Company Law Assignment: Corporate Structure, Meetings, and Duties

This company law assignment solution provides a detailed overview of key concepts including corporate personality, the doctrine of lifting the veil, and the pros and cons of incorporation. It explores legal obligations of promoters, the registration process, and the requirements of a Memorandum of Association. The assignment also covers articles of association, the doctrine of ultra vires, and the contents of a prospectus. Further topics include various types of capital, laws on share issuance and dividends, and capital maintenance. The solution also addresses the duties and powers of directors, different types of company meetings, protection of minority shareholders, and the rights of shareholders and debenture holders, including liquidation rights. The document offers insights into the legal framework of company operations and the protection of stakeholders.

COMPANY LAW

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
1.1 Corporate personality as well as doctrine of lifting veil.......................................................1
1.2 Pros and Cons of incorporation.............................................................................................2
1.3 Legal obligation of promoters as well as legal contracts regarding pre-incorporation.........3
1.4 Legal process of registration of business..............................................................................4
TASK 2............................................................................................................................................4
2.1 Requirement of Memorandum for partnership firm..............................................................4
2.2 Contract consists Article of association................................................................................5
2.3 Doctrine of ultra virus...........................................................................................................6
2.4 Contents of prospectus..........................................................................................................6
TASK 3............................................................................................................................................7
3.1 Various types of capital.........................................................................................................7
3.2 Law on issue of share and dividends.....................................................................................8
3.3 Law of capital maintenance..................................................................................................9
TASK 4............................................................................................................................................9
4.1 Duties and power of directors in different organizations......................................................9
4.2 Different types of company meetings ans their rules..........................................................11
4.3 Protection of interests of minority shareholders.................................................................11
4.4 Rights of shareholders as well as debenture holders...........................................................12
4.5 Rights of liquidation............................................................................................................12
CONCLUSION..............................................................................................................................12
REFERENCES..............................................................................................................................13

INTRODUCTION
Company is stands for concerning companies as well as other business organizations. It
consists various types of rules, regulation and policies which are imposed on firms. Every entity
having separate legal entity, perpetual succession and common seal. Directors play significant
role in every firm as they are responsible for overall operations. Members hold ownership
through purchase shares equal to nominal value. They have to fulfil requirement of every firm
which is mentioned under provision of law (Sealy and Worthington, 2013). Memorandum of
association and Article of association are different document which needs to be maintain by
every entity. As it is compulsory procedure for them which is mentioned under law. Through
such legal documents legal authorities are able to protect interest of investors and creditors.
Doctrine of ultra virus stands for it is process which is opted by corporation beyond the scope of
their powers.
TASK 1
1.1 Corporate personality as well as doctrine of lifting veil.
Corporate personality is considered as principles of company law. Every business entity
having perpetual succession and common seal. The legal structure of firms are not depends on
existence of directors. It has independent legal existence which is separate from its directors,
creditors and shareholders. Companies are able to done transaction with their own name. No
other firms having power to use name of another (Dignam and Hicks, 2011). For this purpose
owners are bound to registered name in order to protect interest of entire firm and maintain
performance of members as well. They have to fulfil legal obligation which are imposed on
them. They have to focus on rules and regulation in order to maintain smooth functioning of
business.
There are two types of corporate personalities name called limited liability (Public) and
unlimited liability (Private). In such entity, liabilities are imposed on its members (Cahn and
Donald, 2010). In public firm members have to pay equal to shares which are hold by them equal
to their nominal value of shares. On the other hand, in case of unlimited liabilities, members
bound to pay entire liability which are imposed on them.

Piercing of corporate veil if the important doctrine which is mentioned under company
law. It is opted when shareholders are responsible for obligations of firm. Through this concept,
members are able to identify actual financial position of company in international market and
maintain their performance as well. At6 the time of lifting of corporate veil, it only means that
court assuming that entity conduct fraud, try to avoid liability and obligation which are
mentioned under provision of law.
Case: LIC of India v. Escorts Ltd. In this case it has been stated that, after Bhopal gas leak
disaster it is compulsory. Lifting of corporate veil is important for companies in order to identify
their actual financial position.
1.2 Pros and Cons of incorporation.
Incorporation is the complicated process which include creation of legal entity. Person
who connected with firms are called as members. Person ho purchase shares of such company
are known as shareholders. Owners are bound to follow rules and regulation which imposed on
them. At the time of incorporation of firm various types of legal obligation has been create on
owners which needs to be fulfil by them (Kershaw, 2012). Through capital of firm can be raise
and receive different types of advantages related to payment of tax. But sometimes they have to
pay double tax which is considered as disadvantage for them.
Some advantages of incorporation as as aligned below-
Raising capital- Incorporation is stands for that owner is serious regarding his business
enterprise. Through this, they are able to sell shares in public and raise capital (Wild and
Weinstein, 2013). Large number of people invest amount in company in order to hold shares and
receive dividend for the same. Owners have to focus on financial resources and responsible to
use effectively use such resources.
Transfer ownership- After incorporation of business, members can transfer their
ownership. It can be conducted through fairly and simply selling stock. There is no restriction
imposed on firms.
Tax benefits- There are large number of companies which enjoy lower tax rates such as
partnership as well as sole proprietorship firm. Furthermore, payment of tax is considered as
advantage for companies which are imposed on them.

Liability- After incorporation of event business there are various types of liabilities has
been created among firm. Which members are jointly able to resolve their same.
Disadvantages of incorporation are as aligned below-
Double tax- People connected with company as owner are also considered as employees
of the firm. As they are able to receive financial compensation with the help of two separate
ways such as interest and dividend (De Lacy, 2013). As in case double tax has been imposed on
them then they have to fulfil such tax and comply with legal regulation.
Finance receive through different sources- Members are able to connect with firm
through invest some amount.
1.3 Legal obligation of promoters as well as legal contracts regarding pre-incorporation.
Promoter play significant role in every business organization. They are responsible
devised strategies or plan for the purpose of different ventures. Furthermore, promoters only
persons who are take first step of incorporation of business. They take such step on behalf of
another and themselves to incorporate firms. For the same purpose they issue prospectus and
receive consent of rest of the parties (Ringe, 2011). As they are responsible for rules and policies
which are imposed on them regrading pre-incorporation and post incorporation. They take initial
step to run successful organization in order to attain target. It is the fiduciary duty of them to
form incorporation. Through this they try to maintain good faith among entire company.
Responsible to disclose entire information or data which is receive on the process of promotion.
Promoter are able to making pre-incorporation contract on behalf of entity. Neither
company can bound nor firm can ratify legal contract. For this purpose they are personally liable.
They have no right to take any action against company for non compliance of legal contract.
Such written document consists various terms which are as aligned below-
Corporate name- The name of firm has been decided by promoters. Such agreement
should be formed to create legal corporate name. It must be registered, after that no another firm
can use the same. Through which companies able to conducted transaction with its own name
and performance in international market.
Incorporation- At the time of incorporate of business promoter have to take initial step.
For this purpose they have to pay non refundable fee. Large number of firms select conduct
incorporation in the Delaware (Goulding, 2013). The biggest reason for this process that it

maintain friendly legal system. Choose one registered agent for communication related to
official.
Equity structure- Initially promoters have to prepare list of number of shares which are
issued to different shareholders. They must ensures that total number of issued capital not be
equal to authorised share capital. Prepare list of each and every shareholders and number of share
which they hold along with nominal value of them.
1.4 Legal process of registration of business.
Owners of companies are bound to follow legal procedure which is mentioned under
provision of law. Business can be start through comply with legal procedure. Prepare written
legal document in order to receive consent of all members. But after registration companies are
able to sue others and be sued by others (Cerioni, 2010). Through this entity is able to conduct
transaction with its own name without any interference of legal authorities. The effective process
of registration is as follows-
File legal application- Owners have to file application for registration of business along
with non refundable fee. Such application is valid till specified time period which is mentioned
under law.
Receive consent from legal authorities- Owners have to receive consent from legal
authorities in order to registered firm. After receiving consent for the same then owners can start
their business in effective way.
File all document- Documents related to incorporation of business must be file by them
in order to receive registration certificate. Try to fulfil all rules, regulation and policies which are
imposed on them and maintain their performance as well.
Offer shares in public- After complete further steps they have to offer shares in public
and try to attract large number of people to sell their shares (Ringe, 2010).
M1
At the time of incorporation and winding up of company members have to proper use of
effective approaches which are helpful for them. Furthermore, they have to opt different
approaches for the purpose of attain objectives and goals.

TASK 2
2.1 Requirement of Memorandum for partnership firm.
On the basis of given scenario, there are three Syrian merchants who wants to set up
Chines restaurant in Damascus, Syria. It is the partnership firm and all partners invest in the
same equally. Also several legal procedure has been followed by them in order to start such firm
successfully. Furthermore, name, capital, services, object and location to be decoded by them
mutually which are related to start up business.
Memorandum of Association is simply called as Memorandum which is considered as
significant document. It should be drafted carefully by members. It include various fundamental
condition. On such conditions business organization are bound to operation functions. It is the
document which event company wants to regulate. Name, location, capital etc. must be
mentioned under such document. Such terms are mentioned under some clause which are as
aligned below-
Name clause- Every firm is considered as separate legal entity so that, it must be
establish with its own name which needs to registered by owners. Through this companies are
able to secure their names which no other firm can use (Dragneva and Dimitrova, 2010). The
name of company can be decided by firms and take final decision with the help of majority of
members. They not able to select name which is closely resemble or identical with name of
another firm.
Situation clause- Owners are bound to mentioned state in which they want to registered
their business organization. Each and every firm must needs to maintain registered office with 30
dates from the date of incorporation.
Object clause- Every firm incorporated for the particular purpose. Members have to use
their collective efforts in order to attain their target and maintain performance or work quality as
well (Vitols and Kluge, 2011). The object clause of MOA is able to defined limits as well as
scope of operation of firms. It explain the activities of firms which members have to follow
while conducting functions. According to section 13(1) of Companies (Amendment) Act, 1956,
it must require immediately.

Liability clause- It consists liabilities of each and every members of firm. In the case if
company limited by shares then MOA having impact on members and they are bound to fulfil
their obligation.
Capital clause- It define authorized as well as nominal capital.
Association clause- According to this clause members have to imposed their signature at
the end of this legal document. In case of public company such document must be signed by
seven or more members. On the other hand, require two or more members for imposed signature.
Draft of contract
This Contract has been made on 20th August of 2017 between:
First party: Silent partnership
Second party: Acting partner
Article 1 – The Preamble:
The preamble of this contract is an integral part.
Article 2 – Company’s Type and Address:
The nature of company is limited partnership. In which first party act as silent partners
and second partner act as acting partner.
Article 3 – Purpose of the Company:
The main purpose of this organization is earn profit and expand business in international
market. It have to deal in various other products and services.
Article 4 – The Company’s Headquarters:
The headquarter of the company has been registered in UK.
Article 5 – Capital of the Company:
The capital of the company is 3,00,000 pounds.
Article 6 – Company’s Management:
The entire management of company can be managed by acting partner. Such partner is
responsible to develop new plans and strategies also to impliment them according to the
requirement.
Article 7 - The Company’s Funds and Accounting:
The fiscal year of firm has been start from 1st January to 31st December. At the first day
of year they form contract and responsible to fulfill terms and condition.
Article 8 – Distribution of Profits and Losses:
10% profit shall be reserved in order to meet contingencies. Profits must be distributed
among partners equally such as 50-50%.
Article 9 – Rights and Obligations:
Both parties having right to check books and accounts on continuous basis. Also they
having right to receive amount of profit.

Article 10 – Duration:
The duration of the company shall be 5 years. After that time it is automatically liquidate.
2.2 Contract consists Article of association.
Article of association is considered as legal contract which is formed among business
organization and shareholders (Sachdeva, 2010). They can subscribe for shares according to their
rights as well as restriction which is imposed on them. It mentioned some rules and regulation
which have to be follow by members in order to attain their target and try to comply with legal
provisions as well. But not able to done activities beyond their power and restriction. Process of
liquidation, dividends, list of forfeited shares and reissue. Also mentioned rate of interest or
dividends and redemption. It is helpful for regulate internal affairs of firms such as issue as well
as transfer of shares. Various powers, duties and responsibilities of directors and other members.
This is considered legal agreement which is formed among firm and shareholders. After
that they become parties which are bound to fulfil terms and conditions which are mentioned
under provision of law. According to Companies Act, 2006, entire company comply with rules
which are imposed on them.
According to given scenario, rights and duties of directors or other members are
mentioned under law (Fetzer, 2010). Duties of all three Syrian merchants has been mentioned
under Article of association. Also their profit sharing ratio decided by them mutually and
mentioned under such written legal document.
2.3 Doctrine of ultra virus.
According to Companies Act, 2006, when companies decide cases beyond the power. So
that. This law instruct to every business organization to entertain activities within power.
Through this legal term firms are not able to entertain cases which are beyond their limits and
not able to manage b6y them. If they do so then legal authorities are able to imposed penalties on
them equal to mentioned under law.
On the basis of given scenario, all three Syrian merchants perform function as partners in
partnership firm. As their limits or duties mentioned under written legal document name called
Article of association. So that, they have to perform function accordingly.

Ultra virus transactions are not able to ratified by number of shareholders. It is mentioned
under object clause of memorandum. Partners are responsible to take decision after consult with
other members. As they are bound to follow rules and policies which are mentioned under law.
Case : Ashtray Railway Carriage and Iron Company Ltd v Riche, in this case it has been
stated that, the term of ultra virus stands for act which is done beyond ultra virus. Hence, it is
useful in define policies of business organization which conduct act beyond their limits.
2.4 Contents of prospectus.
According to section 2 (36) of Companies Act 2006, prospectus means written document
which is issued as notice (Wigmore, 2016). It is offered for the purpose of inviting people in
order to sell shares and debenture. It is not a contract but it is invitation to offer which released
among people. Through which they are able to attract large number of people. This invitation is
made on behalf of entire business organization which is helpful for them to sell large number of
shares and debentures. Prospectus is related to shares and debenture. Owner needs to prepared
the legal document and filed the same to Registrar of companies (ROC). It should be filed by
ROC before present such offer in public. People who are interested to purchase shares or
debentures they can do so. Promoters are responsible to prepare prospectus mentioning required
information or data. It must be duly dated and imposed signed of all members. Through this
process companies are able to convince people and try to sell large number of shares. Firms can
receive minimum level of subscription with approx. 120 days from the date of issue of
prospectus (McLaughlin, 2013). If entities issue prospectus before receiving certificate of
incorporation or commencement in such firms people are not interest to invest money. In such
written document mentioned details about number of shares issued to people along with number
of shares and their nominal value.
On the basis of given scenario, there are three partners incorporate partnership firm and
want to share such information in public through prepare prospectus in order to sell shares or
debentures.
According to provision of law, cited document is like a offer which is made by members
of company name called promoters and send the same in public. If people accept the same then it
become legal contract among them and both parties are bound to follow rules and regulation
which is mentioned under agreement deed. It should be signed by both parties and mentioned

terms and condition with mutual consent. Through this entities are try to convince potential
investors who actually wants to invest money in order to receive interest and dividend. They
have to maintain honesty as well as goof faith among people.
Prospectus has been issued after incorporation and registration of it is compulsory
process for them. It is mandatory activity for company to issue the same in order to sell shares or
debenture to raise capital.
D1
As members of company I realize that preparation of memorandum is considered as very
difficult task for me. Because it consists various types of rules and regulation and bound entire
company to follow the same.
TASK 3
3.1 Various types of capital.
Every business organization raise capital with the help of various methods. Such method
they have to effectively use in order to raise their market and share and expand business in
international market. Some different types of capitals are as follows-
Internal capital
Equity share capital- Equity shareholders are considered as real owner of every
company. They hold large number of shares in company receive interest amount for the same.
They are actual members of firms (Spolaore and Wacziarg, 2013). They have to opted various
method to sell their shares or debentures. Rate of dividend not specified for them.
Preference share capital- Members who are not holder of equity which are known as
preference shareholders. As their name implies, companies have to made payment to them them
before made payment of equity shareholders. There is rate of dividend has been specified for
them. These members are considered as outsiders.
Reserves share capital- The balance amount of companies are considered as reserve
capital for them.
Owner's capital- In this capital raising process members ot partner of firm are invest
some specified amount for smooth functioning of business.
External capital

Loan from financial institution- Business entities can obtain loan from financial
institutions in order to complete their requirement and maintain their performance as well in
international market. This is the another source for companies to raise capital.
Borrow from other company- One firms is able to borrow from another entity at the time
of requirement of money. After receiving amount they have to made payment to them along with
interest amount.
According to given case scenario, there is partnership firm so that there is no equity and
preference share capital (Lan and Heracleous, 2010). In case of internal capital, firm having
option to raise capital through owner's capital. All three members can invest money in order to
attain their target and objectives within stipulated time period. On the other hand, in external
capital firm can opt loan from financial institution up to the rate mentioned under provision of
law.
3.2 Law on issue of share and dividends.
There are various types of rules mentioned under provision of law regarding issue of
shares, dividends and class rights. Allotment of shares is the first step which is taken by
companies to raise their share capital. As they are only able to issue share equal to the limited
imposed on them. They are not able to issue share more then authorised share capital. Against
which companies are bound to made payment to them in the form of dividends. They can be
issue shares with the help of issue prospectus in public. This document can be issue after
incorporation of business.
Class shares are considered as ordinary type of shares such as preference and non voting
types of shares. Also these are defined in alphabetic form and present in infinitely flexible form.
Such rights are attached with particular type of shares (Deakin, 2010). Members who hold the
same are responsible to follow rules and policies which are imposed on them. Made payment to
them at the time of wound of company. They have to take effective decision in meetings which
are conducted under firms in order to take related decisions.
Dividend is made by company to their shareholders equal to rate of dividend which is
imposed on each types of shares. It is considered as compulsory payment for them. Hight of
dividend is able to able to attract large number of investors.

According to given scenario, all three partner have to comply with rules related to issue
of shares and payment of dividend. While conducting partnership firm several types of legal
procedures have been imposed on them.
3.3 Law of capital maintenance.
There are various legal obligation mentioned under law in order to protect exiting capital
of firm. Members have to use their collective efforts in order to raise capital and maintain the
same as well. Try to frame some plans or strategies and implement them on the basis of
requirement of firm (Muchlinski, 2012). The doctrine of preserving as well as maintaining the
legal capital must be received by business organization. Through this principal, companies are
able to attain continuous success. As per the rules of Companies Act, 2006, organizations are
able to maintain their long term success and maintain performance as well.
TASK 4
4.1 Duties and power of directors in different organizations.
Company act of UK legislation is described with various roles and responsibilities of
directors along with defining different power given to an director of company. This act describes
about the eligibility to be an director of an company and also the number of directors which
should be part of board of directors of company. The one person company should have minimum
1 director while Private company should have two members in bread of directors. Public limited
company should have at-least 3 directors in boards of director to work according to legal system
of country and work in compliance with the Company Act.
The private company directors are focus on their responsibility towards profitability of
firm majorly. While the director of public limited company (PLC) is responsible towards to all
other stakeholders and customers also (Appleman, Appleman and Holmes, 2011). Section 170
defines about the nature of general duties of director working for success of an company. The
various duties of an director is defined in sections from 171 to 177 according to company act
2006. These are defined as follows:
Section 171- Duty to act within power: This describes that director is having
responsibility towards use of his power that he make sure the powers are exercised only for the

reason for which powers are conferred to him. This also binds the director to make action
according to constitution of company.
Section 172- Duty to promote the growth of company: This describes the duty of
director in company which binds an individual to act with regards of the consequences of his
decisions, for success of company, according to interests of his employees and act in relation to
foster the company relationship with its customers, suppliers and other stakeholders.
Section 173- Duty to make independent decisions: It is responsibility of an director to
act independently and exercise independent decision in working environment.
Section 174- Duty to exercise reasonable skills, diligence, and care: This section defines
that the person working at the position of director should use its knowledge and skills reasonably
according to the need in contribution of company success.
Section 175- Duty to avoid conflicts of interest: This work in compliance with this that
director should act ethically while dealing with the personal interest and the company interest as
an individual (Xi, 2011). The person should not exploit property of company of his personal
growth and personal interest.
Section 176- Duty of not to accept benefits from third parties: This section binds an
person to his duties not to take benefits from the other person or third party.
Section 177- Duty to disclose self-dealing: If the director is direct and indirect interest
related to company arrangement and transactions should be communicated and compared with
other directors interest also.
Power of an director of an company are as follows:
 Power of loans to directors.
 Service Contract of directors with fixed term for more than 2 years.
 Director is having power to shares issues with all stakeholders of company.
 Power of delegation to individual director.
4.2 Different types of company meetings ans their rules.
There are several types of meetings has been mentioned under provision of law. Such
meeting needs to be held in order to take effective decision which are helpful for them. There are
as follows-

Statutory meeting- As per the companies act, 2006 this members have to arrange
meeting after one month from receiving letter of commencement of business. This is the first
general meeting of every company (Klöhn, Hornuf and Schilling, 2016). Before held such
meeting members have prepare notice 21 days before for the same and send to shareholders and
connected people. Effective decisions which are taken in the same are called as statutory
decision.
AGM (Annual General Meeting)- After getting registration, firms are responsible to
held AGM with in 18 months from such process. Members have to hold each and every year.
The gap among two such meeting may not be exceed more than 15 months. Effective decision
are taken by shareholders which is known as general decision.
EGM- This meeting is considered as extra ordinary general meeting. This should be held
any time whenever directors may thinks fit. For this purpose they can call only one tenth of
members to take decision which is helpful for entire company.
4.3 Protection of interests of minority shareholders.
The section 395 of company act 1956 defines about the rights if minority shareholders of
an business firm. This works in protection of their rights while working for success of an
company. In correspondence to this section 236 defines that the 90% shareholder of an company
can acquire all the shares an business firm which reflects that there is no impression of rights of
minority shareholders in organisation (UK Company Law. 2017). So, in order to act legally an
ethically firm should protect all rights of minority shareholders in commercial firm. The various
remedies that can be considered according to different claims that an minority shareholder can
demand for are as follows:
Unfair prejudice petition: In this remedy to the respective claim is that majority
shareholders will purchase all the remaining shares at the prices decided by the court to
compensate the losses of minority.
Petition of equitable winding up relationship with the company: This is followed up by
the winding up all the assets of an business firm to the shareholders at time of solvency.
The derivative claims: This is vested at the company director which ultimately increase
the cost of available assets of an business firm which is distributed among shareholders.

4.4 Rights of shareholders as well as debenture holders.
Rights of shareholders
Receive dividend- Shareholders having right to receive amount of dividend in return of
amount which they invest in company within stipulated time period.
Attend meetings- Also they having right to receive notice and attend meeting as well. In
which they are able to share their views and ideas in order to take effective decision.
Rights of debenture holder
Receive amount of interest- Members who invest their money in debenture, they having
right interest amount equal to rate of interest mentioned under law.
4.5 Rights of liquidation.
Liquidation is the process in which existence of company is going to end. So that, no firm
can conduct transaction after such process. There are various types of rights of members of
mentioned under this which are as aligned below-
Rights of shareholders- These are important part of every business organization. So that,
at the time of liquidation (Company Law. 2017). Liquidator is responsible to release all assents
and made payment to entire liabilities such as pay dividend to shareholders equal to rate
mentioned under law.
Rights of creditors- Company have to made payment to their creditors up to the amount
liabilities imposed on them.
D3
During preparing this assignment I have been faced problem collection of information,
mentioned them written document. While conducting such act I have to take advice from other
members. But I have solved this problem through gather information or data from one person
which is higher authority of company.
CONCLUSION
On the basis of above report, it has been concluded that company law defined various
types of legal obligation on each and every members of company which are connected with it.
There are various types of meetings held in every firm in order to take effective decision. Such

meetings are held at different time. Also there are different types of laws which are able to
protect interest of minority shareholder.
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