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Questions and Answers
What must the court require a company to settle if reduction involves one of the first two methods?
What must the court require a company to settle if reduction involves one of the first two methods?
What action must a public company take if its share capital falls below £50,000?
What action must a public company take if its share capital falls below £50,000?
In the case of Lee v Lee's Air Farming, why did the liquidator try to avoid paying compensation to the widow?
In the case of Lee v Lee's Air Farming, why did the liquidator try to avoid paying compensation to the widow?
What is the consequence of making a solvency statement without reasonable grounds?
What is the consequence of making a solvency statement without reasonable grounds?
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What key concepts were enshrined in the law through Salomon v Salomon & Co Ltd?
What key concepts were enshrined in the law through Salomon v Salomon & Co Ltd?
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Why do treasury shares not have to be cancelled after being purchased?
Why do treasury shares not have to be cancelled after being purchased?
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In Macaura v Northern Life Assurance, why was M unable to claim insurance for the destroyed forest?
In Macaura v Northern Life Assurance, why was M unable to claim insurance for the destroyed forest?
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When can a company declare a dividend?
When can a company declare a dividend?
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What circumstance would lead to lifting the corporate veil according to Woolfson v Strathclyde Regional Council?
What circumstance would lead to lifting the corporate veil according to Woolfson v Strathclyde Regional Council?
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Out of what can a company only make distributions such as paying dividends?
Out of what can a company only make distributions such as paying dividends?
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Why was S in Held personally protected from creditor claims?
Why was S in Held personally protected from creditor claims?
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What is the main reason for a parent company to prepare group accounts?
What is the main reason for a parent company to prepare group accounts?
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What allows the courts to look at the identity of the shareholders of a company?
What allows the courts to look at the identity of the shareholders of a company?
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In what situation can directors of a public company be made personally liable for any loss or damage suffered by a third party?
In what situation can directors of a public company be made personally liable for any loss or damage suffered by a third party?
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Under which Act can a disqualified director be held jointly or severally liable for the company's debts if they participate in the management of a company?
Under which Act can a disqualified director be held jointly or severally liable for the company's debts if they participate in the management of a company?
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What must be delivered to the Registrar when incorporating a Limited Liability Partnership?
What must be delivered to the Registrar when incorporating a Limited Liability Partnership?
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In what scenario can a company be restrained from competition according to the case of Gilford v Horne?
In what scenario can a company be restrained from competition according to the case of Gilford v Horne?
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Under which act are members and/or directors found to have carried out wrongful or fraudulent activities held accountable?
Under which act are members and/or directors found to have carried out wrongful or fraudulent activities held accountable?
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Study Notes
Corporate Settlement Requirements
- A court can require a company to settle debts if the reduction of capital involves issuance of new shares or reducing the share premium account.
Public Company Share Capital
- If a public company's share capital falls below £50,000, it must notify the Registrar and take steps to rectify the situation or risk being made subject to winding up.
Lee v Lee's Air Farming Case
- In Lee v Lee's Air Farming, the liquidator sought to avoid paying compensation to the widow due to the belief that Lee was not an employee of the company he controlled, impacting claims under employment statutes.
Solvency Statement Consequences
- Making a solvency statement without reasonable grounds can lead to directors facing personal liability for any debts incurred during that period.
Key Concepts of Salomon v Salomon & Co Ltd
- The Salomon case established the principle of corporate personality, affirming that a company is a separate legal entity distinct from its shareholders, protecting shareholders from personal liability for company debts.
Treasury Shares
- Treasury shares do not have to be cancelled post-purchase because they are held by the company and can be reissued; they don't count towards shareholder equity.
Macaura v Northern Life Assurance Case
- In Macaura v Northern Life Assurance, M was unable to claim insurance for the destroyed forest because he did not have an insurable interest in the property, despite owning the shares in the company that owned the forest.
Declaration of Dividends
- A company can declare a dividend if it has sufficient profits available for distribution, ensuring compliance with legal and financial requirements.
Lifting the Corporate Veil
- The corporate veil can be lifted according to Woolfson v Strathclyde Regional Council when the company is merely a façade concealing the true facts, often in cases of fraud or misconduct.
Company Distributions
- A company can only make distributions such as dividends out of profits available for distribution, which must be verified to ensure legality.
Personal Protection from Creditor Claims
- S was personally protected from creditor claims due to the principle of limited liability, where personal assets remain outside the reach of company debts.
Parent Company Group Accounts
- The primary reason for a parent company to prepare group accounts is to provide a comprehensive view of the financial position and performance of the entire group, ensuring transparency and accountability.
Identity of Shareholders
- Courts can examine the identity of shareholders based on principles established in common law, particularly when determining matters of control or responsibility in corporate actions.
Directors' Personal Liability
- Directors of a public company can be held personally liable for loss or damage suffered by a third party in cases of breach of duty or negligence in their roles.
Disqualified Director Liability
- Under the Insolvency Act, a disqualified director can be held jointly or severally liable for a company's debts if they participate in its management while disqualified.
LLP Incorporation Requirements
- When incorporating a Limited Liability Partnership (LLP), a statement of compliance and particulars of members must be delivered to the Registrar.
Restraint from Competition
- A company can be restrained from competition as per the Gilford v Horne case if it is found to be using a company structure to avoid contractual obligations or to engage in unfair competitive practices.
Accountability for Wrongful or Fraudulent Activities
- Members and/or directors found to have engaged in wrongful or fraudulent activities are held accountable under the Insolvency Act, ensuring responsible corporate governance.
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Description
Explore the legal concepts of separate legal personality and limited liability through the case of Lee v Lee’s Air Farming. Understand the implications of the court's decision regarding the individual's liability in relation to the company.
