Chapter 14 - Intro to companies

Features of a company

Companies Act 2006

Key features

• S - separate legal personality - separate from directors/employees
  • Saloman v Saloman & Co established separate legal entity
  • Seperation is also known as veil of incorporation
  • Court may list veil so that directors/owners can be held liable for the actions of the company
  • If the company is a sham/fraud
  • If directors are fraudulently trading
  • If directors are wrongfully trading
• P - perpetual succession - the company cannot die a natural death
• L - limited liability - creditors cannot go after assets not owned by the company
• A- assets held in company name 
• T - transferrable ownership - e.g. shares

Advantages and disadvantages of using a company

+

• SPLAT

-

• More expensive
• Annual return fees
• Time-consuming

Public Companies

• (PLC)
• Certificate of incorporation
• Must have an issued share capital of £50,000 at least 25% of which must be paid up
• regulation and disclosure requirements are higher
• must have at least two directors and a qualified company secretary

Quoted vs unquoted aka listed vs. unlisted companies on the stock exchange

Private companies

• Cannot offer shares publicly
• Has less stringent regulatory requirements

Companies limited by shares or by guarantee

• most companies are limited by shares
• this means members are liable for the amount unpaid on their shares
• Companies can be limited by guarantee
• means each member commits to a fixed amount of capital which they will be liable for if the company is insolvent

Protected cell companies

• Involves a cell company that has many individual cells beneath it
• no veil of incorporation between cells
• each cell may have it's investment
• Saves money on audit fees/admin fees
• Assets of each cell are ring-fenced from the others
• Creditors and shareholders should only be able to access the assets of that particular cell if the…