Enter contracts
Have actions brought against it
Borrow money and give security
Own property
S74(2)(D) Insolvency Act 1986
Where a company has limited liability, on liquidation shareholders are liable to the company for the value of outstanding shares
Meaning of limited liability
Shareholders are only liable for unpaid shares. If shares are paid off they owe no personal liability to the company.
Directors are not liable for company debt
When would directors be liable for a company entering liquidation
S214 Insolvancy Act 1986- Directors are personally liable when a company enters liquidation if they knew or ought to know there was no prospect of avoiding insolvent liquidation
