Company Law Essay Example | Topics and Well Written Essays - 2750 words

Company Law - Essay Example The rights, duties and powers are conferred to the company and its members who become part and parcel of the Articles of Association2. The articles of association of a company are a binding force for the existing members and future members who wish to join in the days ahead. Moreover, the heirs of members, successors and the legal agents are to comply with the provisions of article. The article of association binds the company and its members as they sign the required documents. In other words, it is a kind of contract that exists between the company and its members. As per the terms of article, the association members can enjoy certain rights and duties towards company; where against the company has certain obligations towards its members. Similarly, the company expects its members to fulfill their duties and obligations that are required for smooth functioning of a company3. The constitution of a company relies on articles of association. The Articles identify a set of procedures t o conduct business, preparation of accounts, hold meetings and directors’ appointment. ... Company Act 2006 Under the Companies Act 2006, different sorts of companies can be formed. It provides guidance with regard to the formation of a Limited / Unlimited company, the shareholders, the directors and the employees. Incorporation of Unlimited Company makes the company liable for all losses and debts under the civil law. If a company is formed limited by guarantee, the guarantor’s liability will be limited to the extent of guarantee7. Insolvency Act 1986 It addresses the  insolvency of firms and individuals in line with the bankruptcy law of the United Kingdom. There are two kinds of bankruptcy law, which comprised cash flow insolvency and balance sheet insolvency. The definition of insolvency under the  Insolvency Act 1986 is that if an individual or the company is unable to pay off the debts on due dates, in order to save the company from becoming insolvent, the company will satisfy the court provided that the value of its assets is more than the amount of its d ebts8. In terms of cash flow insolvency, let us look at the case law Re Chine Finance plc9 where the court examined the financial status of cited company to determine its present and future capabilities to pay off debts when they were due. Hence, the creditors would be in a position to call earlier insolvency of the company10. Brief History The case in point is about Paul, who in the year 2010 established sizzling business of supplying delicious food to individuals and companies. In the subsequent year, Paul formed a company namely Murdock Kitchens Ltd and became its sole director by issuing ordinary shares of pound sterling 40,000. During the course of business, he entered into an agreement with Yorkshire Water to supply food for lunches. Later on, Paul got seriously injured