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Questions and Answers
What is a key characteristic of private companies?
What is a key characteristic of private companies?
What distinguishes the governance model of a two-tier system from a one-tier system?
What distinguishes the governance model of a two-tier system from a one-tier system?
Which of the following statements about legal personality is true?
Which of the following statements about legal personality is true?
What is the implication of regulatory competition among countries?
What is the implication of regulatory competition among countries?
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What are pre-incorporation transactions?
What are pre-incorporation transactions?
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Which of the following describes the type of shares that represent ownership rights?
Which of the following describes the type of shares that represent ownership rights?
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Which statement is true regarding minimum share capital for public companies?
Which statement is true regarding minimum share capital for public companies?
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What can lead to a company's nullity?
What can lead to a company's nullity?
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Flashcards
Private Company
Private Company
A smaller company, not publicly traded, and often not subject to strict EU regulations.
Public Company
Public Company
A larger company, traded publicly on a stock exchange, facing more regulations.
Legal Personality
Legal Personality
Companies gain an independent legal existence separate from their founders after registration, acting as themselves.
Limited Liability
Limited Liability
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Share Capital
Share Capital
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Minimum Share Capital
Minimum Share Capital
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Nullity of Company
Nullity of Company
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Freedom of Establishment
Freedom of Establishment
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Study Notes
Company Types
- Private companies (e.g., GmbH in Germany, Ltd in the UK) are smaller, less regulated, and prevalent.
- Public companies (e.g., AG in Germany, Plc in the UK) are larger, publicly listed, and subject to stricter regulations.
Key Features of Companies
- Legal Personality: Companies are legally independent entities after registration.
- Limited Liability: Shareholders' liability is restricted to their investment.
- Transferable Shares: Shares are typically transferable, although exceptions exist.
- Minimum Share Capital: Required for incorporation; varies by country.
Governance Models
- Two-tier system: Separate boards for management and oversight exist.
- One-tier system: A single board handles all functions.
Regulatory Competition
- Countries vie to attract company registrations via favorable laws (e.g., minimum share capital).
- Cases like Centros (C-212/97) and Überseering (C-208/00) address cross-border company recognition and freedom of establishment.
Freedom of Establishment
- Protected under Articles 49 and 54 TFEU, allowing companies to choose incorporation and expansion locations.
Company Formation
- Essential documents like Articles of Association and Memorandum of Association are required.
- Disclosed information includes company type, name, capital, management, and activities.
- Online company formation is common in the EU.
Pre-Incorporation Transactions
- Individuals acting before registration are personally liable unless the company assumes responsibility later.
Legal Personality
- Companies acquire legal personality upon registration, becoming distinct entities from their founders.
Share Capital and Contributions
- Share capital comprises cash and in-kind (non-monetary) contributions.
- Contributions must be properly valued, often by expert reports.
- Minimum share capital regulations vary by country (e.g., €25,000 for public companies).
Shares
- Shares represent ownership and can be categorized as nominal, non-par, registered, or bearer shares.
- Some special shares (e.g., loyalty shares, preferred shares) offer additional benefits but may have limited voting rights.
Nullity
- Nullity (invalidation) of a company is extremely rare and only occurs due to major irregularities like improper registration or unlawful objectives.
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Description
This quiz explores various types of companies, including private and public entities, and their distinct features. It also delves into governance models and the regulatory competition among countries. Test your knowledge on these essential business concepts!
