Coursework 1 Adam, Belle, Claire and Dennis have decided to set up a new company which is private, limited by shares.
Incorporation Documentation Memorandum of Association (MoA)
The MoA was significantly simplified later by the Companies Act 2006. Now, it requires the names of the first subscribers. Also under s 8 (1)(b) it states that the first subscribers must be allotted with at least one share and automatically become members of the company. The new act merely evidences the subscribers` intention to form a new company and thus upon registration, the members need to authenticate it. IN01 Form
The CA85 replaced various requirements of the MoA with the Application for Registration (s. 9, CA06), as well as speeding the manual process of the MoA`s content (ss 2 and 10, CA85). The information required is included in s 9(2), s 9(4), s 9(5) and 9(6) of CA06, and briefly this includes the company`s details such as the name, place of registered office, shares, capital, proposed officers and a copy of the company`s AoA. All these need to be delivered to the relevant registrar with the required fee. Part 1
In addition, even if the name is not interpreted as misleading, then under the Geneva Conventions Act 1957 it cannot be used under any circumstances. s 6(3) Clearly prohibits anyone to use wording that is associated with the Red Cross Organisation.
The first Option available on A7 of the IN01 form is to obtain model articles, also known as “off the shelf” (The Companies (Model Articles) Regulations 2008). Option 2 again has to do with “off the shelf” articles but, you can add and/or amend provisions. The additional and/or amended provisions must be attached to the IN01 form. As opposed to Options 1 and 2, Option 3 is entirely new articles. For instance, all the provisions are drafted from scratch, known as bespoke articles; a copy of the bespoke must be submitted with the IN01 form.
The functions of a company’s secretary are not defined in the acts. However, a better understanding is made in the case of Re Maidstone Buildings Provisions Ltd. The judgment held that “A secretary is not concerned in the management of the company. Equally, I think he is not concerned in carrying on the business of the company … a person who holds the office of secretary may in some other capacity be concerned in the management of the company`s business.”
As a company secretary is not defined in the act, then for now they might not need a corporate secretary.
From the 1st of October 2010 all companies are required to have at least one natural director (s 155, CA06) and his details must be stated in E1 of the IN01 form
The “Service Address” can technically be the same as the “URA”. However, as the “Service Address” is publicly recorded, it is advised to use a different “URA” so that the information is disclosed from the public. This has replaced the old system where only officers at serious risk could have their residential addresses kept off the public record; and with the old system the registered office could be the same as the “URA”. The necessary information is given in sections D1-D5 of the IN01 Form and it is in accordance with s 165, CA06. Part 3
On the other hand, the share premium is the amount received over and above the face value of the shares (anything over A£1) (s 610, CA06). Generally speaking there are no restrictions on who holds shares, but the company which cannot be a member of itself (Trevor v Whitworth (1887). However, there are some exceptions stated in s 659, CA06:
In contrast, Preference shares give the holder preferential rights, usually in dividends and/or return of capital when winding up the company. Preference shares are not defined in the Act, however, they are eligible to receive automatic “Fixed preferential cumulative dividend”. In other words, shareholders with Preference shares are entitled of any dividends that have been omitted in the past, and if more dividends are left then common shareholders receive those rights. The statement of capital must be completed in F1-F5 of the IN01 form. H. Initial Shareholdings.
Parts 4 and 5 I. They do not need to complete both parts as part 4 is just for companies limited by guarantee (Charities). However, Part 5 needs to be completed by all companies (Statement of compliance). Final Page J. The fee owed to the companies house for registering depends if it is submitted electronically or by paper and if you need the same-day incorporation service. Below is a breakdown of the fees: Electronic (Software)
Electronic (Web incorporation Service
*Fees are subject to periodic change. You should always check the Companies House for current fees. Articles of Association K. Tweaking the Articles
However, Deleting Article 8 might interfere with Article 15 in the future. Thus, it is not advised to delete Article 8.
L. After registration the company still has the power to amend any of its AoA (s 21, CA06), which can be done under a special resolution (must be a resolution by the members passed by 75%) (s 283). However, there are some limitations. For example, a clause limiting the company from amending is invalid as seen in the case of Punt v Symonds & Co Ltd. The alterations must be “for the benefit of the company and the members as a whole”. Allen v Gold Reefs Of West Of Africa Ltd, in which it was held that alterations could not be inferred with the court unless the amendments were bona fide for the goodwill of the company, illustrates this point. Any amendments of the articles must again be sent to the registrar (s 26(1), CA06) and published (ss 1077/1078, CA06). M. They should include a clause in the AoA about Erin. However, will she be bound by it? Case law suggests that she won’t be bound it. The test is provided in Hickman v Kent or Romney Marsh Sheep-Breeders Association, and it stated that “an outsider to whom rights purport to be given by the articles in his capacity as such outsider, whether he is or subsequently becomes a member, cannot sue on those articles treating them as contracts between himself and the company to enforce those rights”. As Erin is Adam`s daughter, she might argue that she is not an outsider. However, in the eyes of the law she is not a member and thus an outsider. She might gain some third party rights under s 6(2) of Contracts (Rights of Third Parties) Act 1999 but, this act does not apply to statutory contracts. The only scenario where Erin has rights, is if she creates a separate contract with the company outside the articles. Section 2 – Pre-incorporation Business N. Yes, s 51, CA06 allows for pre-incorporation contracts to be entered into.
When signing contracts “for and behalf of” the company, the person authorizing it (promoter) will be usually held liable as seen in the case of Kelner v Baxter (1866-87).
The Second Procedure is called “Novation”. The newly formed company must create a new contract with the same previous terms. Ratification is not enough as it is now a different contract with the incorporated company instead of the promoter. Section 3 – The Corporate Entity O. It is important to remind ourselves, that this is a company private limited by shares. With that noted, the idea that their personal assets will be protected stems from the landmark case of Salomon v Salomon & Co . The main principle of Salomon derives from the wording “separate Legal Entity”. To form a better understanding, “separate legal entity” means that the company acts as a juristic person in the eyes of the law thus, the individuals involved in the company are not personally liable if something should go wrong. The company as its own legal person is liable for all its debts, not the owners. Therefore, only the company can be sued and not the members; risk only arises to the members if assets were purchased illegally. However, there are exceptions to this principle and this aspect is one of the most ambiguous areas in company law. This is where a court decides to ignore the “separate legal personality”; and it was created by the landmark case through the wording “the veil of incorporation”. There is no general principle on how a judge might decide to lift the corporate veil. However, the corporate veil might be lifted where there is clear abuse of the corporate form. This was illustrated in the case of Jones v Lipman  where an unlawful refusal to sell a house was made due to the sham transfer of the house to a company controlled by Lipman. Thus abysmal circumstances might lead to personal liability if decided so by the judges. Bibliography
 CA85  MoA  Companies Act 1985 s 2-6  CA06  Companies Act 2006 s 8(1)(b)  Woodley, M. G,Osborn’s concise law dictionary.(11th, Mick Woodley, London : Sweet & Maxwell/Thomson Reuters 2009 ) 42  IN01 Form  Companies Act 2006 s 9  Companies Act 2006 s 2,10  Companies Act 2006 s 9(2), 9(4), 9(5) and 9(6)  Charles Wild and Stuart Weinstein,Company Law(16th, Pearson Education Limited, Edinburgh gate 2013) 74-77  Companies Act 2006 s 59(1)  https://wck2.companieshouse.gov.uk/ (WebCheck)  Companies Act 2006 s 66(1)  Companies Act 2006 s 1099  Companies Act 2006 s 67(1)  SoS  Companies Act 2006 s 68(2)  Companies Act 2006 s 76(1)  Geneva Conventions Act 1957  Geneva Conventions Act 1957 s 6(3)  G Scanlan, ‘The Company Names Adjudicator – A New Regime – New Principles’  Comp. Law, 172  Companies Act 2006 s 9(2)(b)  Supplies Ltd v Jerry Creighton Ltd 1 KB 42  Companies Act 2006 s 86  Charles Wild and Stuart Weinstein,Company Law(16th, Pearson Education Limited, Edinburgh gate 2013) 98  Companies Act 2006 s 15(2)(e)  Charles Wild and Stuart Weinstein,Company Law(16th, Pearson Education Limited, Edinburgh gate 2013) 97  AoA  Companies Act 2006 s 18  Companies Act 2006 s 33  The Companies (Model Articles) Regulations 2008  Alexis Mavrikakis, Helen Watson, Christopher Morris and Nick Hancock,CLP Legal Practice Guides: Business and Company Legislation(College of Law Publishing, UK 2014/15) 59  Companies Act 2006 s 22,23 and 24  Companies Act 2006 s 270(1)  Companies Act 1985 s 283  Re Maidstone Buildings Provisions Ltd  1 WLR 1085  Susan McLaughlin,Unlocking Company Law(2nd, Routledge, Oxon 2013) 235-236  Companies Act 2006 s 154  Companies Act 2006 s 155  URA  Alexis Mavrikakis, Helen Watson, Christopher Morris and Nick Hancock,CLP Legal Practice Guides: Business and Company Legislation(College of Law Publishing, UK 2012/13) 125-126  Companies Act 2006 s 165  Companies Act 2006 s 542  Companies Act 2006 s 552 and 580  Ooregum Gold Mining Co v Roper  AC 125  Companies Act 2006 s 610  Trevor v Whitworth (1887) 12 App Cas 409  Companies Act 2006 s 659  Companies Act 2006 s 724  Companies Act 2006 s 560  Charles Wild and Stuart Weinstein,Company Law(16th, Pearson Education Limited, Edinburgh gate 2013) 157-60  Companies Act 2006 s 1063  https://www.companieshouse.gov.uk/toolsToHelp/ourPrices.shtml  Companies (Model Articles) Regulations 2008/3229 Article 8  Companies (Model Articles) Regulations 2008/3229 Article 7(1)  Companies (Model Articles) Regulations 2008/3229 Article 15  Companies (Model Articles) Regulations 2008/3229 Article 11(2)  Companies (Model Articles) Regulations 2008/3229 Article 17(1)(a)  Companies (Model Articles) Regulations 2008/3229 Article 27(2)(a)  Companies Act 2006 s 318(2)  Companies (Model Articles) Regulations 2008/3229 Article 49(1)  Companies Act 2006 s 21  Companies Act 2006 s 283  Punt v Symonds & Co Ltd  2 Ch 506  Boyle and Birds,Company Law(8th, Jprdan Publishing Limited, Bristol 2011) 123-130  Allen v Gold Reefs Of West Of Africa Ltd  1 Ch 656  Companies Act 2006 ss 1077/1078  Hickman v Kent or Romney Marsh Sheep-Breeders Association  1 Ch 88a  Sealy and Worthingtons,Cases And Materials In Company Law(10th, Oxford, UK 2013) 254  Contracts (Rights of Third Parties) Act 1999 s 6(2)  Companies Act 2006 s 51  s 15, Companies Act 2006  L.S. Sealy,Cases And Materials In Company Law(Cambridge University Press, Cambridge 1971) 19  Kelner v Baxter[1866-87] 2 LR 174 (CP)  s 51, Companies Act 2006  Phonogram Ltd v Lane QB 938  Charles Wild and Stuart Weinstein,Company Law(16th, Pearson Education Limited, Edinburgh gate 2013) 71  S 51, Companies Act 2006  Newborne v Sensolid (Great Britain) Ltd 1 QB 45  Re Northumberland Avenue Hotel Co Ltd 38 ChD 156  Salomon v Salomon & Co  22 AC  Susan McLaughlin,Unlocking Company Law(2nd, Routledge, Oxon 2013) 64-68  S Ottolengthi, ”From Peeping behind the Corporate Veil, to Ignoring It Completely’  Modern Law Review 338-350, 338  Jones v Lipman 1 ALL 442 (ER)  Charles Wild and Stuart Weinstein,Company Law(16th, Pearson Education Limited, Edinburgh gate 2013) 35-48
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