Introduction to Company Law / Legal Personality and Types of Registered Companies

Question 1

What is a separate legal entity

Answer 1

When an organisation becomes it’s own business having responsibilties, rights and financial obligations like a normal human being

Question 2

What is the nature and purpose of company law

Answer 2

Promote investment and innovation

protect and govern stakeholders interests.

Promote businesses in a fair manner protecting interests of the people involved.

Question 3

What are the sources of company law

Answer 3

Rules of the company are created based on government law, agency regulations, court decisions and international agreement to ensure business is run fairly and effectively.

Question 4

companies act 2006

Answer 4

Rules and regulations modernized to make sure the company is run fairly and lawfully.

Question 5

What is a white paper in company formation

Answer 5

A document where the governement seeks feedback from the general public and discussing how they run the company.

Question 6

Philanthropy

Answer 6

Do good

Question 7

what does corporation aggregate mean

Answer 7

When organisations share common goals and interests with limited liability.

Question 8

What are the consequences of separate legal personality

Answer 8

Legal relationships
Rights and responsibilities
Separate personality to its’s memebrs

Question 9

What is a The case established the principle of separate legal personality.
 Mr. Salomon's assets were safeguarded as distinct from the company's assets.
 The company, despite being a one-man company, was legally recognized.Registered Company:

Answer 9

Registered companies exhibit professionalism, limited liability for shareholders, adherence to legal
requirements, a separate legal personality, corporate governance, and a complex organizational
structure.

Question 10

What are the facts of Salomon V Salomon case

Answer 10

The case established the principle of separate legal personality.
 Mr. Salomon's assets were safeguarded as distinct from the company's assets.
 The company, despite being a one-man company, was legally recognized.

Question 11

What is a share

Answer 11

A share is the percentage of rights or power the shareholder has in the company.

Question 12

What are the features of a public limited company

Answer 12

Access to sell shares to the public
Minimum of £50,000 share capital
Required to publish their financial accounts
Listed in the FTSE.
Traded on stock exchange

Question 13

What are the features of a private limited company

Answer 13

Cannot sell shares to the public
no initial investment necessary
Not needed to publish their financial accounts
no minimum capital required
no taxes

Question 14

What is a holding company

Answer 14

It’s a parent company with limited liability holding enough shares in another company to control the company.

Question 15

What is a subsidiary

Answer 15

A company own or controlled by another company for e.g. a parent company

Question 16

what are the consequences of separate legal personality

Answer 16

Companies can sue and be sued in their own name
companies can hold property
perpetual succession

Question 17

exception for separate legal personality

Answer 17

Agency
Facade

Economic unit group of companies

Question 18

What is agency

Answer 18

Authority to create legal relations between principal and third party

Question 19

Application INO form

Answer 19

The process of forming a company initiates with the completion of the INO application form, which
serves as the initial step in the company formation procedure.

Question 20

Memorandum of Association:

Answer 20

The Memorandum of Association delineates the company's fundamental objectives and scope of
operations. It serves as a foundational document outlining the company's existence.

Question 21

Articles of Association:

Answer 21

The Articles of Association encompass the rules governing the internal management and governance
of the company. It provides a framework for decision-making, operational procedures, and internal
regulations.

Question 22

Additional Information:

Answer 22

Supplementary details beyond the Memorandum and Articles may be required, providing
comprehensive insights into the company's structure, governance, and other relevant aspects.

Question 23

Certificate of Incorporation:

Answer 23

Upon fulfilling the regulatory requirements and completing the formalities, the Certificate of
Incorporation is issued, marking the official recognition of the company's existence.

Question 24

Company Act 2006 Regulatory Requirements:

Answer 24

Adherence to the regulatory stipulations outlined in the Company Act of 2006 is imperative,
ensuring legal compliance and proper incorporation.

Question 25

Model vs. Bespoke Articles:

Answer 25

Companies can opt for either model articles, readily available and customizable for immediate use,
or bespoke articles tailored to specific company needs.

Question 26

Article as a Contract:

Answer 26

Articles of Association function as a contractual agreement among shareholders, and any alterations,
especially special resolutions requiring 75% member approval, must be voted upon.

Question 27

Arbitration:

Answer 27

Arbitration is a dispute resolution method outside the court system where a neutral third party, the
arbitrator, makes a binding decision. For example, if two business partners have a contractual
disagreement, they might choose arbitration to resolve the issue.

Question 28

Outsider Rights:

Answer 28

Outsider rights refer to the legal standing and protections afforded to individuals outside the
company structure, ensuring fair treatment and accountability.

Question 29

X. Amending Articles:

Answer 29

Amending articles necessitates a summary, typically requiring a 75% majority vote to pass proposed
changes, ensuring significant decisions are well-supported.

Question 30

Restrictions on Amendment:

Answer 30

Statutory restrictions, such as those outlined in the Companies Act 2006, impose limitations on
amendments, safeguarding voting rights and preventing undue alterations without sufficient
support.

Question 31

Shareholder Agreement:

Answer 31

A shareholder agreement stipulates conditions under which stakeholders can set up businesses that
may compete with the company's interests, ensuring alignment and preventing conflicts of interest.

Question 32

Object of a Company:

Answer 32

The object of a company outlines its purpose and objectives. In cases where objects are unrestricted,
the company possesses flexibility in its activities and scope.

Question 34

Ethical responsibility

Answer 34

Do what’s right

Question 35

Legal responsibilty

Answer 35

Obey the law

Question 36

Economic responsibility

Answer 36

Be profitable

Question 37

Businesses ethics

Answer 37

Business ethics is the study of
appropriate business policies and
practices regarding potentially
controversial subjects including
corporate governance, insider trading,
bribery, discrimination, corporate social
responsibility, and fiduciary responsibilities

Question 38

The law

Answer 38

Legislation sets the minimum standard of
behaviour. Finding and using legal loopholes is
viewed as unethical.

Question 39

Government regulations

Answer 39

Regulations sets standards on issues such as
safety and product design. Finding ways round
regulations is viewed as unethical.

Question 40

Ethical codes

Answer 40

Written codes of companies which are compusilve for companies to follow

Question 41

Social pressure

Answer 41

Change the values and views of the public

Question 42

Corporation culture

Answer 42

Try to encourage more ethics in the way things are done generally.

Question 43

Personal policies and values

Answer 43

An individual’s gender, age an religious beliefs
will affect their ethics

Question 44

Rules-based approach

Answer 44

Guideline’s and mandatory instructions on how to behave.

Question 45

Principles based approach

Answer 45

Ideally it’s important to comply however a rationalie and justifiable reason must be given for the non compliance. Rules and regaulations are set however, it’s up to the companies the way operations will be handled.

Question 46

What are the advantages to rules based approach

Answer 46

Penalty is guaranteed for non compliance

Not overcomplicated when non compliance happens

Breaching the rules will imply in penalties, therefore companies are not willing to take those risks.

The application is consistent

There are rules for specific outcomes

Breaches are easy to identify as there no flexibilty unlike the principal method

Question 47

What are the disadvantages of rules based approach

Answer 47

Old fashioned and may not be relevant to the modern day needs for e.g. hard to given a clear punishment.

It will be a hard judgement if certain situation are not covered in the rule book.

Some rules may be hard to interpret

Question 48

What are the advantages of the principle based approach

Answer 48

Encourages pro active actions

Member’s are treated as individuals

Increased flexibility in complex situations.

Harder to search for loopholes

It is less prone to become out of date

Question 49

What are the disadvantages for principle based approach

Answer 49

Subjective interpretations

Potential for inconsistency

Difficult to monitor compliance

Guidelines may become rules to some rationality.

Ambiguity may be confusing

Question 50

Integrity

Answer 50

Ensure fair dealing and truthfulness at all times

Being straightforward and honest in all business and professional relationships

Question 51

Objectivity

Answer 51

Ensure professional judgement and decision making is not biased or due to personal interest.

Question 52

Professional competence

Answer 52

Ensure professional development is done on a consistent basis so clients are dealt accordingly.

Question 53

Confidentiality

Answer 53

Information should not be disclosed unless permitted by the law for e.g. health, safety reasons if a person if going to harm someone or themselves.

Question 54

Professional behaviour

Answer 54

Ensure compliance with all laws and regulations.
Treat others with courtesy and consideration. Avoid
discrediting fellow professionals in marketing
campaigns.

Question 55

Consequences of unethical behaviour

Answer 55

Loss of reputation
◦ Threat of legal action or investigation
by regulators
◦ Resignation of key ethically-minded
staff
◦ Business closure, resulting in
redundancy.