Unit 2 - Company Formation and Management

Unit 2, International Legal English Exercises and Flashcards

These exercises focus on Unit 2, International Legal English

Wordlist for Unit 2, International Legal English

Word	Definition	Example
legal person	An entity recognized by the law as having legal rights and obligations, such as corporations and organizations	The legal person, in this case, is a multinational corporation
personal liability	The legal responsibility of an individual for their actions or debts, which may require them to use their personal assets to satisfy obligations	Personal liability means that the individual's assets are at risk in case of a lawsuit
fraud	Deceptive and dishonest conduct or misrepresentation with the intent to gain an unfair or unlawful advantage	The CEO was charged with fraud for manipulating financial reports
ultra vires	Acting beyond the legal authority or powers granted by law or a corporate charter	The decision to purchase real estate was deemed ultra vires by the board of directors
corporate veil	The legal separation between a corporation's liabilities and its shareholders' personal assets, protecting the shareholders from most corporate debts	The corporate veil protects shareholders from personal liability
legal entity	An organization, such as a corporation or partnership, recognized as a distinct legal person with rights and obligations separate from its members	An LLC is a separate legal entity, distinct from its owners
certificate of incorporation	A legal document issued by the government confirming the formation of a corporation and its legal status	The certificate of incorporation confirms the company's legal existence
statutory forms	Prescribed, standardized forms required by law for specific corporate or legal processes, such as filing company documents	Filling out the necessary statutory forms is a critical compliance step
memorandum of association	A legal document that sets out a company's constitution, including its name, registered office, and objectives	The memorandum of association outlines the company's objectives and powers
authorised capital	The maximum amount of capital that a company is allowed to issue or have at its disposal as specified in its articles of association	The company has $10 million in authorised capital for future expansions
nominal capital	The minimum amount of capital with which a company must be registered, often a small sum required by law	The shares have a nominal capital of $1 per share
articles of association	A document that outlines the internal rules, management, and regulations governing a company's operation	The articles of association govern the internal workings of the company
annual general meeting	A yearly meeting held by a company's shareholders and directors to discuss company matters, including financial reports and elections	The annual general meeting will be held on May 15th
extraordinary general meeting	A meeting of a company's shareholders called for specific, urgent, or significant matters outside the regular AGM	Shareholders convened an extraordinary general meeting to vote on the merger
board of directors	A group of individuals elected or appointed to oversee the management and decision-making of a corporation	The board of directors is responsible for strategic decisions
duty of care	A legal obligation requiring individuals, especially directors and officers of a company, to act with reasonable care and diligence	Directors have a duty of care to make informed decisions for the company
fiduciary duty	The duty of trust and loyalty that certain individuals, like directors, owe to their organization or beneficiaries, requiring them to act in their best interest	Trustees owe a fiduciary duty to act in the beneficiaries' best interests
conflict of interest	A situation where an individual's personal interests may compromise their ability to make impartial or fair decisions in their professional capacity	Disclosing a conflict of interest is vital in maintaining transparency
balance sheet	A financial statement that provides a snapshot of a company's assets, liabilities, and equity at a specific point in time	The balance sheet shows the company's financial position at a specific date
profit-and-Ioss account	A financial statement that shows a company's revenues, expenses, gains, and losses over a specific period, typically a fiscal year	The profit-and-Ioss account reveals the company's income and expenses
bonus	Additional compensation or benefits provided to employees or shareholders, often as an incentive or reward	Employees received a bonus as a reward for exceeding sales targets
capitalisation issue	The process of converting a company's profits or reserves into additional shares, typically distributed to existing shareholders	The capitalisation issue increased the company's equity base
liquidation	The process of winding up a company's affairs, selling its assets, and distributing the proceeds to its creditors and shareholders	The company faced liquidation due to insurmountable debts
auditor	An independent professional responsible for examining and verifying a company's financial statements and records for accuracy and compliance	An independent auditor reviewed the financial statements for accuracy
company secretary	An officer responsible for administrative and compliance matters within a company, ensuring legal and regulatory requirements are met	The company secretary manages administrative tasks and ensures compliance
director	An individual appointed to serve on a company's board of directors and participate in its decision-making	The director is responsible for making decisions that impact the company's direction
liquidator	A person appointed to oversee the liquidation process of a company, ensuring that its assets are sold and debts are paid off	The liquidator will oversee the distribution of assets during the winding-up process
managing director	The highest-ranking executive officer in a company, responsible for its day-to-day operations and management	The managing director is responsible for the day-to-day operations of the company
official receiver	A government-appointed official responsible for managing the affairs of a bankrupt company or individual	The official receiver handles insolvency cases on behalf of the government
promoter	A person or entity responsible for initiating and organizing the formation of a company, often involved in its early stages	The promoter secured venture capital for the tech startup
proxy	A person or entity authorized to act on behalf of another, typically to vote at a meeting or represent a shareholder	Shareholders who can't attend the meeting may appoint a proxy to vote on their behalf
receiver	A person or entity appointed to take control of specific assets or property, often to satisfy debts or secure interests	A receiver was appointed to manage the assets of the bankrupt company
shareholder	An individual or entity that holds ownership shares or equity in a company, entitling them to certain rights and dividends	Each shareholder has a vote in the company's decision-making process
private limited company (LTD)	A type of company with limited liability, often identified by "Ltd." after its name, typically not publicly traded	LTD companies offer limited liability to their shareholders
general partnership	A type of business organization where partners share management responsibilities and personal liability for the business's debts	In a general partnership, personal liability is shared among partners
public limited company (PLC)	A type of company whose shares are publicly traded on a stock exchange, often identified by "PLC" after its name	PLC companies can raise capital by issuing shares to the public
limited partnership	A partnership where general partners manage the business and have personal liability, while limited partners have limited liability	Partners in an limited partnership have limited liability and aren't involved in management
sole proprietorship	A business owned and operated by a single individual, where the owner has unlimited personal liability for the business's obligations	A sole proprietorship is owned and operated by a single individual
on the grounds that	A phrase used to introduce the reason or basis for a particular action or decision	The lawsuit was filed on the grounds that the contract was breached
at the discretion of	Subject to the judgment or choice of a particular person or authority	The distribution of profits is at the discretion of the board of directors
the ensuing year	The following or upcoming year in the context of time or future events	The budget projections are based on expected revenues for the ensuing year
statutes give wide leeway	Statutory laws provide broad flexibility or discretion in their interpretation or enforcement	Statutes give wide leeway for interpretation in specific cases
alleging	Asserting or claiming something, often in a legal context, as an accusation or assertion	The plaintiff is alleging negligence in the medical malpractice case
to act in good faith	To conduct oneself honestly, fairly, and without deceit or fraudulent intent	Directors must act in good faith when making business decisions
letter of advice	A written communication providing advice or guidance, often in legal matters, addressing specific issues or questions	The attorney provided a letter of advice outlining legal options
legal opinion	A formal written statement by a lawyer or legal expert that provides their professional judgment on a legal matter	The legal opinion supported the company's decision to proceed with the merger
referring to the subject matter	Relating to or discussing the specific topic or subject under consideration	The contract explicitly states the terms referring to the subject matter
summarising facts	Presenting a concise overview of the relevant information or details in a clear and organized manner	The legal brief does an excellent job of summarising key case facts
identifying the legal issue	Recognizing and stating the legal questions or problems that need to be addressed or resolved	Identifying the legal issue is the first step in preparing a case strategy
referring to previous court decisions	Citing or mentioning prior judicial rulings or cases as precedent or for guidance in the current legal matter	The judge strengthened the argument by referring to previous court decisions
drawing conclusions	Formulating judgments or inferences based on available evidence, facts, or legal principles	The attorney will draw conclusions based on the evidence presented
indicating options	Presenting different courses of action or choices available in a particular situation or legal context	The mediator is skilled at indicating various dispute resolution options
closing	Concluding or finalizing a written communication or a legal argument	The closing arguments summarized the case's key points for the jury
in the course of	During the process or progression of something	In the course of the trial, new evidence came to light
in terms of	In relation to or concerning a particular aspect or perspective	In terms of liability, the company is responsible for damages
by way of	As a means of or through a particular method or approach	The contract was executed by way of electronic signature
in response to	As a reaction or answer to a specific event, action, or inquiry	The legal action was taken in response to the breach of contract
violate a law	To breach or infringe upon a legal statute, regulation, or requirement	Failing to comply with environmental regulations can violate a law
call a meeting	To convene or organize a gathering of individuals for a specific purpose, often in a formal setting	The board will call a meeting to discuss the proposed merger
overturn a decision	To reverse or nullify a previous judgment or ruling, typically through a legal process or appeal	The appeals court may overturn the lower court's decision
gain representation	To secure legal representation or counsel, often in a legal proceeding or dispute	The defendant has the right to gain legal representation in court
conduct affairs	To manage or oversee the activities, operations, or business matters of an organization or entity	The CEO is responsible for conducting the company's affairs efficiently

Illustration of Unit 2 - Company Formation and Management

FAQ: Company Formation and Management

What is a "legal person"?

A legal person is an entity, such as a company, that has legal rights and obligations similar to an individual. It can own property, enter contracts, and sue or be sued in its name.

What does "ultra vires" mean?

"Ultra vires" refers to actions taken by a company or individual that are beyond the scope of their legal authority. Such actions may be deemed invalid or unenforceable.

What is the "corporate veil"?

The corporate veil is the legal distinction between a company and its shareholders. It protects shareholders from being personally liable for the company’s debts. However, in cases of fraud or misconduct, courts may "pierce the corporate veil" to hold individuals accountable.

What is the difference between a "memorandum of association" and "articles of association"?

The memorandum of association outlines the fundamental details of a company’s incorporation, such as its name, objectives, and authorized capital. The articles of association, on the other hand, define the company’s internal rules and governance procedures.

What are the duties of a director?

Directors have several legal obligations, including a duty of care (to act responsibly and prudently) and a fiduciary duty (to act in the best interests of the company and avoid conflicts of interest).

What is a "private limited company" (LTD) versus a "public limited company" (PLC)?

An LTD is a company where shares are privately held and not traded on public stock exchanges. A PLC, however, is authorized to offer its shares to the public and is usually subject to more stringent regulations.

What is the purpose of an annual general meeting (AGM)?

An AGM is a mandatory meeting for shareholders to review the company’s performance, approve financial statements, and make important decisions like electing directors or declaring dividends.

What happens during liquidation?

Liquidation is the process of closing a company and distributing its assets to creditors and shareholders. It often occurs when a company becomes insolvent or when shareholders decide to wind it up voluntarily.

What is the role of a company secretary?

A company secretary ensures compliance with statutory and regulatory requirements, maintains company records, and advises the board on governance matters.

How can I improve my understanding of corporate law terminology?

Practical Application: Review real-life company documents, such as articles of association or financial statements.
Case Studies: Analyze legal cases involving company law to understand the practical implications of key terms.
Flashcards and Glossaries: Use tools like flashcards for frequent practice.
Legal News: Follow corporate law news to see how terms are used in current events.