Business Law Assignment: Advising London Car Ltd. on Company Expansion

This report analyzes the legal aspects of business expansion for London Car Ltd., focusing on UK company law. It outlines the steps for company formation, including setting up the business structure, choosing a name, and creating the memorandum and articles of association. The report emphasizes the importance of shareholder involvement in decision-making, particularly regarding expansion, and differentiates between ordinary and preference shares. It details the process of passing resolutions for expansion, highlighting the powers and duties of directors, including their responsibilities to act in good faith and exercise due diligence. The conclusion summarizes the key points, emphasizing the role of company law in governing business activities and the significance of shareholder and director roles in the expansion process. The report is supported by several academic references.

Business Law

Table of Contents
INTRODUCTION...........................................................................................................................3
MAIN BODY...................................................................................................................................3
3. Advising London car Ltd. For expanding business.................................................................3
CONCLUSION................................................................................................................................6
REFERENCES................................................................................................................................7

INTRODUCTION
Business law is a governing body that has been developed for the purpose of developing
numerous controlling and monitoring measures for governing various business activities in the
business. The present study shows legal solution of the case study relating to a business problem.
For the purpose of providing solution, various rules and regulations in context to company law of
the UK.
MAIN BODY
3. Advising London car Ltd. For expanding business
1 Steps to form a company
As per the company law, the London Car Ltd. Needs to follow the following steps for the
formation purpose:
 Setting up nature and structure of the business is a basic step of company formation.
London Car Ltd. Needs to first decide what type of company it needs to form.
 After deciding structure, it needs to decide its name that has not yet been taken by any of
the company (Ridley-Duff, 2018) .
 Creation of memorandum and articles of association is next step of company formation
along with deciding directors and shareholders of the company.
 Further, the name of the company shall be registered to the registrar of state.
 After setting up name, the London car Ltd. To fulfill all the documentary procedure.
 Furthermore, it would need to submit all the required documents to the registrar.
 After such documentation, the registrars shall register the company and the company
formation procedure shall be completed.
2 Nature and essential contents of articles and memorandum and articles of association
Memorandum and articles of association shows all essential information of the company.
They also shows the limits of areas upto which the company can perform its tasks. They are one
of the essential documents required for forming a company. (Chang, 2018) Therefore, the
London Car Ltd. Would need to create its memorandum and articles of association at the time of
forming a company.
Name and address of directors, information of promoters, objectives of company, major
areas of working of the company, etc. are some essential contents that London Car Ltd. Shall
needs to involve in the memorandum and articles of association (Companies Law, 2019).

3 Involvement of shareholders in expansion of business
As per the clauses of company law, the equity shareholders of company keeps involved
in the decision making procedures of the company (Lu, 2018) . Further, as they gets the voting
right with the purchase of shares in a company, for the purpose of expanding the business,
London Ltd. Needs to involve its equity shareholders in the decision regarding expansion of
business.
Further, the equity shareholders are termed as the actual owners of company. In this
regard they are also liable to pay the debts for the company. Although liability of these
shareholders limits upto the amount of shares held by them in the business.
4 Nature of shares and difference between ordinary and preference shares
Majorly, all the shareholders can be categorised into two parts. i.e. ordinary shareholders
and preference shareholders (Parpworth, 2018). The ordinary shareholders are termed as the real
owners of the company in this order, they also have right to be involved in the decision making
process of company. On the other hand, the preference shareholders does not get such right.
They are involved in the company for providing funds and getting dividends in return only.
In this order, for the purpose of expanding the business, London Cra Ltd. Shall need to
pass special resolution by conducting vote for ordinary shareholders only.
5 Passing of resolution for expansion purpose
Shareholders are one of the key persons of a business organisation. In this regard, the
company shall needs to take into consideration views of its shareholders (Tombs, 2018) .
Company law states that a business organisation shall be needed to pass appropriate resolution
for taking any of the decisions regarding company by conducting votes of the shareholders.
For appointment of directors, auditors, for the purpose of setting remuneration of both
directors and auditors, etc. are some major purposes of company for which the London car Ltd.
Would be needed to pass ordinary resolution. Further, for some special purposes such as
expansion, changing nature of business, changing registered office of company, the business
needs to pass special resolution.
In order to this, London car Ltd. Shall needs to pass special resolution in the company for
the expansion purpose.
6 Powers of directors
Directors derives their powers from the following sources :

Article of association (Berka, 2018).
companies ordinance
common law
resolutions of its members
Some statutory power of directors :
 power of authorizing lack of shares
 power of borrowing money through any medium other than on debentures
 Directors have power of making investments on behalf of company
 They can make call on unpaid shares at the time of liquidation
 They possess the power of issuing debentures within or outside country.
 Directors have the authority to diversify the business of organisation
 They are empowered for takeovers and acquisitions another company.
 They can give their approval for mergers, amalgamation and reorganisation.
7 Duties of directors
Directors of a company have several duties which are either been established by courts as
a way of common rules and equitable/natural justice while some have been conferred from
statue. Below are some duties of directors :
 to act in good faith and to utilise the powers in the best interest of company
 to exercise due diligence, care in their work (Nachemson-Ekwall and Mayer, 2018).
 directors have duty to not engage in evil practise by taking the advantage of director's
position,
 maintain the confidentiality and shall not make unauthorised utilisation of property of
company
 they have duty to exercise judgement independently and shall not delegate powers except
by the way of appropriate authorisation.
CONCLUSION
From the study of above case, it can be concluded that the company law contains rules
and regulations regarding each activity of the business. For formation of a company, the business
needs to follow a set procedure. Shareholders are essentials part of company in this regard,
company needs to pass special resolution for expansion purpose. Further, company law has
provided both range of duties and powers to the directors of a company.

REFERENCES
Books and Journal
Ridley-Duff, R., 2018. The internationalisation of FairShares model: where agency meets
structure in US and UK company law.
Chang, S. E., 2018. Indonesian Company Law. Routledge.
Nachemson-Ekwall, S. and Mayer, C., 2018. Nomination Committees and Corporate
Governance: Lessons from Sweden and the UK.
Lu, L., 2018. Solving the SME Financing Puzzle in the UK: Has Online P2P Lending Got the
Midas Touch?.
Parpworth, N., 2018. Constitutional and administrative law. Oxford University Press.
Tombs, S., 2018. The UK’s corporate killing law: Un/fit for purpose?. Criminology & Criminal
Justice. 18(4). pp.488-507.
Berka, A. L., 2018. Community Renewable Energy in the UK: A Short History. In Handbuch
Energiewende und Partizipation(pp. 1011-1035). Springer VS, Wiesbaden.
Online
Companies Law. 2019. [Online]. Available through <https://www.coddan.co.uk/faq/corporate-
law/companies-law-info/>