For public companies they also have to obtain a

This preview shows page 37 - 39 out of 250 pages.

For public companies, they also have to obtain a trading certificate before they could start business. This certificate confirms that the company has the requisite minimum capital. 19.6 THE COMPANY PROMOTER A company cannot conceive or register itself; there would usually be somebody who gets the idea to start a company, undertakes its registration, and submits the necessary application and documents to the Registrar of companies. Such a person would be the promoter of the company. According to Cockburn J. in Twycross v. Grant [1877] 2 CPD 469 at 541 , a promoter as someone who “undertakes to form a company with reference to a given project and to set it going, and who takes the necessary steps to accomplish that purpose.” A promoter may (and often does) become a shareholder or director of the company. Promoters, like directors of a company are fiduciaries. This means that they must act in good faith and in the best interest of the company. They must not make secret profits from their position and must account for any such profits made. Any contract between a promoter and the company are pre-incorporation contracts and could be made void by the company unless a full disclosure is made and an independent board of directors or all the original members approve the contract. A company may sue its promoter for restitution and damages in respect of monies received or wrongs done against the company. Download free eBooks at bookboon.com
Image of page 37

Subscribe to view the full document.

BUSINESS ORGANISATIONS AND AGENCY COMPANIES 361 19.7 CLASSIFICATION OF COMPANIES An incorporated company may be classified in various ways even though all of them share the attributes of incorporation. The main classifications are as follows. 19.7.1 LIMITED AND UNLIMITED COMPANIES Under s 3 CA 2006, a company may be registered as limited or unlimited, although only a few choose the unlimited option. An unlimited company is a legal entity but the liability of its members is not limited, meaning that they could be personally liable for the debts of the company if it is unable to pay it from its assets. However, the members would not be liable directly to the company’s creditors. If the company were to be wound up, the liability of its members would be to contribute money to the company for the payment of its debts. The main reason for establishing an unlimited company is that such a company is not required to deliver annual accounts and reports to the Registrar of Companies. A limited company, on the other hand is a company the liability of whose members to contribute to its debts on liquidation is not absolute but restricted to the unpaid value of their shares or guarantee. Download free eBooks at bookboon.com Click on the ad to read more 95,000 km In the past 5 years we have drilled around —that’s more than twice around the world.
Image of page 38
Image of page 39
  • Fall '19
  • Corporation, Managing Partner

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern

Ask Expert Tutors You can ask 0 bonus questions You can ask 0 questions (0 expire soon) You can ask 0 questions (will expire )
Answers in as fast as 15 minutes