Law
| Front | Discuss the documents required for incorporation as stated in the Companies Act 2006 |
| Back | Memorandum of Association:- Section 8 CA 2006- Memorandum stating that subscribers wish to form a company under this act, and agree to become members of the company, and in the case of a company that is to have a share capital, take at least one share each- Memorandum must be in the prescribed form and authenticated by each membersRegistration Documents- Section 9 - Memorandum of Association must be delivered with these documents, an application for registration and a statement of compliance- Application must state: Company's proposed name, where office is situtated in the UK, whether liability is limited and if so, by shares or guarantee, whether company is to be private or public- Must contrain a statement of capital and initial shareholdings, if they have share capital, statement of guarantee if limited by guarantee, statement of company's proposed officers- Must also contain a statement of intended address of registered office, copy of proposed articles of association, statement of intended principal business activitiesStatement of Capital and Initial Shareholdings:- Section 10- Must state total number of the shares of the company to be taken on formation by the suscribers to the memorandum of association- Aggregate nominal value for each share- For each share class - the prescribed particulars of the rights attached to the shares, total number of shares, aggregate nominal value of share in the classStatement of Proposed Officers- Section 12- Must contain the required particulars of the person who is to be the first director(s) of the company- If the company is private, who will be the first secretary- If the company is public, who will be the first secretaty or joint secretaryStatement of Compliance - Section 13- Must be delivered to the registrar to show that requirements of CA have been complied with- Registrar may accept this as sufficient evidence of compliance |
| Front | Discuss the binding power of the company constitution. |
| Back | - Articles form a contract between the company and its shareholders, meaning the shareholders are bound to the company- The company is bound to the shareholders- Pender v Lushington (1877)- Company articles stated that every shareholder got a vote per 10 shares, capped at 100 shares- Pender owed 1,000 shares so transferred them to other nominees so they could vote for a resolution he wanted to pass.- Chariman refused to accept the votes of the nominees. Company was bound by the rights of shareholders so had to accept the votes- The shareholders are individually bound to eachother- Rayfield v Hands (1960)- Rayfield was a shareholder who wanted to sell his shares.- The company articles stated that every member who intends to transfer shares shall inform the directors who will take the said shares equally between them at fair value- The directors were refusing to follow this rule and Rayfield sought an injunction- Articles bound each shareholder to eachother so the directors had to purchase Rayfields shares- Articles do not bind the company or the shareholders to anyone in their capacity as an outsider |
| Front | Discuss the different types of company director that could exist in a private or public company and three of their duties. |
| Back | - Directors are responsible for the management of the company. They are an agent of the company and can bind the company by their acts without personal liability. Established in part 10 of the CA, 2006.Executive Directors- Those with management responsibilities within the company- May work full time at a compnay but not always- If they do work, they will have a contract of employment, meaning they are an employee of the companyNon-Executive Directors:- Dont receive a salary but may be paid a fee per board meeting- Role is to check a company is being managed properly and ensure high standards of financial integrity- Shares the same liabilities as executive directorsShadow Directors:- Insttructs the other directors of the company on how to at- Can be a natural or corporate person. A parent company may be a shadow director for its subsidary- A management consultant or a major creditor could also be considered one, but not those who give advice in a professional capacityDe-Facto:- Those who haven't been formally appointed as a director, but fulfil the role of a director- Can be difficult to determine whether someone is acting as a director from their tasks and responsibilities in the company- If judged to be a director, will be subject to the same duties and liabilitiesAlternate Director:- If a director is unable to attend a board meeting, they may be allowed to appoint someone to attend and vote on their behalf- Depends on what is the articles allow- Usually the alternate director is a fellow directors rather than Duty to Act Within Powers:- Directors must act in accordance with the company constitution- Must only excercise their powers for the purpose they were given- Transactions can be approved by the shareholders in a general meeting even after it occuredDuty to Promote Success of the Company:- Directors must act in good faith and in the companies' best interest- Director needs to consider that is best for the company and its members as a whole- May involve subjective decisionsDuty to Excercise Independent Judgement:- Directors need to exercise their own judegement and not merely rely on instructions from others- When a parent company acts as a shadow director, its important that directors still consider what is in the best interests |