Podcast
Questions and Answers
What is an outcome of registering a company at Companies House?
What is an outcome of registering a company at Companies House?
Once a company is incorporated, its members are always shielded from personal liability.
Once a company is incorporated, its members are always shielded from personal liability.
False
What must happen for a pre-incorporation contract to be valid?
What must happen for a pre-incorporation contract to be valid?
The company must be incorporated.
The case __________ established that incorporation creates a new and separate legal entity.
The case __________ established that incorporation creates a new and separate legal entity.
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Match the following cases with their outcomes regarding piercing the corporate veil:
Match the following cases with their outcomes regarding piercing the corporate veil:
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Under which section of the Companies Act 2006 can a company enter into pre-incorporation contracts?
Under which section of the Companies Act 2006 can a company enter into pre-incorporation contracts?
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Directors can ratify pre-incorporation contracts after the company is registered.
Directors can ratify pre-incorporation contracts after the company is registered.
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What is the process by which a party can be released from a pre-incorporation contract?
What is the process by which a party can be released from a pre-incorporation contract?
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Upon registration of a company, it achieves __________ legal personality.
Upon registration of a company, it achieves __________ legal personality.
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Who can incorporate a private company?
Who can incorporate a private company?
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What is the primary document that must be delivered to the registrar for company registration?
What is the primary document that must be delivered to the registrar for company registration?
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A company can be formed by a single person under the companies act 2006.
A company can be formed by a single person under the companies act 2006.
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What is the role of the Articles of Association within a company?
What is the role of the Articles of Association within a company?
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The ____________ is a document stating that the subscribers wish to form a company under the CA 2006.
The ____________ is a document stating that the subscribers wish to form a company under the CA 2006.
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Match the following terms with their correct definitions:
Match the following terms with their correct definitions:
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Which of the following statements about shareholder agreements is true?
Which of the following statements about shareholder agreements is true?
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The Memorandum of Association is included in a company's constitution as per the CA 2006.
The Memorandum of Association is included in a company's constitution as per the CA 2006.
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What must directors do according to MA 3 of the Model Articles?
What must directors do according to MA 3 of the Model Articles?
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The ____________ includes any resolutions and agreements that affect a company’s constitution.
The ____________ includes any resolutions and agreements that affect a company’s constitution.
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Match the following sections with their descriptions from the Companies Act 2006:
Match the following sections with their descriptions from the Companies Act 2006:
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What must occur for a breach by a single member to be pursued?
What must occur for a breach by a single member to be pursued?
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A company can amend its Articles of Association by a simple majority vote among members.
A company can amend its Articles of Association by a simple majority vote among members.
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What is the purpose of entrenchment in the Articles of Association?
What is the purpose of entrenchment in the Articles of Association?
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A __________ certificate serves as conclusive evidence that a company is entitled to do business.
A __________ certificate serves as conclusive evidence that a company is entitled to do business.
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Match the following provisions with their definitions:
Match the following provisions with their definitions:
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Which right allows a member to purchase shares before an outside investor?
Which right allows a member to purchase shares before an outside investor?
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If a member’s right is personal, they can take direct action against the company.
If a member’s right is personal, they can take direct action against the company.
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What is the section number in CA 2006 that allows members to amend the Articles of Association?
What is the section number in CA 2006 that allows members to amend the Articles of Association?
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An amendment to the Articles cannot bind a member to take up more shares than they held at the date of __________.
An amendment to the Articles cannot bind a member to take up more shares than they held at the date of __________.
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How can entrenchment provisions be overridden?
How can entrenchment provisions be overridden?
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Study Notes
Company Incorporation: Birth of a Company
- Registration at Companies House transforms subscribers into shareholders of a separate legal entity.
- Separate legal personality is a direct result of incorporation.
- Salomon v. Salomon & Co. Ltd. (1897) established the concept of the corporate veil, shielding members from liability.
Piercing the Corporate Veil
- Exceptions to limited liability allow courts to look behind the company structure.
- Courts pierce the corporate veil in limited circumstances (e.g., Gilford Motor Co. Ltd. v. Horne; Jones v. Lipman).
- Prest v. Petrodel Resources Ltd failed to pierce the corporate veil.
Pre-Incorporation Contracts
- A company cannot enter into contracts before incorporation.
- Directors or others signing pre-incorporation contracts face personal liability.
- Liability can be avoided through novation or the other party's agreement to cancel the contract.
Company Incorporation Process (Companies Act 2006)
- Private companies can be incorporated by one or more persons (individuals or companies).
- Registration is processed via Companies House (England, Wales, Northern Ireland, Scotland).
- Key documents for registration include:
- Memorandum of Association
- Articles of Association (default provisions are "Model Articles")
- Application for registration
- Compliance statement (specifying the type of company).
Memorandum of Association (Pre- and Post-2006)
- Pre-2006: Significant document outlining company objectives. Ultra vires actions (exceeding those objectives) could be void.
- Post-2006: States subscribers' intent to form a company and become members. No longer the company's constitution. Instead, the company's constitution includes the articles of association and related documents.
Articles of Association
- Company's internal rulebook, contract between company & members, & members inter se.
- Accessible to the public via Companies House.
- Default rule: Companies (Model Articles) Regulations 2008 apply.
- Directors' powers derived from articles, supplementing CA 2006.
- Shareholders' decisions dictated by the Companies Act and their decisions, and directors follow the Model Articles.
Shareholder Agreements
- Supplement articles, often used for specific terms.
- Example terms: restrictions on outside share sales, coordinated voting, specific sale conditions when leaving the company.
Amendment of Articles
- Amendments require a special resolution of members (s21 CA 2006).
- Any restrictions to amendment, such as entrenchment provisions, can be overridden if agreed by all shareholders or a court order.
- Entrenchment (s22) aims to protect minority shareholders by making amendment more difficult. This is rare today
Certificate of Incorporation
- Proof that the company registration process was successfully completed.
- Trading Certificate validates the company's right to carry out business activities.
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Description
This quiz covers essential topics related to company incorporation, including the transition of subscribers to shareholders, the implications of separate legal personality, and key case law affecting limited liability. Analyze important concepts such as piercing the corporate veil and the processes involving pre-incorporation contracts under the Companies Act 2006.
