When a company has been registered it will receive from the Registrar of

When a company has been registered it will receive

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When a company has been registered, it will receive from the Registrar of Companies a certificate of incorporation. The certificate enables the company to start business except for public companies which will also need to obtain a trading certificate. 19.9 PRACTICE QUESTIONS 1. Explain the key differences between a private and a public company; which would you recommend to a business and why? 2. Explain the difference between a company limited by shares and a company limited by guarantee. 3. What is a community interest company? Explain the additional requirements for the registration of such a company. Download free eBooks at bookboon.com Click on the ad to read more “The perfect start of a successful, international career.” CLICK HERE to discover why both socially and academically the University of Groningen is one of the best places for a student to be Excellent Economics and Business programmes at:
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BUSINESS ORGANISATIONS AND AGENCY 365 CORPORATE PERSONALITY 20 CORPORATE PERSONALITY 20.1 INTRODUCTION This chapter discusses the nature of incorporated companies and the origins, implications and consequences of corporate personality – the doctrine that a company is a separate legal person – for the company, owners and third parties. 20.2 LEARNING OBJECTIVES At the end of the chapter, readers should clearly appreciate: • The legal nature of companies • The meaning and implications of corporate personality • The effects of incorporation on companies, creditors and the public • The circumstances in which the courts might disregard the separate personality of a company 20.3 CORPORATE PERSONALITY Upon incorporation, a company becomes a body corporate and assumes a separate identity in law distinct from that of its members. Even though the company is owned by its members, it is regarded as different from those members. In a sense, the law raises an imaginary veil or barrier between the company and its members. A company is capable of acquiring its own rights, and is subject to its own duties and obligations. It is able to do most things a natural person could do. The House of Lords explained and consolidated the principle of corporate personality in the case of Salomon v Salomon & Co Ltd (1897) AC 22 . Mr. Salomon ran a successful shoe making and repair business as a sole proprietor. Later he formed a company called Salomon and Co. Ltd. and transferred the business to it. He sold his interest in the business, which he valued at £39,000, to the company partly in cash and partly in debentures which were secured by a charge on the company’s business. The other members of the company were Mr. Salomon’s wife and his five children to whom he allotted one share each. Mr. Salomon was fully in control of the company and its management just as he was when the business was a sole proprietorship. Soon after incorporation, the company ran into financial difficulties and Salomon obtained unsecured loans from other people. However, the company had to be liquidated despite the efforts to keep it going. The argument was whether Mr. Salomon was entitled to recover the value of
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  • Fall '19
  • Corporation, Managing Partner

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