Case Study of London Car Repair Ltd

CASE STUDY

Table of Contents
PROJECT 3......................................................................................................................................3
Steps that were taken to form the Company................................................................................3
Nature and essentials content of the Company 's articles and Memorandum of association......3
Shareholder involvement in the expansion and the extent they are liable for Company's debts 4
Nature of shares and difference between ordinary and preference shares...................................4
Company's resolutions and the matters for which resolutions are required................................4
Power of Directors.......................................................................................................................5
Duties which Directors owe to the Company..............................................................................5
REFERENCES................................................................................................................................6

INTRODUCTION
Business Law refers to the body of law that governs the business and commerce. It is
often considered as the branch of civil law and deals both with issues of public and private law.
The project report is based on Case Study of London Car Repair Ltd. Report will outline the
steps that were taken to form a company and essential content of a company's articles and
memorandum of association. Further report will differentiate between ordinary and preference
shares. Lastly, report will discuss the power of directors and their duties in the Company.
Background of the Company
London Car Repair Ltd is organised in London UK, it deals in repair and maintence of
Cars. Therefore, it has in total 20 numbers of shareholders. Each shareholder has 5 shares in
total. The nominal value of the shares is $50. In future the company will expand their business
by bringing modification in Cars with the use of high technological advancement.
Steps that were taken to form the Company
London Car Repair Ltd has to following steps -
 Selection of suitable name and as the Company is private it is necessary to include
private Ltd in its last name (Hannigan, 2018).
 The Company should have registered office.
 Appointment of one director is mandatory so company has to appoint a person who is at
least 16 years old.
 The Company should have at-least one share class. The value of shares can range from
£0.01 upwards. Once the Share Class has issued one shared should be issued to one
person.
 From 6 of April 2016 it is mandatory to keep track record of people with significant
control (PSC).
 Lastly the Company has to submit formation form before it they checks the information
which is being entered is correct.
Nature and essentials content of the Company 's articles and Memorandum of association
Article of Association – Article of Association is an important document that contains
rules and regulations of the Company. Nature of document lays out how tasks are to be
accomplished in the Company inclusive of the process for appointing directors and handling the
financial records.

Contents of Article of Association
 Classes of shares, their values and their rights.
 Calls on shares, transfer of shares and alternation of capital.
 Directors, their appointments and powers (Gerner-Beuerle and Schilling, 2019).
Memorandum of Association – Memorandum of association defines the constitution
and the Scope of powers of London Car Repair Ltd. The nature of Memorandum of association
is that it is the document that aids to regulate the firm external activities and also drawn up the
formation of registered and incorporated entity. It mainly serves as the constitution of company.
Contents of Memorandum of Association
 Name clause - For the private limited Company the name should contain Private limited
as the last words.
 Registered office Clause – The Company must specify the registered office and where it
is situated.
 Object Clause – This clause contains the objects of the company for which it is been
incorporated.
 Liability Clause – It specify liabilities of the members .
 Capital Clause - The company must specify the amount of Authorized capital divided
into shares of fixed amounts.
 Association Clause – The MOA should clearly specify the desires of subscriber.
Shareholder involvement in the expansion and the extent they are liable for Company's debts
The Company has separate legal personality from its shareholders (Ridley-Duff, 2018).
The Company generates significant free cash flow often face pressure from the shareholders to
return some of the surplus cash to the shareholders in the form of dividends and share buybacks
this leads towards firm's expansion..Therefore, the liability of the shareholder of the company
limited by shares. In firm, shareholder to the company are not liable for the acts and omission of
the firm. It can be stated that it is limited to the nominal value of its shares.
Nature of shares and difference between ordinary and preference shares.
Ordinary shares have a lower priority for the Company assets and receive dividends at the
discretion of the corporation's management. Preference shares do not have voting rights and can
easily be converted into common shares.
Basis Ordinary shares Preference shares

Meaning This is called common shares.
Shareholders entitling its
holder to dividends which vary
in amount on the fortunes of
the Company.
The preferences shares are
entitles the holder to a fixed
dividend whose payment takes
priority.
Voting rights Ordinary shares have voting
rights.
Preference shares have no
voting rights.
Company's resolutions and the matters for which resolutions are required
Compnay Act 2006- The main piece iof legislation that governs the company law in the
UK. This enables company to be formed by the registration, sets out the responsiblituies of the
companies. Therefore, it is the longest piece of the legislation that enacted in the UK.
Resolutions are require at-least 75 % majority of votes to be passed. The ordinary resolutions are
used for decisions making by directors and shareholders. The Companies Act 2006 provide
needs of Article of association and has passed special resolutions for the Company. The
resolution covers three things first the intention to propose the resolution as a special resolution
has been duly specified in the notice calling the general meeting or other intimation given to the
members of the resolution (Soerodjo, 2018). Secondly, the notice required under this Act has
been duly cast and third is in favour of the resolution, whether on a show of hand. For the
matters for which resolutions are required are as follows -
 At the time of change in registered office.
 For the alternation of MOA and AOA of the Company.
 At the time of making changes in object clause (Matters Requiring Sanction of
Shareholders by Special Resolution, 2015).
 For the appointment of more than 15 directors. The Company can appoint more than
fifteen directors by passing special resolution.
Power of Directors
 Power to approve amalgamation, merger and reconstruction.
 Power of issuing debentures.
 Power of investing funds ( e Roux and Hammond, 2018).
 To make loans and to give guarantee in respects of the Company.

Duties which Directors owe to the Company
 To Form policy and determining the London Car Repair Ltd.
 To delegate power to committee.ou fallow every step with definition and advices.
 To appoint the subordinate officer and managing director of the Company.
 To act in accordance with the Articles of the Company (Li and et.al., 2018).
 To perform duties with due diligence.
CONCLUSION
It is concluded from above project report that it is necessary to add private Ltd in private
company's last name. It is summarise that it is mandatory to keep track record of people with
significant control in the firm. It is also concluded that resolutions has to passed at the time of
change in registered office and while doing alternation of memorandum of association and
article of association.
Recommendations to London Car Repair Ltd
 The Company should follow intellectual property rights and privacy laws.
 The Company should follow the compliance formality by disclosing legal details , reports
and forms.
 The Company should not take high risk by taking unwanted loans and debt burden at
initial level.

REFERENCES
Books and Journals
Gerner-Beuerle, C. and Schilling, M.A., 2019. Comparative Company Law. Oxford University
Press.
Hannigan, B., 2018. Company law. Oxford University Press, USA.
le Roux, D. and Hammond, G., 2018. Directors owe a duty to the company, not to
shareholders. Without Prejudice. 18(10). pp.12-13.
Li, C and et.al., 2018. Controlled synthesis of graphite oxide: formation process, oxidation
kinetics, and optimized conditions. Chemical Engineering Science. 176. pp.319-328.
Ridley-Duff, R., 2018. The internationalisation of FairShares model: where agency meets
structure in US and UK company law.
Soerodjo, I., 2018. Juridical Implication of Share Cross Holding According to Limited Liability
Company Law in Indonesia. Journal of Legal, Ethical and Regulatory Issues. 21(2). pp.1-
18.
Online
Matters Requiring Sanction of Shareholders by Special Resolution. 2015. [Online] Available
through:<https://www.bcasonline.org/Referencer2015-16/Other%20Laws/Company
%20Law/matters_requiring_sanction_of_shareholder.htm>