COMPANY LAW Flashcards
What is company law and what are its advantages?
Acording to lord justice lindley a company is an association of people that put together their money or money’s worth into a common stock, and employ it into a trade from which they share the resulting profits or loses.
By extention company law is that branch of law that gorvens the formation, registration, management, and disolution of companies.
The advanges of company law inclued(CPC-baLi)
- Coperate Gorvernance:
Company law sets standards for the gorvenance of companies so that companies are gorven ethically and effieciently in order to protect the interest of share holders and avoid coporate scandals, missmanagement or fraud - Protection of share holders
Company law defines the rights and responsibilities of share holders, and how they interact with company, with the aim protecting the interest of both them and the compay - Compliance and Enforcement:
Company law sets rules for compliance and consequences for non complaince to be enforced by the competent authorities in matters like legal requirements or report fillings - Legal frame work
Company law provides a legel framwork on how companies should be created, registered, managed and disolved
What are the different types of business recognised by OHADA and what will you say is the difference between a public limited liability company and a private limited liability company?
There are diffrent forms of business entities provided for by OHADA including Partnerships, Limited liability companies, and unregistered companies
- Partnerships
There are two types of partnerships that include:
i. Ordinary Partnership:
This is a buisness organisation, that is formed by a minimum of 2 members to an unlimited amount of members, and has no minimum required capital, each member in these organisation is liable for the full extend of the companies debts
ii. Limited Partnership
This is a partnership made up of two kinds of members, active and sleeping partners. Here active parters have unlimited partnership while sleeping partner’s liabililiy is limited to their investment. Active partners handle the day to day running of the organisation
- Limited liability companies
There are two types of limited liability companies: private and public, and where are going to analyze them by defining their similarites and differences:
Similarities:
-> Both types of companaies are companies where the liability of share holders are limited to their shares and their shares also represent thier rights within the compay
-> Both types of companies can be created by a single individual provided they can obtain the required minimum capital
Differencies (NA-SMS):
-> Number of shareholders: The number of share holders in a public limited liability company ranges from 1 to 100, while in a private limited liability company it ranges from 1-50
-> Acronym: In frence public liability companies a abriviated SA, while private limited liability companies are abreviated SARL
-> Sharevalue: The individual share value in an SA is 10,000frs while in a SARL it is 5000frs
-> Minimum capital: for SA it is 100 million, for SARL it is 1million
->Share transfer: in an SA shares are transfered freely in a SARL shares can only be transfered through the unanimous agreement of shareholders
- Unregistered companies
i. Joint venture
A joint venture is when two individual companie come together to archive a project that can otherwise not be realised by any single one of them alone either because of complexity, funds, etc. During the course of the project they main their legal entites and the venture comes to an end once the project is realised
ii. Defacto Company
This is a suituation where company provided for under OHADA law is created but the creators have not completed the requirments provided for by OHADA
iii. Company Limited by garantee
This is any type of Limited liability company where the shareholders liability does not end at their shares but extends to an agreed upon amount after their shares.
Expalin the process of company creation in Cameroon and what documents are recuired for the registration of companies in Cameroon.
This process can be divided into three main parts (CRT)
- Capital
-> The soon to compay’s lawyer shall write to a cormercial bank requesting for a bank account for the company
-> The founders shall deposit the companies capital into the account and obtain a receipt - Registration
-> The founders shall hire a public notatry to establish articles of association for the company
-> The founders shalll then deposit an application for registration at the TPPCR together with any other required documents: These doucments include:
* 2 certified copies of articles of association
* 2 certified true copies of certificates of payment of shares- 2 certified true copies of the list managers, directors, and sharehoders
- 2 certified copies of certificate of non conviction of managers directors and shareholders
* Permit to conduct business where applicable.
-> If their registeristration is approved the founders shall then have the news of their registration published in the competent news papers
- Taxes
-> After obtaining a certificate of registration or incorporation they shall apply for 2years of tax exemption
-> They shall then apply for tax payer card from the competent tax center
-> Lastly the shall register the company with the National Insurance Fund or CNPS so that thier employees can enjoy social security or Pention
Who are shareholders, and what are their right and obligations? ii) What the possible types of shareholder contributions?
Shareholders are the top organ of a company, and one needs to buy shares in said company to be one of them, sharehoders meet together to hire or dismiss directors or other staff and handle the company’s profits or losses. These sharehoders have certain rights and responsibiltes.
Firstly their rights, the rights of share holders are divided into two pecuinary(financial) and (non pecuinairy rights):
i)Pecuinairy rights:
Share holders have the rights to:
-> Share in company profits
-> Share in company assets upon the disolution of the company if there are any left after the debts of the company have been paid
ii)Non-pecuiniary rights:
Share holders have the right to:
-> attend ordinary and extraodinary meetings
-> Vote on company matters
-> Participate in decission making
The Obligations of share holders on the other inculde:
-> Sharing in the company’s losses
-> Attend company meetings or deligate the powers to someone else competent
-> Contributing to the smooth running of the company
-> Contribute to the company’s capital
Shareholder contributions provided by the OHADA Uniform act include
-> Contribution in Cash
-> Contribution in Kind
-> Contribution in services
Explain the concept of legal pesonality, its advantages, the concept of lifting the veil of in corporation and when it can happen.
The concept of legal personality is concept that explains that once a company is registered or incorporated it becomes a seperate legal entity from it’s shareholders and now has it’s own rights and obligations similar to that of a natural person. This was better established in the case of solomon v. solomon and co ltd, where the House Of Lords of England ruled that once a company is incorporated it becomes a completely distinct entity from it’s shareholders.
There are certain advantages that come from the incorporation of a company that include:
-> Share holders liability become limited to their shares
-> The company can now own property
-> The company can now sue or be sued
-> The company gains nationality in the country it was incorporated in
-> Share become more easily transferable or succeeded
A company can be stripped of it’s legal personality this concept is called lifting the veil of incorporation, here a company’s legal personality is ignored and its share holders or managers become liable for any acts done in the name of the company.
Lifting the veil of Coporate personality can occur under two conditions:
1. Express Statutory Provition:
When a company employee uses company asserts for their personal intrest and have to be sanctioned
- Case law:
In cases of fraud, sham practices or Illegality
What is the Disolution of a company, what are its causes and, what are it’s concequences?
The dissolution of a Company refers to the legal process through which a company comes to end. Here the relationship between shareholders end as they are no longer in business together and the company is discontinued.
The possible resons for the disolution of a company are as follows(LOCAC)
- Lifespan:
Under OHADA Companies have a life span of upto 99 years. A company must dissolve if it reaches the maximum lifespan - Objectives:
A company can disolve if the it archives the goal for which it was created - Contract
A company has disolve if the contract forming the compay is annulned - Aggrement
Companies can dissolve on the aggreement of share holders, under conditions provided by the articles of association - Court or Share holders
Companies can disolve on the request of the court or shareholders
When a company is disolved it’s asserts are liquided and the resulting money is used to settle the company’s debts and what ever is left is appropriately shared among share holders. But the effect of company dissilution are in 3 steps
1. The company ends all business but still retains legal personality
- The company is removed from the list of registered company’s in the TTPPCR
- A liquidator is assinged to liquidate the company
What does TPPCR stand for ?
Trade and Personal Property Register
What are articles of association and what constitute then ?
An article of assocaition is contract established for the formation of a company, it is signed by company share holders and it is done on a plain unheaded paper. It is either esteblashed throught private contract or Notorial Deed.
There are 8 componets or peices of information articles of association must contain.
- The name of the company
- The type of company
- The registered office of the company
- The scope and purpose of the company
- The Duration of the company
- The Identity of shareholders
- The contibution amounts and types
- The rights and obligations of shareholders
