Business Law - An Overview

Business law is a set of legal rules and guidelines that aimes to govern those who are starting or running a company. It monitors the rights and duties among shareholders, employees, creditors and directors. The board of directors have the power to manage the business under a company constitution, which is all governed by business law. Shareholders will implement sole voting rights in general meetings. These general meetings hold minimum rights to change the company constitution, issue resolutions and remove members of the board. This means that the directors will owe duties to their companies and must carry out their responsibilities with competency, in good faith and undivided reliability to the business.

Businesses may be incorporated under the Companies Act 2006, which is an extensive piece of legislation and is not for the faint hearted. Someone interested in forming a company must first decide whether it will be a unlimited or limited company. An unlimited company would mean that incorporators will be liable for any losses and debts under civil law. Becoming a limited company on the other hand could mean that it is limited by guarantee, meaning that if the company is in a lot of debt and is struggling to pay creditors off, it will be limited to the extent of the money it can guarantee to the creditors. Or being a limited company could mean that capital investors' liability is limited to the amount they give for share capital. It could also mean that there is a choice to make the company public or private.

Under a limited company, the name of the company must have 'PLC' or 'LTD' displayed at the end and be registered with Companies House. Most new companies decide to be a private company limited by shares. Before registering with Companies House, anyone who is trying to attract investors has strict fiduciary duties to disclose all material facts concerning the company to not mislead. Whilst the company is being registered at Companies House, those who have invested money into the business will be required to sign a memorandum of association stating what shares they will take, and pledge their compliance with the 2006 legislation. The Model Articles, which are the standard company constitution, will apply unless the company has registered its own articles of association.

Business law dictates that directors must be appointed. There must be at least one in a private company, and two in a public company. The latter must have a secretary and a least one member. The name of the company is very important and it must not be inappropriate or already being used by another registered company. All this information is required to be detailed on the form IN01 and a £20-50 fee is paid for registration. Companies House will then issue the new business with a certificate of incorporation.

I am a legal writer covering advice on topics of law business law, for further text and similar works visit business law or contact a solicitor today.

For more legal advice and information, and for free legal resources I suggest you visit lawontheweb.co.uk.