COMPANY LAW

company law



company law

Part 1

The concept of an organization being a legal enterprise can make complications in understanding the how the process of law and regulation is carried out. This concept on the other hand can also give undesirable results which can lead to misleading statements from the organization (Baxt & Fridman, 3008). The concept of lifting the corporate veil is described as legal decision to treat the rights and duties of a corporation as the right or liabilities of its stakeholders and shareholders. This law originated from the case of Salomon Ltd (Ciro & Symes, 3009). The case of S&S laid the basic foundation of the company. This law clearly explains that a company is treated as a personality rather than an entity. If the company owes debt to creditors than the creditors cannot sue one person of the company because the company acts as whole company rather than an entity. The basic idea of this law is when a company becomes incorporated it becomes a separate entity regardless of its members. It can be sued and it can sue with its own name rather than the name of the people who own the company. The law is not that simple as it seems it has many regulatory policies which we will discuss. When a company is incorporated following principles emerge.

Limited Liability

The company is liable for its own debts to its own creditors. It can obtain the capital from its members to run the operation of the company. This debt will be paid by the company when it will achieve profit from its operations. The profit will be distributed to all the members of the corporation (Baxt & Fridman, 3008).

Succession

When a member sells his or her share in the company nothing will be changed with respect to any regulation (Baxt & Fridman, 3008). The equity of shares will remain the same regardless of who the person is and why that person is in the company.

Shareholder's Equity

A person or an individual's inters tint he company is represented by his or hers share in the company. The more shares you own the more equity in the company you will have.

Assets, rights and liabilities

All the assets which are in registered or bought by the name of the company will remain assets of the company. Members of the company do not own any asset which is registered in the name of the company. Company has legal existence regardless of the member of the company and because of this the company will own every asset to its name.

Capital

All the company members pay to issue shares and all the money which is coming in the name of the company is called as the company's capital. Members of the company have no right on company's capital for their own personal use.

Appointment of Directors

According to the law the company is an artificial person which is controlled and run by board of directors. The members of the company have the right to vote the board of directors ...