Company Law and Shareholder Rights

This assignment delves into key aspects of company law, focusing on the rights of shareholders and debenture holders. It examines various legal provisions governing share ownership, dividend distribution, voting rights, and liquidation procedures. The document also discusses the responsibilities of company directors towards shareholders and the overall governance of the company.

Company Law

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 3............................................................................................................................................1
Different types of capital(AC_3.1).............................................................................................1
Laws on Share, class rights and dividends(AC 3.2)...................................................................1
Law for capital maintenance and insider dealing(AC 3.3).........................................................2
TASK 4............................................................................................................................................2
Duties and powers of Directors(AC 4.1).....................................................................................2
Rules on different types of meetings(AC 4.2)............................................................................2
Law on minority protection(4.3).................................................................................................3
Rights of shareholders and debenture holders(4.4).....................................................................3
Rights on Liquidation(4.5)..........................................................................................................3
CONCLUSION................................................................................................................................4
REFERENCES................................................................................................................................5

INTRODUCTION
The company law will be implemented by the company to see through the effective
running of the business in an organisation (Bainbridge, 2014). The report will cover the details of
various types of capitals, laws on various issues with the duties and power of directors and
various rights in a company.
TASK 3
Different types of capital(AC_3.1)
There are various types of capital that are been taken into consideration by a company.
Some capitals are:
 Natural Capital: It is a stock of processes or the resources that flows from one point to
other for the production of goods or services (Gerven and Berlingin, 2015).
 Human Capital: It consists of employees and customers health, knowledge, skill sets
and motivational factors that are needed for the production in the company.
 Social Capital: it includes the factors like family, community, business, trade unions etc.
that are been considered while development of the human capital in the company
(Koutsias, 2016).
 Manufactured Capital: it consists of material goods and fixed assets like tools,
machineries etc. that is been owned by the company.
 Financial capital: They play a very important role in the economy of the company. It
comprises the bonds, shares and bank statements.
Laws on Share, class rights and dividends(AC 3.2)
Various laws are been taken into consideration at a company. Some of them are:
Laws on Share: According to Companies Act,1956, a share is the part of profit or the stock that
is been owned by the company. The company is liable to provide the exact value of the shares
that are been owned by the shareholder in the company (Collison and et.al., 2014).
Laws on Class Right: It includes the practices to distributing the share of stock or profit to its
shareholders based on the profitability and the amount of share owned.
Laws on Dividends: Under this law, the company sets the different share of the classes. This
allows the company to pay the right dividend to the employees of their family members.
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Law for capital maintenance and insider dealing(AC 3.3)
Law for Capital management: Under the doctrine of capital maintenance, a company is liable
to obtain a proper consideration of its issued share and the capital received is not repaid it to the
members under certain circumstances.
Law for Insider dealing: Based on the Criminal Justice Act, 1993, it states that the persons
within the organisations can trade the details to the outsiders (DINE and Koutsias, 2014). It will
look after the strict implementation of the regulations that are meant to be taken into
consideration by the company to safe guard the resources, capital and make the laws more
straightforward.
TASK 4
Duties and powers of Directors(AC 4.1)
The director will play a very crucial role in the management of the company and has
certain duties and powers.
Duties:
 Forming the policies and objectives of the company.
 Issue the instruction to the employees or the subordinates so that they can implement the
policies (Stout and et.al., 2016).
 Appointing subordinates, managers, secretary etc.
 Call a general meeting as a member of Board of Directors.
Powers:
 Power to call upon the share in respect of due payments and authorize lack of shares in
company.
 Issue debentures, in and abroad market. Invest in funds and borrow money.
 They can also take loans and provide a guarantee for the loans (Koutsias, 2016).
 They can diversify the business of the company by amalgamation or mergers.
Rules on different types of meetings(AC 4.2)
Status update: It is the most common type of meeting held to update the progress,
challenges and next steps. It should be held for problem solving and task assignment (Hannigan,
2015).
Information Sharing: In this, the presentations, debates and key notes should be
presented to share information on certain goal or target.
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Decision making: Should be called upon for deciding the business policies and strategies
by the directors or management.
Problem Solving: A problem should be placed in this meeting so that it can be
brainstormed and a perfect solution is been found to it (Gerven and Berlingin, 2015).
Innovation Meeting: Newer and innovative ideas should be discussed to make the
processes of company more effective.
Law on minority protection(4.3)
The minority share holders can ask for the protection from the company under
Companies Act 2006. The shareholders can do so by having an unfair prejudice claim, going for
the derivative actions and seeking a petition (DINE and Koutsias, 2014). The directors at the
company will look after it and should work for maintaining the personal rights of shareholders
and corporate governance in the company.
Also, the company's legislation make the minor shareholders liable to make the claims on
to certain extent. The director would be responsible to provide them the benefit from the increase
in the values of assets.
Rights of shareholders and debenture holders(4.4)
While the share is a part of capital share, the debentures are the piece of credit given to
the holder. The shareholders are liable to get paid in the dividend on their share holding whereas
the debentures holders are been paid in the interest on the amount of debentures hold by them
(Collison and et.al., 2014). The dividends provided to the share holders are not a constant source
of income. But debentures are a secure source. But, shareholders have a right to participate in the
annual meeting of the company while the debentures are called only when they involve in the
decision making.
Rights on Liquidation(4.5)
The liquidation allows a qualified individual to take the control of the company or the
organisation. The main purpose is to wind up the issues that can affect the operations of the
company (Bainbridge, 2014). The creditors vote for the liquidation after an end of organisational
plan. The shareholder targets to get the share and thus appoints a liquidator to get the more profit
of the lenders or shareholders in company.
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CONCLUSION
Thus, it can be concluded from the report that company laws are very important for the
betterment of the company. Various rights have been discussed to get an idea about the
operation's in a company with powers and duties of a director.
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REFERENCES
Books and Journal
Bainbridge, S.M., 2014. Director versus Shareholder Primacy in New Zealand Company Law as
Compared to USA Corporate Law.
Collison, D.,and et.al., 2014. Financialization and company law: A study of the UK Company
Law Review. Critical Perspectives on Accounting. 25(1). pp.5-16.
DINE, J. and Koutsias, M., 2014. Company Law 8e.
Gerven, D.V. and Berlingin, M., 2015. Arbitration and Company Law in Belgium. European
Company Law. 12(3). pp.132-137.
Hannigan, B., 2015. Company law. Oxford University Press, USA.
Koutsias, M., 2016. Economic Actors and Legal Certainty. Comparing Company Law.
Stout, L.A and et.al., 2016. The Modern Corporation Statement on Company Law.
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