Legal Aspects of Business

LEGAL ASPECTS OF
BUSINESS

Table of Contents
INTRODUCTION...........................................................................................................................3
MAIN BODY..................................................................................................................................3
Reference to Relevant Legislation in the Area of Company Law...............................................3
Reference to Relevant Case Law.................................................................................................4
Analysis of the Process of Incorporation of Company under Companies Act 2006...................5
Explain Principles of Corporate Personality & Limited Liability...............................................7
Advantages and Disadvantages of Separate Legal Entity and Limited Liability........................7
Critical Analysis..........................................................................................................................8
CONCLUSION................................................................................................................................8
REFERENCES................................................................................................................................9

INTRODUCTION
Forming a company is gaining importance in present era as this is one of the business
organisations which is gaining importance. A company once formed has a separate legal entity
from its directors and also the life of the company will not be dependent upon the life of the
founding members as there is perpetual succession in the company. While forming a company
various laws has to be followed. To incorporate a company in United Kingdom the Parliament
has passes a legislation called Companies Act 2006 where all the required formalities which are
necessary while incorporating a company has been mentioned. While forming the company, the
members who are responsible for this formation will contribute certain amount of money
towards the company. This amount contributed by each member will be known as capital of
company. The person contributing more capital will get more rights with the higher chance of
risks also. The profit and losses which will occur to the company in a financial year will be
divided among various shareholders as in proportion to the capital contributed by them. As per
the law and various judgements decided by the courts in UK the corporation is having a separate
legal entity from its directors and the owners and directors will be having the limited liability
which means that if the debts of the company remains due after selling the assets of the company
also, the director's personal assets cannot be sold to discharge the debts. This separation of
identity between the directors and company is known as corporate veil. In this report it will be
discussed that how Companies Act 2006 has influenced the incorporation of company and how
sometime the directors of the company try to escape their liability by misusing the concept of
corporate separate identity.