3. Questions

1)      Why is the form of unlimited company rarely used?

2)      What form of limited liability company is suitable for trading?

3)      What is the main difference between a private limited company and a public limited company?

4)      What does the legal definition of a subsidiary company state?

5)      What clauses does the Memorandum of a company limited by shares contain?

6)      What are the legal restrictions on a company name?

7)      What must be kept and presented at the registered office?

8)      What does the capital clause state?

9)      What kind of a person is called a promoter?

10) What are fiduciary duties of promoters?

 

4. Find the following sentences in the text.

1) Эти преимущества теперь доступны для небольших закрытых компаний с ограниченной ответственностью, и форма компании с неограниченной ответственностью встречается редко.

2) Существуют две разные формы компании с ограниченной ответственностью: компания с ответственностью, ограниченной гарантией, и компания с ответственностью, ограниченной акциями.

3) Закрытая компания может иметь одного директора, тогда как открытая компания должна иметь по меньшей мере двоих директоров.

4) Отношения между холдинговой компанией и ее филиалами могут быть очень сложными.

5) Меморандум охватывает внешние стороны компании.

6) Компания может изменить свое название добровольно при помощи специальной резолюции.

7) Учредители не имеют права на вознаграждение от компании и несут личную ответственность за расходы по учреждению.

 

5. Recite the main points of the text.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 Unit 4. Business Organisations

The Registered Company as Itself

1. Words to be remembered.

notice – уведомление

qualify(ied) (здесь) – тот, которому следует (определенно) исполнять что-либо

waive– отказаться от

re– указывает на повторение действия

reappoint– назначать снова (повторно)

subsidiary– дочерняя компания

articles(здесь) – устав

statutory– основанный на законе

promotion– учреждение, основание (акционерного общества,

компании)

conviction– осуждение

indictable– подлежащий рассмотрению в суде

offence– правонарушение, преступление

indictment– обвинительный акт

breach– нарушение

return– отчет (здесь)

default– невыполнение обязанностей

fraud– обман, мошенничество

insolvent– несостоятельный

guilty– виновный в

unfit– неподходящий

voidable– тот, который может быть оспорен, аннулирован

preference– преференция, предпочтение

bracket– категория, группа, разряд

receiver– распорядитель имуществом

minute– протокол, вести протокол

authenticate– свидетельствовать подлинность, скреплять печатью

ostensible– чисто внешний (показной)

penalty– штраф. наказание

alleged(здесь) – установленный, явный

persuasion– убеждение

ultravires(лат.) – вне компетенции

shareholder– владелец акции (держатель акций)

abuse– нападки, злоупотребления

derivative– произвольный

infringement– нарушение (прав, закона и т.п.)

wrongdoer–правонарушитель

imdemnify– гарантировать возмещение ущерба

prudent– осторожный

prejudice– предрассудок

venturethecapital– вложить капитал в рискованное предприятие

onthefootingthat– на том основании, что . . .

fiduciary– доверенное лицо, попечитель, опекун

dilute– уменьшить (капитал, доход)

discretionary– дискреционный, имеющий право решать по

собственному усмотрению

just– справедливый

perpetuate– восстановить на все время, дать неограниченный срок

misfeasance– злоупотребление властью, ненадлежащие действия

requisition– обращение с формальным письменным требованием

 

2. Text for reading. 

The Directors

A director includes ‘any person occupying the position of a director, by whatever name called’. A ‘shadow director’ is a person ‘in accordance with whose directions or instructions the directors of the company are accustomed to act’ – but excludes persons giving advice in a professional capacity and parent companies in respect of their subsidiaries. A company can be a director.

The appointment of directors

Those named in the statement of first directors and secretary are deemed appointed. Subsequent appointments are governed by the articles, which usually provide for appointment in general meeting by ordinary resolution, the board generally has a power to fill casual vacancies.

No person other than a director retiring by rotation shall be appointed a director at an AGM unless: (i) he is recommended by the directors; or (ii) not less than 14 nor more than 35 days before the date appointed for the meeting, notice by a member qualified to vote has been given of the intention to propose that person. Directors of a public company must be voted on individually unless the meeting has unanimously agreed to waive the rule, otherwise the appointment is invalid.

The retirement of directors 

At the first AGM all directors retire and at every subsequent AGM one-third or the number nearest must retire being those who have been longest in office since appointment or reappointment. If the vacancy is not filled at the AGM, the director shall be deemed reappointed unless it is resolved not to fill the vacancy or unless a resolution for reappointment has been put and lost.  

Age restrictions on directors 

Directors of a private company which is not a subsidiary of a public company are not subject to an age limit but for public companies, a person cannot be appointed if 70 or over. 

Disqualification of directors 

Directors can be disqualified from acting as such either by statute or under the terms of the articles of association.

Statutory disqualification.

Under the Company Directors Disqualification Act 1986 the court may disqualify persons. Disqualified persons cannot, without leave, be a director, liquidator or administrator of a company or be a receiver or manager of a company’s property or in any way, directly or indirectly, be concerned or take part in promotion, formation or management for a specified period.

Conviction of an indictable offence.A director may be disqualified when convicted on an indictment or summarily, of an offence in connection with the promotion, formation, management or liquidation of a company, or receiveship or management of the property of the company. The maximum period of disqualification is five years (summary) or 15 years (on indictment).

 

Persistent breaches of companies legislation.   Directors can be disqualified for breaches relating to any return, account or other document to be filed with, delivered or sent, or notice of any matter to be given, to the Registrar of Companies. Three or more defaults in five years constitutes a persistent breach. The maximum period of disqualification is five years. 

Fraud and so on in winding-up.   The court may make a disqualification order if a person:

(a) has been guilty of fraudulent trading, or

(b) has been guilty of fraud in relation to the company or breach of his duty (this includes shadow directors). The maximum period of disqualification is15 years.

 Duty to disqualify unfit directors of insolvent companies 

The court must impose a minimum disqualification of two years, if a person is or has been director of a company which has become insolvent and where his conduct as a director makes him unfit. Unifitness is defined as responsibility for the company becoming insolvent or for transactions which are voidable preferences. Other factors are taken into consideration by the court such as continuing to operate the company with a number of debts outstanding, general breaches of standard of care as a director for which an objective test is applied.

The liquidator, administrator or administrative receiver have a statutory duty to report to the Secretary of State if aware of evidence of a director’s unfitness. For this purpose, ‘director’ includes shadow directors. The maximum period of disqualification is 15 years. In Re Sevenoaks Stationers Ltd [1990] the Court of Appeal divided a 15 year period into three: ten or more years reserved for particularly serious cases, two to five years where the case is relatively not very serious, six to ten years for serious cases not meriting the top bracket.  

The Company Secretary

Every company must have a company secretary. The first secretary is the person named in the statement of first directors and secretary filed with the Registrar before incorporation; subsequent appointments are made by the directors. The secretary may be an individual or a corporation but a corporation cannot be the secretary if its sole director is also the sole director of the company. A sole director cannot also be secretary.

The secretary of a private company is not required to have any professional qualifications but, for a public company, the directors must secure that the secretary either was a secretary of a public company before or who by virtue of his professional qualifications (as a chartered secretary, an accountant or a lawyer, or standing) appears to be capable of discharging the functions of a secretary.

The secretary is the chief administrative officer of the company and his duties include attending and minuting board and general meetings, authenticating certain documents, recording transfers of shares, keeping the company's books and registers and making necessary returns. The decision of Panorama Developments (Guildford) Ltd v. Fidelis Furnish Fabrics Ltd [1971] recognised that the secretary had ostensible authority to enter into contracts connected with the administrative side of the company's affairs 'such as employing staff, ordering cars and so forth’. Authority does not extend to commercial or trading contracts, and the company would not be liable for money borrowed in its name.

The secretary owes fiduciary duties to the company similar to those of a director and is liable to specific criminal penalties if he defaults in his statutory duties.

The Enforcement of Directors’ Duties

The rule in Foss v. Harbottle provides for majority rule. If there is a wrong against a company or an alleged irregularity in its internal management which is capable of confirmation by a simple majority of the members, the court will not interfere at the suit of a minority which must accept the decision of the majority. The minority can attempt to bring about change in the majority by the normal democratic process of persuasion and, if a minority shareholder does not agree with the majority, he can always sell his shares. 

Common law exceptions to the rule in Foss v. Harbottle