- •Unit I company law lead-in
- •Answer the questions.
- •Comment on the following:
- •I. Read the text.
- •Main features of a company
- •Advantages of company
- •Disadvantages of a company
- •Principle of corporate/company veil
- •Classification of companies2
- •I. Classification on the Basis of Incorporation
- •Classification on the Basis of Liability
- •III. Classification on the Basis of Number of Members
- •Classification on the Basis of Ownership
- •Classification on the Basis of Independence
- •Companies in action: special attributes and key parties3
- •Corporate personality and lifting the veil4
- •Lifting the corporate veil
- •Winding up of a company5
- •Dissolution of a company
- •II. Answer the questions.
- •III. Define if the following sentences are true or false. Use the required information from the text above and correct the false statements.
- •Language focus
- •I. Fill in the gaps using the above words and expressions.
- •II. Study the use of the phrases with “company” and translate the sentences given below into Ukrainian.
- •III. Match the following abbreviations and acronyms with their full equivalents.
- •Grammar focus
- •I. Translate the following sentences into English.
- •II. Read the text and fill in the gaps with the given verbs in appropriate form.
- •International company registration services by efsag
- •Writing
- •Self-control
- •I. Word formation. Complete the following tables:
- •II. Read the article taken from “Oxford Business And Management” and translate it into Ukrainian.
Unit I company law lead-in
Answer the questions.
How can the term “company” be defined?
What types of companies do you know?
What do you know about the company formation?
Comment on the following:
Quotations
“Every man is like the company he is wont to keep” (Euripides Phoenix)
“A wise man may look ridiculous in the company of fools” (Thomas Fuller Gnomologia)
“Tell me thy company, and I’ll tell thee what thou art” (Miguel de Cervantes Don Quixote)
Proverbs
“A man is known by the company he keeps”
“Two is company, three’s a crowd”
READING
I. Read the text.
DEFINITION OF COMPANY
NATURE OF COMPANIES1
Literally, the term company means a group of persons associated for any common object such as business, charity, sports etc. It is an association of persons.
DEFINITION OF COMPANY
Definitions given by Well-known Authors
Kimball and Kimball. “A Corporation (Company) is by nature, an artificial person created or authorised by the legal statue for some specific purpose.”
Prof L.H. Haney. “A Company is an artificial person created by law having a separate entity with a perpetual succession and a common seal.”
Dr. W.R. Spriegal. “The Corporation (Company) is a creature of state and possesses an entity distinct from the persons owing its stock or other securities.”
Definitions given by Well-Known Justices
Lord Lindley. “By a company is meant an association of many persons who contribute money or moneys worth to a common stock and employ it for a common purpose. The common stock so contributed denoted in money and in the capital of the company. The persons who contribute it or to whom it belongs are members. The proportion of capital to which each member is entitled is his share.”
Lord Selborne. “The company is mere abstraction of law.”
Lord Macnaughten. “The company is at law a different person altogether from the subscribers to the memorandum of association.”
Lord Justice James. “Company means an association of persons united for a common purpose.”
Justice Hidayatullah. “An incorporated company has a separate existence and the law recognizes it as a legal person distinct from its members.”
Justice Charlesworth. “A company is an artificial person incorporated for certain specified object.”
Chief Justice Marshall. “A corporation (Joint Stock Company) is an artificial being, invisible, intangible and existing only in the contemplation of law. Being a mere creation of law, it possesses only the properties which the charter of its creation confers upon it either expressly or as incidental to its very existence.”
To conclude, a company may be defined as an incorporated association, an artificial legal person, having an independent legal entity, with a perpetual succession, a common seal, and carrying limited liability.
Main features of a company
Incorporated Association. The company is an incorporated association […]. It must be compulsorily registered or incorporated […]. An association which is not registered cannot be called a body corporate and the liability of the members of such an association is unlimited.
Artificial Legal Person. The company is an artificial person in law. It does not exist physically but it does exist legally. It is considered as a single person in law as distinct from the members of the company who are called the shareholders. J. Hidayatallah observes that “unlike an unincorporated company which has no separate existence and which the law does not distinguish from its members, an incorporated company has a separate existence and the law recognises it as a legal person distinct from its members. This new legal personality emerges from the moment of incorporation.” Therefore, a company can enter into contracts, acquire and dispose of property in its own name as any individual can do. The actions of its members do not bind the company nor the actions of the company bind the members. But in case of a partnership, the actions of a partner bind the firm because of firm does not have a separate existence as distinct from its partners. Thus, company can do all such acts as any other person who is competent to contract. It can sue and can be sued. Legal proceedings may be instituted between the company and its members.
Common Seal. A company has a common seal […]. Recognised as an artificial person without physical existence, it cannot by itself put its signature. This is done by means of common seal regarded as the signature of the company. As the seal of a company is affixed to a document, it is said to be authenticated. After the seal is affixed […], the document is considered as the will of the company. The seal is in the custody of the board of directors or any responsible official. It is affixed whenever the documents are to be signed by the company. […]
Perpetual Succession. A company has perpetual succession. It continues to exist and its life is permanent unless it is wound-up under certain circumstances. As a company has a separate legal entity, its existence is not affected by death, insolvency, lunacy or retirement of its members or the board of directors members may come and members may go but the company can go on for ever. If a private company has two members, who are directors of the company also, die in an accident, the company will still exist. The perpetuity of existence marks out the joint stock company from other forms of business organisations.
Limited Liability. The liability of every member of a public limited company is limited to the extent of the total amount of the shares he has purchased. The shareholder of a limited company is free of his liability the moment his share is fully paid-up. Hence his private property cannot be seized in the event of winding-up the company for the payment of its debts.
Transferability of Shares. Shares of a public limited company are freely transferable to any person as per the choice of a shareholder. Formal approval of the company may be necessary to regularise the transfer. Where the proposed transferee is of bad character or of very bad financial position and the shares to be transferred are only partly paid, the company may put certain restrictions on the right of the shareholder concerned. But, generally no shareholder can be prohibited from transferring his shares […].
Separate Property. Shareholders are not, in the eyes of law, part owners of the property of the company. He does not have insurable interest or legal and equitable interest therein. A company can sue and be sued.