Corporate and Business Organizations Law
Corporate and Business Organizations Law
This domain tests business structures, company formation and governance, directors duties, shareholder rights and insolvency, mainly under the Companies Act 2014.
Business structures
- Sole trader: unlimited personal liability, no separate registration beyond Revenue.
- Partnership: Partnership Act 1890; partners jointly liable; limited partnerships require registration.
- Companies: the LTD is a private company limited by shares with a single-document constitution, separate legal personality and limited liability. Other forms include DAC, PLC, CLG, PUC and unlimited companies.
Formation and governance
- Incorporation through the CRO requires a constitution, registered office and officers. An LTD must have at least one director and a separate secretary where there is only one director.
- Salomon v Salomon confirms separate personality; the veil is lifted only in limited cases such as fraud or agency.
- Directors owe statutory and fiduciary duties: act in good faith and honestly, avoid conflicts, not accept secret profits, exercise due care and skill, comply with the constitution and law. They must also have regard to employees and members.
- Members exercise rights at general meetings or by written resolution; minority protection includes oppression remedies and derivative actions. Annual returns, financial statements, beneficial ownership filings and audit exemption conditions must be met.
Insolvency
Examinership, receivership, liquidation and schemes of arrangement have different triggers and protections. Directors can face restriction or disqualification for reckless trading.
Worked example
A director learns of a supply contract and diverts it to his own company. Separate personality does not protect him: the duty to avoid conflicts and account for secret profits makes him personally liable to the company.
Traps
Limited liability does not protect directors from personal wrongdoing. Do not confuse share capital with company funds. Late annual returns can lose audit exemption and trigger strike-off.