Nobody downloaded yet

Sam's Liability for SamCom Ltd's Obligations - Essay Example

Comments (0) Cite this document
Summary
Sam’s Liability for SamCom Ltd’s Obligations Promoter Liability and Pre-Incorporation Contracts Sam is a promoter under the definition put forth by Twycoss v. Grant [1877] 2 CPD 469, as he was the person who filed for the articles of incorporation and got the new corporation started…
Download full paperFile format: .doc, available for editing
GRAB THE BEST PAPER91.9% of users find it useful
Sams Liability for SamCom Ltds Obligations
Read TextPreview

Extract of sample "Sam's Liability for SamCom Ltd's Obligations"

Download file to see previous pages Promoters also have a fiduciary duty to the shareholders, as he stands in the same position as a company director. As such, Sam cannot make a secret profit and he must have full disclosure with any transaction that he takes while he is the promoter of the company. He also cannot serve himself at the expense of the shareholders (Erlanger v New Sombrero Phosphate Co (1878) 3 App Cas 1218). The facts state that the business that became SamCom Ltd was valued at ?50,000, yet the business was sold to SamCom Ltd for ?90,000. This might be a breach of Sam’s fiduciary duty to his shareholders (Cahn & McDonald, 2010), if he did not disclose that his company was worth substantially less than what SamCom Ltd. paid for it. The solicitor who Sam hired to take the necessary steps for incorporation, however, is not considered a promoter, as Re Great Wheal Polgooth Co. Ltd. (1883) 53 LJ Ch 42 established that persons who are acting as a professional capacity at the behest of the promoter, such as solicitors, do not become promoters. As for the contract to buy the silicon chips for ?5,000, this is a pre-incorporation contract, and the company would not be bound on this contract. This was established in the case of Kelner v Baxter (1866) LR 2 CP 174, which established that pre-incorporation contracts do not bind the company. ...
was incorporated, so the company would not be bound by this contract. Separate Personality of the Company and Lifting the Veil On the facts, it may be assumed that this is a closely held corporation. This does not, however, negate the separate legal personality of SamCom Ltd. According to established English law, a corporation is a separate legal personality who has the ability to sue and be sued and hold debts in its name (Wild & Weinstein, 2011). Moreover, the fact that only one person is a corporation does not defeat the separate legal personality of the corporation. This was established in the seminal case of Salomon v. Salomon & Co. [1897] AC 22. In this case, Salomon made leather boots, and he was basically the sole bona fide shareholder of his company. The company went into liquidation, and the creditors attempted to make Salomon personally liable for the company's debts. The Salomon court held that, as long as a company is a legal entity, then the business, and the debts, belongs to the company, not to the shareholder(s). In this case, the lower courts had attempted to say that Salomon himself was liable, because he was the only interested shareholder – the other shareholders were his family members, and they were disinterested. The House of Lords held, however, that this does not defeat the claim of corporate personality. Therefore, this case may be applied to the facts, in that SamCom Ltd. is a closely held corporation, but, as per Salomon, the corporation would still have a separate legal personality and Salomon further demonstrated that corporations, because they are separate legal entities, will be liable for the debts incurred by ...Download file to see next pagesRead More
Cite this document
  • APA
  • MLA
  • CHICAGO
(“Sam's Liability for SamCom Ltd's Obligations Essay”, n.d.)
Retrieved from https://studentshare.org/law/1440575-law3106-business-organisations
(Sam's Liability for SamCom Ltd'S Obligations Essay)
https://studentshare.org/law/1440575-law3106-business-organisations.
“Sam's Liability for SamCom Ltd'S Obligations Essay”, n.d. https://studentshare.org/law/1440575-law3106-business-organisations.
  • Cited: 0 times
Comments (0)
Click to create a comment or rate a document

CHECK THESE SAMPLES OF Sam's Liability for SamCom Ltd's Obligations

New Right and 1970's - 1990's

...New Right and 1970's - 1990's Introduction The New Rights period started around the 1970’s in America with the election of Ronald Regan as the county’s president (Nelson 7). Other leading countries in the world adapted the New Rights between 1970’s and 1980’s. These countries were; Australia, Chile, France, Germany, Netherlands, New Zealand, Poland, Romania, South Korea and the United Kingdom. Many reasons contributed to this change in world politics. Economic problems became serious political problems in American politics with massive government programs of the 1960s and the economic problems in the 1970s. Social issues came to the forefront of voters'...
5 Pages(1250 words)Essay

S Corporation vs. Corporation

...the tax liability by retaining most of the income of the corporation. This retained income will only get taxed when it reaches a certain limit. For an entity to be recognized as an S corporation there are certain criteria that it must meet. To begin with the corporation is only limited to seventy five members. That is the corporation should not have more than 75 shareholders. The law recognizes a wife and husband pair as one shareholder. There is also the limitation that the corporation can only admit eligible shareholders. These are entities that have been approved by the tax code to be shareholders of S corporations. All shareholders have to be citizens of the United States. The final...
3 Pages(750 words)Essay

OH&S-Your organisation's OH&S system

...My organization's OH&S system My organization, Swann Communications, deals in manufacturing and marketing of a variety of cameras. Since every manufacturing step is automated there is no chance of any major occupational hazards. Earlier the main risk was during the cutting of lenses but modern technology has enabled the workers to cut the lenses mechanically, which is totally hazard proof. Still, the company is very dedicated towards the safety and well being of its employees. Both physical and mental healths are diligently taken care of. Keeping the economic growth, economic reality and technical progress in mind, the organization follows the 'machine bureaucracy system'. In this system the employees are expected to do...
6 Pages(1500 words)Case Study

1960's

...Making the Geopolitical Intensely Personal: Lyndon Johnson’s Vietnam The war in Vietnam was different from most of the other conflicts in American history. There was not a clear point of entry into the conflict – a stark contrast with the horrific night of Pearl Harbor, for example. The rationale behind United States involvement lacked the hearty sentiments of Manifest Destiny or the hated enemies Kaiser Bill or Adolf Hitler. It may have been these murky beginnings that made the war such an unpopular one, and a topic that enervated rather than energized the American public. It may have been this lack of unity regarding the Vietnam conflict that offended President Johnson, who sought to turn the conflict around and make... the Geopolitical ...
4 Pages(1000 words)Essay

S

...;” and those involving direct foreign management or ‘exported management’ such as: “sole direct foreign investment, joint ventures, and international services” (Ibid, pp. 19-27). Recent global developments have provided added venues for international business to enter foreign markets like the cross-border mergers and acquisition which since mid-1980s have been more utilised by MNEs in entering foreign markets (see illustration below) compared with FDI which was popularly used in 1950s-1960’s. (‘International Labour Organization’ n.d.) Moreover, MNE operation today is characterised by intra-firm trade which role is considered critical because it may help MNEs in two ways: cost reduction through good distribution or...
12 Pages(3000 words)Essay

Revenue Budget(s)s

...Part 2 The changes in the surplus and deficit are attributed to the change in license system from an old style to a newer system. Part 3 If the number of vehicles failing inspection would increase then this would increase the revenue obtained from the vehicle inspection fees by an additional 15%. Therefore making standards tougher would result in more vehicles failing the inspection and subsequently lead to an increase in revenue. This would be beneficial to the organization. Part 4 a) If the new system is implemented at the beginning of the year, there would be higher deficits in general for that financial year. This is because the cost incurred by the organization in contracting outsiders for the licenses is much higher... 2 The changes in...
1 Pages(250 words)Case Study

Assignment s

...the US has little public interest in deciding the matter. In this case, the plaintiffs favor the district court as here they would obtain ten times as much compensation and damages for the suit. However, in Piper vs Reyno it was ruled that plaintiff’s favored forum had little bearing on granting dismissal on grounds of forum non conveniens. If courts were to take plaintiffs choice of forums as weighty consideration then dismissal would be rare. Furthermore, in Yavuz vs 61 MM LTD it was help that claims do not have to be similar to those offered by the district courts for a foreign jurisdiction to be accessed as an adequate forum In addition, the change of forum would not change either party’s case as plaintiffs could...
2 Pages(500 words)Assignment

S- corporation

...Accounting and Finance Accounting and Finance Built-In Gains Tax for S-Corporations Inventory Fair Market Value $210,000 Less Adjusted Basis $180,000 Built-In Gains realized $30,000 Land Fair Market Value $120,000 Less Adjusted Basis $125,000 Built-In Loss ($5,000) Net Built-In Gain $25,000 Tax rate 35% Built-In Gains Tax $8,750 Taxable income for 2013 $65,000 Tax Rate 35% Tax liability $22,750 Lockhart’s Built-in Gains tax for the year2013 was $8,750. That is because Built-in Gains tax is paid based on the lesser of the corporations net recognized Built-In Gains or the corporations taxable income. In this case, the tax liability based on the taxable income would be...
1 Pages(250 words)Essay

G&S

...DNA Forensic al Affiliation) DNA Forensic Forensic science has become most outstanding and sensitive biological techniqueused world wide to identify unknown criminals by use of DNA of such individuals. law enforcers has found this methods most sensitive as most of their investigation has been eased and made quickly to ensure security issues is handled in the most accurate way possible and in situation where visual evidence is not available (Balding, 2005). However, there have been situations where DNA samples have been faked in the process making it difficult to identify specific criminals. DNA forensic has been useful in handling criminal cases such as theft, rape and murder. This procedure for DNA forensic always begins... Forensic al...
4 Pages(1000 words)Research Paper

S&S Air Company

...S&S AIR COMPANY Internal growth rate= (Return on Asset x Retention ratio Return on Asset x Retention ratio) Return on Asset= 2,029,766/19,986,170=0.10 Retention ratio= 1-dividend pay-out; Dividend pay-out= 610,000/2,029,766=0.3 1-0.3=0.7 IGR= (0.1 X 0.3)/1-(0.1 X 0.3) 0.03/0.97=0.031 3.1% Sustainable Growth Rate= (Net income/ Shareholder’s equity) x (1-retention ratio) (2,029,766/11,435,815) x (1-0.7) 0.18 x 0.3=0.053 5.3% Internal growth rate: This percentage of (5.3%) is the maximum growth S&S Company can grow with external financial aid. Sustainable Growth rate: Refers to the growth rate a S&S Air company can grow...
1 Pages(250 words)Case Study
sponsored ads
We use cookies to create the best experience for you. Keep on browsing if you are OK with that, or find out how to manage cookies.

Let us find you another Essay on topic Sam's Liability for SamCom Ltd's Obligations for FREE!

Contact Us