- •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.
Corporate personality and lifting the veil4
In addition to recognizing natural (or human) personality the law will also recognize artificial personality in that a corporation (company), sole or aggregate, is treated by the law as a person in its own right entirely separate from the individuals who brought it into being. The company, as with natural personality, can contract and litigate in its own name as well as buying and selling property. Other forms of association may also have these attributes, but then: it is the partners or sole trader who, in effect, are the principal parties to the action. Here it is the company itself.
[…] A company once incorporated is distinct and separate from its shareholders and directors. Often shareholders will also be directors so that with the advantage of limited liability a shareholder-director may have full involvement in running the company; but in the event of company failure they will be liable for only what they have committed themselves to invest in the company, e.g. the value of these shares, or if a company by guarantee then they will be liable only to meet that guarantee but no more.
Such separation of company and shareholder is clearly beneficial to shareholders and makes companies very attractive propositions. But like all benefits there is a price to be paid. Here it takes two forms. Firstly, the company and its officers are made subject to a demanding regulatory regime with sanctions imposed for non-compliance. Secondly, a court always reserves the right to examine a company’s incorporated status and if it is discovered that incorporation is merely being used as a front behind which wrongdoing takes place then figuratively the veil of incorporation will be lifted so that the true relationship between the company and its manipulators can be identified. If the wrongdoing is sufficiently serious then the benefit of incorporation will be removed so that the corporators will bear full legal liability and be made to make amends for their injurious conduct.
Lifting the corporate veil
On incorporation the company is taken to be a separate person in its own right. Therefore, as in Salomon, creditors are not able to take action against the members - only against the company. For this reason it has been said that incorporation acts as a veil behind which the members stand immune, apart from their contribution to capital, from liability. However, the concept of separate legal personality may lead to injustice and hardship so that public policy or statute will demand that a court pierces the veil in order to examine the true nature of the relationship between the company and its controlling members.
Winding up of a company5
Defining the term winding up Prof. Gower says, “Winding up of company is the process whereby its life is ended and is properly administered for the benefits of its creditors and members. An administrator, called liquidator, is appointed and he takes the control of the company, collects its assets, pays it debts and finally distributes any surplus among the members in accordance with their rights.”
A company is an artificial person, created by law it cannot die a natural death. Whenever the life of a company is put to an end, it must be through a legal process. It remains in existence until the process of its winding up is completed. Winding up of a company means the stage when the business of the company is dissolved, all the assets of the company are realised and the money realised is distributed among the creditors, debenture-holders and shareholders of the company. If the company does not realise the money, sufficient enough to pay off its creditors, then it asks for the money from its shareholders if there is any uncalled money on the shares.
Thus, the term winding up means the process of realization of the assets, payment of the liabilities and distribution of surplus if any, among the members of the company. It is also known as liquidation of a company.
[…] A company may be wound up in any of the following three ways:
Compulsory winding up by court.
Voluntary winding up.
Winding up under the supervision of court.