Question

Critically discuss and apply the legal framework that regulates a company’s dealings with outsiders

Answer 1

There are various legal framework that regulate a companies dealing with outsiders as those are the framework which are aimed at protection of the interest of the business organisation as well as protection of the interest of the outsiders.

A. If the company acted beyond objectives which were stated in its statute or memorandum of association, such act would be deemed as void.

B. When the registered company changed the corporate status to ordinary business, this company is also required to have specific purpose objects in their memorandum and they were more likely to change the nature of the business over time so there was a need for protection of the interest of outsiders.

C.the protection of outsider should be based upon the problem of companies who legitimately wish to change the nature of the business and outsiders were dealing with the company, who were in danger of having unenforceable contract ,because the company was acting outside its powers so there was a need for establishment of framework which will deal with the companies dealing with outsiders, so that their interest can be protected.

D. These legal framework have focused upon maintaining more transparency so that there would be high flexibility of operation and there would be a higher level of disclosure requirements while dealing with the outsiders.