Corporate Terminology PDF

# A. Legal Terminology ## 1A.7 The Corporate Department ### Terminology | Term | Definition | |---|---| | Annual General Meeting (AGM) | Shareholders in limited companies must be invited to an AGM every year to consider business as laid down in companies' legislation. This includes receiving the...

# A. Legal Terminology ## 1A.7 The Corporate Department ### Terminology | Term | Definition | |---|---| | Annual General Meeting (AGM) | Shareholders in limited companies must be invited to an AGM every year to consider business as laid down in companies' legislation. This includes receiving the directors' and auditors' reports, approving the financial accounts, agreeing dividends, and appointing or reappointing directors. | | Annual Return | A document which must be sent to the Registrar of Companies exactly one year after the company was registered and every subsequent year thereafter. It confirms details of the company and its share capital, names and addresses of directors etc. | | Articles of Association | The Articles of Association is a document which sets out the aims of the company; its name and registered address; states that the company has limited liability; and shows the amount of nominal capital. Model articles for a company can be found on the Companies House website: http://www.companieshouse.gov.uk. | | Company Accounts | A registered company must, under companies’ legislation, file with the Registrar of Companies a copy of the Company's Accounts within a specified period after the end of the accounting period. If the Accounts are not submitted within the prescribed period, civil penalties are charged by the Registrar. When filed, Company Accounts are open for public inspection. | | Company Seal | Once a company is registered it may use a seal. This used to be sealing wax which was impressed (stamped) with the company logo. It is now, usually, a red wafer seal. | | Company Secretary | A Company Secretary has specific obligations under law and is NOT to be confused with a shorthand-typist type of secretary. Often a Company Secretary is an accountant or a lawyer because the role is concerned with the legal and financial running of the company. | | Competition Commission | The Competition Commission is an independent public body which helps to ensure healthy competition between companies in the UK for the ultimate benefit of consumers and the economy. It conducts in-depth investigations into mergers and markets and also has certain functions with regard to the major regulated industries. | | Contract | An agreement between two or more people, which is enforceable at law.| | Director | An appointed or elected member of the board of directors of a company who, with other directors, has the responsibility for determining and implementing the company's policy. Directors have statutory responsibilities under the Companies Acts. | | Dividend | A payment representing a portion of the company's after tax profits which is paid to shareholders. It represents a 'reward' for investing in a company. | | Extraordinary General Meeting (EGM) | A meeting called by a company to discuss a particular aspect of management or to transact business which cannot wait until the AGM. | | Intellectual Property | Relates to the ownership of ideas and includes copyrights, patents, trademarks, designs, goodwill etc. Intellectual property rights protect the exploitation of one person's work by another. | | Invitation to Treat | An invitation to treat is not an offer of any kind. It is a method by which a business invites potential customers to do business with it. Shops, for example, do not offer things for sale; they merely issue an invitation to treat and it is then up to prospective buyers to make an offer to buy (which the shop can accept or reject). | | Limited Liability Partnership (LLP) | A LLP is a partnership in which some or all of the partners have limited liability. In an LLP one partner is not liable for another partner's misconduct or negligence. In practical terms a LLP is a cross between a partnership and a limited company.| | Liquidation | In law, liquidation is the process by which a company is brought to an end and the assets of the company distributed to those entitled. | | Memorandum of Association | This is a written statement made by each person wishing to start a company stating that they wish to form a company and to become a member of the company. It also regulates the relationship of the company with those who may wish to deal with it (such as banks and investors). | | Partnership | A contractual relationship between two or more persons carrying on a joint business venture with view to profit and by which each person incurs liability for losses and a right to share in the profits.| | Private Limited Company (Ltd) | A company registered under the Companies Acts which offers limited liability or protection to its shareholders but places restrictions on ownership. The company's share capital is usually divided into 'shares' and the liability of each shareholder is limited to the amount unpaid on their shares. Shares are not sold on the Stock Market and not generally available to the public. | | Public Limited Company (plc) | A registered company under the Companies Acts whose value is divided into 'shares' and the liability of each shareholder is limited to the amount unpaid on their shares. Unlike a private limited company, its shares are sold on the Stock Market to anyone who wishes to invest. Plcs are very strictly regulated because of the opportunity for fraud. | | Registrar of Companies | All new companies are legally required to register with the Registrar of Companies at Companies House. Details are recorded and they are issued with a register number and a Certificate of Incorporation (which is like a birth certificate for the company). | | Shares | The value of a company is divided into shares which are held by shareholders. As a reward for investing in the company shareholders expect to receive a dividend which represents their portion of the profits made by the company. There are several types of shares including preference shares, deferred shares, and ordinary shares. | | Sole Trader | Refers to one person running a business. A sole trader is liable for all the debts incurred by the business and in the event of the business failing the personal assets (such as house, car, investments etc) of the sole trader can be seized to pay the business debts. |