Company Law
Paper F4 (ENG)
CHAPTER
Corporate and business law
8
Companies and legal personality
Contents 1 2 3 The features of a limited company Types of company Advantages and disadvantages of incorporation: the veil of incorporation
© EWP Go to www.emilewoolfpublishing.com for Q/As, Notes & Study Guides
199
Paper F4: Corporate and business law (English)
The features of a limited company
Comparison of companies with other forms of business The meaning of separate legal personality (‘doctrine of separate personality’) Limited liability Separation of ownership from control Transfer of ownership and perpetual succession Loan capital Capital maintenance Public information about companies The statutory regulation of companies: Companies Act 2006 The regulation of financial institutions: Financial Serivces and Markets Act 2000
1
The features of a limited company
Companies are an alternative form to sole trader businesses and partnerships as a form of business entity.
1.1
Comparison of companies with other forms of business
Companies differ significantly from other forms of business. A sole trader is an individual who owns and runs his or her own business. The law does not recognise the business: the law recognises only the individual who runs it. The individual is liable for the debts of the business and is also personally liable for any breaches of the law by the business. An ordinary partnership is a group of individuals who own and run their own business. Each partner contributes capital to the business. An ordinary partnership business is not recognised as a ‘person’ by the law. Individual partners are personally liable, jointly with the other partners, for the debts of the business. Most companies are companies limited by shares. The capital of a company is represented by shares, and the ‘ordinary’ shareholders are its owners. Company law refers to shareholders who are owners of the company as members of the company. Companies are
CHAPTER
Corporate and business law
8
Companies and legal personality
Contents 1 2 3 The features of a limited company Types of company Advantages and disadvantages of incorporation: the veil of incorporation
© EWP Go to www.emilewoolfpublishing.com for Q/As, Notes & Study Guides
199
Paper F4: Corporate and business law (English)
The features of a limited company
Comparison of companies with other forms of business The meaning of separate legal personality (‘doctrine of separate personality’) Limited liability Separation of ownership from control Transfer of ownership and perpetual succession Loan capital Capital maintenance Public information about companies The statutory regulation of companies: Companies Act 2006 The regulation of financial institutions: Financial Serivces and Markets Act 2000
1
The features of a limited company
Companies are an alternative form to sole trader businesses and partnerships as a form of business entity.
1.1
Comparison of companies with other forms of business
Companies differ significantly from other forms of business. A sole trader is an individual who owns and runs his or her own business. The law does not recognise the business: the law recognises only the individual who runs it. The individual is liable for the debts of the business and is also personally liable for any breaches of the law by the business. An ordinary partnership is a group of individuals who own and run their own business. Each partner contributes capital to the business. An ordinary partnership business is not recognised as a ‘person’ by the law. Individual partners are personally liable, jointly with the other partners, for the debts of the business. Most companies are companies limited by shares. The capital of a company is represented by shares, and the ‘ordinary’ shareholders are its owners. Company law refers to shareholders who are owners of the company as members of the company. Companies are
References: Chapter 8: Companies and legal personality subject to extensive regulation under the provisions of the Financial Services and Markets Act 2000 (FSMA 2000)