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Business-Organisations-And-Agency PUBLISHED.Pdf LAWRENCE EMEKA MODEME BUSINESS ORGANISATIONS AND AGENCY MODERN BUSINESS LAW PART 5–7 Download free eBooks at bookboon.com ii Business Organisations and Agency – Modern Business Law: Parts 5–7 1st edition © 2016 Lawrence Emeka Modeme & bookboon.com ISBN 978-87-403-1492-2 Peer review by Prof. Yenkong Ngangjoh Hodu, Faculty of Law, University of Manchester Download free eBooks at bookboon.com iii BUSINESS ORGANISATIONS AND AGENCY CONTENTS CONTENTS To See Parts 1–4, Download: English Legal System and Obligations – Modern Business Law: Parts 1–4 Part 5: Partnerships And Companies 332 18 Partnerships 333 18.1 Introduction 333 18.2 Learning Objectives 333 18.3 The General Partnership 334 18.4 Limited Partnerships 348 360° 18.5 Limited Liability Partnerships 351 18.6 Chapter Summary 354 18.7 Practice Questions 360° 355 thinking. thinking. 360° thinking . 360° thinking. Discover the truth at www.deloitte.ca/careers Discover the truth at www.deloitte.ca/careers © Deloitte & Touche LLP and affiliated entities. Discover the truth at www.deloitte.ca/careers © Deloitte & Touche LLP and affiliated entities. © Deloitte & Touche LLP and affiliated entities. DownloadDiscover free the eBooks truth atat bookboon.com www.deloitte.ca/careersClick on the ad to read more iv © Deloitte & Touche LLP and affiliated entities. BUSINESS ORGANISATIONS AND AGENCY CONTENTS 19 Companies 357 19.1 Introduction 357 19.2 Learning Objectives 357 19.3 Definition of “Company” 357 19.4 Formation of Companies 358 19.5 Registration of Companies 358 19.6 The Company Promoter 360 19.7 Classification of Companies 361 19.8 Chapter Summary 363 19.9 Practice Questions 364 20 Corporate Personality 365 20.1 Introduction 365 20.2 Learning Objectives 365 20.3 Corporate Personality 365 20.4 Disadvantages of Incorporation 371 20.5 Lifting or Piercing the Corporate Veil 372 20.6 Corporate Personality and Groups of Companies 378 20.7 Chapter Summary 382 20.8 Practice Questions 383 21 Company Constitution And Contractual Capacity 384 21.1 Introduction 384 21.2 Learning Objectives 384 21.3 The Company Constitution 384 21.4 Company Contractual Capacity 393 21.5 Chapter Summary 398 21.6 Practice Questions 399 22 Company Members 400 22.1 Introduction 400 22.2 Learning objectives 401 22.3 Membership of a company 401 22.4 Members’ Meetings 402 22.5 Resolutions 406 22.6 Voting at meetings – s. 284 CA 2006 409 22.7 Chapter Summary 410 22.8 Practice Questions 411 Download free eBooks at bookboon.com v BUSINESS ORGANISATIONS AND AGENCY CONTENTS 23 Members’ Powers And The Protection Of Minorities 412 23.1 Introduction 412 23.2 Learning Objectives 412 23.3 Members’ Powers 412 23.4 Protection of Minority Shareholders 415 23.5 Chapter Summary 423 23.6 Practice Questions 424 24 Company Directors 425 24.1 Introduction 425 24.2 Learning Objectives 425 24.3 Who is a Director? 425 24.4 Types of Directors 426 24.5 Appointment of Directors 428 24.6 Qualification of Directors 430 24.7 Termination of Directorship 430 24.8 Disqualification of Directors 431 24.9 Powers of Directors 433 24.10 Directors as Fiduciaries 434 24.11 Directors’ Duties 436 24.12 Remedies for Breach of Duty 446 24.13 Chapter Summary 446 24.14 Practice Questions 448 25 The Company Secretary And Auditor 449 25.1 Introduction 449 25.2 Learning Objectives 449 25.3 The Company Secretary 449 25.4 The Company Auditor 452 25.5 Chapter Summary 462 25.6 Practice Questions 464 Download free eBooks at bookboon.com vi BUSINESS ORGANISATIONS AND AGENCY CONTENTS 26 Company Share Capital 465 26.1 Introduction 465 26.2 Learning Objectives 466 26.3 Definition and Nature of Shares 466 26.4 Classes of Shares 468 26.5 Variation of Class Rights 470 26.6 Allotment of Shares 472 26.7 Pre-emption Right 473 26.8 Maintenance of Share Capital 473 26.9 Chapter Summary 479 26.10 Practice Questions 479 27 Company Loan Capital 481 27.1 Meaning of Loan Capital 481 27.2 Learning Objectives 481 27.3 Debenture 482 27.4 Charges 483 27.5 Chapter Summary 488 27.6 Practice Questions 488 28 Insolvency And Liquidation Companies 490 28.1 Introduction 490 28.2 Learning Objectives 490 28.3 Company Voluntary Arrangement 490 28.4 Receivership 491 28.5 Administration 492 28.6 Compulsory Winding Up 495 28.7 Voluntary Winding Up 500 28.8 Chapter Summary 502 28.9 Practice Questions 503 Part 6: Wrongdoings In Businesses 504 29 Fraudulent, Wrongful And Insider Trading 505 29.1 Introduction 505 29.2 Learning Objectives 505 29.3 Fraudulent Trading 506 29.4 Wrongful Trading 509 29.5 Insider Trading and Market Abuse 511 29.6 Chapter Summary 514 29.7 Practice Questions 515 Download free eBooks at bookboon.com vii BUSINESS ORGANISATIONS AND AGENCY CONTENTS 30 Money Laundering, Bribery And Phoenix Companies 516 30.1 Introduction 516 30.2 Learning Objectives 517 30.3 Money Laundering 517 30.4 Bribery 519 30.5 Restriction on the Re-use of Insolvent Companies’ Names 522 30.6 Chapter Summary 523 30.7 Practice Questions 523 Part 7: Agency Law 524 31 Agency Law 525 31.1 Introduction 525 31.2 Learning Objectives 526 31.3 Types of Agents 526 31.4 Establishment of Agency Relationship 526 31.5 Agents’ Authority 532 31.6 Duties of Agents 534 31.7 Remedies for Agents’ Breach of Duty 540 31.8 Rights of Agents 541 31.9 Liability of Agents 543 31.10 Termination of Agency 543 31.11 Chapter Summary 544 31.12 Practice Questions 545 List of cases 546 List of statutes 565 Endnotes 573 Download free eBooks at bookboon.com viii PART 5: PARTNERSHIPS AND COMPANIES Download free eBooks at bookboon.com 332 BUSINESS ORGANISATIONS AND AGENCY PARTNERSHIPS 18 PARTNERSHIPS 18.1 INTRODUCTION A business may operate as a sole proprietorship, partnership or company. The choice of business organization is determined by many things, including, the number of people involved, the amount of money they have to invest, their ambition, their need for privacy and control, the nature of business, etc. The most important of the business forms are partnerships (in its various formats) and incorporated companies and are the ones with which we shall mostly concern ourselves. Sole proprietorships are of limited importance in terms of law relating to businesses. It is the simplest and most flexible form of business medium and has minimal formality. A sole proprietorship is typically an unincorporated business owned and operated by one individual, albeit sometimes with the help of people who are not co-owners. Such a business enterprise would not be a separate legal entity under the law, but rather would be an extension of the individual who owns it. The owner has possession of the business assets and is directly responsible for the liabilities incurred by the business. The profits and losses of a sole proprietorship are combined with the other incomes of the owner for income tax purposes. There are three types of partnerships, namely, the general partnership, the limited partnership, and the limited liability partnership. 18.2 LEARNING OBJECTIVES At the end of this chapter, the reader should clearly understand: • The meaning and nature of partnerships • The nature of a general partnership and its characteristics • The relative advantages and disadvantages of doing business as a general partnership • The nature of limited partnerships and it characteristics and limitations • The nature and characteristics of limited liability partnerships • The relative advantages and disadvantages of limited liability partnerships Download free eBooks at bookboon.com 333 BUSINESS ORGANISATIONS AND AGENCY PARTNERSHIPS 18.3 THE GENERAL PARTNERSHIP The general partnership is the traditional or ordinary form of partnership with others being later modifications of, or departures from, it. Unless otherwise indicated, a partnership would be a general partnership; and unless otherwise excluded by partnership agreement, the provisions of the Partnership Act (PA) 1890 govern general partnerships. However, as observed by Lord Millet in Khan v Mia and others [2000] 1 WLR 2123, the provision of the Act are not statutory presumptions but default provisions; very slight evidence would be required to exclude their application. S.1 (1) PA 1890 defines a partnership as “the relation which subsists between persons carrying on a business in common with a view of profit.” A general partnership is therefore an unincorporated business organization formed by two or more persons for a common undertaking in order to make profit. This implies that non-profit undertakings may not be formed as partnerships. Persons in a partnership are collectively called “a firm”, and the name under which they do business is referred to as the “firm name” (s. 4 PA 1890). 18.3.1 DETERMINING WHETHER A PARTNERSHIP EXISTS It must be noted that somebody would not be considered a partner merely because he is a joint owner of property or receives payment or remuneration (regular or irregular) from a business as a servant, agent or beneficiary of a deceased partner. In addition, although the receipt of a share of the profits of a business may be evidence of partnership, such a receipt by itself does not make a person a partner – s. 2 PA 1890. However, if some form of agreement is in place and business activities have commenced, a partnership may be deemed to have commenced even if actual trading had not started and even if a formal partnership agreement had not been drawn up. Whether a partnership as contemplated by s.1(1) PA 1890 exists, in that the parties are carrying on business in common with a view to profit, is a question of fact depending on the circumstances of the case.
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