Prepare a constitution : see section 134 & 135 so that your company's internal management is governed by a combination of replaceble rules and a constitution. The constitution should make a provision for a class of preference shares.
Explain how they completed their assignment.
Answer:
1. Introduction:
According to Schulz and Wasmeier (2012), the constitution is a document, which contains different rules and policies for a business enterprise or for a country. The researcher study is based on the commercial application of company law, which will be based on the business rules and laws. For the preparation of making constitution, a company needs to form its own legal trademark under the company act and local government. As per the Companies Act 2006, the newly formed company needs to open a bank account in a nationalised bank so that the tax file can be clear as per the rule in time. The constitution of the company needs to ensure that it will cover all the necessary business activities and provide rules and duties to the stakeholders of the company. As the Companies Act 2006, the company will need to conduct a fair business process in the market area.
1.2. Necessity of constitution:
The new version of Companies Act has generated in 2006. As per the rule of the Companies Act, it is not necessary to have a constitution of every company. However, it will be considered as legal act if a company prepare its own constitution for
the business enterprise. The constitution of the company will specify the objectives and the goals of the company, based on which the business activities will systematically take place. According to the companies’ act 2006, the companies not having their own constitution will be considered as formal group of companies and they will need to follow extra government policies. The extra governmental policy means if the company runs in loss, the government can take over the company and run as per the governmental rule (Mitchell, 2011). If the companies have their own constitution, they are able merge and collaborate with other companies, which will support in the loss stage. The government will verify the constitution of the company and the business activity followed by the constitution will be considered as legal business activity. Therefore, the constitution is required for every business organisation.
1.3. Mechanism of constitution:
In the words of Daly (2011), the modified Companies Act 2006 has some necessary components, which are useful for the company’s day-to-day activities. The Companies Act 2006 has different components like, identity of the company, management department formation rules, Rules for the share distribution, rules for the board meetings and the dissolution part. The Companies Act 2006 has many sections regarding the business process and the researcher has discussed some of the3 important sections in the assignment.
Section 1 (CA 2006): The section has explained that every new formed business entity should register under the companies act and needs to follow legal steps provided by the government. Section 1 of CA 2006 also mentioned that the company needs to fulfil all the responsibilities and duties towards the company’s objectives and goals.
Section 113 (CA 2006): According to the section, the companies need to maintain a register for the members of the business enterprise. The register will maintain all the necessary information of the members so that it will be easy to contact with the member at the time of requirement.
Section 116 (CA 2006): According to Rosen (2014), this section provides the rights and the legal authority of the members of the company. According to the section, the members of the company will have the authority to examine the information regarding the company. In this case, the member will need to prepare an application to the company or can continue the process with the help of court if the company does not agree to provide information to the respective member.
Section 117 (CA 2006): According to the section, the company is liable to provide information as per the members’ requirement. The information should be send direct to the member through the postal address or via email.
Section 147 (CA 2006): According to Camacho (2012), the section 147, the members of the company have the right to inspect the financial statement of the company. The company is liable to provide the financial statements to the members. This process will help to maintain the relationship between the company and the members.
Section 172 (CA 2006): According to the section 172, the director and other senior executives of the company will need to continue the business process in a profitable way, so that the members and other stakeholders of the company can have the profit sharing part. Running the business activity in a profitable manner, it will lead to enhance the reputation of the company. In short, the process will help in brand development. Fair business process will help to make trust of the society (Ahn and Hun, 2011).
Section 43 (CA 2006): As per the companies act 2006, every company have the right to make profitable mergers with other companies.
1.4. Special effects of constitution:
The special effect of the constitution of the company is, it helps to maintain the relationship with the members of the company towards the goals and the objectives. The constitution of the company unites the stakeholders and defines their duties as per company rules.
2. Introduction of the company:
The assignment study has taken place on ASIC and the topic is commercial application of company law. ASIC is Japanese based business enterprise that produces sporty equipments like sports shoes and other essential sports equipments. The business enterprise is having more than 5900 employees and many business units. The company has expanded its business in many countries. Therefore, the company needs to put in order a constitution that will centre of attention on the diverse economical and big business atmosphere (Gomadthinking.com, 2015).
2.1. Preparation the aims and objectives:
Under section 1 of companies’ act 2006, the company needs to register its business under the Local government and under section 172; the mission and ultimate vision of the company will need to be prepared. For the fulfilment of the vision, ASIC needs to prepare a list of objectives, which will meet to the ultimate goal in the future (Michael, 2011).
2.2. Powers on the behalf of the company:
According to the Companies Act 2006, every key members of the company will need to have the authority to take decision on the behalf of the company. The key members of the company will need to prepare different objectives and strategies for the business process and the strategies will need to flow downwards. The top level will have the r responsibilities and the lower level will have the tasks based on the strategies.
2.3. Membership rules:
As per the words of Psaroudakis (2010), the section 113 of Companies Act 2006, the members of the company will need to follow the rules and the constitutions of the company. The constitution will provide the duties and the responsibilities to the members and they need to work based on that. As per the section 43, the company can become a member of another entity through partnership process.
2.4. Organising management committee:
For a successful run of the business process, ASIC will need a proper management team for each business unit. The management committee will have directors, executive directors, business developers and other business unit managers. As per the Companies Act, the company needs to have seven numbers of boards of directors (Hooper, 2011).
2.5. Officers selection:
According to MacIntyre (2012), ASIC has different business units in different countries. Therefore, the company will need different business officers. As per the section 113 of Companies Act 2006, the officers have right to inspect the necessary business information. As per the section 117, the company is liable to provide necessary information to the officers.
2.6. General meetings:
Like every company, ASIC also needs to conduct general meetings in every year. The general meeting can quarterly, half-yearly and yearly. According to the Companies Act 2006, the board meetings should have minimum seven members. In the board meeting, the members will need to discuss the every aspect of the business. According to section 172, the board members will need to discuss about the profitability factors of the shareholders also (Tillson, 2013).
2.7. Finance of the company:
As per the Companies Act 2006, ASIC needs to have some fixed financial sources for the business activity. As per the law, the company will need to provide interests to the sources. The finance is the backbone of every business enterprise. Therefore, ASIC needs to maintain and manage the financial sources.
2.8. Variation to the constitution:
The economic conditions and the business environment are changing with the time. Every company is facing competition in the market area. Therefore, the constitution of the company needs to change if necessity occurs. For alteration, the opinion of the members is required.
2.9. Dissolution:
The dissolution part of the constitution will take place if there is any separation takes place between the management committee. In that case, the rest members will need to take decisions for the payables of the members.
Conclusion:
As per the rule of the Companies Act, it is not necessary to have a constitution of every company. However, it will be considered as legal act if a company prepare its own constitution for the business enterprise. The researcher has concluded that the commercial law is necessary for the successful running of the business.
Reference List:
Books:
Hooper, A., Ormerod, D., Murphy, P., Leveson, B., Phillips, J. and Atkinson, D. (2011). Blackstone's criminal practice, 2012. Oxford: Oxford University Press.
MacIntyre, E. (2012). Business law. Harlow, England: Pearson Education.
Mitchell, R. (2011). Law, corporate governance and partnerships at work. Farnham, Surrey, England: Ashgate Pub.
Schulz, M. and Wasmeier, O. (2012). The law of business organizations. Berlin: Springer.
Tillson, J. (2013). Consumer and commercial law. Harlow: Longman.
Journals:
Ahn Kyeong-Bong, and Hun Park, (2011). Tax Law and Revision of Corporate Accounting Provisions in Commercial Law. seoultaxlawreview, 17(3), pp.128-163.
Camacho, J. (2012). Mayo “naysâ€Â: The Supreme Court says no to patenting laws of nature. Journal of Commercial Biotechnology, 18(3).
Daly, E. (2011). Competing Concepts of Religious Freedom Through the Lens of Religious Product Authentication Laws. Eccles. law j., 13(03), pp.298-332.
Michael Wilson and Partners Ltd v John Forster Emmott. (2011). Arbitration Law Reports and Review, 130(1), pp.967-1003.
Psaroudakis, G. (2010). The Mandatory Bid and Company Law in Europe. European Company and Financial Law Review, 7(4).
Rosen, K. (2014). Company Law and the Law of Succession Droit Commercial/Commercial Law. American Journal of Comparative Law, 62(-1), pp.387-405.
Websites:
Gomadthinking.com, (2015). Asics UK | Go MAD Thinking. Available from: https://www.gomadthinking.com/differences-made/measurable-differences/asics-uk/ [Accessed 19 Jan. 2015]
