Dissolution of a company

Dissolution means the stage when the company ceases to exist. Its existence comes to an end. Thus dissolution of a company means that:

1. The existence of a company ends.

2. The existence of the liquidator of the company also ends.

3. There is no more recognition of any loan of the company because the company is no more in existence.

4. No work can be carried in the name of company.

II. Answer the questions.

1. How can company be defined?

2. What are the main features of a company?

3. What are advantages of a company?

4. What are disadvantages of a company?

5. What does principle of corporate veil assume?

6. What are the companies used for?

7. What is corporate personality?

8. On what basis can the companies be classified?

9. What classification of companies on the basis of incorporation do you know?

10. What classification of companies on the basis of liability do you know?

11. What classification of companies on the basis of number of members do you know?

12. What classification of companies on the basis of ownership do you know?

13. What classification of companies on the basis of independence do you know?

14. What must relevant norms of company law provide?

15. What are the major players in company’s activities and are their main functions and responsibilities? Are they all involved in the day-to-day management of the company?

16. Explain how a company and its shareholders can be separated?

17. What does “lifting the corporate veil” mean?

18. Can you define the term “winding up a company”?

19. In which ways may the company be wound up?

20. What does dissolution of a company mean?

III. Define if the following sentences are true or false. Use the required information from the text above and correct the false statements.

1. 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.

2. By a legal person is meant an association of many persons who contribute money or money’s worth to a common stock and employ it for a common purpose.

3. An association which is not registered can also be called a body corporate and the liability of the members of such an association is limited as well.

4. A company can enter into contracts, acquire and dispose of property in its own name as any individual can do.

5. Recognised as an artificial person without physical existence, it can by itself put its signature. This can also be done by means of common seal regarded as the signature of the company.

6. 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.

7. The liability of every member of an unlimited liability company is limited to the extent of the total amount of the shares he has purchased.

8. Shares of a public limited company are freely transferable to any person as per the choice of a shareholder.

9. The relevant company law must provide rules to deal with the creation of companies and the ways companies deal with insiders.

10. The company is managed by the representatives of its owners, who, of course, must be the experts in their fields.

11. A court always reserves the right to examine a company’s incorporated status.

12. A company can be created by law, and can be dissolved only by the law.

13. Company law is about the interactions between a company (as a legal person in its own right), the company’s members (and since most companies are limited by shares, these are generally it shareholders), its directors, its creditors (both secured and unsecured) and its consumers or buyers.

14. The task of the directors is to manage the company (although what this means in practice is determined by the constitution of the company, which in turn is governed by the members).

15. The directors generally act collectively, via a Commission of creditors.

16. 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.

17. Winding up of company is the process whereby its life continues but there is a need to administer the benefits of its creditors and members.

18. 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.

19. 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 the agreement or assent.

20. Dissolution means the stage when the company ceases to exist.