Podcast
Questions and Answers
What is the meaning of a company?
What is the meaning of a company?
A company means an association of individual formed for some common purpose.
According to Prof. Lindley, how is a company defined?
According to Prof. Lindley, how is a company defined?
An association of many persons who contribute money or money’s worth to a common stock and share the profit or loss.
Which of the following is NOT a characteristic of a company?
Which of the following is NOT a characteristic of a company?
A company is created by _____ and can only be ended by a process of law.
A company is created by _____ and can only be ended by a process of law.
Signup and view all the answers
A company can die like a natural person.
A company can die like a natural person.
Signup and view all the answers
What document signifies a company's official identity and acts as its signature?
What document signifies a company's official identity and acts as its signature?
Signup and view all the answers
In a company limited by shares, what is the liability of members?
In a company limited by shares, what is the liability of members?
Signup and view all the answers
Which case established that a company is a separate legal entity from its members?
Which case established that a company is a separate legal entity from its members?
Signup and view all the answers
What is the definition of a company according to Prof. Lindley?
What is the definition of a company according to Prof. Lindley?
Signup and view all the answers
What are the characteristics of a company? (Select all that apply)
What are the characteristics of a company? (Select all that apply)
Signup and view all the answers
A company has a perpetual succession, meaning it ceases to exist when its members die.
A company has a perpetual succession, meaning it ceases to exist when its members die.
Signup and view all the answers
What does limited liability in a company mean?
What does limited liability in a company mean?
Signup and view all the answers
What is the purpose of a common seal in a company?
What is the purpose of a common seal in a company?
Signup and view all the answers
Which of the following statements is true regarding the transferability of shares in a company? (Select all that apply)
Which of the following statements is true regarding the transferability of shares in a company? (Select all that apply)
Signup and view all the answers
In what capacity can a company engage in legal actions?
In what capacity can a company engage in legal actions?
Signup and view all the answers
Study Notes
Joint Stock Company
- A company is an association of individuals formed for a common purpose, characterized by capital divided into shares.
- Defined by Prof. Lindley as a group that contributes to a common stock for a trade or business, sharing profits or losses based on contributions.
Characteristics of a Company
- Separate Legal Entity: Legally distinct from its members; recognized as an artificial person with no physical existence. Case: Salomon vs. Salomon & Co. Ltd solidified this principle.
- Perpetual Succession: A company exists indefinitely, unaffected by changes in membership, insolvency, or other personal conditions. Its existence is maintained by law, not individual members.
- Limited Liability: Members’ liability is limited to unpaid shares. In a share-limited company, members pay only the value due on shares, whereas in a guarantee-limited company, liabilities are based on agreed contributions if the company is wound up.
- Common Seal: Companies operate through a common seal, which serves as an official signature, required for contracts and legal documents.
- Transferability of Shares: Shares of a company are generally transferable, allowing shareholders flexibility and ensuring no permanent attachment to the company.
- Capacity to Sue and Be Sued: Companies have the ability to initiate or face legal actions in their corporate name, independent of the personal identity of their members.
Formation and Legal Structure
- Incorporation: The process of legally establishing a company which gives it rights, duties, and legal status.
- Memorandum of Association: Essential document defining the company's structure and scope; includes clauses on the company's name, objectives, and capital.
- Articles of Association: Governing document detailing rules for the company’s internal management and operations; complements the memorandum.
- Doctrine of Ultra Vires: Limits a company's actions to those outlined in the memorandum, protecting both the company and third parties from unauthorized actions.
- Doctrine of Indoor Management: Protects third parties dealing with the company by affirming that they can assume internal procedures are properly followed.
Prospectus
- Contents of a Prospectus: Essential document issued by a company to invite public investment; outlines business details, financial statements, and risk factors.
- Statements in lieu of Prospectus: Alternative disclosures made when a company does not issue a prospectus, ensuring transparency for potential investors.
Joint Stock Company
- A company is an association of individuals formed for a common purpose, characterized by capital divided into shares.
- Defined by Prof. Lindley as a group that contributes to a common stock for a trade or business, sharing profits or losses based on contributions.
Characteristics of a Company
- Separate Legal Entity: Legally distinct from its members; recognized as an artificial person with no physical existence. Case: Salomon vs. Salomon & Co. Ltd solidified this principle.
- Perpetual Succession: A company exists indefinitely, unaffected by changes in membership, insolvency, or other personal conditions. Its existence is maintained by law, not individual members.
- Limited Liability: Members’ liability is limited to unpaid shares. In a share-limited company, members pay only the value due on shares, whereas in a guarantee-limited company, liabilities are based on agreed contributions if the company is wound up.
- Common Seal: Companies operate through a common seal, which serves as an official signature, required for contracts and legal documents.
- Transferability of Shares: Shares of a company are generally transferable, allowing shareholders flexibility and ensuring no permanent attachment to the company.
- Capacity to Sue and Be Sued: Companies have the ability to initiate or face legal actions in their corporate name, independent of the personal identity of their members.
Formation and Legal Structure
- Incorporation: The process of legally establishing a company which gives it rights, duties, and legal status.
- Memorandum of Association: Essential document defining the company's structure and scope; includes clauses on the company's name, objectives, and capital.
- Articles of Association: Governing document detailing rules for the company’s internal management and operations; complements the memorandum.
- Doctrine of Ultra Vires: Limits a company's actions to those outlined in the memorandum, protecting both the company and third parties from unauthorized actions.
- Doctrine of Indoor Management: Protects third parties dealing with the company by affirming that they can assume internal procedures are properly followed.
Prospectus
- Contents of a Prospectus: Essential document issued by a company to invite public investment; outlines business details, financial statements, and risk factors.
- Statements in lieu of Prospectus: Alternative disclosures made when a company does not issue a prospectus, ensuring transparency for potential investors.
Studying That Suits You
Use AI to generate personalized quizzes and flashcards to suit your learning preferences.
Description
This quiz covers the essential characteristics and definitions of a joint stock company. Learn about the legal principles, separate legal entity, perpetual succession, and limited liability through various key concepts and cases. Test your understanding of how these principles shape corporate structures and governance.
