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Companies Act 2006 Assignment Sample

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Companies Act 2006 Assignment Sample


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The report is based on the critical overview of the company act (CA) 2006, mainly focused on the nature of the business. There is the actual significant analysis of CA 2006 by defining the various partnership rights and liabilities. Furthermore, it was seen multiple rules and applications to the corporate business. Moreover, a clear view of the issues, rules, and their application, Subsection 51 introduces pre-incorporation contracts, under CA 2006. The research may understand the nature of the business through the application of the CA 2006 and by various arguments on it. The case study shows the multiple discussions on the application of IFRS and AAC to UK-based companies, which help to look after transparency.

The various advantages and disadvantages of the IFRS and AAC in the incorporation of the business is to increase accounting transparency. These will provide better knowledge to the management on how to manage the different departments about its rights. The implication of different acts such as “The Employment Protection Act 1978”, “Competition Commission (CC)” and the “Office of Fair Trading (OFT)”, “Equal Pay Act 1970” and “The Health and Safety at Work Act 1974” provide protection to the workers and management. Furthermore, the case study evaluates the concept of separate legal entities and their application to UK companies. The researcher may evaluate the knowledge about legal liability and different approaches. The convincing argument based on the s51 (pre-incorporation contracts), under CA 2006 related to the relevant cases. The report also demonstrates a depth analysis of laws and statutes.

2. CA 2006 and its actual significance

2.1 Introduction

The company act 2006 is the primary source of business in the UK. Its provision applied to different aspects of the business such as managing different departments in a company and financing. It covers almost 700 pages and 1300 sections under CA 2006. There are different sources of CA 2006 such as “the insolvency act 1986”, “European Union directives”, and “The UK Corporate Governance Code. The company laws mainly cover two types of fields such as corporate finance and corporate governance. The different duties and rights of the shareholders, employees, creditors and directors are introduced under corporate governance. Furthermore, corporate finance helps limited companies with various ways to raise money. Therefore, the case study is based on the proper analysis of the CA 2006 and its impact on the UK business.

2.2 Issue

The implication of the companies’ act 2006 in the corporate business or governance business may cause some issues to arise. According to ICAEW, 2020, the companies may face the issue of interest to the FD (finance directors). There may be a rise in the problem between the worker and the management, which creates misunderstandings among them (ICAEW, 2020). Therefore, the “communication provision 2006” act provides the ability for companies to use electronic systems of communication. They can make contact with the shareholders and defaulted positions in the management.

The problem will be related to careless processes in the management that may create bad performance in the financial statement and on the reputation of the company. Therefore, the introduction of a statutory law imposed on the director, mentions the “duties codifying on the common law rules and different principles” (ICAEW, 2020). These are helpful in creating equal principles among directors and to the company for good management skills.

2.3 Rule

According to CA 2006, there are some rules that companies need to follow in the UK. The specific requirements and significance are discussed below to understand the importance of the company’s act 2006.

  • Every UK-based company will be required to present at least one director, which comes under the category of a natural person (Emerald, 2007). Therefore, a separate register needs to be kept for the director for the usual addresses of residuals.
  • The Act provides a statutory right to the shareholders to sue the directors for any act of negligence. Furthermore, the shareholder may have the gaining consent against the company and may claim its consent to the court.
  • The company act 2006 provides a special resolution and ordinary rules in the process of applying written resolution in the business. There is the majority of 75 percent of implications of the laws in the business that will be sufficient to pass the written resolution (Emerald, 2007). Furthermore, the requirement of the consent of members is 100 percent based on “The UK Corporate Governance Code”, which needs to be followed by the company in the UK.
  • The requirement of the laws on the private companies to acknowledge a secretary in the company. This is required to appoint the secretary with an authorized signature to the companies for executive documentation. The accommodation of the sole proprietor in the management will help the company in the process of passing sufficient written resolution.

2.4 Application

The implication will provide a proper judgment by the supreme court to re enforcement the general principle. Furthermore, the process of different business criteria in the UK by using the laws may help to invest shares or money in different sectors for trading in the UK market. The different uses of the act and laws provide a proper way of conducting business in the manner of protecting the rights of the employees and different departments in management. According to IASB, the application of the standard is globally consistent in the process of providing investors and on the various uses of financial statements (Cfainstitute, 2022). These will help to get the difference between the financial performance and have the ability to compare the companies on a like-for-like basis.

The UK company follows the rules of the UK government to bring out changed laws in the business process. The inclination of UK GAAP with respect to IFRS by using different financial instruments (FRS 25 and 26) in the business were used for development (Kortext, 2022). According to the IFRS, the regulator's framework uses of the statutory instruments will be issued on the basis of the 2005 company act. Although the “partnership act” under CA 2006, states the collectivity of partners in a firm is required to maintain proper law. There is no difference between a partnership and a legal entity, as there are unlimited liabilities. Therefore, most of the legislation in the UK or Australian states allow the relevant form of limited partnerships (Westlaw, 2022). Hence, the partners with liability in the limited companies have imposed the active partners in the business.

2.5 Argument

The process of judgment by using the different laws under the company’s act 2006, provides a proper justification for any case. According to the case law of “Andrew Chell v Tarmac Cement and Lime Limited [2020] EWHC 2613” dealing with the “scope of vicarious liability”. The uses of the law concluded that “ill-discipline and malice were not the matter of the risk assessment” (Brownejacobson, 2020). Therefore, the envisaged scenario implying the practical joke by the employee may find the object of the employer. This scenario comes under “The Employment Protection Act 1978”. Therefore, the judgment has been decided under this law in respect of the employees by protecting their rights.

According to the case law of “Braymist Ltd v The Wise Finance Company Ltd”, the wise finance company, apple tops the respondent to purchase the wise parcel of the ‘land adjoining the A380, part of Harcombe Wood, Chudleigh, Devon ("the Property")’ (vlex, 2002). Therefore these types of cases will be resolved under the company’s act 1985. The court placed the judgment under contract act 36C (1) which purports to have been made on the behalf of the company as there is no form of effect on the subject to any type of the agreement (vlex, 2002). Furthermore, the disposition order will be incorporated into the terms of the parties. Hence, the agreement will be made on the basis of the agreed contract in one document where the different types of contracts are exchanged between each other.

2.6 Conclusion

The companies act 2006 contains a descriptive knowledge of the law and its impact on the performance of businesses. It has the grip to contain the detail and potion about the shareholders, directors, and lawyers, in the business. There are many details about GAAP on the business approaches in relation to the account. The detailed knowledge and secondary legislation are conceited, the e implication of CA 2006, that keep the company in the way to the development. These help the companies by providing distributable profit and different sales by the company for the purpose of noncurrent assets. 

3. S 51 (pre-incorporation contracts) under CA 2006

3.1 Introduction

The pre-corporation contract is a type of legal agreement used by a juristic person. These introduce to the UK business for those processes, which have not yet completed to such type of contact that is void at common law. Section 54 (2) recognized it as a contract that was made to purport on the behalf of any subject agreement at the time the company was not formed. The main purpose of S51 is to encourage entrepreneurs and represent efficiency in flexibility and simplicity in the maintenance of the business. These also help a company by acquiring liabilities and rights in the future. These provide assurance to the company to start a business in the UK after the process of the corporation. 

3.2 Issue

There may be some issues that may have occurred by the implication of Section 51 on the company due to changes in the rules.

The company may face the issue of making decisions as there are different managers in the working process (Bytestart, 2022). Therefore, according to the company act 20063, private companies may resolve the issues by the elective regime by holding the AGM. 10% of voting may be applicable to the rights of the AGM of the company.

The company may face problems related to financial assistance in the company. Therefore, the implication “company Law Review” (CLR) will help fill in the process of core law of the company. 

3.3 Rule

According to, Bytestart, 2022, the implication of the company act 2006 under section 51, provides better knowledge of audit, community enterprises, and investigation. The engagement of the promoters in the running private companies in the UK is required to follow the “power of proxy. These help in the purpose of the long-term investment in the business to the shareholder of the company.

  • There is the requirement of the legal for deregulating and simplifying the requirements.
  • There is a prohibition on financial assistance in companies for the purpose of purchasing their own shares.
  • According to the AAC, the companies need to follow facilitating e-communication for better contact with the shareholders and directors of the company (Bytestart, 2022).

3.4 Application

The application of pre-incorporation contracts on the UK companies made to take decisions and better contract with the companies. These are subject to a large number of the control and contracts or restrictions on the directors. The act also introduces a wide range of areas off the formation of the may in the UK (Peachyessay, 2020). Furthermore, a wide range of changes in the management and the formation such as directors, duties and liabilities. Therefore, some rules and regulations are applicable to the company.

3.5 Argument

According to the case law of “Kelner v Baxter '', the major legal issue in the coolant is for the sake of the contact, to which the contract will enter. The existence of the company in the completion of the obtain certificate for the incorporation of business in the UK (Peachyessay, 2020). Therefore, the implication of the company acts 2006 under S51 the court was ordered to reject the agreement between them. Hence, the promoter will become liable for the liability automatically. These may be created in the course of the promoter’s acting and creating new agreements.

In the case study of “Rolle family & company ltd v rolle (BAHAMAS)”, the person who purported to the act 2006, the company has the half of cease. There is expected to be the provided section 51, to bonus the entitled for the benefit of the contract (Casemine, 2017). Therefore, the effect of the financial instrument on the company may create a void agreement between the parties. Therefore, the provision of S51 provides the instant decision mak8ng in the process of incorporation of the business. The legal application of the law on a company may provide proper knowledge to the investors to invest their share in the company or not (Casemine, 2017). Fundamentally, the artificial entity of the legal composite or condition to the management in terms of liability provides corporate lawfulness and possession.

3.6 Conclusion

This is concluded that the different types of general duties and common laws are equitable bl;e to the principles of the law. The companies’ act 2006; section 51 will be liable to the purports to act on the nature of the company. This is suggested to the companies to the new duties that are partial to the codified applications and interpretations. This may lead to the prior to the upcoming act 2006. Additionally, this helps to provide proper knowledge about the replacement and complexity of the situation. The company act 2006 goes under section 51 providing the general duties of the workers of the company. These will propose better conditions in the working process of management. The changes may introduce the allotment of empower and shares to the directors to allot the share from the different sectors. The obligation of the agreement in the company is to make the capital and maintaining provisions in the large sector or the vast area of the majority.

Conclusion and recommendation

4.1 conclusions

This is concluded that the company act 2006 may be helpful for the companies of the UK in the process of incorporation. The changes in the laws introduce the simplification of the issues that are related to the company. The applicable of the act in both the sector corporate company and Governance Company may get the proper pre-emption right. It is observed that incorporation of IAS and IFRS implementation would help to look after the transparency of the report and maintain the company act 2006.

4.2 Recommendation

The contract purports to resolve the different types of the issues that were held at the time of incorporating the business. Therefore, the companies act 2006 section 51 helps full to the directors of the company in the process of incorporating the business. Hence, it is recommended to the UK-based company to follow the IFRS, AAC, and GAAP, which are very helpful for the process of incorporation. The company may spend a disproportionate amount of money or time in the structuring of the transaction process. Therefore, it is recommended that the financial assistance and provisions are simplistically held in the capital reduction regime. These may be subject to the UK Company or the agent of the company may personnel follow the law. These will provide safety for the business in the future. The application of three laws resulted in the sweeping change in the management in running the private companies under the company act 2006. The up-to-date changes in the process of the law may force the company also in the process of updating.

Reference list

Brownejacobson, 2020, Assessing the scope of employers liability – Chell v Tarmac, 2020, Available at: https://www.brownejacobson.com/insurance/training-and-resources/legal-updates/2020/11/assessing-the-scope-of-employers-liability-chell-v-tarmac (accessed on: 14.07.2022)

Bytestart, 2022, Companies Act 2006 and private companies – key points, 2022, https://www.bytestart.co.uk/companies-act-2006-and-private-companies (accessed on: 14.07.2022)

Casemine, 2017, Rolle family & company ltd v rolle (BAHAMAS), 2017, Available at: https://www.casemine.com/judgement/uk/5b2897d02c94e06b9e19bad7 (accessed on: 14.07.2022)

Cfainstitute, 2022, IFRS: International Financial Reporting Standards, 2022, Available at: https://www.cfainstitute.org/en/advocacy/issues/international-finance-reporting-stds#sort=%40pubbrowsedate%20descending (accessed on: 14.07.2022)

Emerald, 2007, Companies Act 2006 to have significant implications for UK business, 2007, Available at: https://www.emerald.com/insight/content/doi/10.1108/sd.2007.05623hab.002/full/html (accessed on: 14.07.2022)

ICAEW, 2020, Companies Act 2006: issues for the FD, 2020, Available at: https://www.icaew.com/technical/trust-and-ethics/company-law/archive-material-passage-and-implementation-of-the-companies-act-2006/fm147-companies-act-2006-issues-for-the-fd-150217 (accessed on: 14.07.2022)

Kortext, 2022, UK GAAP for Business and Practice, 2022, https://store.kortext.com/uk-gaap-for-business-and-practice-19618

Peachyessay, 2020, AN INTRODUCTION TO SECTION 51 COMPANIES ACT 2006 EXPLAINED, 2020, Available at: https://peachyessay.com/sample-essay/an-introduction-to-section-51-companies-act-2006-explained/ (accessed on: 14.07.2022)

Vlex, 2022, Braymist Ltd v The Wise Finance Company Ltd, 2002, Available at: https://vlex.co.uk/vid/braymist-ltd-v-the-792977025 (accessed on: 14.07.2022)

Westlaw, 2022, Partnership, 2022, Available at: https://content.next.westlaw.com/practical-law/document/I376a9adff3c811e698dc8b09b4f043e0/Partnership?transitionType=Default&contextData=(sc.Default)&viewType=FullText&firstPage=true (accessed on: 14.07.2022)

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