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5 Cards in this Set
- Front
- Back
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Formation of a limited company
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Documents required 1. memorandum of association : it is the primary document that sets up the constitution and objects of the company. 2. articles of association : contains the ryles and regulations by which the internal affairs of the company are governed. it contains the shares, share capital and director details. Note: both must be signed by 7 people in the case of a public company and 2 in the case of a private company. 3. statement of nominal capital : only required if the company has a share capital. the fees thatbone pays on registration will be determined by the share capital thae company has started. 4. Declaration of compliance : statutory declaration to the effect that all the requirements of the companies act have been compiled with. |
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Statutory corporations |
it is created by an act of parliament. |
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Advantages of Incorporation |
1. Limited liability A corporation is a legal entity distinct from its members, capable of enjoying rights being subject to duties which are not the same as those enjoyed or borne by the members.
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salomon vs salomon |
salomon was a merchant he sold his business to salomon and co ltd .salomon was both a creditor because he held a debenture and a shareholder because he held shares in the company .The company ran into financial problems and wound up.Its assets were not enough to satisfy the debenture holder salomon and so there was nothing left for the unsecured creditors. The creditors sued Held: Lord Macnaughten the company at law is a different person altogether from the subscribers even though even after incorporation the business is completely the same as it was before. significance of the decision 1. The decision established the legality of the one man company 2. showed that incorporations was readily available to the small private partnerships and sole traders 3. it showed that it is possible for a trader not merely to limit their liability to the money invested in his enterprise but even to avoid any serious risk to capital by subscribing for debentures rather than shares |
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macaura vs Northern assurance co ltd |
The appelant owner of a timber estate assigned the whole of the timber to a company for the consideration of £42000. The company proceed with the cutting of the timber .The appelant insured the timber against fire in his own name .The timber was destroyed by fire.The insurance company refused to pay any indemnity to the appelant on the grounds that he had no insurable intrest in the timber at the time affecting the policy. held: it was clear that the appelant had no insurable interest in the timber. Neither as creditor or shareholder could he insure the company assets . |
