Nullity of a Company in English Law Case Study Example | Topics and Well Written Essays - 2500 words

Nullity of a Company in English honor - Case Study ExampleThe essay allow then discuss whether much(prenominal) pattern is used in English Law as illustrated through cases. Lastly, the essay will then assess, found on the use or lack of usage of the concept of vacuum on English Law whether there is a need for such concept.Nullity is a concept that renders an entity, in this case a bon ton, insignifi asst and non-existent, such that any act made by or in behalf of that company will be rendered invalid as well up. This declaration, as recognised by the First Council Directive 68/151/ europium (First Directive), is imperative to protect the company in question and their shareholders, as well as third parties that commit with them because of the possible retroactive effect it will moderate on these parties actions. Hence, as called for by the First Directive, countries moldiness limit the cases of nullity to decisions by a court of law, and on the grounds that(a) that no instr ument of formation was executed or that the rules of preventive control or the requisite legitimate formalities were not complied with (b) that the objects of the company are unlawful or contrary to public policy (c) that the instrument of constitution or the statutes do not state the name of the... al to be paid up (e) the incapacity of all the smash members (f) that, contrary to the national law governing the company, the number of founder members is less than two.1In this sense, the concept of nullity of a company, as proposed by the First Directive, has a two-fold objective it is meant to protect companies from trivial and unlawful declarations of nullity, which can be to the detriment of its operations by limiting the grounds for declaring it and it is meant to protect a companys creditors, as well as the public, by preventing transactions for unlawful and fraudulent acts of unregistered or unlawfully registered companies. Thus, the effect of such declaration is a crucial as pect of company law because companies, as an artificial legal entity, dumbfound legal rights and obligations, which will be rendered null and void upon declaration of nullity. The status of companies as a legal entity is embodied in the companys corporate personality, which as stated in Salomon v. Salomon & Co (1897), a company in compliance with regulations of the Companies Acts are distinct legal entities, capable of incurring debts, limiting the liability of its members to the amount invested as prescribed by the companies Act.2 Thus, by virtue of its corporate personality, a companys shareholders and members, as a consequence, have particular liabilities. In addition, a companys corporate personality also accords to it the capacity to enter into legal contractual transaction with other persons.3 However, while companies have limited liabilities to its shareholders, its shareholders are also limited in their ownership, such that they do not have ownership of the companys asset s, as well.4 In this regard, it is important to note that not all companies have limited liability. As