Company Law Flashcards
Types
Registered
Chartered
Statutory
European
Main effects of incorporation
The registered company is a person of law
That it has perpetual succession by which the company existence is independent of its members who may be replaced due to death / some other reason
Limited liability
Unlimited company
They have separate legal identity, however if company assets are insufficient to meet its liabilities all members are liable to contribute without limit to paying its debts
Chartered company
Chartered granted by the crown under certain provisions eg bbc
Statutory company
Formed by act of Parliament eg utilities prior to privatisation
Effects of registration
1 creates a legal persona superset from its directors
2 perpetual succession
3 limitation of liability
Separate legal persona
The company is separate legal entity from its shareholders, directors and managers
Salomon v Salomon 1897
Perpetual succession
Company’s existence is independent of its members-a change in the company’s membership by a transfer of shares /death doesn’t represent a change in the company itself which will continue to exist as a legal entity and carry on business regardless of the identity of its members
Limitation of liability
-the company as a persona at law is liable without limit, for its debts
Limitation of liability-general rule
In the event of a winding up the members of such companies are required to contribute only the amount of any which remains unpaid on their shares or amount of their graduate
Directors won’t be liable for business debts
Lifting the veil of incorporation
is a legal decision to treat the rights or duties of a corporation as the rights or liabilities of its shareholders.
Judicial lifting
Where the courts may decide to lift the veil
Woolfson v Strathclyde regional council (1978)
