UK Company Law: Formation and Types
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1
What are the three ways to create a company?
Chartered companies, statutory companies and registered companies.
2
How are chartered companies incorporated?
By the Crown through the grant of a Royal Charter under the Royal prerogative.
3
What are examples of chartered companies?
Exeter Cathedral and Exeter University.
4
Are chartered companies still used for ordinary trading or commercial purposes?
No, they are no longer used for ordinary trading or commercial purposes.
5
How are statutory companies created?
They are created or incorporated under an Act of Parliament.
6
What is an example of a statutory company?
Channel Four Television.
7
Are statutory companies still used for ordinary trading or commercial purposes?
No, they are no longer used for ordinary trading or commercial purposes.
8
What is the main way to create a trading company?
By registering a company.
9
Which legislation governs the registration of companies?
The Companies Act 2006.
10
Does creating a registered company require Crown or Parliamentary authority?
No, it requires only a small fee and registration, which is available online.
11
What must the name of a public company end with?
Public limited company or plc.
12
Can a public company offer shares to the public?
Yes, a public company can offer shares to the public.
13
Must a public company be listed or quoted on a stock exchange?
No, it does not have to be listed or quoted.
14
Are public companies subject to more or fewer legal restrictions?
More legislation and restrictions.
15
What is the minimum number of members required for a public company?
One member.
16
What is the minimum number of directors required for a public company?
Two directors.
17
When must a public company hold its annual general meeting and have audited accounts?
Within six months of the end of the financial year.
18
What is the minimum share capital required for a public company?
£50,000.
19
What is a private company?
Any company registered under the Companies Act 2006 that is not a public company.
20
What must the name of a private company end with?
Limited or Ltd.
21
Can a private company offer shares to the public?
No, a private company cannot offer shares to the public.
22
Can a private company be listed or quoted on a stock exchange?
No, a private company cannot be listed or quoted.
23
Are private companies subject to more or fewer legal restrictions than public companies?
Fewer restrictions and less legislation.
24
What is the minimum number of members required for a private company?
One member.
25
What is the minimum number of directors required for a private company?
One director.
26
What is the minimum share capital required for a private company?
There is no minimum share capital requirement.
27
What is separate legal personality?
The principle that a company is a separate legal person from its members, directors and officers.
28
What is a company described as in law?
A body corporate.
29
Who owns the business and assets of a sole trader?
The sole trader.
30
Who owns the business and assets of a partnership?
The partners.
31
Who is liable for the debts of a sole trader or partnership?
The sole trader or partners.
32
What do members own in a company?
Shares in the company.
33
Do company members own the assets used by the company?
No, the company owns its business and assets.
34
What was the key legal principle established in Salomon v Salomon (1896)?
A company has a separate legal personality from its members.
35
What was Mr Salomon's business before incorporation?
He was a sole trader.
36
What company did Mr Salomon incorporate?
A Salomon & Co. Ltd.
37
Who owned shares in A Salomon & Co. Ltd.?
Mr Salomon and his family.
38
What happened to A Salomon & Co. Ltd.?
It became insolvent.
39
What did the company's creditors want Mr Salomon to do?
Pay the company's debts personally.
40
What did the House of Lords decide in Salomon v Salomon?
Mr Salomon and the company were separate legal persons.
41
Was Mr Salomon personally liable for the company's debts in Salomon v Salomon?
No, he was not liable for the company's debts beyond what he had invested.
42
Is the principle in Salomon v Salomon considered unfair to creditors?
No, it is consistent with the Companies Act, although creditors can lose money.
43
What does lifting the corporate veil mean?
Allowing a person other than the company to be held responsible for certain company actions or liabilities.
44
When can the corporate veil be lifted?
In certain very rare situations permitted by judges or statutes.
45
Who might be held responsible when the corporate veil is lifted?
A shareholder or a director, for example.
46
How is a company normally formed?
By completing the necessary forms and registering at Companies House, usually online.
47
What happens when a company is registered?
It becomes a body corporate with separate legal personality.
48
What is the minimum number of shareholders a company can have?
One shareholder.
49
What is the minimum number of directors a company can have?
One director.
50
What is the role of a promoter?
A promoter usually undertakes the process of registering a company at Companies House.
51
What does a promoter usually become after incorporation?
A director of the company.
52
Can a company enter into a contract before it is incorporated?
No, because the company does not yet exist.
53
Who is generally responsible for a pre-incorporation contract?
The promoter, unless there is an agreement to the contrary.
54
What is a pre-incorporation contract?
A contract made before a company has been legally incorporated.
55
How can a company enter into a contract with similar terms after incorporation?
By entering into a new contract, following the rules of novation.
56
What is novation?
The creation of a new contractual arrangement that replaces or transfers an existing contractual obligation with the necessary agreement.
57
What are the necessary registration documents for a company?
Application form, capital details, registered office details, officers' details, Articles of Association and a statement of compliance.
58
What information is included in the company application form?
The company name, whether it is public or private, liability details and the required fee.
59
What capital information must be provided when registering a company?
The amount of capital and the initial shareholding.
60
What is the registered office document requirement?
The address of the company's registered office must be provided.
61
What information about officers is required for registration?
Details of the proposed directors and secretary.
62
What are the Articles of Association?
The company's internal rules.
63
What is the purpose of the statement of compliance?
To confirm compliance with the requirements of the Companies Act.
64
What additional certificate must a public company obtain before trading?
A trading certificate.
65
Can a public company commence trading before its trading certificate is issued?
No, it must wait until the certificate has been issued.
66
Does a private company need a trading certificate?
No, private companies do not need a trading certificate.
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