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Company Law

What is it and how does it work?

Setting up and running a company in the UK is governed by the Companies Act 1985. The act was put in place to regulate standards, it sets out the responsibilities of companies, their directors and secretaries.
There are many other regulations which affect operations within a company.

These include:

Sale of Goods Act 1979 - There are regulations covering the sale of any items, basically it is the seller not the manufacturer who is held responsible if goods do not conform to their description. Goods should be deemed fit for their pupose and of satisfactory quality.
Health and Safety At Work Act 1974 - regulates minimum standards of health and safety for employees in their work places.
Employers' Liability (Compulsory Insurance) Act 1969 - this ensures that an employer has at least the minimum level of insurance cover against any liabilty claim made against them by an emploee. Any injury sickness or disease that an employee incurrs as a direct result of their employment would be covered by this type of insurance.

Types of company

Private Company - these are companies which are usually a small and more often than not family run.s. Private companies can't offer shares to the public and must have one director and/or one member. They are Limited companies and have to have Ltd ('Limited Liability') in their company name and be registered with Companies House..
Public Company - To be a public company there must be a minimum capital of £50,000, a public company can offer shares to the public and must legally have two directors or members.The company has to be registered with Companies House and must include 'plc' (Public Limited Company) in the registered company name.
If you want to go into business alone then it is still possible to go into business without setting up either a private or public company. You can operate as a 'sole trader,' basically self-employment, or you can form a 'partnership,' that is two or more people running a business. It isn't necessary to register with Companies House and legal requirements relate mainly to the Inland Revenue.

All companies have to: 'prominently display' the company name, address and type of business on all business letters, invoices and receits.
The details, such as names and addresses of the owners or directors of the company have to be readily available for anyone that does business with you to view. It is actually a criminal offence to not have these details available.

There are strict rules governing the names chosen by company members. The Business Names Act was put into place in1985.

A company cannot use names that suggest it does something it does not, for example if a business does not actually trade overseas then the word 'international' will not be allowed to be used in the company name.
Suggests the company is bigger than it is, e.g. naming a company 'ABC International' when it does no business overseas.
Contravenes registered trademarks or is already being used.

How Does Company Law Affect You?

Having decided what kind of business you want run and what type of business you can make a success of you then have to choose the name that would give the right impression of your business. Once you have the name you need to get it up and running.

Before you start trading as either a public or private company you must register 'articles of association' at Companies House. Applications must be witnessed by a solicitor and must name the 'first director' and 'company secretary.' Your solicitor will be able to explain the process to you.
Directors do not have to be formally trained; they're only legally obliged to 'carry out their duties to the best of their abilities.'
The 'Company Secretary' also needs no formal training but should be a 'competent person' able to oversee the efficient operation of the business.
The next thing to consider is where to run your business from, an office, a work shop or maybe your home. There are regulations governing workplaces that need to be observed. There are planning rules for residential areas so you need to find out if you would be allowed to run your business from your home.

Commercial Premises

Commercial premises need planning permission.
You may have to pay 'business rates' which is a local authority tax and are the means by which local businesses contribute to the cost of providing local authority services.
You need to consider provisions for disabled people, wheelchair access should be good.
You will have Health and Saftey regulations to adhere to. Any employees should have a safe and healthy enviroment to work in.
You should have insurance cover under the Employers' Liability (Compulsory Insurance) Act 1969.
Any goods that you produce or distribute must satisfy the General Product Safety Regulations 1994.

Main 2 roles of a business

Company Directors, in order to be elected a business director you must not have been disqualified by a court from being a director - if you have, you need the court's permission.
If you are over 70 and you wish to be a Director of a public limited company then your appointment must be approved at a general meeting of the company.

What are the duties of company directors?
Company directors have a number of legal duties and these include:

- Directors should act in the best interest of the company and it's employees and not themselves.
- company law requires you to produce proper accounts and send various documents to Companies House
- You have as a director ensure that the company complies with all employment laws, discrimination racial or sexual, as well as fair working conditions and practices.
- As Director you may be held responsible for the actions of company employees.
Directors have other legal duties besides those relating to Companies House.

- Directors are responsible for putting a health and saftey policy into place.

Company secretary
Under the Companies Act 1985, a company secretary, is an officer of a company, and as such they have certain legal duties. Legally, a company secretary may be liable if a company fails to provide the relevant authorities with details about the company's directors and accounts. Their general work duties are described in their contract of employment

The Companies Act demands that a number of company registers are kept and these are usually the responsibility of the company secretary and include the register of members, directors' interests and interests in shares. A company secretary's duty also entails making sure forms are filed, proper notice of meetings are given, keeping minutes of meetings and allowing access to company records when necessary.