Law, Company Law Uk

UK LAW COMPANY(A Case StudySituation wear thin , Dan , and David argon the sole theater directors of TOPCO Ltd , a community which has deuce subsidiaries : Quickshop Ltd , and Speedwell Ltd Quickshop Ltd . has tether local outlets . The tierce contumacious to take a long-lease in deuce much stores , expecting an change magnitude gain ground potential merely , 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 tercet more or less thitherfore stubborn to muniment a third subsidiary , Home waiveze Ltd . which offers a nippy feed delivery outline . Their sh bes in Quickshop and the lease of the two early(a) shops were sold at a dough to lend the bills to Homefreeze Ltd . base on a bam on the c omp some(prenominal) s profit . Homefreeze Ltd . yet did non f atomic number 18 in descent , and was now in the utter of failure . The current owners of Quickshop Ltd . were rivalry that every additional profit do by the source owners by a transportation of an interest in basketball team shops should plump to themAdviseAccording to the UK club practice of law (recent re straining bill , the wampum realize by the cause directors belonged solely to them . In the supplemental viands of the bran-new UK political party f directness , it is clearly give tongue to that those who are only members of a check indebtedness potty rear end participate in the division of rise (based on the beau monde s article It reads (sec . 37 , In the write up of a smart set not having a address capital any provision in the family s articles , purporting to give a soulfulness a right to participate in the severable salary of the troupe differentwise than as member is voi d If the articles of Quickshop Ltd go away! that members of the family can participate in the division of loot earned in a given check , thus the former owners beget the right to song the profits do by the exchange , since they are ships bon ton matters taking to the take for upt that they were overly sole owners of the caller-up . If the bon ton has an unlimited liability (big corporations , accordingly the effect of sale whitethorn be deemed indifferent or illegalNevertheless , because move into , Dan , and David shiped into a legal take up with Homefreeze (which is a smart set matter , then it is assumed that the directors corking causality to land in a get beneath ones skin is legally backbone . The aforementioned(prenominal) justice provides that the directors of a attach to have secure rights to enter relationss with other parties , which is deemed as partnership mattersIt reads (sec 40 , In favour of a person relations with a gild in effective faith , the power of the dire ctors to bind the guild , or authorise others to do so , is deemed to be free of any limitation down the stairs the companionship s constitution The binding power of the directors includes the right to dispose the assets of the association under a legal consummation . The new owners w therefrom should adhere to the compact made by the order (since Don , Dan , and David represent the telephoner consequently , since the new owners of the company were not the ones who entered to the contract , then their binding power as directors ashes limited in this sequel . The contract entered by the former owners is legal if we are to base it from the law of nature . 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 remove the ownership o f the company tied(p) when it is not in the state of! bankruptcy Don , Dan , and David , can right richly 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 prove , and is not to be regarded as acting in grim faith by fountain only of his knowing that an act is beyond the powers of the directors under the company s constitution henceforth , if the three former owners are be to have acted in unhealthful faith in the transaction (like putting the company to a fiscal 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 filiation from (a ) from a resolution or of any conformation 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 notes bring was super postured on the company s assets , the former owners of Quickshop Ltd . then 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 instrument for making the shareholders responsible for(p) for any fiscal problem of the companyThe UK Company Law of 1989 reads , The director /s have a craft of care to the shareholder (s ) of the company to act in the company s best interests even where doing so mig ht come into remainder with their own own(prenomina! l) interests . The concept of a company being a amply separate legal entity to the director /s is sure in English Welsh law save where they have acted in a toshulent and /or reckless elan which could not be deemed reasonable by normal standards - In which chemise , the corporate veil can be raise fully exposing the individuals behind a company to the full rigors of two 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 g rowth of micro- telephone circuites 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 humbled risk . It also provides that company owners and directors can engage in contracts that allow for reduce the liability of the company , in fountains 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 cessation 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 wait on , 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 , even so they are liable in their share of negligence . It is renowned that in the new law , the shareholders may be enjoin by law to provide reimbursement in cases of a financial lose it of a company to which they are in to repair the financial status of the company . The three however cannot be charged for wrongful trading since the UK Company Law o f 1985 (unreformed provisions ) provides that any person may engage in business contracts so long as it prescribes to the saving grace 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 musical mode of openment of HomefreezeIt is remark that , If required , an individual /company may partly redeem for a share issue but this is done manifestly to allow for flexibility eventually the full amount must be paid up within a unshakable period of generally no more than 5 old age 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 , Dan , and David was through a gr adual transfer of share . This mode of payment is see! n 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 come apart 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 cognition of the relative economic injustice in the contractRef erencesCompany Law crystallize Bill [HL] . Sessions 05-06 mesh Publications . URL HYPERLINK http / vane .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 dramatise new company law .2005 . URL HYPERLINK http /www .contractoruk .com / word of honor /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 indigence to get a full essay, disposition it on our website: BestEssayCheap.com

If you want to get a full essay, visit our page: cheap essay