Section 1: Companies in the UK

The company is a body corporate, whose regulation is governed by one of the various Companies Acts, reduced effectively to the Companies Acts I948 and 1967. In popular usage it is a company with a share capital. Companies may be created by royal charter, by a specific act of Parliament, or may be registered with the Registrar of Companies under one of the various Companies Acts, particularly the Act of 1948.

Certain organizations must be registered under the Building Society Acts 1874, 1894, and 1939, the Industrial and Provident Society Acts 1893–5 and 1913. These are not strictly companies but are often called such.

In the case of companies dealt with under the 1948 Act, the liability of members may be limited by shares, or by guarantees, or may be unlimited. The commonest type of company in existence in the UK is a company limited by shares. The principle characteristics of a company limited by shares are that each is a separate 'legal persona' (i. e. it can contract as a separate person) and that the liability of the company is limited to the nominal value of the shares.

Companies may also be public or private.

About 97 per cent of the limited companies registered in Great Britain are private companies. A private company is one which restricts the right to transfer its shares, limits its members to fifty (but has a minimum of two), and cannot invite the public subscribe for shares. It has certain legal privileges, but these are not of great consequence and the tendency today is towards removing them.

All companies registered as companies under the Companies Act 1948 are public companies, unless they satisfy the conditions necessary to constitute them.

A company may have any name provided that the board of trade does not think it undesirable. The last word must be ''Limited' except in the case of certain non-profit-making companies formed to promote the arts, science, etc. The name must be fixed or painted outside every office or place of business and must be conspicuous and easily legible. It must also appear on all business letters, notices, cheques, advertisements, bills, etc. If the word 'Limited' is omitted the consequences could be serious. The Registration of Business Names Act 1916 applies to any company carrying on business under a name not its corporate name. Where the word 'Limited' does not appear, the organization is not a company in the legal sense. The names of directors must also appear on catalogues, circulars, etc.

Undesirable names are those too much like those of other companies. At one time words like 'royal' and 'imperial' were prohibited. They may still be disallowed by the Board of Trade.

The objects of a company must be stated in its memorandum of association. Anything inconsistent with these objects would be ultra vires. For this reason the powers or objects of the company tend to be stated in very broad terms.

If the main object of the company disappears, the company may be wound up. Objects must not be illegal. Objects or powers may be changed by altering the memorandum by special resolution. This alteration must enable the company to achieve its objects more effectively, to carry on some other business that can be conveniently combined with its own, to restrict or abandon some of its objects, to sell the business, or to amalgamate with another company. Application to the court to have the alteration cancelled may be made by holders of at least 15 per cent of issued share capital, or debentures, or any class of these. The application must be made within twenty-one days of the resolution. The court may confirm or cancel the alteration or may order the interests of the objectors to be purchased. Whatever the alteration, the court can do nothing if application is not made within the specified time. No alteratian can be made which increases the liability of any member.