Incorporation (wk7 + 8) Flashcards
(11 cards)
Define and describe the typical acts of a promoter
- Someone involved in setting up a limited company (not a legal term)
- Rausing the idea of forming a company
- Soliciting the interests of others
- Finding directors, shareholders + other investors
- Acquiring business assets (e.g. premises) for use by the new company
- Negotiating business contracts on behalf of the new company
Promoter case: Kelner v Baxter
Facts:
- A group of promoters entered into a contract to purchase alcohol b4 the company was incorporated
- The incorporation was approved but the company failed later on
- The company failed b4 the payment was made but the alcohol had already been consumed
Held: The promoters were personally liable for a contract to purchase wine since the company did not exist at the time of agreement
S.51 Companies Act 2006
Pre-incorporation contracts
- a contract that purports to be made by or on belhalf of the company at a time whre the company has not been formed has effect as the person purporting to act for the company and he is personally liable on the contract for it
Describe Off the shelf companies
- can be purchased by promoters to acquire a company that has already been trading for some time
- The promoter would not be personally liable for any pre-incorporation contracts as the company is already in existence
False misrepresentation case - Edgington v Fitzmaurice
Facts:
- Directors of a business provided a prospectus containing debentures to attrct subscriptions
- They stated the purpose of the debentures was to complete alterations of buildings of the company
- It was later revealed that the money was used to pay off other liabilities
- The company became insolvent and a debenture holder filed a claim for the money he is owed
Held: The defendant had no intention of using the money to expand the company, making it an actionable misrepresentation
Describe the registration of a company
- Documents myst be refistered with the Registrar of Companies at Companies House
- Must prepare forms + pay a fee
- Registers (important docs) must be kept at the registered office of the company (registers of members, directors + company secretary, accounts, minutes of all meetings etc.)
- Choice of name cannot be already in use by others
- Company’s objects + ultra vires doctrine must be filed
Economic Crime + Corporate Transaprency Act 2023
- Companies house now have more power to query infor + ask for evidence
- Stronger checks on company names
- New rules for office addresses (cannot use a PO box address)
- Companies required to supply a email address
- Companies required to confirm they are incorporating for a lawful purpose
- Ability to annotate the register when info appears to be confusing or misleading
Memorandum of Association
- CA 2006 sets it out as a statement of intent of the subscribers to form a company and that they agree to become members of the company, taking at least one share each.
- Limits the no. of shares allowed to be issued; if want to amend this they must get agreement from all shareholders
Articles of Association
A document of the internal constitution of the company, including:
- share capital, certificates and transfer of shares
- meetings
- notices
- proceedings
- votes
- company secretary
- munites
- accounts
- dividends
- directors: appointmentm powers, removal, disqualification and remuneration
Model articles of association
In CA 2006: Standard default articles a company can use and make personal amendments to. i.e. can adopt in part or in total.
Company’s Objects and Ultra Vires Doctrine
s. 31 CA 2006
- a company’s objects are UNRESTRICTED UNLESS expressly limited in its Articles
- If a company’s objects are RESTRICTED in its Articles, director’s face a breach of duty to act within the powers of a company if they act outside the objects without altering it.
