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Formation of Companies

How are Companies created. Royal CharterAct of ParliamentRegistration under CA 2006Registration under LLPA 2000. Promoters and Pre-Incorporation. Promoter ? someone who undertakes to form a company and takes steps to start the processHowever ? a promoter can be liable for engaging in pre-inc

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Formation of Companies

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    1. Formation of Companies Unit 5

    2. How are Companies created Royal Charter Act of Parliament Registration under CA 2006 Registration under LLPA 2000

    3. Promoters and Pre-Incorporation Promoter – someone who undertakes to form a company and takes steps to start the process However – a promoter can be liable for engaging in pre-incorporation contracts The promoter cannot be an ‘agent’ as there IS no company at that point Kelner v Baxter 1886

    4. Avoiding liability as a promoter CA 2006 s51 Wait until the company is formed Buy an ‘off the shelf’ company – then the ‘agency’ concept works and the company can always ratify An exclusion clause stating that the promoter’s liability ceases as soon as the company is formed and enters an identical contract with the 3rd party

    5. The Registrar Issues certificates of incorporation Keeps a list of all names of UK registered companies and LLP’s Issues certificates of –re-registration when companies change from public-private etc Receives all annual financial returns Registers and archives all relevant documents Strike out dissolved companies Allow public access Register resolutions made Publish relevant receipts of documents in the ‘London Gazette’

    6. Registration A company is formed and registered under CA 2006 once it is issued with a certificate of incorporation An application MUST contain the following under s9:

    7. s9 Name of company Location of registered office Statement of liability - shares or guarantee Public or private Address of registered office

    8. Documents to be delivered? To Companies House, to the Registrar [part of Dept of BERR (ex DTI) 1. Memorandum of Association Historically informed the outside world about the company Now, after CA 2006, not really important as information is found in the ARTICLES OF ASSOCIATION The memorandum now just states that the persons involved wish to form a company and that they agree to become members. If there is share capital, each member must agree to subscribe for at least one share

    9. Delivery 2. Articles of Association [actual or proposed] The key document that sets out the internal rules of the company – ie the companies ‘constitution’ [see Friday’s lecture]

    10. Delivery 3. Statement by the proposed officers of the company 4. Statement of compliance 5. Statement of capital and shareholdings 6. Registration fee of Ł20

    11. Alternative? ‘off the shelf’ company No need to file documents and no risk of liability for pre-incorporation contracts BUT: Memo and Articles might not suit the needs of the new owner Change of name Shares transferred and recorded Increase in share capital

    12. What will the registrar do? He will ensure compliance with CA 2006 Documents are in order Then issue a certificate of incorporation This is conclusive evidence that the company is incorporated CA 2006 s16 – the company can now begin to trade; is a legal entity; the persons named as directors and company secretary are now ‘deemed’ to be appointed; the registered office is now recorded. The company is now a legal personality and can sue or be sued; buy or sell property and trade in its own right

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