In depth and neatly organised Company Law notes made from:
Company Law (Core Text Serties) by Alan Dignam and John Lowry (ISBN 1831) AND Company Law by Brenda Hannigan (ISBN 7709). These notes cover the main topics of Corporate Personality, Corporate Constitution, Corporate Decision Making and Corp...
Hannigan (Ch 17: Decision-making + company meetings)
5. Corporate Governance
Hannigan (Ch 7: Board Composition - Directors)
, Introduction
Dignam (Chapter 1: Introduction to company law)
Business organisations are about the effective combination of: • If a partner runs away with client’s funds → each individual
Capital - does it facilitate investment in the business? partner is legally responsible for the whole debt
Risk - does the form of business organisation mitigate or • Two types of partnerships that allow limitation of liability:
minimise the risk involved in the venture? (1) Limited Partnership Act 1907
Disagreement - does the form of business organisation Allows certain partners to have full limited liability
provide a clear organisational structure? ‘Sleeping partners’ (take no active part in running)
Common with investment fund industry
Sole Traders (2) Limited Liability Partnerships Act 2000
• One person operation Allows partners to limit liability up to a point
• No legal filing requirements Allows liability to be limited for general trading
• Usually provide capital with personal savings or bank loan debts but individual partners are not able to limit
• Contract in their own name and have personal liability for all their personal liability for a negligent act
debts of the business Designed to allow large professional partnerships
• Legally no distinction between sole trader’s personal and to achieve some measure of protection for
business assets partners not involved in negligent act
• Little risk of disagreement → no need for formal organisational
structure • Risk for partners is larger than that for shareholders in a limit
liability company
• Risk to sole trader is large
• Organisational structure is flexible as partnership agreement
Partnership can facilitate almost any situation
• The Partnership Act 1890 Section 1:
‘the relationship which subsets between persons carrying on Company
a business in common which a view of profit’ • Setting up is governed by the Companies Act 2006
• Very broad definition • Entrepreneur is required to provide the Registrar of
Companies with:
• Partnership can come about by oral agreement, inferred by
conduct, or a formally written agreement specifying terms and Constitution of the company (internal rules of company
conditions of the partnership and any objects clause limiting the power the company
may have)
• No formal process of being partners
Memorandum of association stating that the subscribers
• Khan v Miah [2000]
If you behave as partners the law will deem you are partners, intend to form a company and become members
even if you have no idea what a partnership is An application for registration containing:
company name
• Minimum membership is 2, maximum unlimited (used to be
20 before 2002) share capital
address of registered office
• Assets of firm are owned directly by partners
whether it is a private or public company
that the liability of its members is limited
• Partnership which does not expressly exclude the Partnership
Act 1980 is governed by it statement of directors’ names and addresses
statement of compliance with CA 2006
• Can be a problem for those who are unaware that they are
partners, as under the Act each partner is entitled to: • CA 2006 provides now for single-person private and public
participate in management companies
equal share of profit
indemnity in respect of liabilities assumed in course of Memorandum and constitution
the partnership business • Memorandum used to be part of company’s constitution
not be expelled by other partners • CA 2006 has reduced memorandum of association to a more
Partnership will end on death of a partner limited function
•
• Normal to modify the Partnership Act and draft a complex • Memorandum is now a simple document providing certain
partnership agreement basic information and key declarations to the public which
state that the subscribers wish to form the company and
• Management, profit sharing and life of partnership can be
made to fit any situation agree to become members taking at least one share
• Subscribers are those who agree to take some share(s) in the
company and thus becoming its first members
• Limited liability cannot be achieved through partnership
agreement → under Partnership Act each partner is jointly • Previously the total amount of share capital that could be
and severally liable for the debts and obligations of the issued to investors had to be stated
partnership incurred while partners
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