Company law 1 Flashcards
(22 cards)
What is a company in legal terms?
A company is a legal entity separate from its members, with its own rights and liabilities.
What is the primary legislation governing companies in most jurisdictions?
The Companies Act.
What does incorporation mean?
The process of legally declaring a corporate entity as separate from its owners.
What is limited liability?
A legal structure where a shareholder’s financial liability is limited to the amount they invested.
What are the types of companies?
Public companies, private companies, and companies limited by guarantee.
What is the difference between a public and a private company?
Public companies can offer shares to the public, private companies cannot.
What is a memorandum of association?
A legal document stating the company’s structure and purpose at incorporation.
What is the articles of association?
The document that governs the internal management of the company.
What is meant by corporate veil?
The legal distinction between the company and its shareholders or directors.
Under what circumstances can the corporate veil be lifted?
Fraud, sham or façade, or where justice requires.
What are company promoters?
Individuals who take steps to form a company and bring it into existence.
What duties do promoters owe?
They owe fiduciary duties and must disclose all material facts.
What is a pre-incorporation contract?
A contract made on behalf of a company before it has been legally formed.
Are pre-incorporation contracts binding on the company?
Generally, no, unless adopted after incorporation.
What is share capital?
The amount of capital raised by a company through the issue of shares.
What is a share?
A unit of ownership in a company.
What are preference shares?
Shares with preferential rights to dividends and repayment on winding up.
What are ordinary shares?
Shares with no preferential rights, typically carrying voting rights.
What is a dividend?
A payment made by a company to its shareholders out of profits.
What is meant by paid-up capital?
The amount of money a company has received from shareholders in exchange for shares.
