Checklist of Features of a Company

  • Legal Person - A company incorporated under the Companies Act is regarded as a separate legal person.

  • Limited Liability - A company allows liability to be limited. This means that shareholders are part owners in the business because they hold shares in it, but they are not personally liable for the actions of the company or for the debts of the company. Their liability is limited to the purchase price of their shares, so that if the company runs into financial trouble and liquidates, they have to pay up only the amount still owing on the price of their shares.

  • Independent - A company is independent. That is, it is a person in the eyes of the law and can enter into contracts and own and deal in property, as well as sue or be sued by outsiders.

  • Contracts - A company can enter into contracts in the normal way.

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

  • Act - A company has to comply with the Company’s Act 1993. Because it is an entity created by law, this means the law will control how the company functions.

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

  • Responsible - Directors are responsible. The directors, rather than the shareholders, are responsible for the day-to-day management of the company and they have to perform their duties and responsibilities, acting in the interest of the company

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

  • Action - Shareholders can bring action. Shareholders can bring action against the directors of the company if they breech their duties and they act outside of the interest of the company, as well as the company owners (the shareholders).

  • Transfer - A company’s shares can be transferred. The ownership of shares in a company can be transferred to other parties by way of disposal or sale and on the basis of price agreed between the parties.

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

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

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

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

  • Existence - The company has continued existence and only dies when put into liquidation. The death of any shareholder, director or officer of the company does not affect it because they are not the company; they are investors or employees of the company.

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