Evaluation of Company Law

TASK 1

1.1 Analysing whether Alan, Bob and Cassy are in breach of duties under Companies Act 2006

Companies Act 2006 governs and regulates organisation in UK. ABC Ltd was formed in 2014 financial year by three directors in carrying out business operations in the best possible manner. On of the director named Bob was blamed for loss making firm and removed from the shareholdings and assets were transferred. In relation to this, Section 174 of Company governs duty of directors. They should provide relevant skills, abilities to effectively promote firm and attain efficiency in business operations (Schewe and Lipsens, 2018). One of director of ABC Ltd which was Bob had been removed on insufficient grounds that profits were reduced. Thus, Alan and Cassy are in breach of duty as they do not scrutinise main cause behind lower profits and removed Bob. The case of John Shaw & Sons Ltd V Shaw is relevant in this aspect and as such, other directors are in breach of duty as they do not perform due care, diligence to effectively maintain business operations and incurred losses. Moreover, without conclusive proof, they can be held liable under Act as Bob was removed without any evidence from the company

1.2 Providing remedies available to Bob in terms of Companies Act 2006

There are various remedies that are available to Bob under the Act and as such, he can get fair judgement in the best possible manner (Bull, 2018). First one is derivative action which is an effective and equitable remedy to the party. In relation to this, court can easily exercise its discretion and take into account claimant's viewpoints, motives by which he has opted for sue and as such, judgement can be provided. Another remedy is unfair prejudice remedy which implies that Bob can file petition on grounds of organisation's affairs and unfair prejudicial to interest of company's members. In relation to this, case of Ebrahimi V Westbourne Galleries can be linked to the case of Bob and as such, remedy can be attained in a better way. Next remedy is Disqualifying director which are not performing as per the due diligence and in a manner detrimental to interest of members, creditors etc. Thus, Alan and Cassy can be disqualified as they have remove other director without having conclusive evidence of decreasing profits.

TASK 2

2.1 Concept of separate legal personality

The company has a separate legal personality apart from the persons forming it. Company applies for getting registered under Companies Act 2006 so that legal position can be attained and operations can be started in effective manner. When Cut & Design Ltd had applied to Registrar of Companies so that certificate of incorporation can be attained. As soon as organisation gets this certificate, it becomes artificial person and separate from owners forming it. This is called as separate legal personality as directors who form the company are regarded as different entity and as a result, organisation is termed as separate legal personality from the owners who have formed them (Westermann-Behaylo, 2018). The relevant case law can be applied to the scenario of Cut & Design Ltd is case of Salomon v A. Salomon & Co. Ltd in the best possible manner. In this case, Salmon was shoe manufacturer who had sold business to a company where shareholders were his wife and five children.