Notes on Corporate Law are very well written and consist of everything taught in the module (Private Law 2, Semester 2, THUAS). They are easy to follow and explain things further.
You can also purchase my bundle on Private Law 2, taught in Semester 2 at THUAS, which constists of Civil Procedure, C...
o UK; company (public or private)
o US; corporation
o EU; undertaking (public or private)
o NL; corporation (open or closed)
o Germany; corporation (private limited/public stock)
Corporate Law is a formation of business forms (companies), legal operation of business for MS
(functions, rights and duties of key actors). *
It’s also a body of law that regulates companies and the environment in which they move (capital
markets); it encompasses different business forms and their characteristics, as well as legal rights,
duties and liabilities. *
Dominant jurisdictions for developing Corporate Law; *
- Germany; Civil law tradition and MS (EU), NL; similar
- UK; Common law tradition and MS (EU) (UKCA 2006 is the basic act in UK)
- US: Common law tradition (each US State has its own statute)
The concept of “partnership” and “company”; laid down and defined in each relevant jurisdiction
i. Legislation – National
Relevance of national legislation on corporations;
o Registered companies can only be created because national legislation permits them to be
created (legal status and legal consequences are established by law)
o Primary source on how companies are operated (legal actions of a company are determined
by law)
ii. Legislation – Relationship national & EU Law
How does EU Law influence MS national rules of Corporate Law?
o In case of membership of EU; several Directives pursuant to Treaty of Rome are relevant *
o Objectives of;
Equality
, Freedom of establishment of businesses throughout Community
Harmonization of domestic company laws
Business Forms *
To ‘be in business’, there is a combination of three aspects to be applied;
a. Capital
First key question to evaluation business form; does it facilitate investment in the business?
b. Risk mitigation
No form is without risk, second key question; does it mitigate risks?
c. Clear organizational structure
Where money, risk and people meet there is a potential for disagreement, third key question;
does the form provide a clear structure?
Businesses come in many forms…
Sole Proprietorship or Sole Tradership *
The sole proprietor is the owner and the controller of the property
No formalities (no license or permit); in some jurisdictions: registration of the name of your
sole tradership
Partnership (General or Limited) *
People doing business together on the basis of an agreement between each other
The partners are the controllers and owners
Some formalities attached before start; in chosen jurisdictions: this form is regulated
US; “independent entity”
i. General Partnership (GP)
- Each partner participates in business activities, have their own “freedom to a certain extent”
- General Partners: each can make business decisions
- Each have personal liability for business debts
ii. Limited Partnership (LP)
- Special form of General partnership
- Not every partner participates; there can be “silent partners” (without a say)
- There are general partners too and those have a say; similar to those in a GP
iii. Limited Liability Partnership (LLP)
- Law firms, accountancy firms,…
- Partners have limited liability
Company or Corporation
Incorporated
Special formalities fulfilled
Resulting in legal consequences
Certain key role actors;
- director (requirement to appoint directors based on (corporate) law)
- shareholder (investor who has put money in corporation and has taken share(s) in return)
, Lecture 2 – The Company and Its Core Characteristics
The Limitations of Sole Trading / Partnerships
i. Personal Liability; personal wealth and lifestyle would be threatened if the business fails
- If the business’ assets wouldn’t be enough to satisfy the creditors/claimants
- Why? If the business’ assets are insufficient; claims could be satisfied against his personal
assets (house, car,…)
- Barriers to raising finance for the business (priority when insolvency)
- Bank interested in having security interests in the business’ assets - a secured creditor (paid
first)
ii. Unknown Liabilities; who would be subject to possible lawsuits?
iii. Strategy; personal liability – risk averse decisions
iv. Continuation; problems if/when trader dies; inheritance?
Can your personal liability be protected through a Contract?
In each and every contract one can require other party to agree to have recourse to the business’
assets only, not to his personal assets.
- But; will other parties agree to this?
- And; they are unfair contract terms (sometimes exclusion of liability is not possible)
- Insurance covers (third party claims); however costs can be very high
Having a (Legal) Personality; Introduction
Natural Persons
Can undertake actions with legal effect;
- Meaning; enter into legal relationships; contract
- Prerequisite; power to contract, age of majority,…
Have ‘legal standing’ in court;
- Can file a claim; admissible as a claimant
- Can be filed a claim against
A Company *
The five core characteristics of a company are; *
Has legal personality
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