Company law fundamentals

    Cards (59)

    • What is the primary focus of company law?
      Regulation of companies' powers and liabilities
    • What are the main relationships regulated by company law?
      • Company and its managers (board of directors)
      • Company and its owners (members/shareholders)
      • Owners and managers
      • Protection of creditors
    • What defines a company?
      A legal entity formed for business purposes
    • What do members of a company contribute?
      Capital, skills, knowledge, and expertise
    • What document is issued upon a company's registration?
      Certificate of incorporation
    • What does Section 16 of the Companies Act 2006 state?
      A company is a body corporate
    • What is the most common type of company?
      Company incorporated under the Companies Act
    • What is the liability of members in an unlimited company?
      Liable without limit for debts
    • What is a Community Interest Company (CIC)?
      A company for social enterprises
    • How are limited liability companies categorized?
      By shares or guarantee
    • What distinguishes a private limited company from a public limited company?
      Private cannot offer shares to the public
    • What is required for a public limited company according to CA 2006, s 271?
      Must appoint a company secretary
    • What is the minimum number of directors for a public limited company?
      At least two directors
    • What must a public company's name include?
      Must end with "public limited company" or plc
    • What are the effects of registration for a company?
      • Creates a separate legal persona
      • Ensures perpetual succession
      • Limits liability of members
    • What does separate legal persona mean for a company?
      Company can enter contracts and own property
    • Which case established the principle of separate legal persona?
      Salomon v Salomon & Co Ltd (1897)
    • What was the outcome of Salomon v Salomon?
      Mr Salomon not liable for company debts
    • What does the term 'corporate veil' refer to?
      Separation between company and its members
    • What was the ruling in Lee v Lee Air Farming Ltd?
      Mr Lee could be an employee of the company
    • What was the outcome of Macaura v Northern Life Assurance?
      Macaura could not claim on the insurance
    • What is the "proper plaintiff" principle from Foss v Harbottle?
      • Only the company can sue for wrongs done to it
      • Minority shareholders cannot initiate actions
    • What does perpetual succession mean for a company?
      Company exists independently of its members
    • What is the limitation of liability for shareholders?
      Liability limited to unpaid share capital
    • What protects members from a company's debts?
      Limited liability
    • Who has standing to sue if a company is wronged by its directors?
      The company itself
    • What does perpetual succession mean for a company?
      The company continues regardless of membership changes
    • What is the liability of shareholders if a company fails?
      Limited to unpaid share capital
    • How does limited liability protect company members?
      It shields personal assets from company debts
    • What is the worst-case scenario for shareholders in a limited company?
      Loss of their investment
    • What is the fundamental principle of company law that a company is a distinct legal person?
      Separate legal persona
    • What is the consequence of a company being a separate legal entity?
      It erects a barrier between the managers and owners of a company and the company itself, referred to as the "corporate veil"
    • What is the term used to describe when the courts look through the company to the identity of the shareholders and office bearers?
      Lifting (or piercing) the corporate veil
    • Why is it rare for the corporate veil to be lifted?
      Because the fundamental principle of company law is that a company is a distinct legal person
    • Under what two main circumstances can the corporate veil be lifted?
      1. Statute or b) Decisions of the court
    • What is an example of a statute that allows the corporate veil to be lifted?
      Company Directors Disqualification Act 1986, s15
    • What is the purpose of the Companies Act 2006, s 399 that requires accounts to be prepared by a group of related companies?
      It recognizes the common link between the companies in the group
    • What are the three main common law grounds for lifting the corporate veil?
      1. Trading with the enemy, b) Fraud/Evasion, c) Concealment
    • What was the key issue in the Daimler Co Ltd v Continental Tyre and Rubber Co (GB) Ltd (1916) case?
      Whether paying a debt to Continental, a UK company with German shareholders, would amount to trading with the enemy during World War I
    • What was the outcome of the Gilford Motor Company Ltd v Horne (1933) case?
      The company was restrained from competing with Gilford Motor Company as it was set up by the former employee to evade his restrictive covenant