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The Legal Eagles

Extracts from this document...

Introduction

CONTENTS PAGE 1. INTRODUCTION 2. TYPES OF COMPANY 2.1 SOLE TRADER 2.2 PARTNERSHIPS 2.3 LIMITED COMPANIES 2.3.1 PRIVATE LTD COMPANIES 2.3.2 PUBLIC LTD COMPANIES 3. CONCEPT OF INCORPORATION o ADVANTAGES o DISADVANTAGES 4. THE LEGAL FORMATION OF COMPANIES 4.1 PROMOTER o REGISTRATION PROCEDURES * MEMORANDUM OF ASSOCIATION * ARTICLES OF ASSOCIATION 4.3 SHARE CAPITAL 4.4 DIRECTORS 4.5 LOAN CAPITAL AND CHARGES 4.6 DISSOLUTION OF BUSINESS UNITS 5. CONCLUSIONS AND RECOMMENDATIONS 6. BIBLIOGRAPHY INTRODUCTION Our company, The Legal Eagles, is a firm of six legal consultants. The partnership was formed in January 2002 and consists of six fully qualified consultants, Amy, Martin, Gavin, Paul, Julia, and Marie. Our client (Cheryl Hayward) is in the process of forming a company. She wishes to avoid personal liability upon any contracts she may enter into on behalf of the proposed company. Our job is to design a report to explain the legal provisions concerned with the formation, management and dissolution of business units. The report will identify the relevant legal principles, which can influence the choice of business unit. Explain the differences in the regulatory approach adopted for partnerships and registered companies and describe the procedures for the dissolution of business units. At the end of the report we will advise our client what type of company would be best suited to her needs. There will also be a presentation to go with the report highlighting the main points. 2.TYPES OF COMPANY There are many different types of business unit. Each is formed by a group of people with a common aim. Britain has what is known as a mixed economy where goods and services are supplied by both private and public sector organisations, as shown in the following diagram: Private Enterprise Sole Trader Partnerships Limited Companies Co-operatives Private Public Retail Producer Public Enterprise Public corporations Government Departments Local Authorities The private sector/enterprise is the term used to describe all businesses which are owned by individuals or groups of individuals and run essentially for profit. ...read more.

Middle

It must also state that each member contributes to the assets of the company if the company were to be wound up, whilst being a member. Under S43 44 of the 1967 Act, a limited company may be reregistered as an unlimited company and an unlimited company reregistered as a limited company. Their may be occasions where a member of a limited company has unlimited liability and is then personally liable for the debts of the company. The share or capital clause S2 1948 provides that a company with a share capital must state in the memorandum the amount of share capital with the company to be registered and the division into shares of a fixed amount. For example the clause might state the share capital of the company is �1,000,000 divided into shares of �1 each. The Articles of Association These article of association govern the internal affairs of the company and regulate the rights of the members as between themselves, and between the members and the company. The articles deal with things such as: * The issue and transfer of shares. * Alteration of capital structure. * Calling general meeting, members' voting rights. * Directors duties their powers and proceedings. * The auditors, accounts and dividends. S 6 of the 1948 provides that if a company limited by shares may register with its memorandum, articles of association. But if a company limited by guarantee or unlimited must register articles of association. The articles may adopt all or any of the regulations contained in Table A. If a company is limited by shares and does not register articles then all Table A applies, and this will be the regulations for the company, as if it had been registered. Articles which are registered but do not cover all the regulations in Table A those regulations in Table A will apply, unless there is a clause which excludes the Table A S8. ...read more.

Conclusion

* Any director making such a declaration without having reasonable grounds for the opinion that the company will be able to pay its debts in full within the specified period shall be liable to imprisonment and or a fine. * If the company is wound-up in pursuance of a resolution passed within five weeks after making the declaration, but its debts are not paid in full within the period stated in the declaration, it shall be presumed, until the contrary is shown, that the director did not have reasonable grounds for his opinion. Creditors winding up A voluntary winding-up where a declaration of solvency is not made is referred to as a Creditors winding-up. Provided the company is solvent, no reference need be made to creditors. The Company appoints the liquidator and creditors have no influence on the winding-up because their interests are not in danger. To commence a creditors voluntary liquidation the directors convene a general meeting of members to pass an extraordinary resolution. They must convene a meeting of creditors S98 giving at least seven day's notice of this meeting. The notice must be advertised in the London Gazette and two local newspapers. Unlike a compulsory winding up, there is no automatic stay of legal proceedings against the company and the employees are not automatically dismissed. CONCLUSIONS AND RECOMMENDATIONS The 'conclusion and recommendations' that we, the Legal Eagles professional law consultants have come to from all the information, research, findings and explanations within the group presentation and report, is to advise our client, Cheryl Hayward, that the best choice of company is a 'Private Limited Company'. The reasons for this are that the formation will be cheap, Table A can also be relied upon, and there is no minimum share capital (e.g. as opposed to public companies) and also the liability of the members is limited which is important for our client, who wishes to avoid any personal liability in respect of any contracts she may enter into on behalf of the proposed company. ...read more.

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