company law 1公司法HND.doc

To: Charles ProspectFrom: Wang NingSubject: Analysis on how to building a companyTime: October 10thThanks for you give me this chance to explain setting up a company. I will respectively explain what is company, the nature of company and registering a company.1) Form this case, Bean & Co need setting up company. A company is an association or collection of individuals, whether natural persons, legal persons, or a mixture of both. Company members share a common purpose and unite in order to focus their various talents and organize their collectively available skills or resources to achieve specific, declared goals.Company have two types: Private Limited Companies and Public limited company. A limited company is a company in which the liability of members or subscribers of the company is limited to what they have invested or guaranteed to the company. Limited companies may be limited by shares or by guarantee. The former may be further divided into public companies and private companies. Who may become a member of a private limited company is restricted by law and by the companys rules. In contrast, anyone may buy shares in a public limited company.A public limited company is a type of public company under United Kingdom company law, some Commonwealth jurisdictions, and the Republic of Ireland. It is a limited liability company whose shares may be freely sold and traded to the public.Advantages of company:1. Limited liability: Limited liability is where a persons financial liability is limited to a fixed sum. One of the most obvious differences between the company and other forms of business organization is that the members of both private and public companies have limited liability. But the company need do legal things. 2. Less involvement: Companies have the ability to subdivide their capital into small amounts, allowing them to draw in huge numbers of investors who also benefit from the sub-division by being able to sell on small parts of their investment.3. Separation of ownership and control.Disadvantages:1. Forming a company and complying with company law is expensive and time consuming.2. Bureaucracy and regulationIn addition to a company, he can do sole trader and find partner do partnerships.Sole trader is a type of business entity that is owned and run by one individual or one legal person and in which there is no legal distinction between the owner and the business. The owner can got all profit in business, and the owner is in direct control of all elements and is legally accountable for the finances of such business and this may include debts, loans, loss etc. Advantages:1. Quick and easy to set up. 2. The owner cans operation and management by self. 3. When market changes, the owner can quickly and easily to change supply and demand.4. If business is not operating, the owner can easy to close.5. Accounts are easily. 6. Their own name is displayed on the premises and on business stationery. 7. In some times, the owner can working in the home that can minimizing running costs.Disadvantages:1. It is not a particularly useful business form for raising capital (money). For most sole traders the capital will be provided by personal savings or a bank loan. 2. The owner has unlimited liability for the business. If the business collapses owing money (an insolvent liquidation) then those owed money by the company (its creditors) can go after the personal assets of the sole trader (e.g. his or her car or house) in order to get their money back. The partnership is the next step in terms of facilitating the growth of a business. Partnerships are very flexible legal business forms.Advantages: partners can share workload, responsibility and all debts; partners contribute different skills; easy expand if necessary.Disadvantages:The partners are jointly and severally liable for the debts of the partnership. Equal share of profit. Must be agreement lot of partners on business decisions.2) The nature of limited companies 1.Separate legal personality about company :A company is a legal person. This capable of having its own rights, duties and obligation and can sue or be sued in its own name. This separates and distinct from its members and shareholders. Legal personality protect the interest of shareholders.Such as: The PC company owes creditor money, PC company need repayment until extinction of debt or go bankrupt. If PC company broken, the people who building the company cannot pay other debt. The legal will think the person (PC company) is death.The fact that some of the shareholders was irrelevant; everything is a one-man (company) business. A company formed in compliance with the regulations of the Companies Acts is a separate person and not the agent or trustee of its controller. As a result, the debts of the company were its own and not those of the members. The members liability was limited to the amount prescribed in the Companies Act i.e. the amount they invested.2. Limited liability about companyLimited liability is the logical consequence of the existence of a separate personality. The legal existence of a company means it can be responsible for its own debts. The shareholders will lose their initial investment in the company but they will not be responsible for the debts of the company. So separate legal personality and limited liability is not the same thing.The limited liability will be lifted if it is against public interests. It is: Fraudulent trading (It refers to a company that has carried on business with intent to defraud creditors.)Sham companies ,Trading with the enemy.Fraudulent trading : R v Grantham 1984 QB 675 is a UK insolvency law case which decides that an intent to defraud, now under the Insolvency Act 1986 section 213, needs to be established for a conviction for fraudulent trading, and knowing that there was no prospect of being able to pay debt when they fell due, even if there might be a distant prospect in the future constituted an intent to defraud.Sham companies: Allied Deals Inc. was a company specializing in brokering trades in non-ferrous metals that perpetrated one of the biggest bank frauds in history. Allied established hundreds of sham companies to purportedly purchase the metals, and created forged documents and fake credit histories, and impersonated the purported buyers to the banks.Trading with the Enemy: it is also a generic name for a class of legislation generally passed during or approaching a war that prohibit not just mercantile activities with foreign nationals, but also acts that might assist the enemy. For example, in 1940, before the United States entry into World War II the president imposed broad prohibitions on the transfer of property in which Norway or Denmark, or any citizen or national of those countries, or any other person aiding those countries, had any interest, with the exception of transfers which were licensed under the regulations of the Department of the Treasury.3) Registered companyIn order to become a company the subscribers must provide certain information to companys house. This address in Cardiff (Wales), Edinburgh (Scotland) and London. Documents to Registrar:1. Memorandum of association: The document that governs the relationship between the company and the outside.