This website uses cookies to ensure you have the best experience. Learn more

Company Law Essay

2489 words - 10 pages

Company Law, s.33 CA '06
            The introduction of the Companies Act 2006 has reformed the law regulating corporations which over the previous century has been subject to much criticism. This essay will show that in the main change to s.33 of the act has not achieved any noticeable reform in relation to the company constitution, challenging the notion that it heralds a new era in the corporate constitution for small closely held companies. The wording of s.33 (1) remains for the most part identical to that of its predecessor s.14 Companies Act 1985:
 
...the provisions of the company's constitution bind the company and its members to the same extent as if they were covenants on the ...view middle of the document...

..,as being treated in law as a party to its own memorandum and articles.” One explanation for this change addresses the previous effect of the earlier statutes which failed to recognise the company's separate legal capacity. 
            The next issue that arises is how s.33 affects the relationship between the members acting in their capacity as a member, members inter se, early cases provide some confusion. In Wood v Odessa Waterworks Co [13] Stirling J considered that “the articles of association constitute a contract not merely between the shareholders and the company, but between each member and every other.” Lord Herschell in Welton v Saffrey [14] was of the opinion that “there is no contract between the individual members of the company.” And In Salmon v Quinn & Axtens Ltd [15] Farwell J stated :
 
The articles...are made equivalent to a deed of covenant signed by all the shareholders. The act does not say with whom that covenant is entered into, and there have been varying statements by learned judges, some of them saying it is with the company, some of them saying it is both with the company and the shareholders.
 
In Rayfield v Hands [16] where the matter for consideration was a pre-emption clause which not only gave the directors a right to pre-empt the purchase of shares by an outsider, but actually cast an obligation on them to buy the shares from the outgoing director , Vaisey J qualified that “it is,..., material that this private company is one of that class of companies which bear a close analogy to a partnership.”[17] What now seems to be the settled is that the contract will be enforceable by the members inter se if the company is of a quasi-partnership type. Something the government failed to clarify in the new act.
            The next consideration is, in what capacity a member is able to enforce the terms of the contract, this deals primarily with the doctrine of insider and outsider rights. The doctrine becomes an issue not when a member is enforcing the rights he has as a member qua (insider rights), but when a member who serves in an official capacity for the company as an outsider and attempts to enforce the terms of the articles in relation to his outside role. This was set out by Astbury J in Hickman v Kent [18] in which he states that:
 
 ...no right merely purporting to be given by an article to a person, whether a member or not, in a capacity other than that of a member, as, for instance, as a solicitor, promoter, director, can be enforced against the company.
 
 Astbury J was presented with the conflicting view of two lines of authority, the first being Eley v Positive Government Security Life Assurance Co [19] which purported “that a member cannot enforce all the terms of the section .14 contract, but only those which relate to him in his capacity as a member.”[20] The other  from Salmon v Quinn & Axtens Ltd [21] where a member of  the company enforced his outsider right as managing director...

Other Papers Like Company Law - Essay

Company Law Essay

2316 words - 10 pages SOALAN: Pengarah mempunyai kewajipan fidusiari di sisi undang-undang yang perlu dilaksanakan terhadap syarikat. Bincangkan tiga aspek kewajipan fidusiari dengan berpandukan kepada peruntukan seksyen dan kes-kes yang berkaitan. JAWAPAN: Pengarah merupakan ejen dan pemegang amanah kepada syarikatnya. Pengarah secara bersesama dalam lembaga pengarah

Company Law - Promoter Essay

494 words - 2 pages Duties of promoter The promoters take possession of important position and responsibility towards the incorporation of a company. Promoters stand in fiduciary relationship with the company they are promoting. The fiduciary obligations of a promoter will arise automatically once he or she becomes the promoter of the company. There are some major duties of the promoter imposed by the court. First of all is acting bona fine. ‘Bona fide’ is

Company Law - Derivative Actions

1015 words - 5 pages There are two types of derivative actions, common law derivative actions and statutory ones. For common law derivative action, it is taken based on case laws such as Foss and Harbottle case. In this case, two shareholders, Richard Foss and Edward Starkie Turton claimed the board of directors decided to misuse the land in Manchester of company which made company wasted many on the mortgage. Then, they sued the five directors because of their

Company Law Case

2942 words - 12 pages as long she holds shares in the Company, and shall not be removed without the approval of Wong Siu Long. As director, Wong Siu Foong shall be entitled to an annual remuneration amounting to $60,000 or 1% of the Company’s after-tax profits, whichever is the higher.” The issue presented in this question is whether SF can enforce the above provision against WFJ. Based on the facts, the general law can be applied to determine the effectiveness of the

Company Law Section 14 Of The Companies Act 1985

2838 words - 12 pages liability and share capital of the company. In contrast, the articles regulate the internal workings of the company and can be drawn up by the founders of the company (or can be taken from Table A of the Companies Regulations 1985) and state the rights ands obligations of the company and its shareholders.Also sometimes considered part of the constitution is a shareholders agreement, which binds the parties under normal contract law. If falling

Mocking Bird

536 words - 3 pages a team of professional writers who are skilled in writing essays related to every field. This kind of work requires an in depth knowledge of literature and expert skills in essay writing. The writer must be able to comprehend the view of the author so that the readers of the essay can associate themselves. Our company ensures that the essay writers strictly follow all the standard guidelines of MLA essay format for the perfect

Economic Problem

880 words - 4 pages paper on the given topic you have found at ProfEssays.com. If you feel you need professional writing assistance contact us! We will help you to create perfect research paper on any topic. ProfEssays.com – Leading custom essay and dissertation writing company and we are 24/7 open to serve you writing needs! Don‘t hesitate! ORDER NOW! Looking for an exceptional company to do some custom writing for you? Look no further than ProfEssays.com! You simply

Role and Functions of Law Paper

764 words - 4 pages Role and Functions of Law Paper Law is used in many forms throughout the nation. Many companies use law to ensure they stay in compliance with state laws, where others use it in society to function. Each person may use law in their workplace and not even know it. This essay will discuss the role of law in business and society and how I have used the role of law in my past job. In business law is often used in larger businesses to

Recognizing and Minimizing Torts

1110 words - 5 pages Recognizing and Minimizing Tort and Regulatory Risk There is an imminent necessity for organizations to recognize and prevent torts. In the following essay we will find the analysis of a simulation for a company called Alumina, indicating the legal matters and risks they are taking. Also we will discuss a preventive plan for a company in Puerto Rico and how the Puerto Rican government treats torts and regulations. The simulation of Alumina

Coroporate

1636 words - 7 pages o Corporate Responsibility and Marketing Strategies BUS508 Contemporary Business Spring Smith July 19, 2015 Ann Sams In this essay it will discuss Apple’s current position about social and ethical responsibilities of the company. The essay will list at least two examples to support the statement. The essay will discuss impacts about the publication of ethics and social violations made by the Company suppliers and it will also have a

Apollo Shoes Auditing Introduction Letter

403 words - 2 pages incongruent goals. I appreciate your interest in Anderson, Olds, and Watershed (AOW) and want to explain some of the many audit and assurance services that my firm has to offer. As a publicly traded company, the Securities and Exchange Commission (SEC) requires Apollo Shoes to submit audited financial statements as part of its annual 10-K filing. The Sarbanes-Oxley Act of 2002 also requires auditors to attest to the effectiveness of internal

Related Essays

Company Law Essay

1754 words - 8 pages ‘Directors duties occupy a strange position in company law. They must be sufficiently strong so as to keep directors in line but sufficiently weak to allow directors to take risks. It is no wonder the courts can’t enforce them properly.’ Do you agree with the above statement? By any measure the 2006 Act is a momentous and monumental piece of legislation. The largest statute ever enacted by the Westminster Parliament, it has engineered the

Company Law Essay

1080 words - 5 pages INTRODUCTION Company law has now put on a broad scope as a result of global economic and technological advancement in this era thus touching on a number of disciplines. Issues pertaining to the company and its administration has been clearly spelled out in the Companies Act 1963 (Act 179) of Ghana. Company law (or the law of business associations) is the field of law concerning companies and other business organizations. This includes

Company Law Essay 3063 Words

3063 words - 13 pages case of Foss v Harbottle (1843) was applied by the old common law that was based on the theory of the 'Majority Rule'. Majority rule can be explained as the minorities have to accept the suggestion of majority and the decision and choices that pass through the majority. In real life, if an individual can hold the greater amount of share which mean that individual will have greater rights and powers to do decision and choices in the company and

Company Law Essay 619 Words

619 words - 3 pages Discuss the procedure to incorporate a public company in Malaysia. The law relating to incorporation of a company in Malaysia is governed by the Malaysian Companies Act, 1965. As per the act any company doing business or wishing to do business in Malaysia must register with the Companies Commission of Malaysia (CCM) under the Companies Act 1965. To incorporate a company, a person must apply the application of search