A Company
Companies are business associations with a character which is distinctly separate to the officers and shareholders. To this end, a company can own property, insulate it’s owners against personal liability and continue trading irrespective of a change in ownership. When a company is used to effect a fraud, a court may lift the corporate veil which will allowing the shareholders to become personally liable.
Company formation
When a governmental authority provides a certificate of incorporation a company is formed. A certificate of incorporation is issued once the constitutional documents and statutory form have been filed.
Duties
The officers of a company are responsible for the management and include a director, manager and/or company director.
UK Company Types
There are a number of common business associations. They have different structures and owner liability:
PLC public limited company
- company whose securities are traded on the stock exchange
- liability generally limited to shareholder contributions
- no personal liability
private limited company
- could be a local retailer such a s a local shop or restaurant
- shareholders cannot offer shares to the general public
- generally members do not have personal liability
limited partnership
- unlimited personal liability for partners
- partners share management rights
- must be at least two general partners
sole partnership
- proprietor is personally liable for payments of debts
- creditors can sue proprietor personally
- unlimited personal liability
Director duties
Directors must exercise a duty of care and fiduciary duty
The duty of care obliges directors to be objectively prudent and diligent in the running of the company. Directors must exercise their decisions in good faith and in the best interest of the corporation.
Acting in the best interests of the company. Directors must consider their fiduciary duties such as avoid conflicts of interest for example, using for personal gain a situation where the director’s company previously declined an opportunity.
What about your country/jurisdiction?
What formalities exist in company formation?
What roles exist in a company?
What company types are there?
What forms and documents are used to forma company?