Company Law: Course Overview and Assessment

• Course coordinator: Mr. Jean-Philippe Germain ([email protected]).

Company Law: Overview

• The course will explore how companies function, how they secure finances, and the liabilities and controls involved
• Goals include understanding common company forms worldwide and knowing which form suits which business
• Students are expected to be punctual, respectful, and engaged in class, avoiding distractions
• Penalties for disrupting the lecture include being asked to leave and being marked absent

Assessment

• The final exam is worth 40%, is an open question format, emphasizing critical thinking and structured reasoning; the duration is 2 hours
• MCQ (30%) will consist of 25 questions, and the duration is 1 hour
• Group projects accounts for 30% and are presentation-based, recorded, the duration is 5 minutes

Introduction to Companies

• A "company" is an association of people sharing common objectives with diverse purposes
• In business terms, reserved for associations pursuing economic activities, the course focuses on these associations
• Companies are not solely legal structures for associating for profit; there are other business entities with different characteristics.

Basic Knowledge

• The enterprise
• The business agreement
• Accessibility of the business structure
• Incorporation

The Enterprise

• Engaging in business requires a specific structure, with each form offering distinct benefits and drawbacks
• There are 3 types of business organizations
• The sole proprietorship is the simplest organization, where the owner and business lack legal separation
• The partnership involves two or more individuals agreeing to operate a business for profit; it creates legal persons under certain laws
• The corporation possesses a separate legal existence from its shareholders, featuring limited liability, centralized management, continuity, and transferable interests
• The organizational form impacts entrepreneur liability, financial situation, taxation, and organizational growth potential

Business agreement

• Divided into general and special conditions
• General conditions include legal capacity, consent, legal activity and legal cause being factors
• Special conditions include plurality of members, contributions, sharing profits and losses, and affectio societatis

Articles of Association

• Refer to Article 1832 of the French Civil Code, where a firm is formed by two or more persons agreeing to contribute property or industry for a joint venture, in order to share profits or the saving
• The articles of association form a company's principal constitutional document
• These articles govern the internal operations of the business legal person
• They cover elements such as power balance among members and directors, meeting procedures, and matters about shares and asset distribution
• All incorporated business structures must have these articles, which promoters can customize to specific business demands and register

Accessibility of the Business Structure

• The accessibility to business structure can be divided into association of capital and association of persons
• Association of persons (intuitu personae), is hardly accessible as other members must consent, involves parts and partners, unlimited liability, joint and several and decentralized management
• Association of capitals (Intuitu pecuniae), is accessible to all, especially when listed, involves shares and shareholders, limited liability and has centralized management

Incorporation

• Defined as the legal process of creating a business legal person by registering with the Registrar of Companies
• Incorporation creates an independent legal person. In the UK, it can occur through Parliament or Royal Charter
• Registration requires documents and publications, culminating in a certificate of incorporation

Certificate of Incorporation

• Companies House needs to be satisfied the requirements for registration are met
• The company registers, gets allocated with an "identification number (SIRET)"
• The company is provided with a certificate of incorporation (KBIS).
• The certificate is a conclusive evidence that the requirements of the law have been met and the company is duly registered
• The effect of incorporation are members that subscribe within the company are a body corporate
• Subscribers become holders of the shares specified and directors named become the appointed their offices

Advantages of incorporation

• Corporate personality
• Limited liability (when applicable)
• Perpetual succession
• Contractual Capacity
• Ownership of assets
• Creating and participating in other business structures
• The ability to commence legal proceedings
• Transferrable shares
• Corporate tax

Disadvantages of Incorporation

• Increased formality regulation and publicity Companies are subject to significantly more formality regulation than unincorporated business
• Complex rules can apply throughout the companies existence (GM and accounts approval)
• Loss of privacy, as most companies are publicly available (financial information and annual accounts, etc)

Incorporation: Legal Personality

• Corporate personality gives the company law recognizes is as a person
• Limited liability means members are typically not personally liable
• Unlimited companies also have members with unlimited liability
• Perpetual succession means companies outlive individuals and continue indefinitely
• Contractual capacity enables companies to enter contracts.
• Ownership of the company belongs to it as a legal person

Legal proceedings

• The ability to commence legal proceedings is more easily determined when the company has wronged someone.
• Transferable shares are straightforward, because shares in a company are freely sold