Lecture14

The Articles of Association
Most limited companies will use the Model Articles, but it is possible to change them if needed. These Articles will set out how the company is run, governed and owned by the members. The Articles can put restrictions on the company's power - which can be useful if the shareholders and directors do not agree and try pulling the company in different directions. This Model Articles cover the following:
• Directors' powers, responsibilities, decision making, appointment and removal, indemnity and insurance
• Shares, distribution of shares and Dividends
• Capitalization of profits
• Shareholders
• General meetings
• Voting Rights
If you want to change these articles in any way, such as issuing different classes of shares or adding or removing shares, then you can. However you will have to notify Companies House when applying to incorporate the company so that they can be reviewed to ensure they are acceptable.
Prospectus:
After the receipt of certificate of incorporation, if the promoters of a public limited company wishes to issue shares to the public, he will issue a document called prospectus. It is an invitation to the public to subscribe to the share capital of the company.
Features of a prospectus:
• A formal summary of a proposed project
• A document describing the chief features of something, such as business, an educational program, for prospective buyers, investors, participants.
Objectives of Prospectus:
• It informs the company about the formation of a new company
• It serves a s written evidence about the terms and conditions of issue of shares of a company
• It maintains all authentic records on the issue.
Contents of Prospectus:
• Name and Registered office of the company
• The main objects of the company
• Remuneration of the directors
• Amount of preliminary expenses
• Amount of expense of the issue
• Details of every contract of the company
• Times and place where contracts may be inspected
• Name and address of the auditor
• Time of opening and closing subscription list