THE MAIN POINTS IN UK COMPANY LAW
Michael Tait sets out some general information about what basics the chairman of a company in the UK should know about company law.
Firstly, the chairman should be aware of the legal requirements for running a company in the UK, including the Companies Act 2006. This act sets out the legal framework for the formation, management, and operation of companies in the UK, and includes requirements for maintaining accurate financial records, holding annual general meetings, and making filings with Companies House.
The chairman should also be aware of their responsibilities and duties as a director of the company, including their fiduciary duties to act in the best interests of the company and its shareholders, and to exercise reasonable care, skill and diligence in their role.
Additionally, the chairman should be aware of the potential legal liabilities and risks associated with running a company, including the risk of personal liability for breaches of company law or other legal obligations.
It is recommended that the chairman seek professional legal advice as needed to ensure they are fully informed and compliant with all relevant legal requirements and obligations.
The main points in UK company law can be summarised as follows:
A company is a separate legal entity from its owners (shareholders) and directors.
A company must be registered with Companies House and have a memorandum of association and articles of association.
Directors are appointed by the shareholders to manage the company’s affairs, and they owe a fiduciary duty to the company.
Shareholders own the company and have the power to vote on major decisions.
Companies can issue shares to raise capital, and shareholders are only liable for the amount of capital they have invested.
Accounts and auditing:
Companies are required to maintain proper accounting records and have their accounts audited annually.
Companies must hold annual general meetings where shareholders can vote on important matters.
Directors must act in the best interests of the company and exercise reasonable care, skill, and diligence in their duties.
If a company becomes insolvent, its assets will be used to pay off its debts, and shareholders may lose their investment.
Companies are expected to adhere to good corporate governance practices to promote transparency, accountability, and responsible business conduct.
Further useful information about company law: