Introduction
For those of you looking for a short summary of limited companies, below are the salient points to remember:
- A company is an entity that is distinct from its shareholders; it has a separate legal personality.
- The shareholders are the owners of a company whilst the directors manage the company on a day-to-day basis.
- Limited liability means that the liability of the shareholders for the liabilities of the company is limited, not that the liability of the company is limited.
- The doctrine of maintenance of share capital means that when companies raise money by issuing shares, the money paid for those shares by the shareholders should not be returned to them except in a solvent liquidation after all creditors have been paid in full.
- The PSC regime requires that companies identify and keep a register of people with significant control in the company.
- The Companies Act 2006 (CA 2006) sets out minimum rules which a company has to follow and the company’s Articles can then apply more rigid or detailed systems of management to the extent allowed by the CA 2006.
- Most companies have articles based on the Model Articles or Table A (the default articles under the CA 2006 and the Companies Act 1985 (CA 1985) respectively).
- Directors must exercise their powers in accordance with their statutory duties under ss.171– 177 CA 2006 and these duties are owed to their company.
- The CA 2006 applies to all types of companies but, in general, private companies enjoy lighter regulation than public companies. Only private companies are able to pass shareholder resolutions using the written resolution procedure.
- Subject to certain conditions, public companies are permitted to offer their shares to the public and a minority of public companies are listed on the Official List which means that their shares can be traded on the Main Market of the London Stock Exchange.
- The provision of financial services in the UK is regulated by Financial Services and Markets Act 2000 (FSMA 2000) and Financial Services Act 2012 (FSA 2012).
- It is a criminal offence to engage in regulated activities (s.19 FSMA 2000) or financial promotions (s.21 FSMA 2000) without appropriate authorisation or to engage in insider dealing (s.52 Criminal Justice Act 1993 (CJA 1993)) or to make misleading statements or impressions in connection with a sale of shares (ss.89 & 90 FSA 2012).
- It is a civil offence to engage in market abuse (under MAR).
- Listed companies and their subsidiaries have to comply with certain continuing obligations (i.e. continuing after their shares have been listed) with a view to maintaining an orderly market in their shares.