COMPANY LAW BASICS- limited by guarantee or shares?

[jeffrey]

1. A company is a legal person, separate from whoever forms ["incorporates"] it as its first members.
2. A company can be limited or unlimited.
3. If "limited", the co. can be limited by shares (= members hold shares in it) or by guarantee (= members guarantee a nominal £1 towards its debts if it is ever wound-up by creditors).
4. Really, those terms "limited" and "unlimited" are misleading. It is the MEMBERS whose liability is limited- to the value of shares or a nominal £1 guarantee. The co. itself (whether "limited" or "unlimited") has unlimited liability in any event.

[Grange]

Are you giving advice for Mr Brown for his new acquisition today?

[jeffrey]

Are you giving advice for Mr Brown for his new acquisition today?
I'm torn between a Rock and a hard place...
[no, that's not a fish on viagra]

[tenant29]

Can members of a Residents managment Company ( limited by shares or by guarantee ) call for a meeting to discuss and pass resolutions if the directors refuse to attend ?
I believe that 10% of members in a small company can call a meeting but are the passed resolutions valid if the directors do not attend ?

[Esio Trot]

Can members of a Residents management Company ( limited by shares or by guarantee ) call for a meeting to discuss and pass resolutions if the directors refuse to attend ?
I believe that 10% of members in a small company can call a meeting but are the passed resolutions valid if the directors do not attend ?

If by "members" you mean "shareholders" then normally yes.

You will need to look at the RMC Memorandum and Articles to see where it differs from the provisions of the Companies Act 1985 (or if a recent company the Companies Act 2006). Within this you will find the rules for calling meetings and quorum percentages for varying resolutions.

[jeffrey]

If by "members" you mean "shareholders"...

For co. limited by guarantee, there are no shareholders. Its membership comprises the guarantors.
For co. limited by shares, its membership comprises the shareholders.

[Esio Trot]

For co. limited by guarantee, there are no shareholders. Its membership comprises the guarantors.
For co. limited by shares, its membership comprises the shareholders.
Thanks for the clarification.

I've not been involved in any "limited by guarantee" companies, only standard shareholder ones.

I love companies, and have four involved in different areas. We "work" for one as employees and earn under PAYE just enough to pay a bit of NI. What is amazing is the amount of money extracted that is not salary, okay some are taxed as benefits-in-kind, but the majority is not. Some can't be offset against corporation tax, but at least it doesn't come out of my taxable income.

[jeffrey]

Can members of a Residents managment Company ( limited by shares or by guarantee ) call for a meeting to discuss and pass resolutions if the directors refuse to attend ?
I believe that 10% of members in a small company can call a meeting but are the passed resolutions valid if the directors do not attend ?
You refer to a meeting. This would be a meeting of members, not Board of Directors. Although directors themselves are probably also members, their non-presence cannot invalidate a members' meeting that is quorate and otherwise complying with Memorandum/Articles.

[tenant29]

The dti ( www.dti.gov.uk ) have issued a small booklet on "A summary of what it means for private companies" ( ref : Companies Act 2006). Inside it has a section ( on page 3) which says from Oct 2007-

1. private companies will no longer hold annual general meeting . Shareholders can demand a meeting if atleast 15% ( 5 % incertain circumstances ) wish to.

2. Shareholder meetings can now be all on a 14 day notice period unless diffrent arrangements are specified in a companies 's artticles.

Three months ago, I attempted to call a meeting of members ( in a company with only 15 shareholders ) but only one flat owner declared interest to attend and none of the directors replied.

If the 2 of us have a meeting after serving 14 days formal notice to all, and write up the minutes to show what proposed resolutions were passed - is it binding on the directors who do not attend ?

[jeffrey]

1. NB: I am not a company law expert.
2. Not all the 2006 Act is yet in force; some is and some isn't.
3. IF the relevant bits are in force, and IF a members' meting is lawfully convened, the Directors' absence would be irrelevant. All members are invited to attend; absentees are bound by lawful decisions taken at the meeting; and the f/r company is entitled to enforce against all lessees anyway (whether or not they were present as members and agreed with the decision).

[tenant29]

Thank you for your advice and explanations.