Comprehensive Company Law Report: Syrian Company Regulations Analysis

This report delves into the intricacies of company law, commencing with an exploration of corporate personality and the concept of lifting the corporate veil, examining its implications for shareholders and creditors. It analyzes the advantages and disadvantages of incorporation, covering aspects like raising capital, continuity, and tax implications, alongside the potential drawbacks. The report further examines the roles of promoters and pre-incorporation contracts, detailing the requirements for company registration and commencement of trading, referencing Syrian law. The report proceeds to analyze the requirements for the memorandum and articles of association, evaluates the doctrine of ultra vires, and discusses prospectus content. Subsequent sections address types of capital, share issuance, class rights, dividends, and capital maintenance. The duties and powers of directors, different types of meetings, minority protection, shareholder rights, and rights on liquidation are also discussed. The report concludes with a synthesis of the key findings and legal principles covered.

Company Law

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
1.1 The concept of corporate personality and lifting the veil.................................................1
1.2 Analyse the advantage and disadvantage of incorporation..............................................1
1.3 The law on promoters and pre incorporation contracts....................................................3
1.4 Requirement for registration and commencement of trading...........................................3
TASK 2............................................................................................................................................4
2.1 Requirements for the memorandum.................................................................................4
2.2 Articles of association......................................................................................................5
2.3 Evaluation of doctrine of ultra vires.................................................................................6
2.4 Content of prospectus listing particulars..........................................................................7
TASK 3............................................................................................................................................8
3.1 Types of capital................................................................................................................8
3.2 Issue of shares, class rights and dividends.......................................................................9
3.3 Law for maintenance of capital and inside dealing........................................................10
TASK 4..........................................................................................................................................11
4.1 Duties and power's of directors......................................................................................11
4.2 Rules of different types of meetings...............................................................................12
4.3 law on minority protection.............................................................................................13
4.4 Rights of shareholders....................................................................................................13
4.5 Rights on liquidation......................................................................................................13
CONCLUSION..............................................................................................................................15
REFERENCES..............................................................................................................................16

INTRODUCTION
The laws which includes partnerships, corporations and other organizations are company
laws. This will have the contribution of all the shareholders, directors, employees and creditors.
This report deals with the required personality of the director or employees in corporate world
and the advantages and disadvantages of incorporation. Further, it will include the basic
requirements for the registration of any company and their trading behaviour. The contents of
prospectus and their listing particulars are present in this written document. This document will
be having a discussion on Human and social capital. Lastly, the assignment is dealing with the
power and duties of directors and the rights of shareholders and debentures.
TASK 1
1.1 The concept of corporate personality and lifting the veil.
The principal of veil incorporation is knows as the legal concept that differentiated the
personality of a corporation from the personality of its shareholders. Further it also protects them
from being personally liable for the company debt and other obligation (Doll, 2017). There is
one big issue in the study of corporate law and commercial system related to the concept of
corporate personality (Arjya, 2017). It also increases the number of concerns related to the way a
firm should be treated in the eye of the law. The concept of a company have a separate identity
from its members and other related persons. Next deal is connected under some circumstance
which the corporate veil may be assistance. Lifting of corporate veil take place at the time when
corporate personality of the company carried out some illegal or fraud act. Further, it can be
stated that artificial person is not capable of doing any fraud. So this is known as the lifting of
any fraud. The concept is changing which is associated with the concept of lifting the corporate
veil (Good, Hipwell and Hanwha, 2016). Further, there are two main theory for the lifting the
corporate veil that is altered- ego and other one is self theory. The main characteristic features of
a company is known as the that it has a separate legal entity to distinct from its members. One of
the most illustrative case related to the lifting the corporate evil is knowns as the Salomon V A
Salomon and co. Ltd.
1.2 Analyse the advantage and disadvantage of incorporation
A firm is knowns as the separate legal identity from its owner. Incorporation of business
has many taxes and legal change for the owner of the business. Further business can be
incorporated with an unlimited number of shareholders or it may have single shareholder.
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There are some advantage of incorporation of business that is as follows: Raising capital- Incorporation is basically shown that the owner of the firm are serious
for their business enterprise. Further they give time and resources in order to enhance
their business for the important period (Gorbaniuk, Lebiedowicz and Leszczyński, 2017).
Here owner can easily enhance its capital by issuing stock of an organisation. An
organisation which is incorporated have some ability to en-ache the capital by issuing
some stock. It can also attract talented employees, this is done by the offering employees
a stock incentives plan. Continuity: An incorporated business have an unlimited life and it may be last for the
centuries either original owner is passes away or not. Further it can be stated that
incorporated business continue its business as a separate legal identity and they are free to
transfer the interest of ownership from owner to owner. Taxes: The incorporate business pay tax more than one time on the same as corporate
profits. There double taxation take place at the time when taxes paid by a business as a
corporation. Further they enjoy lower tax as compare to other corporates business (what
are the advantages and disadvantages of incorporation? 2014). This made easy for a
business to invest in pension plan and other type of benefits. Formalities: Incorporate business have different type of formalities and regulation as
compared to other type of business. There are some formality which need to be fulfil in
order to incorporating the business. Further it need to keep all records of an account so
that all information can be recorded and use as the time of requirement.
Disadvantage Lifting of corporate veil: For all the purpose it is important for the business to make a
separate entity and to keep look an individual to be behind the corporate veil. Extra paperwork: There are some extra paper work that does not stop filling of two tax
returns. Along with this it need to take care of detailed books and notes in meeting.
 Lack of ownership: At the time of establishing separate corporate entity it is need to make
credit card and bank accounts separately. Further the personal identity is not enough
because business and personal fund cannot be mix.
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1.3 The law on promoters and pre incorporation contracts
For getting the benefits from the corporate personality it is very important for an
association person for becoming incorporated as per the companies act, 1956. At the time of
incorporation of association the business come into existence. Then it can start its business
operations so that it can come into existence. One of the basic reason behind the given business
is that firm need to be incorporation company do not have any legal existence before
incorporation. One of the basic reason behind is that before incorporation company not have any
legal existence before incorporation (Lopez, Sakhel and Busch, 2017).
Further it can be stated that a matter of inconvenience that an association of person
cannot be easily perform any type of official business operations in the name of firm before
existing into incorporation or problem related to certificate of beginning of business. When
promoters enter into a contract then on behalf of this corporation need to be formed so that
promoter can be consider as a personally liable for meeting the obligation of the corporation
(What Is Business Law? 2017). Along with this, for any reason if corporation unable to meet all
the obligation then it may not be formed any contract. Party to the contract is knowns as the
promoter and as per the law it is personally bound as an agent act on behalf on it. Therefore, the
adoption of contract is knows as the anticipated by the parties with the contract. If this contract is
adopted by the corporation then it need to expect all those rights and liabilities which are set in
the contract.
Promoter is the one who is having the control of the affairs of the company in the direct
manner or indirect manner. The promoter is the one who used to give advice to the board
members of the company over any kind of problems faced by them. The law of promoter will
give the authority that he is not viable to sell his own property to the company until and unless he
shows all the relevant facts. The main function of promoter in Syrian law is to conceptualize the
business ideas and discover new opportunities for the business. He will prepare the documents
and arrange the funds for the business. He is having the responsibilities for implementing the
new business idea. If the efforts made by the promoter is valid and he is not generating any kind
of personal profit from the shares of the company then he is rewarded for his efforts.
1.4 Requirement for registration and commencement of trading
The basic requirement for starting any company is to select the name of the company.
The name will be a long term decision which can not be changed for a certain duration of time. It
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should be based on the products the company are selling. After selecting the name, the owners
have to fill form IN01, and file an application in companies house. The Syrian act of companies6
is having some requirements which consist of Application form IN01 (Pasura, 2014.). This
include: The name of the company and the registration office of Syria, where all the liability of
members are limited. Apart from this, they have to register for VAT, only if the revenue
generated by the firm in Syria from last 12 months is more than £83,000. Since, the restaurant is
new, so the merchants will not have to focus on this, because they don't have to apply for VAT.
Further, the company have to contact HMRC for setting up their contribution scheme which is
national insurance tax and PAYE (pay-as-you-earn) tax. In Syria, this will be issued within the
first 5 working days.
Trade description act and sales of goods act are the laws made for trading. Small size
shops can open anytime as there is no restriction of trading hours. For the shops having the area
more than 280 square meters can open on Sundays i.e. for a duration of 6 consecutive hours from
10 am to 6 pm, but they must close on Easter Sunday. The shops on airport and railway stations,
registered pharmacies, some sea-going vessels which is departing from harbour or port, all are
exempted from this. The size of restaurant is quite small, so for them, the trading hours are not
fixed. Syrian law ensures that the workers are not doing extra work without getting paid. They
will make sure that the restaurant owners are paying the required amount of tax if they are trading
more than the mentioned amount. The most basic requirement for registration is Syria is to have
the accurate and described size of the restaurant which is very essential.
TASK 2
2.1 Requirements for the memorandum
The memorandum of any establishment is the most important written material and it
should be handle with care. This contains some key conditions which the company have to
follow if they want to do business. Three Syrian merchants have to complete a draft, which will
be having all the information regarding their Chinese restaurant. They have to present that to the
Ministry of internal Trade and Consumer protection. The purpose of this document is to share the
information regarding the company or range of enterprises with all the share holders, their
creditors and all other members who are associated with the company. Though, it is very
essential for the new company to file a memorandum, this will further form like a constitution,
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which is having some specific information about the company. All three Syrian owner's have to
open a financial account which will be followed by the registration of the company in Tax
department. They will also have to buy stamps from the tax authority of ministry of finance. The
duty applied on stamp is 0.4 % of the total capital amount.
The basic requirements for the memorandum is the information of the agency, and in the
given case it is about the restaurants. This information will include the details of all the service
providers of the restaurant, which must include the service provider of the third party. Further it
will also include the specification of each service which will be provided by the Syrian
merchants in their restaurant. Finally, the documentation of their business must be provided to
the Syrian government. The merchants have to make sure that they are giving all the correct
information about the company so that it will not cause any problems in near future. The capital
amount should also be decided because it is also a requirement in the law of Syria.
They have to deposit all the capital amount in bank and then obtain the financial
statement. After that only the company is liable to open their business. All the associated parties
of the company have to agree the rules and regulations set by Syrian government to open the
restaurant. All the members have to take at least one share of the company. This is just like an
legal document and the requirement is that it should be signed by all the initial shareholders
which have agreed while forming the company. There will be an article of association contains
all the rules and regulation of the fellowship and these also agreed by directors, shareholders and
the secretary of the company. Basically the memorandum of the company contains some clauses
which restricts the capacity of the company to act. The final memorandum must be published in
the official Gazette, this will cost SYP 4000 per page.
2.2 Articles of association
A limited Liability Partnership
The contract has been made from _____ of _____ 2017.
The first party: _______
The second party: ______
The third party: ______
Introduction:
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The three parties or three Syrian merchants wanted to open a Chinese restaurant. All the
parties are having equal contribution towards the total capital of the company. They have
decided to open this in Damascus, Syria.
Article 1 – The preamble
The Syrian merchants have decided to open the restaurant in Syria. They have equally
contributed in the finance of the company. There are some guidelines they have to follow so that
their restaurant can be started legally.
Article 2 – Company's type and address
The company is private limited company because none of the department of the
restaurant is handled by the Syrian government. The place decided by them was Damascus,
Syria.
Article 3 – Purpose
The purpose of the restaurant is to provide quality food for their consumers. Their aim is
to keep the food eaters safe at their restaurant, so they have equipped surveillance cameras and
other equipments. They all are under the rules and regulations of Syrian Arab republic.
Article 4 – The final place of restaurant
As mentioned earlier, the final place will be in Damascus, Syria. After establishment of
first place, they can also open some other branches but that has not yet decided.
Article 5 – Capital
The total capital is SYP 300,000 which will be paid by all the three Syrian merchants.
The first party will manage the marketing of the restaurant. The second one will be managing the
finances and the third party will manage the customer relationship.
Article 6 – Management
All the management is properly managed by all three partners. They have proper meeting
from time to time, so that they will discuss the changes required to be made in the marketing
plan of the restaurant. All the decisions taken by them must be recorded, so that no one will have
the right to reject the claim.
Article 7 – Fund's and accounting
The fiscal year will start from 1st April and end on 31st March. They can deposit their
money in the Syrian bank. The official record book must be kept in the restaurant and all the
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activities must be mentioned in that. An accountant must be hired by them, so that the records
can be maintained properly.
Article 8 – Distribution of profit and loss
All the profits and losses will be divided equally among all the three partners, because
they have applied the same amount of capital income, i.e. 33.33% to each partner. All three of
them is having the right to withdraw their money whenever they want.
Article 9 – Rights and Obligations
All the Syrian merchants are having the right to go through the record books of the
restaurant. They are prohibited from doing any wrongful act which is harmful to the restaurant.
Anyone of them is not having the right to assign the shares of the company to any other party
without taking proper permission from the other members. The permission should be in written
form.
Article 10 – Duration
The contract duration is of 5 years form the first day. All three should sign the contract
and if they want to extend their contract then they can make another agreement and sign on that.
Article 11 – liquidation and dissolution
If in any case there will be any dissolution in the restaurant, then all three of them have to
take responsibility of that. They will collect all the debts of the restaurants and pay back those
debts which is owned by the restaurant. The final capital will be distributed equally among all of
them. All the workers must be paid their fees which will also include their lay-off remunerations.
Article 12 – Pulling off
All three of them is having the right to pull of their money from the restaurant. If anyone
of them has decided to pull of, then new partner should be announced and if not, then equal
amount should be distributed among the two who are left.
Article 13 – Settlement of disputes
Any dispute occurs occurred between any of the party must be resolved and all the
liquidation of all the assets have to be resolved. All the parties must nominate their arbitrator and
if anyone of them failed to fulfil those amounts, then they are duly responsible for the legal
proceedings taken by the other parties.
Article 14 – General provisions
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In case of the death of anyone member, then their heirs will be the silent partners and
both the remaining partners will be the acting partners until the new contract is going to be
announced.
Article 15 – Addresses of the contract parties
In case of any disputes or any legal formalities, all the three Syrian merchants have to
mention their valid address in the legal document of the company.
Article 16 – Registration
After signing the agreement by all the three merchants, the contract shall be entrusted to
the Civil court and then Damascus commercial registry to be proclaimed.
In witness of the above association, all the three merchants have to put their signature on
the contract and must kept a legal copy with themselves and refer to that if needed.
First Merchant Second Merchant Third Merchant
This will be having some guidelines for running the business in Syria. The Syrian
merchants have to notarize the mentioned memorandum as well as the articles of association.
This will also include the forms C2 and C2a. They have to make sure that these forms are signed
by all the founding shareholders and authenticate authority before applying for registration. This
article of affiliation will set some guidelines and for running, governed and owned the company,
the owner's have to follow those regulation. The company's power can be restricted by such kind
of associated article (Werth, 2014). This article will be having the name and location of the
restaurant, which has been decided already by the partners. It will also be having the total capital
and the services which will be provided by them. Further, it will also include a public document,
which suggest that any shareholder can argue the article with respect to the current ownership or
running condition of the company.
There will be a representative from the Syrian company's registry, he will inspect the
whole premises of the restaurant, so that he can confirm its existence. After that only he will
deliver the certificate of incorporation to the ministry. There are no described articles of
association for any company, but there are some basic modes of article. They are having:
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 The liability of members
 Appointment and removal of the board of directors
 All the share related issues.
 Directors roles, responsibilities and power.
If any of these mode articles is not adopted by the company, then the whole document
has to be submitted to the companies house for approval. If they will find any perceived problem
in that article, then house can refuse to give approval to the company. After the implementation
of EU, the imports from Syria has dropped 97% and all the exports about 85%. This will also
affect the performance of the company because their imports will prove to be more costly. The
articles of association have to be adopted by the merchants because they have to take permission
from the Syrian government for the approval of the restaurant. Eu was the fourth trading partner
for Syria after Iraq, united Arab emirates and Saudi Arabia. Due to the high violence in Syria,
European union have placed number of restriction on the imports and exports of the country.
This is also having negative effect on the performance of the restaurant.
2.3 Evaluation of doctrine of ultra vires
The doctrine of ultra vires is applicable to the given memorandum of the company. The
memorandum contains various activities and some objective clauses (Olivier, 2015. The
company is not able to defend any of the activities which are not under the memorandum of the
company. Any activity which is completed out of the mentioned activity can be considered as
ultra vires activity. They are rules to protect these actions from happening and it will also protect
the creditors of the company and the shareholders interest. Effects of Doctrine of ultra vires are:
 Syrian ultra vires act will not bind the restaurant. So neither the owners, nor the
external factors can affect the contract.
 From all the three members, any one of them can bring the injunction in order to
prevent the restaurant from the ultra vires act.
 In Syria, such kind of Ultra vire contracts are treated as invalid in most of the parts,
and because of estoppel or ratification, it can not be treated as intra vires.
The Syrian ultra vires consists of ultra and vires which means beyond and powers
respectively. All these acts are void and can not be ratified even if all the three merchants want to
do it. Such kind of rules have been developed just to protect the creditors and the investors of the
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restaurant. Such kind of doctrine will helpful in preventing the money of the investors. The
major problem occurs is about the validity of the contract of the restaurant, and this will be
checked by the Syrian house of companies. They have the authority to check about all the
possible prospects of the restaurant and their owners. The company or the merchants are not
having any capacity to modify or ratify that contract.
Further, the doctrine of ultra vires have to ensure the creditors and owner's of the
restaurant that the capital amount and the funds will not be used in any other purpose other than
for generating the specific memorandum. This particular memorandum of the restaurant will set
out the goals, objectives and areas of operation both internally and externally. This will be
helpful for the merchants in setting out their business in the most appropriate way, so that they
can achieve the objectives and goals which were set earlier.
2.4 Content of prospectus listing particulars
The contents of prospectus in Syria is termed as a document which is a sort of legal
document carrying all the information about the company. The personal information of all the
Syrian merchants will be listed in this along with their financial condition, their family
background and the total number of shares they are having in the company. All the payment
allocated methods are included in this and the total number of profit which each merchant will
get is also included in this case.
Prospectus is any kind of legal documents which include any notice, advertisement or
circular, attracting some cash deposits or offers from public for the purchase of the shares of the
company. All these particulars contained the specific and detailed information regarding the
securities of the company (Tao, Deokar and El-Gayar, 2014,). The main contents are:
1. The aim and object of the company including company's name, address,
description of the products which will be served in the restaurant.
2. Entire number of shares and their class. The extent of shareholders and the total
profits.
3. Full number of redeemable shares which are yet to be issued, the date of
redemption, their notice period and the methods used for redemption.
4. Absolute number of shares which are fixed by the articles according to the
qualification of director
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