Incorporation. Under the law a company incorporated under the Act is a distinct entity They exist in the form of entries in the book of depositories. This system . Company Law Textbook - [Free] Company Law Textbook [PDF] [EPUB] This listing of free Law Books Online TextBooks and tutorials they are. A company is a "corporation" - an artificial person created by law. A company thus has legal rights and obligations in the same way that a natural person does.
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Avatar Singh: Company Law, Eastern Book company, Lucknkow. 3. Anantha Raman, Lectures on Company Law, Wadhwa and Company. 4. Tadon M.P. UNIT 4 – DEVELOPMENT OF COMPANY LAW IN NIGERIA This study material is the first part of Company Law. Company law itself is . Anderson in his book. But for many purposes, a company is a legal person like a natural person. Separate Legal Entity: A company has a legal distinct entity and is independent.
The Law of Business Structures will undoubtedly fulfil this need. Both law students and commerce students, including accounting and auditing students, will find the book useful in guiding and assisting them in the study of the law of business structures. In addition, those who teach the law of business structures will find this book to be a useful guide and teaching aid. We hope that The Law of Business Structures will also serve the needs of practitioners, whether attorneys, accountants, auditors or company secretaries, who require a reliable and ready source of information on the law of business structures, and particularly on the new Companies Act 71 of The Law of Business Structures contains a fairly detailed treatment of the law of partnerships, business trusts, close corporations and companies, whether large or small, and whether formed for a profitmaking or a non-profit-making objective.
The centrepiece of the book is undoubtedly company law. The reason for the strong focus on company law is quite obvious. Company law in South Africa has been thoroughly and extensively overhauled. Basic and fundamental corporate law doctrines and concepts were deemed to be outdated, obsolete or archaic and to have outlived their usefulness, because they were no longer appropriate to the contemporary economic and business environment. An additional policy factor led to this sea change, namely, the need to harmonise South African company law with that of our main trading partners internationally, in order to ensure that South African companies are not competing at a disadvantage because of an outdated and restrictive company law regime.
Hence, the new Companies Act 71 of , with its many innovative legal concepts and new underlying philosophies, was passed. Roman Dutch law did not take the common law of corporations much further and the development of law in this country and in South Africa owes most of the injection of English Law. These corporate bodies owned property and incurred liabilities separately from their members so that a judgement against a corporation did not permit execution against the personal assets of a member.
Later there came into being corporate bodies built created by act of parliament, a procedure which we will still see today in the setting up by Government of Parastatal bodies such as National Railways of Zimbabwe. The 18 th century was a great time of commercial activity. There was a great deal of abuse of the system at that time and the advantages of separate corporate status. The fraudulent company promoter appeared on the same scene, having downloadd the Charter of a defunct company or merely purpoting to have done so.
Its main features were: By permitting transfer of shares the act of course implied established the third characteristic of a company, viz, perpetual succession, which distinguishes it from a partnership. The Act enabled corporate status to be attained by companies whose members held shares simply by registration of a Memorandum of association.
It covered the liability of directors and other officers and provided for the limited liability of members.
It also laid down the procedure for the liquidation or winding up of companies. The statute which now governs the affairs of companies of the Companies Act Chapter The main objectives of the act are: It is, therefore, a combined political, social, economic and legal institution.
A company is an artificial or juristic person. The holder of a share acquires certain rights in the company and becomes a member of the company also having certain obligations towards it. This form of company is recognisable by the letters Ltd after its name.
Such companies must comply with certain requirements to enable them to be licensed by the Minister. It combines features of partnerships and private companies. The Act was amended in to provide for co- operatives. There is no such thing in our law as the company with unlimited liability.
In the main, we will focus our study on to the form of company cited under 1. This is a company formed in terms of the Act, limited by the shares, that is, it raises its working capital by having people join it by downloading shares.
Once formed the company has its own existence and hold its own property quite distinct from that of the shareholder or members.
In the event of the company incurring any liability, contractual or otherwise, the liability of members is limited to any outstanding among which they have undertaken to pay for the shares they have downloadd. It is a legal persona existing independent of its members. By incorporation under the Companies Act, the company is vested with a corporate personality, which is distinct from the members who compose it.
This body corporate is capable of exercising all the various functions of an incorporated company and it must have perpetual succession. A well known illustration of the above principle is the case of Salomon v Salomon Co. Ltd AC 22 H. One Salomon was a boot and shoe manufacturer. His business was in sound condition and there was a substantial surplus of assets over liabilities.
The seven subscribers to the memorandum were Salomon, his wife and daughter and four sons and they remained the only members of his company. Salomon, with his two sons, constituted the board of directors of the company. The business was transferred to the company for 40 pounds. In payment, Salomon took 20 shares of 1 pound each and debentures worth 10 pounds.
One share was given to each remaining member of his family. The company went into liquidation within a year. On winding up, the state of affairs was broadly something like this — Assets — pounds, Liabilities — Salmon was debenture holders.
Thus after paying off the debenture holder, nothing would be left for the unsecured creditors. The unsecured creditors, therefore, contended that though incorporated under the Act, the company never had an independent existence, it was in fact Salomon under another name; he was the managing director, the other directors being his sons and under his control.
His vast preponderance of shares made him absolute master. The business was solely his, conducted solely for and by him and the company was mere sham and fraud, in effect entirely contrary to the intent and meaning of the Companies Act. It must be treated like a company, as an entity consisting of certain corporators, but a distinct and independent corporation. They have done this in cases where the company is being used for fraudulent or other illegal purposes, or where matters of residence, trust relationships and the interests of third parties are involved.
In other words, the liability of the members is limited. No member is bound to contribute anything more than the nominal value of the shares held by him. In a partnership, the liability of the partners for the debts of the business is unlimited, i. Speaking of he advantages of trading with limited liability, Buckley J. This feature is a direct result of the transferability of shares.
The death or insolvency of individual members does not, in any way affect the corporate existence of the company. Professor Gower, for example, has cited this example in a footnote in his book: But the company survived; not even by a hydrogen bomb could have destroyed it.
In a partnership, a partner cannot transfer his share in the capital of the firm except with the unanimous consent of all the partners. If a transfer is made against the will of the other partners, the transferee does not become a partner although he has some rights in the dissolution of the firm. Discuss, in greater detail, the nature, characteristics and advantages of a registered company. A partnership firm was carrying on the business of plying buses.
Having worked for some time, some of the partners formed a private limited company, which they could under the law even while the partnership continued to be a running concern.
Such of the partners who formed the company sold to the company their own buses which were, up to then, being used by the firm. The other set of partners who constituted the minority, sued the section forming the company for accounts and their share of profits on the ground that in reality the company was not a different entity from the firm and the business carried on by it was the same as that of the firm.
As discussed earlier, there are many types of business organization, although there are mainly tow types of companies generally formed viz the private and public companies.
Before we look at this in some detail, lets look at the company in general, the partnership as well as the co- operative — all being forms of business organizations that we see here, there and everywhere. At the end of this topic, the participant should be able to: Cite some of the advantages of a private company over a public company.
Public company — may have hundreds of shareholders, who take no part in running the business, contributing large amounts of capital. Perpetual succession, i. Any property acquired by the partnership belongs to all the partners in common. Public company — usually fully paid shares feely transferable.
All partners must consent to the transfer of interest from one partner to another. A transfer will terminate the original partnership. Transfer of interest restricted. Do not have an existence separate form the members who form it. Has a personality completely separate from the members it is a legal persona. Do not require an annual audit. Annual audit only necessary if required by the co-operatives. Such companies will have a share capital.
In general a registered company may be a public company or a private company. Let us compare and contrast between the two. Private and Public companies Compared and Contrasted.
Needs to be certified by the Registrar of Companies before starting business. Certain formalities dispensed with — e. Not required to lodge consent form with Registrar. Formalities required, e. Must signed consent form with Registrar and sign for qualification shares. Generally unrestricted. Not required; but if directors have shares, company cannot start business until each director has paid for their shares.
Registers must be kept. Annual balance sheet must filed with Registrar. Not required to be shown in the accounts. Generally prohibited. If granted, must be shown in the accounts at the annual general meeting. A private company can be formed in a matter of a couple of weeks and can commence business as soon as it is incorporated. The stringent rules relating to the appointment of the first directors Section and the absolute prohibition of any loans to directors Section do not apply to private companies.
Generally, the fact that a private company has only a few members makes for relatively easy management where decisions requiring a resolution of the company are concerned e. Compare and contrast between a private and a public company. How different is a Partnership from a Co-operative? Such application follows a certain laid down procedure which, when followed properly, will result in a company being formed in as short a period of time as two weeks.
The procedure is described, broadly, below: Name Search Submit on prescribed form CR21 the proposed company name preferably three or even four names in order of preference. This is to ascertain by search and examination, that a name is available for registration, i. The Registrar maintains a register of company names.
Identical or near- identical names are rejected. It must be noted that the Registrar has the power to reject any name, for registration purposes, which in his opinion, may be misleading, offensive, derogatory, blasphemous or undesirable. A name which is in compatible with the main object of the company being formed will not be accepted.
For example, a furniture At the end of this topic, the participant should be able to: Explain what each of the various company registration CR forms is used for, when and why.
Sometimes, also, the Registrar of Companies will object to the company name if such a name is in conflict with the provisions of Section 20 1 of the Act. Law requires, further, that the name of the company shall be displayed in a very conspicuous position outside all offices or places of operation, and it must appear on all offices or places of operation, and it must appear on all business letters, notices, etc. See a specimen of Form CR Memorandum and Articles of Association Memorandum of Association Any two recent enactment, one or more persons may form a company by signing a Memorandum of Association.
The Memorandum must state the desire of the subscribers to be formed into a company, and the agreement of each to take a specific number of shares in the company.
In Zimbabwe, no subscriber may take less than one share. Each subscriber is required to write opposite his name the number of shares he takes and sign the Memorandum in the presence of at least one witness who must attest the signature.
It is a requirement of the Companies Act Section 9 that the Memorandum, state: Nevertheless, it must be understood that a company, being a legal person, must have a name to establish its identity. What is of equal importance is that the name of the company should not be identical with the name of another registered company.
The reason is: The common law recognizes that a company is a creature of statute and only has the powers it is born with. The list of objects usually ends up with one all embracing object. The choice of objects obviously lies with the subscribers to the Memorandum and their freedom in this respect is almost certainly unrestricted.
The only obvious restrictions are that the objects should not go against the law of the land and the provisions of the Companies Act. Further, the Act provides that a company limited by shares cannot, subject to a few exceptions, download its own shares. Accordingly, any clause in the Memorandum giving the company a power to download its own shares will be in operative.
Yet, in reality, that capital has been contributed by the shareholders and is thus held by the company as though in trust for them. The statement of objects. Therefore, gives a very important protection to the shareholders by ensuring that the funds raised for one undertaking are not going to be risked in another.
The creditors of the company trust the corporation registered and not the shareholders who may come and go.
Creditors are important. It also prevents concentration of economic power. If his shares are fully paid up, his liability is nil. For example, it may read: The printed names, addresses and occupations of the subscribers for, written in their own handwriting.
Brougham AC at p.
If articles are not registered, then Table A of the First Schedule of the Companies Act automatically applies to the company.
If articles are registered with the memorandum, then they must be signed and dated by the subscribers and their signatures witnessed. The names, addresses and occupations of the subscribers and witness must again be printed.
The company is a private company and accordingly: In the case of a private company, earlier see, the articles must restrict the right of members to transfer shares, must limit its members to not more than fifty and must prohibit any invitation to the public to subscribe, and a co-operative company must have similar provisions.
One point worth noting with regard to the Articles of a Company: They usually cover matters like the distribution of the share capital, the rights of shareholders of different classes, transfers, liens, forfeiture of shares, alteration of share capital, meetings, voting procedure, appointment of Directors and their powers, keeping of accounts.
The articles constitute a contract between the company and its members and between the members themselves but they differ from other contracts in that the terms can be changed unilaterally by the company in general meeting and a member joins the company with that understanding and cannot sue the company for any breach if it changes its articles or Memorandum by the proper procedure.
In other words, provided the appropriate majority are happy, the minority have to accept the terms of the contract as amended. The articles are not in any way a contract between the company and any employee as such. In the case of Eley v. Please note that attendance at seminars is compulsory and registers will be kept. Not free to disregard the principle of Salomonmerely because it considers.
Concept paper Note on the Approach. Following the recommendations of the Company Law fqlfh htpdfyjd Committee known as the Bhaba Committee set up in the.
Pre-incorporation contracts. Bills of exchange and promissory note. Liability for company debts where membership is below legal minimum. Free e-book on Computation of Depreciation under Companies Act, Any minority members of the merging companies, may be obtained free of charge, from the. Free lectures download on Company Law including slides, notes, handouts, exam papers, past exams in pdf and ppt for school and college and much more.