Seminar 4 Business Law BUSI1094/1129 – Company Law 2024

Learning Outcomes:

 Understand Limited and Unlimited Liability in business.

 Explain the differences between public and private companies.
 Explain resolutions in company meetings under the Companies Act
2006 S282 and S283.
 Understand how a floating charge works and how it operates in
insolvency and liquidation process.

Reading:

See Chapter 14 and 15 of the Textbook Marson, J. and Ferris, K. 2020.

“Business Law” 6th ed.

This seminar covers Topic 11 and 12 Company Law Materials – see

resources available to you on Moodle.

You can also use google and look at the Companies Act 2006 linked in
moodle.

Please prepare notes on this seminar material to get the most out of this
seminar.

In the seminar your tutor will work through the answers with you.

1. Compare and explain the nature of the liability of a partner in

an unlimited partnership with that of a member of a limited
liability partnership.

2. There are key differences between a private company and a

public company. In the following table summarise the
difference between a private company and a public company in
the UK.
Key Points Public Companies Private (limited)
companies
Definition

Name Must end with public Must end with Limited

limited company or or LTD
PLC

Capital Must have at least No minimum share

£50,000 share capital capital is required

Raising capital Entitled to offer shares Cannot offer shares to

and debentures to the the public
public and may be
listed on London stock
exchange

Start of trading?

Directors Atleast 2 directors Only one director is

required required

Secretary Requires a qualified Doesn’t require a

secretary secretary and if they
have one they don’t
need to be qualified

Accounts

AGM Public companies have No necessity to hold

to hold AGMS legally an AGM

Audit
3. a. Explain the difference between an ordinary and special
resolution and how these are made.

b. Can a resolution ever be passed without the need for a

meeting?

4. Read the following problem and answer the questions below.

Moonstone Limited (‘Moonstone’) is a micro-distillery, based in the Peak

District in Derbyshire, producing gin and an exclusive range of fruit
liqueurs and non-alcoholic syrups. It was formed in 2018, with
unamended Model Articles for Private Companies Limited by Shares.

On incorporation, the company entered into an overdraft facility

agreement with Northern Bank that is secured by a fixed charge over
Moonstone’s premises. In addition, Moonstone was given an unsecured
loan of £100,000 by Priya Patel, the wife of one of its directors.

Moonstone has been successful since its formation, although it made quite
small profits until late 2023, due to competition from many similar
businesses. However, in December 2023, Moonstone secured a lucrative
contract to supply a national chain of department stores with its products
for a minimum of two years. Consequently, Moonstone needs quickly to
expand its workforce and its production facilities.

Priya Patel has offered to increase her loan by a further £100,000 but has
been advised by her solicitors to insist on a fixed charge over Moonstone’s
book debts and a floating charge over the company’s undertaking to
secure both the original loan as well as the additional amount.

Advise Priya on:

(a) the nature of a floating charge, including any issues arising from the
proposal for a fixed charge over book debts

(b) the benefits which Priya would enjoy, if the company were to go
insolvent, as a result of the floating charge granted to her

(c) the consequences of granting the fixed and floating charges to Priya, if
Moonstone were to go into liquidation within two years of the creation of
the charge.