Companies and Limited Liability

Summary of the Nature of a Company

  • A company incorporated under the Act is regarded as a separate legal person.

  • A company can enter into contracts and be sued like a person.

  • A company is made up of shareholders that own shares in the company and directors who manage the affairs of the company.

  • The directors are accountable to the shareholders for the operation of the company.

  • The shareholders retain control of the company and can remove directors if they are not carrying out their duties according to the constitution or the rules laid out in the Act.

  • A company need not have a constitution they can adopt the standard one contained in the Act.

  • A constitution can include matters covered by the Act, as well as additional terms or conditions.

  • A constitution cannot breach the requirements of the Act and must be consistent with the rules laid out in the Act

  • The constitution is enforceable. This is done between the company and its shareholders, or between the shareholders.

The Nature of a Company
A company is a business structure, which is registered under the Companies Act 1993 and regarded as a legal entity in the eyes of the law. That is, the law recognises it as a legal person independent of its owners, the shareholders.

A company is generally made up of two groups:

  1. The shareholders who own shares in the company.
  2. The directors who are charged with managing the affairs of the company.

Documents can be served on it at its Registered Office which must be a physical address. It cannot be a post office box or document exchange.