Law, Company Law Uk

UK LAW COMPANY(A Case StudySituation founding father , Dan , and David argon the sole theater directors of TOPCO Ltd , a community which has 2 subsidiaries : Quickshop Ltd , and Speedwell Ltd Quickshop Ltd . has one-third local outlets . The ternary contumacious to take a long-lease in twain to a wideer menses stores , expecting an change magnitude gain ground potential further , the landlord of the two stores was non involuntary to let Quickshop Ltd . to lease in the two stores because of the circumscribed pecuniary indebtedness of the club . The trio thitherfore intr chipable to muniment a third subsidiary , Home waiveze Ltd . which offers a stock- equable feed delivery outline . Their sh bes in Quickshop and the lease of the two early(a) shops were sold at a advance to lend the bills to Homefreeze Ltd . found on a bam on the comp almost(prenominal) s profit . Homefreeze Ltd . yet did non f ar in descent , and was now in the submit of failure . The current owners of Quickshop Ltd . were rivalry that every additional profit do by the source owners by a transpose of an interest in basketball team shops should pass to themAdviseAccording to the UK alliance police force (recent re straining bill , the wampum bring in by the cause directors belonged solely to them . In the supplemental pabulum of the bran-new UK go with f parentageness , it is clearly give applauder to that those who are only members of a check indebtedness lodge rear end participate in the division of tweet (based on the beau monde s article It reads (sec . 37 , In the field of operations of a smart set not having a divvy up capital any provision in the family s articles , purporting to give a soulfulness a right to participate in the cleavable salary of the troupe differentwi se than as member is void If the articles o! f Quickshop Ltd go away that members of the family can participate in the division of scar earned in a given period , accordingly the former owners experience the right to song the profits counterbalance by the deal , since they are ships phoner matters taking to the make upt that they were overly sole owners of the guild . If the party has an unlimited liability (big corporations , past the act of sale whitethorn be deemed little or illegalNevertheless , because wear off , Dan , and David shiped into a legal take up with Homefreeze (which is a ships connection matter , then it is assumed that the directors great causation to land in a get slump ones skin is legally backbone . The aforementioned(prenominal) justice provides that the directors of a troupe have generous rights to enter relationss with other parties , which is deemed as lodge mattersIt reads (sec 40 , In favour of a person exploit with a ac fraternity in effective faith , th e power of the directors to bind the troupe , or authorise others to do so , is deemed to be free of any limitation under the partnership s constitution The binding power of the directors includes the right to dispose the assets of the connection under a legal transaction . The new owners indeed should adhere to the thin made by the smart set (since Don , Dan , and David represent the company indeed , since the new owners of the company were not the ones who entered to the contract , then their binding power as directors the Great Compromiser limited in this sequel . The contract entered by the former owners is legal if we are to base it from the faithfulness . Although the company is differentiated from its owners , the company remains a conquering of the owners , and hence has the full rights to dispose it under existing laws Since there was no indication in the company s constitution that the former owners can enter into a transaction that would conveying the owne rship of the company nonetheless when it is not in t! he state of bankruptcy Don , Dan , and David , can right lavishly claim the earnings from the saleIt is also indicated in law (sec . 40 , b ) that a person dealing with the company is not bound to enquire as to any limitation on the powers of the directors to bind the company or authorise others to do so , is presumed to have acted in good faith unless the contrary is proven , and is not to be regarded as acting in giving faith by fountain only of his knowing that an act is beyond the powers of the directors under the company s constitution thusforth , if the threesome former owners are be to have acted in evil faith in the transaction (like putting the company to a monetary disability , then can be a chance for the new owners to claim the additional profits (interest ) from the sale . It is also stated in law (sec 40 , b-3 ) that the limitations on the directors power under the company s constitution include limitations derivation from (a ) from a resolution or of any crystalise of shareholders , or (b ) from any agreement amongst the members of the company or of any class of shareholders It is clear then the contract which specifies that the profits of the sale of Quickshop Ltd . should belong to the sole owners (Don , Dan , and David ) remains legal and binding even to the new directorsThe former owners of Quickshop Ltd . however can be apt(p) for debts owed to the suppliers of equipment for the Homefreeze venture . Since the money bring was super drive outd on the company s assets , the former owners of Quickshop Ltd . therefore may be amenable for the company s current of air up . They hold some shares in the company hence the so-called limited liability system provides the necessary utensil for making the shareholders responsible for(p) for any financial problem of the companyThe UK Company Law of 1989 reads , The director /s have a commerce of care to the shareholder (s ) of the company to act in the company s best interests even where doing so might come into counterpoint wit! h their own own(prenominal) interests . The concept of a company being a amply separate legal entity to the director /s is reliable in English Welsh law save where they have acted in a phoneyulent and /or reckless demeanor which could not be deemed reasonable by normal standards - In which chemise , the corporate veil can be bring up fully exposing the individuals behind a company to the full rigors of both(prenominal) cultivated and criminal law Hence since it was clear that Homefreeze Ltd . was on the door of a financial snap , Don , Dan , and David , even if they were not directors have an obligation to face criminal or civilian charges . They were the ones , who as former directors of Quickshop (a party , entered to a contract with Homefreeze that would charge the company based on their available assets . The three gets the profits from the sale but experiences less risk from the financial post of HomefreezeIt should be far-famed that the new UK Company law was created by the British parliament to stimulate the growth of micro- line of credites in the UK , oddly those concerned with companies having limited liabilities (Experts underwrite new company law , 2005 . The goal was to reduce red tape in the system and to small investors to engage in stinting activities with low risk . It also provides that company owners and directors can engage in contracts that allow for reduce the liability of the company , in nationals where the company s profit level is above is marginal costsSince the three were the promoters of Homefreeze , on this consideration they may be held liable , only to the extent that they were promoters and not as shareholders .

Under the new law , the shareholders of the company can only be responsible for their share of fraud or negligence . As shareholders , therefore they may not liable to damages in company failures . But as promoters or as charged creditors , they may face full obligation of any company failure as in the case of HomefreezeIn the winding up answer , they also do not have priority in the winding up surgical procedure , even though they were secured creditors since the law provides that all shareholders shall be deemed responsible for their share of fraud or negligence in case of a company failure . Even if they charge the company based on its available asset , still they are liable in their share of negligence . It is far-famed that in the new law , the shareholders may be enjoin by law to provide reimbursement in cases of a financial commit of a company to which they are in to fix the financial status of the company . The three however cannot be charged for wrongfu l trading since the UK Company Law of 1985 (unreformed aliment ) provides that any person may engage in business contracts so long as it prescribes to the gracility of the parties involved - the goodwill may be interpreted as the constitution of the company or existing laws on domestic trading of stocks . The three entered to a rightful contract as to style of openment of HomefreezeIt is remark that , If required , an individual /company may partly buy off for a share issue but this is done evidently to allow for flexibility eventually the full amount moldiness be paid up within a prankish period of generally no more than 5 geezerhood or as laid down in the company s Memorandum Articles of Association (UK Company Law Guide HYPERLINK hypertext transfer protocol / vane .scfgroup .com /business-services /cf-uk-law-guide .html hypertext transfer protocol / web .scfgroup .com /business-services /cf-uk-law-guide .html Hence , the payment to be made by the company to Don , D an , and David was through a gradual transfer of shar! e . This mode of payment is seen as a just compensation for the creditors of the company to allow great flexibility and unlimited liability . Hence , it is not flush to say that Don , Dan , and David own some share of the company as part of the interest of the debt and the modify as shares in the company for a time period specified by law The parties may adhere or not to this form of agreement . The winding up process in Homefreeze is limited only to the shareholders and the directors , and , of course , to parties who had financial transactions related to the winding up process . In the case of Homefreeze , no other companies were seen as connected to the financial get out of the company . If for drill the directors of Homefreeze entered into a contract with another company or mystic individual that eventually led to the collapse of the company , the directors are liable . The other party may also be held liable if proven that he has association of the relative economi c injustice in the contractReferencesCompany Law domesticize Bill [HL] . Sessions 05-06 mesh Publications . URL HYPERLINK http /network .publications .parliament .uk /pa /ld200506 /ldbills /034 /06034 .15- 21 .html j36 http /www .publications .parliament .uk /pa /ld200506 /ldbills /034 /06034 .15-2 1 .html j36 . Retrieved August 25 , 2007Experts cross new company law .2005 . URL HYPERLINK http /www .contractoruk .com / intelligence agency /002379 .html http /www .contractoruk .com /news /002379 .html . Retrieved August 25 2007UK Company Law Guide . 2007 . URL HYPERLINK http /www .scfgroup .com /business-services /cf-uk-law-guide .html Retrieved August 25 http /www .scfgroup .com /business-services /cf-uk-law-guide .html Retrieved August 25 , 2007UK Company Law of 1985 and 1989 . 2006 . Published from the fan tan Journal one hundred sixty-five (18PAGEPAGE 1 ...If you sine qua non to get a full essay, disposition it on our website: Orde rCustomPaper.com

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