Company Law Essay Example | Topics and Well Written Essays - 2250 words

Company Law - Essay Example The tax system also favours debt financing. The share capital and its cost is difficult to determine as there is no schedule that determines the amount that is paid to the shareholders. Furthermore, the tax system does not favour share capital. If a share capital is raised, the person who acquires such shares and becomes member of the company and in accordance with his class is granted certain rights. Thus it can be safely said that there would be a degree of influence which he can exercise over the running of the company. This is so even if the person is a minority shareholder. As far as a lender is concerned, he is generally not entitled to interfere in the running of the company and so as long as the company is complying with the terms of the debenture no action can be taken by the lender so as to influence the policy of the company. In respect of a dividend for the shares, it needs to be paid only if there is a profit and that too is discretionary that is the directors decide upo n whether it should be paid or not. Contrary to shares, the interest on debt finance must be paid in accordance with what had been agreement upon and is in no way dependent upon the profits of the company. Thus even if there are no profits, the capital has to be used so as to pay the interest failure of which would entitle the lender to appoint an administrator or receiver, in accordance with the terms and conditions of the agreement. As far as dividend is concerned, it is not a deductible expense because of the fact that is a distribution of profit and a corporation tax has been deducted from it. However, in respect of the interest for the land and because of the fact that such has been taken as a trading expense and is taken into consideration for computing trading profit, tax is deductible. In respect of share capital a company normally does not have to repay its members the capital which was invested in the company, when company is wound up. Thus the directors do not have to con sider this point. However, for loan capital, there is a date in future on which the loan has to be repaid, which can also be on demand, thus the directors have to consider this and ensure the availability of funds whenever the loan falls due. Thus debt financing may increase earnings per share but there might be a reduction in share price. Thus if investors find that too much has been borrowed then they might sell shares resulting in the company to have greater liabilities than its assets. Thus the directors have to take this into account and to maintain the gearing ratios and to raise share capital and debt finance accordingly. Thus the directors of Green Books Plc would benefit from the advantages listed above and suffer from the disadvantages as well. (ii) In respect of charges, most of them need to be registered with the Companies Registry (CA 2006, s 860) and would be void against liquidator, administrator or creditor who has an interest in the secured assets if not registered (s.874). However, it is important to mention that the contract that is existent between the lender and the company would still be held valid. As for fixed charges over land they must be registered in HM Land Registry. As far as securities are concerned the most attractive ones are buildings etc. A number of fixed charges can be created

Managing Director on WTO Impact and Helping Enter New Markets Dissertation

Managing Director on WTO Impact and Helping Enter New Markets - Dissertation Example Also, the access to previously untapped markets has greatly helped the global economy as well as the different efforts of various countries and their governments to fight off poverty. Indeed, the economic activity that has been fuelled by trade liberalisation has contributed positively to the overall struggle to help ease poverty albeit there remain some countries as well as sectors that have yet to benefit fully from free trade (Mortishead 2006). Still, it cannot be denied that overall; free trade has provided immense opportunities that companies can take advantage of. Thus, for companies that are targeting to go global, it is important to factor in to their strategies the innate benefits of free trade that consumers have come to expect as well as the prospect of having more competitors and intricate transactions in the complex global marketplace (Wyld and Thomas 2011). Background, Aims and Objectives The liberalisation of trade has enabled globalization to gain much traction by all owing access to companies to previously untapped markets as well to take advantage of the different competitive advantages of various countries that can help them mitigate their costs and thereby increase their respective bottomlines. From its early years, the General Agreement on Tariffs and Trade (GATT) to its current WTO form, the organisation has pushed for greater trade liberalisation in order to maximize the potential of various nations as well as to hear out the pressing concerns that are being voiced out by member countries. Encouragingly, the recent Uruguay round has ushered in new, better and more binding agreements since there are more trade issues that have been sealed by more member nations compared to previous WTO rounds (A Round to End All Rounds, 2011). The increase in the trade agreements as well as the more numerous number of members that have joined together for the Uruguay round has greatly boosted the scope of trade liberalisation. Also, the membership of the pr eviously reclusive China has vastly increased the size of the global market since this country has the largest population all over the world. Consequently, there have been important policy adjustments that have been promulgated by the Chinese to support their membership to the global marketplace. Hence, there have been adjustments in their economic policies as well as their social and legal systems in order for them to qualify for WTO membership. Probably the most important of this was the lowering of their tariffs which have previously barred foreign competitors from entering their economy (Chow 2001). Another important contribution by trade liberalisation was the rise of the private sector which has immensely contributed to the growth of their respective economies and aggregately to the global economy as a whole (Wharton University Articles 2006). The free flow of products and services has also been accompanies by the flow of capital from the richer countries to the developing cou ntries. All these have been made possible when borders and barriers have been significantly brought down by free trade (Wacziarg and Spolaore 2004). Hence, there has been a strong improvement of the global economy as a whole with these important reforms that has been the fruit of having a strengthened free trade and the demolition or easing of protectionist policies between nations. Thus, companies are able to move freely across the borders of different nations gaining important new markets for their products as well as possible cheaper labour that are