LAW 2.docx - SALIENT FEATURES OF THE MALAWI 1984 AND 2013 COMPANIES ACT \u2022 INTRODUCTION A company is a legal entity formed by a group of individuals to

LAW 2.docx - SALIENT FEATURES OF THE MALAWI 1984 AND 2013...

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SALIENT FEATURES OF THE MALAWI 1984 AND 2013 COMPANIES ACT INTRODUCTION A company is a legal entity formed by a group of individuals to engage in and operate a business, commercial or industrial, enterprise. A company may be organized in various ways for tax and financial liability purposes depending on the corporate law of its jurisdiction. The line of business the company is in will generally determine which business structure it chooses such as a partnership , proprietorship , or corporation . These structures also denote the ownership structure of the company. They can also be distinguished between private and public companies. Both have different ownership structures, regulations, and financial reporting requirements. A company is essentially an artificial person, also known as corporate personhood, in that it is an entity separate from the individuals who own, manage, and support its operations. Companies are generally organized to earn a profit from business activities, though some may be structured as nonprofit charities. Each country has its own hierarchy of company and corporate structures, though with many similarities. A company has many of the same legal rights and responsibilities as a person does, like the ability to enter into contracts, the right to sue (or be sued), borrow money, pay taxes, own assets, and hire employees. Companies can be either public or private, both of which have different ownership structures, rules, and regulations. Since its inception in 1884, a company has become the most important and powerful form of business organization. The benefits of starting a company include; Limited Liability. Separate legal personality; Salomon vs Salomon, 1897 A company owns and disposes of property in its name. A company can sue or be sued in its own name
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Transferable membership is only available in companies Perpetual succession Flexible borrowing facilities – debentures A company is allowed to issue shares to raise capital Management of a company is entrusted to directors Income diversification A strong correlation between effort and reward Creative freedom and flexibility. The disadvantages of starting a company include increased financial responsibility, increased legal liability, long hours, responsibility for employees and administrative staff, regulations, and tax issues. BACKGROUND The Companies Act is a fundamental piece of legislation for the development of the business sector, creating conducive environment for businesses and attracting foreign direct investment. The act, among other things, looks at capital maintenance and shares, insolvency, corporate governance, reasonable care, conflict of interest, skill and diligence in companies.
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