Formation and Constitution of a Company Part 1

Описание: The Formation and Constitution of a Company

THE ROLE AND DUTIES OF COMPANY PROMOTERS:
Company Promoter is a person or group of persons who take necessary steps to give birth to a company form
of business organisation. Company promoters are those who discover the opportunities to make money,
investigate such propositions, assemble and finance them and thereby, give a shape for joint stock company.
Functions of Company Promoters:
1) Create an idea of forming a company;
2) Analyse profitability of the idea;
3) Investigate workability of the idea;
4) Decide the name and location of the company;
5) Prepare the Memorandum of Association and other documents.
PRE-INCORPORATION CONTRACTS:
A pre-incorporation contract i s a contract which promoters enter into, naming the company as a party, prior to
the date of the certificate incorporation and hence prior to it’s existence as a separate legal person.
Promoters can avoid liability for pre-incorporation contract in a number of ways:
1) It is possible to to avoid entering the contract until the company has actually being incorporated;
2) The promoter may enter into an agreement “subject to contract” with the effect that there is no binding
agreement until the company itself enters into one;
3) The promoters can expressly provide that they will bear no responsibility for any pre-incorporation contracts.

REGISTERING COMPANIES:
S.7 of the Companies Act 2006 requires persons to subscribe their names to a Memorandum of Association. S.9
of the Companies Act 2006 requires two documents to be delivered to the registrar:
1) The memorandum of association:
It is not possible to update or amend it;
It evidences the intention of the subscribers to form a company;
It evidences the agreement to take at least one share in a company;
2) The application for registration , which must contain:
The company's name;
Its location and address;
Whether the liability is to be limited;
Whether the company is to be a private or public company;
A copy of any proposed articles;
Memorandum of Association;
Additional documents:
A statement of capital and initial shareholdings/Statement of guarantee;
A statement of the company’s proposed officers;
A statement of compliance;
A registration fee.
The Articles of Association are the main element of the company’s constitution and they are the rules which
govern a company’s internal affairs, such as:
appointment/dismissal of directors;
the allocation of powers between the members of a company.
Any of such rules must not contain anything that contradicts the General law or the Companies Act.

STATUTORY BOOKS AND RECORDS:
Accounts must be prepared for each accounting period, usually 12 months. These accounts:
Must include a balance sheet and profit/loss statement ;
Must show a true and fair view of company’s affairs;
Accounting records must be kept for three years for private companies and six years for public companies.

CONSTITUTIONAL DOCUMENTS:
The core documents are:
1) The Memorandum of Association - relates to the external affairs of the company;
2) The Articles of Association - relates to the internal affairs of the company.
The Companies Regulations 2008 (Model Articles) are the default company constitution for a limited
companies under UK law. It will apply to a limited company if it is not registered its own articles. There are no
Model Articles for unlimited companies.
Schedule 1 contains the Model Articles for Companies limited by shares.
Schedule 2 contains the Model Articles for Companies limited by guarantee.