Public and Private Companies

A company may be a public or a private company. The Act gives a statutory definition of a public company and defines a private company as any company which is not a public company. Of the total of over 900,000 companies now registered, over 99 percent are private companies but the comparatively small number of public companies includes many large companies well known to the ordinary person. Section I defines a public company as a company which is either:

a) limited by shares; or

b) limited by guarantee with a share capital;

provided that in either case:

a) its memorandum states that it is to be a public company; and

b) the statutory provisions governing the registration of a public company have been comply with.

A public company, accordingly, is always a limited company. It follows that unlimited company is necessarily a private company.

Limited and Unlimited Companies

Section I enlarges on the subject of liability. A company may be:

a) limited by shares (i.e. the liability of the members is limited by the memorandum to the amount unpaid on their shares); or

b) limited by guarantee (i.e. the liability of the members is limited by the memorandum to the amount which the members have undertaken or guaranteed to contribute to the assets of the company on winding up); or

c) unlimited (i.e. there is no limit to the liability of the members. Here, although the association is a corporation and not a partnership, the extent of the members’ liability is the same as that of partners. Unlike partners, however, they are not directly liable to the creditors, but are only directly liable to the company).

The Contents of the Memorandum

The memorandum as a document must contain:

a) The name of the company. If the company is a public company its name should end with the words “ public limited company ” and the memorandum must state that the company is to be a public company. If the company is a private company, the last word of its name must be “ limited ”.

b) The domicile of the company, i.e. whether the registered office is to be in England or Wales.

c) The objects of the company.

d) The limitation of the liability of the members, if the company is limited by shatter or quarantines.

e) Unless the company is an unlimited company, the amount of share capital, divided into shares of a fixed amount.

These five clauses (six in a public company) are usually referred to as the compulsory clauses. Other clauses however are often included. Where the memorandum states that the registered office is to be Wales it is permissible to state a private company’s name with “ cyfyngelig ” as the last word instead of “limited”. Similarly the name of a Welsh public company may end with the words “ cymni cyfyngelig cyhoeddus” instead of “public limited company”. Furthermore, none of these expressions is required to be given in full. Section 27 permits abbreviations to be used in all cases, as follows:

- for “limited” – “ltd”;

- for “public limited company” – “plc”;

- for “cyfyngelig” – “cyf”;

- for “cymni cyfyngelig cyhoeddus” – “ccc”.

The Form of the Memorandum

The memorandum must be signed by each subscriber in the presence of at least one witness. Anyone may be a witness so long as he is old enough to understand what he is doing. Each subscriber should take at least one share and for there to be shown against his name the number of shares he takes.

Model forms of memorandum for the different types of companies are to be found in the Companies (Table A-F) Regulations 1985. The models must be followed as closely as circumstances admit. After the compulsory clauses appears what is known as association clause by which the subscribers bind themselves together to form a company, but no mention of this clause is made in the Act itself.

ARTICLES OF ASSOCIATION

The articles of a company are the regulations for its internal management, corresponding to the partnership deed in a partnership. The management of every company is governed by articles, though not every company need register articles with the registrar.

The Nature of Table A

Table A consists of the regulations for the management of the commonest category of registered company, i.e. a public or private company limited by shares. The clause headings may be grouped as follows:

a) shares (share capital, share certificates, lien on shares, calls on shares, transmission of shares, alteration of share capital, purchase by company of its own shares);

b) meetings (general meetings, notice of general meetings, proceeding at general meetings, votes of members);

c) directors (number of directors, alternate directors, powers of directors, delegation of directors powers, appointment and retirement of directors, disqualification and removal of directors, remuneration and expenses of directors, directors’ gratuities and pensions, proceeding of directors (including board meeting);

d) company secretary;

e) minutes;

f) company’s seal;

g) financial matters (dividends, accounts, capitalization of profits);

h) notices;

i) winding up (ликвидация); and

j) indemnity.