The total nominal value of shares that a company has allotted.

The principal constitutional document of a company that usually provides for rules that regulate the internal affairs of the company.

The maximum total nominal value of shares that may be allotted by a company.

Shares allotted to existing share­holders and paid for out of the company’s distributable profits.

A sum owed to a company by those who have purchased goods or services from the company.

Where a company calls for payment on shares that have not been fully paid for, the amount called for plus the paid-up share capital is known as the called-up share capital.

The ability of a person to enter into certain transactions or make certain deci-sions. For example, a company’s contractual capacity refers to its ability to enter into legally binding contracts.

A series of rules designed to protect creditors by maintaining a company’s level of capital by preventing capital from being returned to the company’s members.

Any form of security where possession of property is not transferred.

A creditor who obtains a charge from another person.

A debtor who grants a charge to another person. Also known as the ‘surety’.

The rights that are attached to different classes of shares.

The process whereby law is collected and restated in statute.

An executive agency of the government responsible for incorporating and dissolving companies and for storing information relating to companies that can be inspected by the public.

An officer and agent of the company who is usually responsible for ensuring that the company complies with its legal and financial obligations.

A company member who is a body corporate (e.g. a company or LLP).

The separate persona­lity that belongs to legal persons (e.g. companies, LLPs). Also known as separate personality or legal personality.

The process whereby a floating charge fixes onto the charged assets.

A document whereby a company creates or acknowledges a debt, whether unsecured or secured.

The capital that companies obtain through borrowing from others. Also known as ‘loan capital’.

‘In fact’.

A general term used in many pieces of legislation that refers to a failure to per-form a legally obligated act (e.g. to appear in court when required).

‘In law’.

The distribution, usually in cash, of profits to the members, usually at a fixed amount per share.

The word ‘fiduciary’ can refer to:
(i) a relationship of trust and confidence (e.g. solicitor and client, doctor and patient, or trustee and beneficiary), or
(ii) a person who is in such a relationship and who is under an obligation to act in the other’s interests (e.g. a doctor, solicitor, or trustee).

An agreement between a company and an employee (usually an executive director) providing that the employee will receive certain benefits upon the termination of his employment.

A theory which states that the knowledge of certain persons is to be attributed to the company.

The process by which a company or LLP is created.

The first sale of shares by a company to the public at large.

A company is deemed to be insolvent if it is unable to pay its debts as they fall due.

The total nominal value of shares that a company has issued.

Persons who are jointly and severally liable may be sued jointly for a loss, or any one person can be sued for the entire loss (although that one party can usually obtain a contribution from the other liable parties).

A business structure established by the Limited Liability Partnerships Act 2000.

A public company whose shares are listed on a stock exchange.

Historically, the principal constitutional document which regulated the external affairs of a company. Its importance has diminished significantly following the passing of the CA 2006. It now merely provides basic information concerning a company at the time of its creation.

The improper or unlawful performance of a lawful act. Can be contrasted with malfeasance, which is the performance of an unlawful act.

A fixed value attached to shares when they are allotted, which may bear no resemblance to the actual value of the shares.

The act of substituting one contract for another.

A clause in a company’s constitution setting out the objects or purposes for which the company was set up.

A resolution passed by a simple majority (i.e. over 50 per cent).

Where a company only has one class of share, its shares will be known as ordinary shares, which will entitle the holder to the normal rights of share ownership (e.g. to vote at general meetings).

The combined nominal value of share capital that has actually been paid.

A company is a parent company of another company if it:
(i) holds the majority of voting rights in the other company, or
(ii) is a member of the other company and has the right to remove or appoint the board of directors, or
(iii) is a member of the other company and controls alone, pursuant to an agreement with other members, a majority of the voting rights in it.

‘With equal step’.

A business structure defined by s 1(1) of the Partnership Act 1890 as ‘the relation which subsists between persons carrying on a business in common with a view to profit’.

The right of first refusal belonging to existing shareholders upon the allotment of a new batch of shares. The company must first offer the shares to the existing shareholders.

Shares which entitle the holder to some sort of benefit or enhanced right, usually in relation to the entitlement to a dividend.

A person who undertakes and enters into the process of setting up of a company.

A person appointed to vote or act on behalf of another for another (e.g. at a general meeting of a company).

‘In the capacity of’.

The minimum number of persons required to have a formal meeting. Meetings lacking a quorum are said to be ‘inquorate’.

A company whose shares are listed on the UK official list, or in an EEA state, or on the New York Stock Exchange or Nasdaq.

Shares issued by a company which can be redeemed (bought back) by that company should the company or the member so require, or upon the passing of a stated period.

A company created through incorporation by registration.

The Chief Executive of Companies House. The principal functions of the Registrar are to register the incorporation and dissolution of companies and to ensure that documents delivered to Companies House are accurate.

A decision arrived at by a formal vote.

A measure of a person’s interest in a company. The owner of a share is called a shareholder.

The capital that the company acquires through the selling of shares. Also known as equity capital.

The sum paid for a share in excess of the share’s nominal value, which usually represents the difference between the nominal value of the share and its market value.

A sole proprietor who is a professional (e.g. solicitor, accountant).

A business structure consisting of an individual who conducts business on his own account and who bears the risk of business failure and is also entitled to the profits of the business.

A sole proprietor who is not a professional.

A resolution passed by a majority of not less than 75 per cent.

A company is a subsidiary company of another company if that other company:
(i) holds the majority of voting rights in it, or
(ii) is a member of it and has the right to remove or appoint the board of directors, or
(iii) is a member of it and controls alone, ­pursuant to an agreement with other members, a majority of the voting rights in it.

The purpose(s) for which a company is formed.

An item of property other than land.

An intangible thing which, being intangible, can only be claimed or enforced by legal action, as opposed to by taking possession of it (e.g. a share).

‘Beyond one’s powers’. If a company acts outside the scope of its constitution, it will be acting ultra vires.

The difference between the company’s issued share capital and its called-up share capital.

The difference between a company’s authorized share capital and its issued share capital.

A company not incorporated by registration (i.e. one created through incorporation by Act of Parliament or through incorporation by Royal Charter).