NationMaster - Encyclopedia: Corporate law

Corporate law (also corporations law or company law) refers to the law establishing separate legal entities known as the company or corporation and governs the most prevalent legal models for firms, for instance limited companies (Ltd or Pty Ltd), publicly limited companies (plc) or incorporated businesses (Inc.). It is a subset of companies law which, depending on the legal system, may cover the wider spectrum of partnerships, trusts, unincorporated associations, guilds or sole proprietorships. Technically, a company is a juristic person which has a separate legal identity from its shareholding members, and is ordinarily incorporated to undertake commercial business. Although some jurisdictions refer to unincorporated entities as companies, in most jurisdictions the term refers only to incorporated entities. It has been judicially remarked that "the word company has no strictly legal meaning",^[1] but is taken to mean a specific form of entity created under the laws of the relevant jurisdiction. Because of the limited liability of the members of the company for the company's debts and the separate personality and tax treatment of the company, it has become the most popular form of business vehicle in most countries in the world. Image File history File links Scale_of_justice. ... Companies law is the field of law concerning business and other organizations. ... A sole proprietorship, or simply proprietorship, is a type of business entity which legally has no separate existence from its owner. ... A partnership is a type of business entity in which partners share with each other the profits or losses of the business undertaking in which all have invested. ... This article needs to be wikified. ... A limited partnership is a form of partnership similar to a general partnership, except that in addition to one or more general partners (GPs), there are one or more limited partners (LPs). ... A limited liability partnership (LLP) has elements of partnerships and corporations. ... For other uses, see Corporation (disambiguation). ... For other uses, see Coop. ... A Massachusetts business trust or MBT is a legal trust set up for the purposes of business in the state of Massachusetts. ... This article is about a U.S.-specific corporate form; for a general discussion of entities with limited liability, see corporation. ... The limited liability limited partnership (LLLP) is a relatively new modification of the limited partnership, a form of business entity recognized under US commercial law. ... A Series LLC is a special form of a Limited liability company that provides extra protection for personal assets comprised of multiple business entities. ... A Delaware corporation is a corporation chartered in the U.S. state of Delaware. ... It has been suggested that this article or section be merged into Nevada. ... It has been suggested that this article or section be merged into Limited liability company. ... A limited company by shares (limited or Ltd. ... In British or Irish company law, a Limited Company is a person on its own right. ... The initials PLC after a UK or Irish company name indicate that it is a public limited company, a type of limited company whose shares may be offered for sale to the public. ... A Proprietary limited company or abbreviated as under Australian law is a business structure that has at least one shareholder with a limited number of shares. ... A community interest company (CIC) is a new type of company introduced by the United Kingdom government in 2005. ... For other uses of civil law, see civil law. ... Aktiebolag is the Swedish term for a corporation, i. ... Aktiengesellschaft (IPA: ; abbreviated AG) is a German term that refers to a corporation that is limited by shares, i. ... An ansvarlig selskap is a Norwegian personal responsibility company model, mainly used in small-to-medium businesses, which translates directly into Responsible Company. This reflects that the participants - or owners - are personally responsible for any outstanding debts the company would aquire. ... An Aktieselskab (abbreviated A/S) is the Danish name for a stock-based corporation. ... An aksjeselskap is the Norwegian term for a stock-based corporation. ... Business corporation ) is a type of corporation ) defined under Japanese law. ... The term Naamloze Vennootschap (usually abbreviated NV) is the Dutch terminology for a public limited liability company. ... OsakeyhtiÃ¶, directly translated as share corporation, is the Finnish equivalent of Limited company (Ltd or LLC) or Gesellschaft mit beschrÃ¤nkter Haftung (GmbH). ... S.A. is the abbreviation of SociÃ©tÃ© Anonyme in French, SpÃ³Å‚ka Akcyjna in Polish, Sociedad AnÃ³nima in Spanish, Sociedade AnÃ³nima in Portuguese, or Naamloze Venootschap (N.V.) in Dutch, generally designating corporations in various countries. ... Gesellschaft mit beschrÃ¤nkter Haftung (GmbH or GesmbH) is a type of legal entity created in Germany in 1892. ... The Council Regulation on the Statute for a European Company of the European Union (adopted October 8, 2001; OJ L 294, 10 November 2001, pp. ... Corporate governance is the set of processes, customs, policies, laws and institutions affecting the way in which a corporation is directed, administered or controlled. ... Limited liability (LL) is liability that is limited to a partner or investors investment. ... Ultra vires is a Latin phrase that literally means beyond the power. ... The business judgment rule is a case law-derived concept in Corporations law whereby a court will refuse to review the actions of a corporations board of directors in managing the corporation unless there is some allegation of conduct that (1) violates (a) the directors duty of care, (b... The internal affairs doctrine is a choice of law rule in corporations law. ... De facto corporation and corporation by estoppel are both terms that are used by courts to describe circumstances in which is a business organization that has failed to become a de jure corporation (a corporation by law) will nonetheless be treated as a corporation, thereby shielding shareholders from liability. ... The corporate law concept piercing (Lifting) the corporate veil describes a legal decision where an officer, director, or shareholder of a corporation is held liable for the debts of the corporation despite the general principle that those persons are immune from suits in contract or tort that otherwise would only... The Rochdale Principles are a set of ideals for the operation of cooperatives. ... A contract is a legally binding exchange of promises or agreement between parties that the law will enforce. ... Civil procedure is the body of law that sets out the process that courts will follow when hearing cases of a civil nature (a civil action, as opposed to a criminal action). ... A juristic person is a legal fiction through which the law allows a group of natural persons to act as if it were a single composite individual for certain purposes. ... For other uses, see Corporation (disambiguation). ... Incorporation (abbreviated Inc. ... Companies law is the field of law concerning business and other organizations. ... In the common law, a partnership is a type of business entity in which partners share with each other the profits or losses of the business undertaking in which they have all invested. ... ... A voluntary association (also sometimes called an unincorporated association, or just an association) is a group of individuals who voluntarily enter into an agreement to form a body (or organization) to accomplish a purpose. ... A guild is an association of craftspeople in a particular trade. ... A sole proprietorship, or simply proprietorship, is a type of business entity which legally has no separate existence from its owner. ... A juristic person is a legal fiction through which the law allows a group of natural persons to act as if it were a single composite individual for certain purposes. ... In economics, a business is a legally-recognized organizational entity existing within an economically free country designed to sell goods and/or services to consumers, usually in an effort to generate profit. ... In United States law, a region of land is unincorporated if it is not a part of any municipality. ... Incorporation (abbreviated Inc. ... Limited liability (LL) is liability that is limited to a partner or investors investment. ... â€œTaxesâ€ redirects here. ... Business organizations is an area of law that covers the broad array of rules governing the formation and operation of different kinds of entities by which individuals can organize to do business. ...

However, companies have a number of other uses. They are not normally subject to rules against mortmain or perpetuity as are trusts, and may have perpetual existence. Companies are often used in tax structuring. Companies, being commercial entities, are often easier to utilise in financing arrangements than partnerships and individuals.^[2] Companies have an inherent flexibility which can let them grow; there is no legal reason why a company initially formed by a sole proprietor cannot eventually grow to be a publicly listed company, but a partnership will generally always be limited as to the maximum number of partners.^[3] The Statute of Mortmain were two enactments, in 1279 and 1290 by King Edward I of England aimed at preserving the kingdoms revenues by preventing land from passing into the possession of the Church. ... The rule against perpetuities is a rule in property law which prohibits a contingent grant or will from vesting outside a certain period of time. ...

Etymology

In the United States, a company may or may not be a separate legal entity. Any business or for-profit economic activity may be referred to as a company; examples of this include "my company", "our company", "the company", and "their company". A corporation may accurately be called a company; however, a company should not necessarily be called a corporation, which has distinct characteristics. According to Black's Law Dictionary, in the U.S. a company means "a corporation — or, less commonly, an association, partnership or union — that carries on industrial enterprise."^[4] For other uses, see Corporation (disambiguation). ... Blacks Law Dictionary, 7th edition Blacks Law Dictionary is the definitive law dictionary for the law of the United States. ...

History

Although some forms of companies are thought to have existed during Ancient Rome and Ancient Greece, the closest recognizable ancestors of the modern company did not appear until the second millennium. The first recognizable commercial associations were medieval guilds, where guild members agreed to abide by guild rules, but did not participate in ventures for common profit. The earliest forms of joint commercial enterprise under the lex mercatoria were in fact partnerships. Hogarthian image of the South Sea Bubble by EM Ward, Tate Gallery File links The following pages link to this file: The South Sea Company Edward Matthew Ward Categories: Public domain art ... Hogarthian image of the South Sea Bubble by EM Ward, Tate Gallery File links The following pages link to this file: The South Sea Company Edward Matthew Ward Categories: Public domain art ... Hogarthian image of the South Sea Bubble by Edward Matthew Ward, Tate Gallery More well known than The South Sea Company is perhaps the South Sea Bubble (1711 - September 1720) which is the name given to the economic bubble that occurred through overheated speculation in the company shares during 1720. ... E.M. Ward, The South Sea Bubble (1846), a Hogarthian subject in the Tate Gallery Edward Matthew Ward (1816-1879) was a Victorian narrative painter best known for his murals in the Palace of Westminster depicting episodes in British history from the English Civil War to the Glorious Revolution. ... The Tate Gallery in the United Kingdom is a network of four galleries: Tate Britain (opened 1897), Tate Liverpool (1988), Tate St Ives (1993), Tate Modern (2000), with a complementary website Tate Online (1998). ... Ancient Rome was a civilization that grew from a small agricultural community founded on the Italian Peninsula circa the 9th century BC to a massive empire straddling the Mediterranean Sea. ... The term ancient Greece refers to the period of Greek history in Classical Antiquity, lasting ca. ... The Law Merchant is a legal system used by merchants in 13th century England. ...

But with the expansion of international trade, Royal charters were increasingly granted in Europe (notably in England and Holland) to merchant adventurers. The Royal charters usually conferred special privileges on the trading company (including, usually, some form of monopoly). Originally, traders in these entities traded stock on their own account, but later the members came to operate on joint account and with joint stock, and the new Joint stock company was born.^[5] For the ship of the same name, see Royal Charter (ship). ... For other uses, see England (disambiguation). ... This article is about a region in the Netherlands. ... This article is about the economics of markets dominated by a single seller. ... A joint stock company (JSC) is a type of business partnership in which the capital is formed by the individual contributions of a group of shareholders. ...

Early companies were purely economic ventures; it was only belatedly realized that an incidental benefit of holding joint stock was that the company's stock could not be seized for the debts of any individual member.^[6] The development of company law in Europe was hampered by two notorious "bubbles" (the South Sea Bubble in England and the Tulip Bulb Bubble in Holland) in the 17th century, which set the development of companies in the two leading jurisdictions back by over a century in popular estimation. Hogarthian image of the South Sea Bubble, by Edward Matthew Ward, Tate Gallery The South Sea Company (1711 â€“ c1850s) was an English company granted a monopoly to trade with South America under a treaty with Spain. ... // Pamphlet from the Dutch tulipomania, printed in 1637 The term tulip mania (alternatively tulipomania) is used metaphorically to refer to any large economic bubble. ...

But companies, almost inevitably, returned to the forefront of commerce, although in England to circumvent the Bubble Act 1720 investors had reverted to trading the stock of unincorporated associations, until it was repealed in 1825. However, the cumbersome process of obtaining Royal charters was simply insufficient to keep up with demand. In England there was a lively trade in the charters of defunct companies. However, prevarication amongst the legislation meant that in England it was not until the Joint Stock Companies Act 1844 that the first equivalent of modern companies, formed by registration, appeared. Soon after came the Limited Liability Act 1855, which in the event of a company's bankruptcy limited the liability of all shareholders to the amount of capital they had invested. The beginning of modern company law came when the two pieces of legislation were codified under the Joint Stock Companies Act of 1856 at the behest of the then Vice President of the Board of Trade, Mr Robert Lowe. That legislation shortly gave way to the railway boom, and from there the numbers of companies formed soared. In the later nineteenth century depression took hold, and just as company numbers had boomed, many began to implode and fall into insolvency. Much strong academic, legislative and judicial opinion was opposed to the notion that businessmen could escape accountability for their role in the failing businesses. The last significant development in the history of companies was the decision of the House of Lords in Salomon v. Salomon & Co. where the House of Lords confirmed the separate legal personality of the company, and that the liabilities of the company were separate and distinct from those of its owners. The Bubble Act of 1720 was an English act that forbade all joint-stock companies not authorised by royal charter. ... The Joint Stock Companies Act 1844 (7 & 8 Vict. ... For the history of introduction of the Act and early experience with its application, see: Limited liability: History. ... A sketch portrait of Robert Lowe Robert Lowe, 1st Viscount Sherbrooke (December 4, 1811 - July 27, 1892), British statesman, was born at Bingham, Nottinghamshire, where his father was the rector. ... Salomon v. ...

In a December 2006 article, The Economist identified the development of the joint stock company as one of the key reasons why Western commerce moved ahead of its rivals in the Middle East in post-renaissance era.^[7] Of course one should not underestimate the effects of early industrialisation either. The Economist is a weekly news and international affairs publication owned by The Economist Newspaper Ltd and edited in London, UK. It has been in continuous publication since September 1843. ... This article is about the European Renaissance of the 14th-17th centuries. ... A factory in Ilmenau (Germany) around 1860 Industrialisation (also spelled Industrialization) or an Industrial Revolution is a process of social and economic change whereby a human group is transformed from a pre-industrial society (an economy where the amount of capital accumulated per capita is low) to an industrial one...

Types

There are various types of company that can be formed in different jurisdictions, but the most common forms of company are: Look up company in Wiktionary, the free dictionary. ...

In legal parlance, the owners of a company are normally referred to as the "members". In a company limited by shares, this will be the shareholders. In a company limited by guarantee, this will be the guarantors. A limited company by shares (limited or Ltd. ... In British or Irish company law, a Limited Company is a person on its own right. ... Liquidation, or winding up, refers to a business whose assets are converted to money in order to pay off debt. ... In the United Kingdom, an unlimited company is a company formed by registration under the Companies Act 1985 where the liability of the members is unlimited - that is, they are liable to contribute whatever sums are required to pay the debts of the company should it go into bankruptcy. ...

There are however, many, many sub-categories of types of company which can be formed in various jurisdictions in the world.

Companies are also sometimes distinguished for legal and regulatory purposes between public companies and private companies. Public companies are companies whose shares can be publicly traded, often (although not always) on a regulated stock exchange. Private companies do not have publicly traded shares, and often contain restrictions on transfers of shares. In some jurisdictions, private companies have maximum numbers of shareholders. The initials PLC after a UK or Irish company name indicate that it is a public limited company, a type of limited company whose shares may be offered for sale to the public. ... A private company is a company that is independently owned. ...

Corporate constitution

In almost every jurisdiction in the world, a company must have a corporate constitution, which defines the existence of the company and regulates the structure and control of the company. In relation to artificial persons, the constitutional documents (sometimes referred to as the charter documents) of the entity are the documents which define the existence of the entity and regulate the structure and control of the entity and its members. ...

By convention, most common law jurisdictions divide the corporate constitution into two separate documents: This article concerns the common-law legal system, as contrasted with the civil law legal system; for other meanings of the term, within the field of law, see common law (disambiguation). ...

In many countries, only the primary document is filed, and the secondary document remains private. In other countries, both documents are filed. Some countries provide statutory forms of basic corporate constitution which a company may adopt (for example, Table A in the United Kingdom, or Replaceable Rules in Australia). A Memorandum of Association is one of the documents required in the United Kingdom to incorporate a company, also seen in many jurisdictions of the British Commonwealth. ... The Articles of Incorporation (sometimes also referred to as the Certificate of Incorporation or the Charter) are the primary rules governing the management of a corporation, and are filed with a state or other regulatory agency. ... Authorised share capital From Wikipedia, the free encyclopedia. ... Articles of Association are a requirement for the establishment of a company under United Kingdom and in most other countries company law. ... A bylaw (sometimes also spelled by-law or byelaw) was originally the Viking town law in the Danelaw. ... In English company law, Table A refers to the default form of Memorandum of Association and Articles of Association for companies limited by shares incorporated in England and Wales where the incorporators do not choose to use modified forms. ...

In civil law jurisdictions, the company's constitution is normally consolidated into a single document, often called the charter. For other uses of civil law, see civil law. ... It has been suggested that this article be split into multiple articles accessible from a disambiguation page. ...

It is quite common for members of a company to supplement the corporate constitution with additional arrangements, such as shareholders' agreements, whereby they agree to exercise their membership rights in a certain way. Conceptually a shareholders' agreement fulfills many of the same functions as the corporate constitution, but because it is a contract, it will not normally bind new members of the company unless they accede to it somehow.^[9] One benefit of shareholders' agreement is that they will usually be confidential, as most jurisdictions do not require shareholders' agreements to be publicly filed. A shareholders agreement (sometimes referred to in the U.S.A. as a stockholders agreement) is an agreement between the shareholders of a company relating to the ownership and management of the company. ...

Another common method of supplementing the corporate constitution is by means of voting trusts, although these are relatively uncommon outside of the United States and certain offshore jurisdictions. A voting trust is a trust whereby the shares in a company of one or more shareholders and the voting rights attached thereto are legally transferred to a trustee, usually for a specified period of time (the trust period). In some voting trusts, the trustee may also be granted additional... An offshore financial centre (or OFC), although not precisely defined, is usually a low-tax, lightly regulated jurisdiction which specialises in providing the corporate and commercial infrastructure to facilitate the use of that jurisdiction for the formation of offshore companies and for the investment of offshore funds. ...

Some jurisdictions consider the company seal to be a party of the "constitution" (in the loose sense of the word) of the company, but the requirement for a seal has been abrogated by legislation in most countries. A company seal (sometimes referred to as the corporate seal or common seal) is an official seal used by a company. ...

Shares and share capital

Companies generally raise capital for their business ventures either by debt or equity. Capital raised by way of equity is usually raised by issued shares (sometimes called "stock" (not to be confused with stock-in-trade)) or warrants. For other uses, see Stock (disambiguation). ... For alternative meanings, see bond (a disambiguation page). ... For other uses of the term Warrant, see Warrant (disambiguation) A warrant is a security that entitles the holder to buy or sell a certain additional quantity of an underlying security. ...

A share is an item of property, and can be sold or transferred. Holding a share makes the holder a member of the company, and entitles them to enforce the provisions of the company's constitution against the company and against other members. Shares also normally have a nominal or par value, which is the limit of the shareholder's liability to contribute to the debts of the company on an insolvent liquidation.

Shares usually confer a number of rights on the holder. These will normally include:

Many companies have different classes of shares, offering different rights to the shareholders. For example, a company might issue both ordinary shares and preference shares, with the two types having different voting and/or economic rights. For example, a company might provide that preference shareholders shall each receive a cumulative preferred dividend of a certain amount per annum, but the ordinary shareholders shall receive everything else. It has been suggested that ex-dividend date be merged into this article or section. ... Capital has a number of related meanings in economics, finance and accounting. ...

The total number of issued shares in a company is said to represent its capital. Many jurisdictions regulate the minimum amount of capital which a company may have, although some countries only prescribe minimum amounts of capital for companies engaging in certain types of business (e.g. banking, insurance etc.). For other uses, see Bank (disambiguation). ... Insurance, in law and economics, is a form of risk management primarily used to hedge against the risk of a contingent loss. ...

Similarly, most jurisdictions regulate the maintenance of capital, and prevent companies returning funds to shareholders by way of distribution when this might leave the company financially exposed. In some jurisdictions this extends to prohibiting a company from providing financial assistance for the purchase of its own shares. In law, financial assistance refers to assistance given by a company for the purchase of its own shares or the shares of its holding companies. ...

Corporate personality

One of the key legal features of companies are their separate legal personality. However, the separate legal personality was not confirmed under English law until 1895 by the House of Lords in Salomon v. Salomon & Co. [1897] AC 22. However, it is now largely accepted throughout the world that companies are legally separate and distinct entities. The corporate law concept piercing (Lifting) the corporate veil describes a legal decision where an officer, director, or shareholder of a corporation is held liable for the debts of the corporation despite the general principle that those persons are immune from suits in contract or tort that otherwise would only... English law is a formal term of art that describes the law for the time being in force in England and Wales. ... Year 1895 (MDCCCXCV) was a common year starting on Tuesday (link will display full calendar) of the Gregorian calendar (or a common year starting on Sunday of the 12-day-slower Julian calendar). ... The House of Lords, in addition to having a legislative function, has a judicial function as a court of last resort within the United Kingdom. ... Salomon v. ...

Separate legal personality often has unintended consequences, particularly in relation to smaller, family companies. A family business is a company owned, controlled, and operated by members of one or several families. ...

However, separate legal personality does allow corporate groups a great deal of flexibility in relation to tax planning, and also enables multinational companies to manage the liability of their overseas operations (see Adams v Cape Industries plc [1990] Ch 433). In law, discovery is the pre-trial phase in a lawsuit in which each party through the law of civil procedure can request documents and other evidence from other parties or can compel the production of evidence by using a subpoena or through other discovery devices, such as requests for... A multinational corporation (MNC) is a corporation or enterprise that manages production establishments or delivers services in at least two countries. ... Adams v Cape Industries plc [1990] Ch 433 resolved a number of important issues under English law. ...

There are certain specific situations where courts are generally prepared to "pierce the corporate veil": to look directly at, and impose liability directly on the individuals behind the company. The most commonly cited examples are: The corporate law concept piercing (Lifting) the corporate veil describes a legal decision where an officer, director, or shareholder of a corporation is held liable for the debts of the corporation despite the general principle that those persons are immune from suits in contract or tort that otherwise would only...

Environmental law is a body of law, which is a system of complex and interlocking statutes, common law, treaties, conventions, regulations and policies which seeks to protect the natural environment which may be affected, impacted or endangered by human activities. ... Notice of closure stuck on the door of a computer store the day after its parent company, Granville Technology Group Ltd, declared bankruptcy (strictly, put into administrationâ€”see text) in the United Kingdom. ...

Capacity and powers

Historically, because companies are artificial persons created by operation of law, the law prescribed what the company could and could not do. Usually this was an expression of the commercial purpose which the company was formed for, and came to referred to as the company's objects, and the extent of the objects are referred to as the company's capacity. If an activity fell outside of the company's capacity it was said to be ultra vires and void. The capacity of both natural and artificial persons determines whether they may make binding amendments to their rights, duties and obligations, such as getting married or merging, entering into contracts, making gifts, or writing a valid will. ... Ultra vires is a Latin phrase that literally means beyond the power. ... In law, void means of no legal effect. ...

By way of distinction, the organs of the company were expressed to have various corporate powers. If the objects were the things that the company was able to do, then the powers were the means by which it could do them. Usually expressions of powers were limited to methods of raising capital, although from earlier times distinctions between objects and powers have caused lawyers difficulty.^[12]

Most jurisdictions have now modified the position by statute, and companies generally have capacity to do all the things that a natural person could do, and power to do it in any way that a natural person could do it.

However, references to corporate capacity and powers have not quite been consigned to the dustbin of legal history. In many jurisdictions, directors can still be liable to their shareholders if they cause the company to engage in businesses outside of its objects, even if the transactions are still valid as between the company and the third party. And many jurisdictions also still permit transactions to be challenged for lack of "corporate benefit", where the relevant transaction has no prospect of being for the commercial benefit of the company or its shareholders. Corporate benefit (sometimes referred to as commercial benefit) is the requirement under some legal systems that the directors of a company must exercise the powers[1] of the company for the commercial benefit of the company and its members. ...

Corporate benefit (sometimes referred to as commercial benefit) is the requirement under some legal systems that the directors of a company must exercise the powers[1] of the company for the commercial benefit of the company and its members. ...

Officers and agents

As artificial persons, companies can only act through human agents. As was once memorably remarked, "It has no body to kick and no soul to damn."^[13]

The main agent who deals with the company's management and business is the board of directors, but in many jurisdictions other officers can be appointed too. The board of directors is normally elected by the members, and the other officers are normally appointed by the board. These agents enter into contracts on behalf of the company with third parties. Chairman of the Board redirects here. ...

Although the company's agents owe duties to the company (and, indirectly, to the shareholders) to exercise those powers for a proper purpose, generally speaking third parties' rights are not impugned if it transpires that the officers were acting improperly. Third parties are entitled to rely on the ostensible authority of agents held out by the company to act on its behalf. A line of common law cases reaching back to Royal British Bank v Turquand established in common law that third parties were entitled to assume that the internal management of the company was being conducted properly, and the rule has now been codified into statute in most countries. In law, ostensible authority refers to the apparent authority of an agent (usually a company director) of a company as it appears to others,[1] and it can operate both to enlarge actual authority and to create authority where no actual authority exists. ... It has been suggested that Turquand Rule be merged into this article or section. ...

Accordingly, companies will normally be liable for all the act and omissions of their officers and agents. This will include almost all torts, but the law relating to crimes committed by companies is complex, and varies significantly between countries. In the common law, a tort is a civil wrong for which the law provides a remedy. ... Corporate manslaughter is a term in English law for an act of homicide committed by a company. ...

Vicarious liability is a form of strict, secondary liability that arises under the common law doctrine of agency â€“ respondeat superior â€“ the responsibility of the superior for the acts of their subordinate, or, in a broader sense, the responsibility of any third party that had the right, ability or duty to... In the criminal law, corporate liability determines the extent to which a corporation as a fictitious person can be liable for the acts and omissions of the natural persons it employs. ...

Members' rights and majority rule

Members of a company generally have rights against each other and against the company, as framed under the company's constitution. In relation to the exercise of their rights, minority shareholders usually have to accept that, because of the limits of their voting rights, they cannot direct the overall control of the company and must accept the will of the majority (often expressed as majority rule). However, majority rule can be iniquitous, particularly where there is one controlling shareholder.

Accordingly, a number of exceptions have developed in law in relation to the general principle of majority rule.

A Shareholders derivative suit is an action brought by a shareholder not on its own behalf, but on behalf of the corporation, on grounds that the corporation is being cheated by corrupt actions from within. ... A shareholder or stockholder is an individual or company (including a corporation) that legally owns one or more shares of stock in a joint stock company. ... A Shareholders derivative suit is an action brought by a shareholder not on its own behalf, but on behalf of the corporation, on grounds that the corporation is being cheated by corrupt actions from within. ...

Director's duties

In most jurisdictions, directors owe strict duties of good faith, as well as duties of care and skill, to safeguard the interests of the company and the members. Chairman of the Board redirects here. ... The court of chancery, which governed fiduciary relations prior to the Judicature Acts The fiduciary duty is a legal relationship between two or more parties, most commonly a fiduciary or trustee and a principal or beneficiary, that in English common law is arguably the most important concept within the portion...

The standard of skill and care that a director owes is usually described as acquiring and maintaining sufficient knowledge and understanding of the company's business to enable him to properly discharge his duties.

Directors are also strictly charged to exercise their powers only for a proper purpose. For instance, were a director to issue a large number of new shares, not for the purposes of raising capital but in order to defeat a potential takeover bid, that would be an improper purpose.^[15]

Directors also owe strict duties not to permit any conflict of interest or conflict with their duty to act in the best interests of the company. This rule is so strictly enforced that, even where the conflict of interest or conflict of duty is purely hypothetical, the directors can be forced to disgorge all personal gains arising from it. In Aberdeen Ry v Blaikie (1854) 1 Macq HL 461 Lord Cranworth stated in his judgment that: A conflict of interest is a situation in which someone in a position of trust, such as a lawyer, a politician, or an executive or director of a corporation, has competing professional or personal interests. ... Robert Monsey Rolfe, 1st Baron Cranworth (18 December 1790- 26 July 1868), Lord Chancellor of Great Britain, elder son of the Rev. ...

However, in many jurisdictions the members of the company are permitted to ratify transactions which would otherwise fall foul of this principle. It is also largely accepted in most jurisdictions that this principle should be capable of being abrogated in the company's constitution.

Corporate governance is the set of processes, customs, policies, laws and institutions affecting the way in which a corporation is directed, administered or controlled. ... A conflict of interest is a situation in which someone in a position of trust, such as a lawyer, a politician, or an executive or director of a corporation, has competing professional or personal interests. ...

Liquidations

Liquidation is the normal means by which a company's existence is brought to an end. It is also referred to (either alternatively or concurrently) in some jurisdictions as winding up and/or dissolution. Liquidation, or winding up, refers to a business whose assets are converted to money in order to pay off debt. ...

Liquidations generally come in two forms, either compulsory liquidations (sometimes called creditors' liquidations) and voluntary liquidations (sometimes called members' liquidations, although a voluntary liquidation where the company is insolvent will also be controlled by the creditors, and is properly referred to as a creditors' voluntary liquidation).

As its names imply, applications for compulsory liquidation are normally made by creditors of the company when the company is unable to pay its debts. However, in some jurisdictions, regulators have the power to apply for the liquidation of the company on the grounds of public good, i.e. where the company is believed to have engaged in unlawful conduct, or conduct which is otherwise harmful to the public at large. A creditor is a party (e. ...

Voluntary liquidations occur when the company's members decide voluntarily to wind up the affairs of the company. This may be because they believe that the company will soon become insolvent, or it may be on economic grounds if they believe that the purpose for which the company was formed is now at an end, or that the company is not providing an adequate return on assets and should be broken up and sold off. This article is in need of attention. ...

Some jurisdictions also permit companies to be wound up on "just and equitable" grounds.^[16] Generally, applications for just and equitable winding-up are brought by a member of the company who alleges that the affairs of the company are being conducted in a prejudicial manner, and asking the court to bring an end to the company's existence. For obvious reasons, in most countries, the courts have been reluctant to wind up a company solely on the basis of the disappointment of one member, regardless of how well-founded that member's complaints are. Accordingly, most jurisdictions which permit just and equitable winding up also permit the court to impose other remedies, such as requiring the majority shareholder(s) to buy out the disappointed minority shareholder at a fair value.

Where a company goes into liquidation, normally a liquidator is appointed to gather in all the company's assets and settle all claims against the company. If there is any surplus after paying off all the creditors of the company, this surplus is then distributed to the members. In law, a liquidator is the officer appointed when a company goes into winding-up or liquidation who has responsibility for collecting in all of the assets of the company and settling all claims against the company before putting the company into dissolution. ...

See also

Business organizations is an area of law that covers the broad array of rules governing the formation and operation of different kinds of entities by which individuals can organize to do business. ... For other uses, see Corporation (disambiguation). ... In the criminal law, corporate liability determines the extent to which a corporation as a fictitious person can be liable for the acts and omissions of the natural persons it employs. ... This article is about a U.S.-specific corporate form; for a general discussion of entities with limited liability, see corporation. ... A limited liability partnership (LLP) has elements of partnerships and corporations. ... A limited partnership is a form of partnership similar to a general partnership, except that in addition to one or more general partners (GPs), there are one or more limited partners (LPs). ... This is a list of company names with their name origins explained. ... This is a list of companies named after people. ... NAICS (pronounced nakes), is the North American Industry Classification System. ... An offshore company is a company which does not conduct substantial business in its country of incorporation. ... An organisation (or organization â€” see spelling differences) is a social arrangement which pursues collective goals, which controls its own performance, and which has a boundary separating it from its environment. ... A Limited liability company (denoted by L.L.C. or LLC) is a type of legal entity which has only relatively recently been made possible to establish in the United States and many other, mainly anglophone, countries. ... The initials PLC after a UK or Irish company name indicate that it is a public limited company, a type of limited company whose shares may be offered for sale to the public. ... A quasi corporation generally refers to an entity that exercises some of the functions of a corporation, but has not been granted separate legal personality by statute, particularly a public corporation with limited authority and powers such as a county or school district. ... This is a list of types of companies, i. ... Eat pizza everyday. ... Companies House is an Executive Agency of the United Kingdom Government Department of Trade and Industry (DTI). ... Companies Registry (Companies House) is The office of the Registrar of Companies. ... This is a list of major companies based in Cyprus. ...

Notes

^ Re Stanley [1906] 1 Ch 131 at 134
^ In England, companies can grant a "floating charge" over all their assets, a popular form of security with banks, but individuals and partnerships cannot because of the prohibition against "general assignments" in bankruptcy law
^ Although some exceptions exist for large law firms and accountancy firms
^ 8th edition (2004), ISBN 0 314 15199 0
^ In England the first joint stock company was the East India Company, which received its charter in 1600. The Dutch East India Company received its charter in 1602, but is generally recognized as the first company in the world to issue joint stock. Not coincidentally, the two companies were competitors.
^ In England, see Edmunds v Brown Tillard (1668) 1 Lev 237 and Salmon v The Hamborough Co (1671) 1 Ch Cas 204
^ "Long ago, the region's failure to develop joint-stock companies was one reason why it fell behind the West." [1] The Economist
^ In the event of any inconsistency, the Memorandum usually prevails, see Ashbury v Watson (1885) 30 Ch D 376
^ Shalfoon v Cheddar Valley [1924] NZLR 561
^ Although it did attach to documents within the husband's custody or control.
^ Williams v Natural Life [1998] 1 WLR 830
^ See the frustration expressed by the House of Lords in Cotman v Brougham [1918] AC 514
^ Attributed to Lord Thurlow LC, although it does not appear in any of his reported decisions. It has been suggested that he actually said "Corporations have neither bodies to be punished, nor souls to be condemned, they therefore do as they like."[2]
^ Foss v Harbottle (1843) 2 Hare 461
^ Harlowe's Nominees Pty v Woodside (1968) 121 CLR 483 (Aust HC)
^ In England, see Ebrahimi v Westbourne Galleries [1973] AC 360

Further Reading: Dignam, A and Lowry, J (2006) Company Law, Oxford University Press ISBN-13: 978-0-19-928936-3 A floating charge is a security interest over all of the assets of a company which floats until an event of default is triggered or until the company goes into insolvent liquidation at which time the floating charge crystallises and attaches to all of the assets of the company. ... A general assignment is a concept in bankruptcy law that has different meanings in different jurisdictions. ... The British East India Company, sometimes referred to as John Company, was the first joint-stock company (the Dutch East India Company was the first to issue public stock). ... This article is about the trading company. ... Edward Thurlow, 1st Baron Thurlow (9 December 1731â€“12 September 1806), Lord Chancellor of Great Britain, was born at Bracon Ash, in the county of Norfolk. ... Foss v Harbottle (1843) 2 Hare 461, 67 ER 189 is a famous decision English decision on corporate law. ... For other uses, see Law (disambiguation). ... For other uses, see Law (disambiguation). ... Administrative law in the United States often relates to, or arises from, so-called independent agencies- such as the Federal Trade Commission (FTC). Here is FTCs headquarters in Washington D.C. Administrative law (or regulatory law) is the body of law that arises from the activities of administrative agencies... The term criminal law, sometimes called penal law, refers to any of various bodies of rules in different jurisdictions whose common characteristic is the potential for unique and often severe impositions as punishment for failure to comply. ... A contract is a legally binding exchange of promises or agreement between parties that the law will enforce. ... Not to be confused with torte, an iced cake. ... This article or section does not cite any references or sources. ... This law-related article does not cite its references or sources. ... 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Labour law (American English: labor) or employment law is the body of laws, administrative rulings, and precedents which addresses the legal rights of, and restrictions on, working people and their organizations. ... Human rights law is a system of laws, both domestic and international which is intended to promote human rights. ... Legal procedure is the body of law and rules used in the administration of justice in the court system, including such areas as civil procedure, criminal procedure, appellate procedure, administrative procedure, labour procedure, and probate. ... The law of evidence governs the use of testimony (e. ... Nationality law is the branch of a countrys legal system wherein legislation, custom and court precendent combine to define the ways in which that countrys nationality and citizenship are transmitted, acquired or lost. ... Family Law was a television drama starring Kathleen Quinlan as a divorced lawyer who attempted to start her own law firm after her lawyer husband took all their old clients. ... In the common law, a will or testament is a document by which a person (the testator) regulates the rights of others over his property or family after death. ... Commercial law (sometimes known as business law) is the body of law which governs business and commerce. ... For the 2006 film, see Intellectual Property (film). ... The following analysis is based on English law. ... Restitution is the name given to a form of legal relief in which the plaintiff recovers something from the defendant that belongs, or should belong, to the plaintiff. ... Tax law is the codified system of laws that describes government levies on economic transactions, commonly called taxes. ... Bank regulations are a form of government regulation which subject banks to certain requirements, restrictions and guidelines, aiming to uphold the soundness and integrity of the financial system. ... Antitrust redirects here. ... Consumer protection is a form of government regulation which protects the interests of consumers. ... Environmental law is a body of law, which is a system of complex and interlocking statutes, common law, treaties, conventions, regulations and policies which seeks to protect the natural environment which may be affected, impacted or endangered by human activities. ... International law deals with the relationships between states, or between persons or entities in different states. ... Admiralty law (also referred to as maritime law) is a distinct body of law which governs maritime questions and offenses. ... Military law is a distinct legal system to which members of armed forces are subject. ... Products liability is the area of law in which manufacturers, distributors, suppliers, retailers, and others who make products available to the public are held responsible for the injuries those products cause. ... World distribution of major legal traditions The three major legal systems of the world today consist of civil law, common law and religious law. ... This article concerns the common-law legal system, as contrasted with the civil law legal system; for other meanings of the term, within the field of law, see common law (disambiguation). ... For other uses of civil law, see civil law. ... In the religious sense, law can be thought of as the ordering principle of reality; knowledge as revealed by God defining and governing all human affairs. ... It has been suggested that this article or section be merged with Socialist Legality. ... To meet Wikipedias quality standards, this article or section may require cleanup. ... This article is about law in society. ... Legal history is a term that has at least two meanings. ... For the jurisprudence of courts, see Case law. ... Law and economics, or economic analysis of law is an approach to legal theory that applies methods of economics to law. ... An approach to law stressing the actual social effects of legal institutions, doctrines, and practices and vice versa. ... For other uses, see Law (disambiguation). ... The Politics series Politics Portal This box: In the law, the judiciary or judicial system is the system of courts which administer justice in the name of the sovereign or state, a mechanism for the resolution of disputes. ... A legislature is a type of representative deliberative assembly with the power to adopt laws. ... The Politics series Politics Portal This box: This article is about the sociological concept. ... A lawyer is a person licensed by the state to advise clients in legal matters and represent them in courts of law and in other forms of dispute resolution. ... The Politics series Politics Portal This box: Civil society is composed of the totality of voluntary civic and social organizations and institutions that form the basis of a functioning society as opposed to the force-backed structures of a state (regardless of that states political system) and commercial institutions. ...

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