Running a Business as a Private Co Limited by Shares Flashcards
(14 cards)
Running a Business as a Private Co Ltd by Shares
Leading principle for separate legal personality
1
Salomon v Salomon (1897)
Running a Business as a Private Co Ltd by Shares
How many days clear notice to call general meeting?
1
14 days clear notice
(14 days must pass between- 1st March = 16th March)
Running a Business as a Private Co Ltd by Shares
The only time Piercing the Corporate Veil is appropriate
2
Scenario and case
Company used as a mask to evade liability to which they were already subject (sham companies)
As per Gilford Motor v Horne (1933)
Running a Business as a Private Co Ltd by Shares
Prest v Petrodel (2013)
1
What was the ratio
Court found a way to say that the company held assets on trust for the shareholder(s)
Meant the husbands assets could be used to meet shareholder (wife) liabilities.
Running a Business as a Private Co Ltd by Shares
Similar consequences to Corporate Veil Piercing
3
- Statutory provisions requiring groups to be treated as one economic unit (usually tax)
- Company treated as agent of shareholders (if owners authorise it)
- Identifying character of company- look beyond company to equate it with owners as per Daimler v Continental (1910) (“enemy alien for WW1)
Running a Business as a Private Co Ltd by Shares
Liability of Directors in Tort
Still veil piercing
Williams v Natural Life (1998)- MD negligently prepared financial statement- not liable and would onyl be so if assumed personal responsibility
Standard Chart. Bank v Pakistan National (2003)- Director WAS held liable in deceit- false statement to obtain payment. For decit, NO NEED to show personal responsibility.
Running a Business as a Private Co Ltd by Shares
Liability of Shareholders
What case?
Still veil piercing
Chandler v Cape- tried to sue cape on basis they were a joint tortfeasor with their subsidiary (not piercing the veil). Held they DID owe Chandler a DoC
This happens where there’s a special relationship:
- Buisness of parent and S were same in relevant respects
- Parent knew as much or more than S in the relevant matter
- S operating in unsafe way and parent knew or ought to have known.
- S and employees were relying on parent companies experitse
Running a Business as a Private Co Ltd by Shares
MA9
1
Calling a Board Meeting
Running a Business as a Private Co Ltd by Shares
MA11
1
Must be a quorum present at board meeting
Running a Business as a Private Co Ltd by Shares
What decision level at board meetings?
1
Simple Majority
Running a Business as a Private Co Ltd by Shares
MA8
1
If decisons made unanimously then no board meeting required- just in writing and signed by all.
Running a Business as a Private Co Ltd by Shares
How long minutes for board meetings and general meetings kept?
1
10 years
Running a Business as a Private Co Ltd by Shares
How long Written Resolutions kept for?
1
10 years
Running a Business as a Private Co Ltd by Shares
How can Shareholders Force a Shareholder Resolution?
2
- Recquisition a general meeting- must own min 5% shares (if Directors refuse members can call a GM at their expense)
- Members WR- “more than 5% shares” can force a WR (shareholders powerless if Directors refuse but its a criminal offence)
