ICAB PL Corporate Laws and Practices key terms

The foundational constitutional document that states a company's name, registered office, objects, liability of members, and capital. It defines the boundary of what the company may lawfully do and is alterable only by special resolution.

The internal rulebook governing a company's management, share transfers, meetings, and officer powers. It operates as a contract between the company and its members and is subordinate to the memorandum and to statute.

The doctrine that acts beyond the objects stated in a company's memorandum are void and cannot be ratified by shareholders. Modern statutes often curtail it, but third parties may still be affected in some jurisdictions.

The presumption that an outsider dealing with a company in good faith may assume internal procedures were properly followed. It protects third parties from defects in directors' appointments or board authorisation.

The legal fiction that anyone dealing with a company is deemed to know its registered public documents. Statutes commonly abolish it in favour of outsiders, but it remains relevant to charges and filings.

The principle that a company is a legal person distinct from its shareholders and directors. It owns property, contracts, sues, and is sued in its own name, and its debts are generally not members' debts.

The rule that members' exposure to company debts is capped at the amount unpaid on their shares, or at the guarantee they undertook. It protects personal assets but does not shield directors from duties.

A court or statutory power to disregard separate personality and hold shareholders or directors personally liable. Grounds include fraud, sham use of the company, or specific statutory provisions such as insolvent trading.

A person who takes the initiative to form a company and arrange its capital before incorporation. Promoters owe fiduciary duties to the company and are personally liable on pre-incorporation contracts unless novated.

An agreement purportedly made on behalf of a company that does not yet exist. Generally the company is not bound, and the individual who signed may be personally liable unless the contract is later adopted.

The process by which a company acquires legal existence on registration of its constitutional documents. It confers perpetual succession and the power to hold property and litigate in the company's name.

The official document issued by the registrar confirming that a company has been registered and exists as a legal entity. It is conclusive evidence of incorporation and states the company's name and registered number.

The formal filing of prescribed documents and fees with the registrar, which brings a company or a charge into legal effect. It creates the public record on which creditors and investors rely.

A statutory set of model articles that applies by default where a company does not adopt its own. Companies may adopt it wholly or partly, and it can be modified by special resolution.

The money or property contributed by members in exchange for shares, shown in the company's accounts. It is generally locked in and may only be returned to shareholders through lawful reduction or distribution procedures.

The principle that a company's issued capital should not be returned to shareholders except through legally permitted routes. It protects creditors and underpins rules on dividends, buybacks, and reductions of capital.

A formal procedure allowing a company to return capital or cancel paid-up capital, usually requiring shareholder approval and sometimes court or creditor-notice safeguards. It differs from an ordinary dividend distribution.

A company's purchase of its own shares, permitted only under statutory conditions such as distributable profits, shareholder authorisation, or court approval. It returns value to exiting shareholders and reduces share capital.

A distribution of profits to shareholders, lawful only if the company has sufficient distributable reserves. Directors who declare an unlawful dividend may be liable to repay it and face statutory penalties.

The legal obligations directors owe to the company, including acting in good faith, with due care and skill, avoiding conflicts, and not misusing company property or information. Breach can lead to liability or disqualification.

A duty of loyalty requiring a person entrusted with power, such as a director or promoter, to act honestly in the beneficiary's interest. It demands disclosure of conflicts and prohibits secret profits.

A situation where a director's personal interest or other role may influence decisions affecting the company. Directors must disclose the conflict, may be barred from voting, and may need board or member approval.

Liability imposed on directors who continue trading when they know or ought to know insolvency is unavoidable. Courts may order them to contribute to company assets, protecting creditors from deepened losses.

Carrying on business with intent to defraud creditors or for a fraudulent purpose. It is both a civil and criminal wrong, exposing directors and others involved to personal contribution orders and prosecution.

A statutory bar preventing a person from acting as a director or manager for a specified period. Grounds include unfit conduct, persistent breaches of company law, or involvement in insolvent companies.

A person whose instructions or directions the actual directors are accustomed to follow, without being formally appointed. Such a person is treated as a director for many duties and liabilities.

A person who acts as a director without valid appointment but is held out or functions as one. The law treats such a person as subject to directors' duties and liabilities.

A statutory meeting of members held each year to receive accounts, appoint auditors, and consider resolutions. Notice periods and business rules are prescribed, and failure to hold it may trigger remedies.

Any general meeting of members other than the annual general meeting, convened to deal with urgent or special business. It may be requisitioned by members holding the statutory minimum shareholding.

The formal communication to members stating the date, time, place, and business of a meeting. Statutory minimum notice periods apply, and short notice requires the consent of the required majority.

The minimum number of members or directors who must be present for a meeting to validly transact business. If a quorum is absent, proceedings are void unless the constitution provides otherwise.

A person appointed by a member to attend and vote at a meeting on that member's behalf. Statutory rights to appoint proxies cannot usually be excluded, and appointment must follow the articles' procedure.

A resolution passed by a simple majority of votes cast by members entitled to vote. It is used for routine matters such as appointing directors or auditors and approving accounts.

A resolution requiring a qualified majority, typically at least three-quarters of votes cast, with prescribed notice. It is needed for constitutional changes such as altering the articles or objects.

A decision taken by members or directors without a physical meeting, circulated and signed or assented to in writing. Statutory procedures govern eligibility, majority thresholds, and the date of passing.

An officer responsible for statutory filings, minutes, registers, and advising the board on governance. Some companies must appoint a qualified secretary, and the role carries specific statutory duties and potential liability.

The registers and records a company must keep, such as members, directors, charges, and minutes. They must be available for inspection by regulators and, in some cases, by members and the public.

A periodic filing summarising a company's current officers, registered office, share capital, and members. It updates the public register and late filing can attract penalties or strike-off action.

An independent professional appointed to examine the company's financial statements and report on whether they give a true and fair view. Statutory rules govern appointment, removal, duties, and independence.

The process of ending a company's existence by realising assets, paying creditors, and distributing any surplus. It may be voluntary or court-ordered, and a liquidator takes control from the directors.

The insolvency practitioner appointed to collect a company's assets, adjudicate claims, and distribute proceeds in winding up. The liquidator investigates director conduct and may bring recovery proceedings.