South East Antique Shop Case Study Example | Topics and Well Written Essays - 3500 words

South East Antique Shop - Case Study Example The liability of the partners in a partnership firm or the owner of a proprietary extends to the company's debts and financial obligations. In order to limit one's liability to the extent of one's investment in the company, a limited liability company is to be formed. This protects the owners by limiting their risk in the event of failure of their business to just their investment. In the event of a claim being preferred against the company, such a claim is limited to the extent of the assets held by the company. The personal properties or belongings of the owners are protected from such claims. In the absence of such a structure, the liability is not limited to the investment in the company and the homes, accounts in banks and other assets of the owners are at risk of being appropriated towards the claim amount1. The word limited in respect of companies is a warning in as much as that if something goes wrong and if a person wants his money back; it will be possible to get only what the company has and not what he has to be reimbursed. One cannot go beyond the assets of the company during this process. In other words the dealings are with an entity having limited liability. Over a period of time, gradually the possibility of making the directors personally liable for some company defaults has increased. The articles of association set out rules for the internal management of the company. Great care must be taken in drafting the Articles of Association. The Articles of a company may be altered by a special resolution. Where Articles of Association are not registered, or if the Articles are registered in so far as they do not exclude or modify the regulation in Table A , those regulations so far as applicable are the regulations of the company in the same manner and to the same extent as if they were contained in duly registered articles. If the company intends to issue shares or stock warrants, special authority for that purpose can and must be given by the articles. The articles may authorize the issue of redeemable preferential shares and may also authorize the company to increase its capital, to consolidate its shares into shares of larger amount, or convert paid up shares into stock and to reconvert stock into paid up shares, to subdivide its shares into shares of smaller amounts , and to cancel shares not taken or agreed to be taken, also to reduce its capital share premium account and capital redemption reserve fund. The articles may also authorize the company to alter its memorandum to impose unlimited liability on its directors or its managers or any managing director. The specimen of the Articles of Association is to be found in the office of The Registrar of Companies. The first clause of this memorandum of association is required to state the name of the proposed company. A company being a legal entity must have a name to establish its identity, the name of the corporation is a symbol of its existence. The second clause of the memorandum of association must specify place where the registered office of the company is to be situated. The third and final clause must