Podcast
Questions and Answers
What can erode the protection of limited liability for a company's shareholders?
What can erode the protection of limited liability for a company's shareholders?
- Separate legal entity status
- Principal legislation
- Corporate veil
- Personal guarantees (correct)
In the context of a company, who are considered as 'officers'?
In the context of a company, who are considered as 'officers'?
- People who run the company
- Agents
- Shareholders
- Directors (correct)
Under what circumstances can the 'corporate veil' be lifted, leading to personal liability for directors and shareholders?
Under what circumstances can the 'corporate veil' be lifted, leading to personal liability for directors and shareholders?
- Day-to-day acts by agents
- Separate legal entity status
- Usage of personal guarantees
- Non-compliance with the CA06 and other legislation (correct)
What is the significance of the term 'limited liability' for a company's shareholders?
What is the significance of the term 'limited liability' for a company's shareholders?
Who carries out the day-to-day acts on behalf of a company?
Who carries out the day-to-day acts on behalf of a company?
What are the 3 documents required to 'form' a company according to s9 CA06?
What are the 3 documents required to 'form' a company according to s9 CA06?
What is the purpose of the Form IN01 when 'forming' a company?
What is the purpose of the Form IN01 when 'forming' a company?
What is the significance of having Articles of Association for a company?
What is the significance of having Articles of Association for a company?
When submitting Form IN01, who must sign to show their consent to act?
When submitting Form IN01, who must sign to show their consent to act?
What are some checks required when naming a company as mentioned in the text?
What are some checks required when naming a company as mentioned in the text?
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Study Notes
Why Choose a Company?
- A company provides limited liability protection to the business owner (shareholder), limiting their liability to the amount of their share capital.
- However, personal guarantees may be required, which can erode this protection.
Company as a Separate Legal Entity
- A company is a legal entity in its own right, separate from its owners (shareholders) and officers (directors).
- Officers (directors) have protection, but can be made liable in certain circumstances.
Humans behind the Company
- The company needs humans (agents) to carry out its acts, such as directors and secretary.
- The acts of the agent may be curtailed/restricted by the company's objects or the agent's own authority.
Authority of Directors
- Directors have actual or apparent authority to bind the company.
- Normal agency rules apply to the acts of directors in terms of their ability to bind the company.
Documents Required to Form a Company
- 3 documents are required to form a company:
- Form IN01 (Application to Register)
- Memorandum of Association (signed by initial shareholders)
- Articles of Association (or default Model Articles)
Memorandum of Association
- Must be signed by at least one subscriber (initial shareholder).
- Contains limited clauses, including company name, liability, and details of initial subscribers.
Articles of Association
- Regulate the internal relationship between the company and its members.
- Typically rely on Model Articles, which can be modified.
- Must be signed by subscribers, dated, and witnessed.
Form IN01
- A "fill in the boxes" exercise.
- Details proposed company name, type, registered office, and first directors and secretary.
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