Corporate law (also "company" and corporations "law) is the study of how shareholders, directors, employees, creditors, and other stakeholders such as consumers, society and environment interact with each other. Companies Act is part of the Companies Act on a larger scale (or business associations law). other types of business associations can include partnerships (in the United Kingdom is governed by the partnership Act 1890), or deposits (such as a pension fund), or companies limited warranty (such as some community organizations or charities.) under the companies Act, companies of all sizes has an independent legal personality, limited liability company or limited to its shareholders. shareholders control of the company by the board of Directors which, in turn, usually delegates control of the operations day after day for the organization full-time executive director. deals with the companies Act with the companies that are included or registered under the companies Act or company of sovereign or states without a national state. four characteristics distinctive modern of the company are:
Legal personality separate from the company (get tort and contract law in a manner similar to a person)
Limited liability of shareholders (personal responsibility to shareholders is limited to the value of their shares in the company)
Shares (if the company is a public company, and the company's shares are traded on the stock exchange)
Delegated management. The Board of Directors delegates management of day-to-day company executives
In many developed countries outside the English speaking world, and corporate boards are set to representatives from each of the partners and staff "codetermine" the company's strategy. Often the Companies Act is divided in corporate governance (which relate to the various power relationships within the company), corporate finance (which relate to the rules on how to use the capital).
The word "corporation" is generally synonymous with large companies owned by the public sector in the United States. In the UK, "the company" is more commonly used as the legal limit for any company incorporated under the Companies Act of 2006. The large-sized companies ( "Companies" in commercial terms in the sense of the United States) will be public limited companies in the UK and Uaadh their shares of listed companies in the stock market. In the British legal to use any registered company, which was established under the Companies Act of 2006, and equivalent to the previous legislation, it is, precisely, a certain subset of a broader category, "the company". The establishment of such a company by the administrative process of registration under the Companies Act the public as a piece of legislation. The company, in the British sense, can be a sole company, which consists of one office by a single person, for example, occupied the king or some bishops in England and Wales. Here, it is recognized as a separate office for the person who holds it. Other companies within the category of "aggregate company," which include corporate bodies that have been created directly by legislation such as the Local Government Act 1972; some universities and professional bodies established by Royal Charter. Companies such as industrial societies and savings that have been created through the public registry under other pieces of legislation, registered companies which are the subject of this article.
In the United States, it may or may not be an independent legal entity company, and is often used synonymously with "company" or "work". It could accurately be called to set up a Company. However, it should not necessarily be called the Company, which have distinctive characteristics. According to Black's Law Dictionary, in America the company means "company - or, less commonly, an association, partnership or company union - that carries on industrial projects."
Special feature of the company is the legal independence of the people who create it. If the company fails, its shareholders lose their money, and staff will lose their jobs, though disproportionately affect their workers instead of top executives. Shareholders are not responsible for any remaining debt owed to the creditors of the company. This rule is called limited liability, and that is why companies end "Limited" (or some variant such as "Company" and "plc"). In the words of the British Judge Walton J, a company.
"... Just a figment of the imagination idiosyncratic, lacking both the body to be kicked and spirit of Leiden."
But in spite of this, under just about every legal system in existence and according to international standards, and companies have the same legal rights and obligations actual human beings. Companies can exercise human rights against real individuals and the state, and they may be responsible for human rights violations. Just because it "born" into existence through its members to obtain the certificate of incorporation, they can "die" when they lose money in insolvency. Even companies convicted of criminal offenses, such as fraud and manslaughter.
Although the thought of some forms of companies existed during Ancient Rome and Ancient Greece, it did not show the earliest ancestors recognized the modern company as far back as the 16th century. With the increase in international trade, Royal charters granted in Europe (especially in England and the Netherlands) to merchant adventurers. Royal charters usually granted special privileges on the trading company (including, usually, a form of monopoly). Originally, it was the merchants trading in these entities securities for its own account, but later members to work on the joint account and with the contribution came, was born a new joint stock company.
The early companies purely economic projects. The only benefit was created in the late stock-holding common shares that the company can not adjust for the debts of any individual. Development companies in Europe, the law has been hampered by two "bubbles" notorious (the South Sea Bubble in England and bubble tulip in the Dutch Republic) in the 17th century, which set the development of companies in the two jurisdictions leading back more than a century in popular estimation .
But companies, inevitably, he returned to the forefront of the trade, although in England to circumvent the Bubble investors may 1720 law returned to trading in securities of individual associations, even abolished in 1825. However, the process was cumbersome to get the royal charters simply is not enough to keep up with demand. In England there was a lively trade in the charters of the dissolved companies. However, the stall between the legislature means that in the UK it was not even contribute to the Companies Act 1844 that is equivalent to the first of the modern companies, formed by registration, appeared. Soon after entering the Limited Liability Act 1855, which in the case of bankruptcy of the company limited the responsibility of all shareholders to the amount of money invested capital.
It came the beginning of the modern corporate law when he recorded two pieces of legislation, according to the law of joint stock companies in 1856 at the request of then vice president of the Council for Trade and Mr. Robert Lowe. Legislation soon gave way to the railway boom, and from there the number of companies formed. In the later nineteenth century depression takes over, and as the company's numbers have boomed, many began to crumble and fall in insolvency. Very much opposed to academic, legislative and judicial opinion a strong notion that businessmen could escape accountability for their role in the failed companies. Was an important development in the history of post companies the House of Lords decision in Salomon v. Salomon & Co., where the House of Lords affirmed the legal personality independent of the company, and that the company's liabilities were separate and distinct from those of their owners.
An article in December 2006, the economists identified the development of a joint stock company and one of the main reasons why Western commerce moved ahead of his rivals in the Middle East in the post-Renaissance.
One of the main features of legal firms is a separate legal personality, also known as "character" or "artificial persons." However, an independent legal personality has not confirmed under English law until 1895 by the House of Lords in Salomon v. Salomon Inc. corporate personality unintended consequences often have separate, particularly in relation to small family businesses. In B against B 1978 Fam 181 it was held that the discovery obtained by the wife against her husband, the system was not effective against the husband's company also did not disclose his name in the system that was separate and apart for. . In Macaura against northern ensure Ltd a claim under an insurance policy where the insured timber was transferred from his name to a wholly owned subsidiary of the earlier name failed, and was later destroyed in the fire; as a property now belongs to the company and not to him, no longer has it is "the interest of Insurance" in it and the failure of his suit.
However, an independent legal personality of corporate groups do not allow a lot of flexibility with respect to tax planning, as well as enable multinational companies to manage the responsibility of their operations abroad. For example, in Adams v Cape Industries plc it was thought that the victims of asbestos poisoning at the hands of one of the American companies can not sue the English parent in tort. There are some special cases where the courts are generally willing to "piercing the corporate veil", to look directly at, and impose liability directly on the individuals behind the company. Examples The most commonly cited are
Where the company is just a front
Where the company is effectively just the agent of its members or controllers
Where the company has taken some personal representative of the responsibility for a statement or action
Where the company is engaged in fraud or other criminal offenses
Where the natural interpretation of the contract or statute is a reference to the group of companies and not individual company
Where permitted by statute (for example, it offers many of the jurisdictions in which the responsibility of the shareholder company violated environmental protection laws)
In many countries, where the company continues to trade despite the near-bankruptcy, the directors can be forced to account personally commercial losses
Historically, because companies are artificial persons of the invention by operation of law, and the law prescribed what the company may not be able to do. Usually this was an expression of the commercial purpose of which was formed for the company, and came to be referred to as objects of the company, referred to as the extent of the company's ability cursed objects. If activity fell outside the company's capacity was said to be ultra vires and void.
By discrimination and expressed his company's devices have the powers of the different companies. If objects are things that the company was able to do, then the means that can be done by the authorities. Usually express powers were limited ways to raise capital, although previous to distinguish between objects and powers times caused lawyers difficulty. Most jurisdictions have now modified the statute position, generally companies have the ability to do all the things that a natural person can be done, and the ability to do in any way that a natural person could do it.
However, the surrender was not too refers to the ability of companies and legal powers to the dustbin of history. In many countries, managers can still vulnerable to their shareholders if they cause the company to participate in the work outside of their goals, 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 interest", where the relevant transaction has no possibility of being in favor of the business of the company or its shareholders.
Artificial as persons, companies can only operate through human agents. The main factor that deals with the company's management and labor is the board of directors, but in many states can appoint other officers as well. Usually it is elected Board of Directors by the membership, and are assigned other officers usually by the Council. The intervention of these factors into contracts on behalf of the Company with third parties.
Despite the company's agents owe duties to the company (and, indirectly, to the shareholders) for the exercise of these powers for the purpose of properly, and generally do not challenge the rights of others if it is found that the officers were acting improperly. And the right of third parties to rely on the alleged agents held by the company to work on behalf of the authority. Line of cases common law access to Turquand against the British Royal Bank was established in non-common law and are entitled to assume that the internal management of the company and conducted properly, and now the rule was codified in statute in most countries.
Accordingly, companies usually will be responsible for every act or omission of the officers and agents. This will include almost all of the damage, but the law relating to offenses committed by companies is complex, and varies greatly between countries.
Corporate governance is primarily a study of power relations between senior executives in the company and its board of directors and those who elect them (shareholders in the "general meeting" and employees). It also relates to other stakeholders, such as creditors, consumers and the environment and society as a whole. One of the main differences between the different countries in the internal shape of the company is between the two levels, the Council of the first degree. The United Kingdom, and the United States, and most Commonwealth countries have plates and one unified management. In Germany, companies have two levels, so that the shareholders (and employees) elect a "Supervisory Board", and then choose to oversee the "Board of Directors" Council. There is an option to use two levels in France, and in the new European company (Societas Europaea).
Visitors literature, especially from the United States, began to discuss corporate governance in the field of administrative sciences. While the rhetoric of post-war focus on how to achieve effective "corporate democracy" for shareholders or other stakeholders, has many scientists turned to discuss the law in terms of the main problems and agent. From this perspective, the basic law firms issue is that when the "main" party delegates of his property (equity capital is usually, but also work the employee) in the control of the "agent" (ie, director of the company) and there is the possibility that the agent will act in its own interests , to be "opportunistic", rather than achieving the wishes of the principal. Reduce the risk of this opportunism, or "agency cost", it is said to be central to achieving the goal of the Companies Act.
Rules for companies stems from two sources. These are the laws in the country: in the United States, usually the institution Delaware General Law (DGCL); in the United Kingdom, and the Companies Act 2006 (CA 2006); in Germany, and the Aktiengesetz (AktG) and the Gesetz betreffend die Gesellschaften MIT BESCHRÄNKTER HAFTUNG (GmbH l Gesetz, GmbHG). The law was drafted rules that are mandatory, and rules that can be compromised. Examples of important rules that can not be derogated from, and usually include how to fire the board, which owe duties of the management of the company or when the company must be resolved as it approaches bankruptcy. Examples of rules that will allow the members of the company to change the selection can include any type of action must follow the general meetings, when you get on the dividends paid, or how many members (beyond the minimum stipulated in the law) can modify the Constitution . Usually, the statute specified material model, which will be supposed the constitution of the institution to be silent if something of a particular action.
The United States, and a few other countries, public law, the Constitution and the division of companies in two separate documents (the UK got rid of this in 2006). Memorandum of Association (or articles of incorporation) is the basic document, and will generally regulate the company's activities with the outside world. And states that oppose the company intended to follow (such as "This company makes cars") and determines the company's authorized share capital. Statute (or laws) is a document secondary, and will generally the internal affairs of the company organize, manage, such as board meetings proceedings, the profits entitlements etc. In the event of any inconsistency, the memorandum prevails in the United States only and is publicized memo. In civil law jurisdictions, the standardization of the company's constitution typically in a single document, often called the Charter.
It is very common for the members of the company to complete the constitution companies with additional arrangements, such as shareholders' agreements, where they agreed to exercise the rights of membership in a certain way. In theory, the shareholders agreement that brings many of the same functions as the constitution companies, but to hold it, it would not normally be required of new members of the company unless they accede to it somehow. One benefit of the shareholders agreement is that they are usually confidential, as most jurisdictions do not require shareholders' agreements that will be filed to the public. Another common way of supplementing the Constitution of the companies is through the unions voting, despite the fact that these are relatively common outside the United States and some jurisdictions abroad. Some jurisdictions consider the company seal to be part of the "Constitution" (the loose sense of the word) for the company, but was removed the requirement for a seal by legislation in most countries.
The most important rules of corporate governance are those relating to the balance of power between the Governing Council and the members of the company. And given the authority or "delegate" to the company's board to succeed investors. And often retain some rights specific decision of the shareholders, where their interests could be affected mainly. There are necessarily rules when directors could be removed from office and replaced. To do this, you need to be called to vote on the meetings issues. How easily can amend the constitution, which necessarily affects the power relations.
It is the principle of corporate law that the right to manage the company management. And it is expressed in the statute of the DGCL, which states §141 (a),
(A) The management of business and affairs of every corporation organized under this chapter or under the supervision of the Board of Directors, except as may be otherwise provided in this chapter or in the foundation certificate.
In Germany, §76 AktG says the same for the Board of Directors, while under §111 AktG, said the role of the supervisory board is to "supervise" (überwachen). In the United Kingdom, and do not put the right to operate in the law, but it is found in Part.2 of model articles. This means that it is the default rule, which companies can choose from (CA s.20 2006) the powers to order members, although companies rarely do. UK law retains Specifically shareholders' right and duty to approve a "large transactions and non-monetary assets" (s.190 CA 2006), which means that more than 10% of the company's value, with a minimum of £ 5000 and a maximum of 100, £ 000. Similar rules, though much less stringent, exist in §271 DGCL and through case law in Germany under the so-called Holzmüller-Doktrin.
Perhaps the most important thing that the directors will act in the interests of the members of the guarantee is that they can easily be alienated. During the Great Depression, and he wrote a couple of scientists at Harvard University, Adolf Berle and Gardiner Means Modern Corporation and Private Property, and the attack on the American law which failed to hold management to account, and linking the growing strength and self-governance of the economic crisis. In the United Kingdom, and it affirmed the right of members to remove the administration by a simple majority under s.168 CA 2006 Moreover, Art.21 of the Model Articles requires a third of the board to put themselves for re-election every year (in bringing about the creation of a maximum three years' imprisonment). 10% of the shareholders may be asked to meet any time, and can be 5% if it has been a year since the previous report (s.303 CA 2006). In Germany, where he creates employee engagement need for more management stability, §84 (3) provides for the AktG that the members of the Board of Directors can be removed only by the Supervisory Board for an important reason (Ain wichtiger Grund) though this can include a vote of no - confidence by the shareholders. Which lasts for five years, only 75% of shareholders to vote otherwise. §122 AktG lets 10% of shareholders require the meeting. In the United States, Delaware allows managers enjoy broad autonomy.
