Companies Flashcards
what are the 7 characteristics of a Company
Legal Personality - A company is a seperate legal person and has the right to sue and be sued
Ownership - a Company is able to own Property in its own name
Perpetual succession - A company will continue to exist even if their are changes to its membership
Representation- Only the Board of directors may make decisions
Number of members - A public company must have 7 or more members - A private company may not have more than 50 members
Domicile - place where the company operates
Name the Two Types of companies
Profit companies and non Profit companies
Name the 4 Profit Companies
State owned companies
Private companies
Personal liability companies
Public companies
Define a state owned company
State owned companies are state owned by local government or municipalities
the name will end in SOC ltd
Define a private company
not Public and not state owned
unable to offer shares or transfer shares to the public
the name must end with Pty Ltd
Define a Personal Liability company
The partners are liable for debts and liabilities
must end in INC
Public company is
not state owned, is not a private company or an incorporation and its name must end with LTD
How must a Company be Incorporated?
1 A Memorandum of Incorporation (either in the prescribed format or in a form unique to the company); 2.A Notice of Incorporation
3. Payment of the prescribed fees.
if the commission accepts the notice of the incorporation the following must be provided
- Assign a unique registration number to the company.
- Enter the prescribed company information in the company’s register.
- Endorse the Notice of Incorporation.
- Issue a registration certificate
The Notice of Incorporation must reflect the following details:
- It must indicate whether the MOI includes any special conditions applicable to the company and/or any requirements for amendments to the conditions in addition to the requirements for amendments that are already set out in the Companies Act.
- It must indicate whether the MOI prohibits the amendment of any particular provision.
- It must reflect at least one director for either a private or a personal liability company, or at least three directors for a non-profit company.
f Salomon v Salomon & Co Ltd 1897 AC 22.
The court rejected this contention and held that, from its inception, a company was legally separate from its members. It further held that there was no evidence of fraud or impropriety on the part of Mr Salomon.
Accordingly, the extent of Mr Salomon’s shareholding in the company was irrelevant in the finding of the validity of his secured claim as debenture holder against the company. It was further held that, based on the facts, there was no basis to hold Mr Salomon personally liable for the debts of the company.
The judgement clearly illustrates the fact that a company is a separate legal entity and that the law must concern itself with the company as an entity and not with the members of a company.
