Current Sources of Basic Legislation in the UK - Case Study Example

Introduction In recent times corporate organizations have had reasons to raise concerns about the system of legislations that serve as regulatory frameworks for the activities of business entities. Among some of the main concerns expressed includes among other things the need to restructure some of the company laws in order for them to be positioned to reflect contemporary realities in the corporate world. For instance as a result of these concerns and many others The 1985 Companies Act has been revised and will soon be replaced by the new 2006 Companies Act that is expected to come into force by the end of October 2008. In the same vein consumer rights and protection groups are also waging a relentless campaign to ensure that government enact and enforce stiffer laws that will safeguard the consuming public from the rising trends of acts amounting to corporate misdemeanor on the part of corporate institutions and their stakeholders. In response to this, most of the old and if you like dormant laws regulating consumer protection have undergone a comprehensive review. As it is now, it can be said that the regulatory environment is progressively being prepared to become very sensitive and responsive to the needs of both consumers and business entities. To this end, the usual brouhaha between these two institutions will be curtailed if not eliminated in its entirety. This essay presents a practical application of the corporate legal regime in the United Kingdom by making a dual assessment of two practical cases. The first case is dedicated to discussing all the legal requirements governing the processes of getting a new company registered in the United Kingdom as well as the internal rudiments of the said business, whilst the second case discusses the scenario of a misleading commercial advertisement. In the second case the discussion will seek to highlight all the contending issues here as well as the established institutional mechanisms of seeking redress. General Overview of the nature of Private Limited Liability Company According to the sovereign United Kingdom laws companies are categorized according to their type, nature and purpose. However, within the scope of this paper emphasis will be placed on the private limited liability company. A company is said to be a private limited liability company if it is incorporated under the laws of either of the following: Scotland, England, Republic of Ireland, and Wales. In addition its shares are strictly limited to a specific group of shareholders but not the general public, consequently cannot be put for trading on a commercial stock exchange.1 The fact that the company is limited by shares is an indication of the presence and ownership of company capital by shareholders who are equally bound by the company's liability to creditors and other third party institutions and agents. Going by the conventional rules governing the issuance of shares, shareholders and their personal effects are legally insulated from confiscation during insolvency save the value of the premium paid and the nominal value of the shares owned and issued by the company. According to the laws of the United Kingdom, all private limited liability companies are mandated to bear the suffix "Limited" abbreviated as "Ltd." The Case of John and his Partners Suffice to begin this section with a definite reference to the new Company and Companies Act 2006, will serve as the main reference framework of this paper. According to the act which will become functional in the last quarter of this year, which states the following: "company" means a company formed and registered under this Act, that is- (a) a company so formed and registered after the commencement of this Part, or (b) a company that immediately before the commencement of this Part- (i) was formed and registered under the Companies Act 1985 (c. 6) or the Companies (Northern Ireland) Order 1986 (S.I. 1986/1032 (N.I. 6)), or (ii) was an existing company for the purposes of that Act or that Order. With this in mind, it is absolutely clear that John's intentions are potential feasible under the current legal dispensation of the United Kingdom. Meanwhile, this should be contingent to his understanding and appreciation of all the requirements as established in these provisions. Therefore for John and his partners to get their intended company incorporated in the United Kingdom, the law requires the registration of the intended company with the Registrar of Companies, which will be made complete and authentic subject to the submission of all the following documents below. A) The memorandum of association; B) The articles of association; C) Form 10; D) Form 12. Memorandum of Association Essentially this document presents a definition of the company as well as its internal operational dynamics in order words whatever the company will be look should be explicitly presented in this document. These are excepts of the main details of the memorandum of association: A) The company's name; B) Objects Clause C) Location of registered office D) The limited liability of members E) Authorised share capital F)Declaration of association. All these provisions are borne out of legislation s1(3) and s2. The memorandum of association document is considered complete when it is signed by each subscriber stated in the document in the presence of a witness to attest to the veracity or other wise of the signature specimens. Article of Association On the other hand the article of association is a collection of the regulations pertaining to the relationship between the directors and the company's shareholders. In order words the article of association together with the memorandum of association serve as the main reference legal document that defines the company. In a typical company, the article of association is the document that spells out the modalities for the issuance of the company's stock vis-a vis the regulatory framework covering the various dividend and voting rights that are established under the individual categories of company shares, shares transfer and the ground rules governing the process of conducting board and shareholder meetings. Form 10 This form makes provision for the recognition of the leadership structure of the company, by explicitly mentioning the first directors, secretary and the location of the registered office. All names mentioned under this form as constituting the leadership should be accompanied by a detailed profile of each of the leadership members here stated. Finally, all members stated append their signatures to make the form complete. Form 12 This form seeks to establish the indulgence of all parties connected with the establishment of the company to the effect that all the statutory provisions governing the establishment of a company in the United Kingdom has been duly adhered to. Moreover, the relevant processes of due diligence have also been scrupulously conducted. It is concluded with the signature of a legal solicitor or any of the directors named in Form 10. The process of signing should be carried out in the presence of the commissioner for oaths, or any statutory institution that has the mandatory capacity to do so. The "object clause" of a company in simple terms spells out the powers vested in the directors in thr process of running the company. In relation to John and his associates the object clause of the company to be set up will state that Susan and Kim have the legal mandate to oversee the successful administrative and managerial activities of the company. Despite John being the major shareholder his role will be limited to the technical process, he will be represented on the board of the company. The object clause pertaining to this company will state in definite terms the role to be played by each of the stakeholders. A number of reasons justify the need for an object clause in this company, but the main one may be to avoid any form of conflict of interest and role duplication. It is clear that John wants the company's activities to be limited to solely the production of organic fruit juices. To this end, anything outside the domain of organic fruit juice production will amount to an ultra vires act. The directors in this case Susan and Kim have the obligation of ensuring the strict adherence to the object clause of the company. In the event of a glaring case of failure by any of the directors to adhere to the object clause provision, the director in question or the entire board will be held to shareholders for acting in ultra vires. Task 2 As consumers Jane and her mother are adequately protected by a number of laws and legislations from the misleading information presented by retailers and producers of merchandise. Among other things, the following laws known as the Trade Marks Act of 1938, the Copyright Design and Patents Act 1988 and the Supply of Goods and Services Act 1982, are all clear about the rights and responsibilities of consumers in relation to retailers and producers. To begin with, it is important to understand that in the case involving Jane and the retailers of the fake skin care product, Jane and her mother have a legal right to lodge a complain about the ineffectiveness of the product. Under the right conditions they are also entitled to the alleged one thousand pound money effectiveness guarantee publicized by the retail company. In the event of failure of compliance by the retail outlet, then they can institute legal actions against the retailer in question, using any of the above statutes as the basis for their case. Indeed, both Jane and her mother Martha all have justifiable legal grounds to institute action against the retailer. If Jane and Martha decide to institute legal actions against the retail agency, then they stand to receive a form of remedy that has the principal aim of enforcing the right of a consumer. This is usually done by a court of competent jurisdiction. According to the regulatory frameworks establishing remedies, in the general principle it is geared towards rendering compensatory claims to any aggrieved person. They are mainly called compensatory damages, involving the payment of money as a substitute to satisfy the plaintiff. In the case of Jane and her mother Martha, they are potentially entitled to what is called "nominal damages" compensatory claims. The sum awarded usually is intended to protect a right of a plaintiff, which will be Martha and her Jane irrespective of the fact that they have not suffered any actual physical harm. References: Farrar, J.H. & Hannigan, B.M. 1998, Farrar's Company Law, Butterworths, London. Reynold, T. & Arthur, F. 1998, Foreign Law: Current Sources of Basic Legislation in Jurisdictions of the World, Rothman and Co, New York. Rene, D. & Briedley, J. 1985, Major Legal Systems in the World Today, Steven and Sons, London. CompanyLawForum.co.uk Leading debate, opinion and comment on company law. Retrieved on August 22, 2008, from http://www.companylawforum.co.uk/index.phpoption=com_fireboard&func=view&catid=16&id=314 Department for Business Enterprise & Regulatory Reform. Accessed from http://www.berr.gov.uk/bbf/co-act-2006/faq%20Act%202006/page38503.html Read More