Company Llaw

Masters
Case Study
Law
Pages 6 (1506 words)
Download 0
There are four recurring themes throughout company law: a company is a separate legal entity, the majority normally rules, Directors have a fiduciary relationship with the organization and that ultimate control rests in the general meeting. The majority of 'conflict' in company law derives from the attempt to balance these basic principles with the interests of shareholders, creditors and other stakeholders.

Introduction

Third parties were often unable to sue companies in contract because of the ultra vires rule pertaining to the objects clause - which specifies the business the company can carry on and the legal powers of the company - in the Memorandum of Association. When the rule applied it made any contract which was caught by the rule void and the creditor could receive no restitution.
This was justified by the rule of constructive notice. This holds that since the Memorandum is a public document all parties are deemed to have had the opportunity to read it prior to committing to a transaction. Moreover the rule protected the shareholders' capital from acts undertaken by Directors purportedly on the company's behalf.
The immediate result was increasingly long objects clauses as companies strove to include any business they might wish to carry on, or power they might wish to exercise, together with catch-all clause permitting the company to carry on any business which the Directors thought fit: Bell Houses Ltd v City Wall Properties Ltd [1966].
An aligned problem is that of Directors acting outside their authority. This may not be deliberate. ...
Download paper
Not exactly what you need?

Related papers

Company Law
This legislation is a critical constituent of the constitution since it provides guidance to corporate entities2. Initially, company act begins by establishing diverse business forms. The key forms include partnership, sole proprietorship and companies. Sole proprietorship Sole proprietorship is the oldest business structure normally founded by a single party. Consequently, the founder of the…
Company law
This paper will explore two specific areas of corporate governance and how the Company Act 2006 is presently addressing it. The first is through granting more rights to minority shareholders to bring suit against majority shareholders for prejudicial business decisions and making these rights meaningful in practice and not just on paper. The second is creating more measures against opportunistic…
Company law
In instances where calls are not met, the shares are forfeited. The main advantage of a no liability company is that the investor has a chance of pulling out if the company has no future. S 112(2) provides that a no liability company must be a mining company, which has a company constitution stating its objects in mining. The provision of section S 148(4) is that a no liability company must use…
Company Law
The essay starts by outlining the essence of the law of separate corporate personality. This will be followed by an outline of the case of John who is an employee of Diamond Car Sales as well as application of this law to the case. The essay will also look at the circumstances under which the corporate veil can be pierced. The main body of the paper will give a critical analysis of the facts that…
Company Law
However, under certain circumstances, it has been identified that courts may disregard this principle. Correspondingly, corporate veil is a legal notion that separates the characteristics of a business from that of the characteristics of its shareholders, which further defends the shareholder from becoming liable for the debts and other legal obligations associated with the company. It simply…
company law
It implies that if somebody starts a business as a limited liability company, the company is regarded as a legal entity with a separate legal personality, which signifies that a company is different from its owners, employees along with shareholders. This in turn assures the advantages of ‘corporate veil’ to the company, wherein the owners, employees and shareholders are directly charged with…
Company Llaw
Third parties were often unable to sue companies in contract because of the ultra vires rule pertaining to the objects clause - which specifies the business the company can carry on and the legal powers of the company - in the Memorandum of Association. When the rule applied it made any contract which was caught by the rule void and the creditor could receive no restitution.…