Formation of Company and Its Effects

Topics: Types of companies, Corporation, Limited liability Pages: 17 (6216 words) Published: May 16, 2013
Table of content

1| Acknowledgement | 2|
1.0| Introduction | 3|
2.0| Procedures to form a company2.1 Reservation of company name| 44| 3.0| Documents required to be lodged to form a company3.1 Memorandum of Association3.2 Article of Association| 555| 4.0| Company’s promoters| 6|

5.0| Natures of the company5.1 Company as a body corporate5.2 Can sue and being sued5.3 Perpetual succession5.4 Ability to own property5.5 Limited liability for its members| 8910101112| 6.0| Types of company6.1 Company limited by shares6.2 Company limited by guarantee6.3 Company limited by both shares and guarantee6.4 Unlimited company| 1414141515| 7.0| Private and public company7.1 Private company7.2 Public company| 161617| 8.0| Comparison between private company and public company| 19| 9.0| Conclusion | 20|

10.0| References | 21|

Firstly, I wish to express the most gratitude to Lord for the completion of my LAW 485 assignment. He had been with me the past years helping me indirectly, gives me the strength and gave his love and guidance in managing my day to day activities.

Secondly, upon completion of this LAW 485 assignment, I wish to acknowledge the helpful comments and guidance from Sir Ahmad Suman as our LAW lecturer. Without him, my assignments would not be completed excellently. Not forgetting my family members too, I would like to express my grateful thanks for supporting me emotionally and financially. They are the one who always concern and encourage me in our studies.

I would also like to take this opportunity to thanks the librarian for helping me to find the books and resources needed as the references sources in completing this assignment. Very special thanks also to all classmates for the guidance and helpful comments during the process of completing this assignment. All in all, I finally manage to complete this assignment successfully.

Title: Incorporation of the Company and its effects.
Topic Sentence: There have several procedures and legal requirement needs to comply with in forming a company relates to its natures and characteristic.

Companies Act 1956 stated a Company as a group of people working together to accomplish common goal or objectives. The word Company is combination of the Latin word ‘Com’ meaning “with or together” and ‘Pains’ meaning “bread”. Thus the company is nothing but a group of people who have a common together or who have contributed money for some common person and who have incorporated themselves into a distinct legal entity in the form of a company for that purpose. Under Section 3 of the Companies Act, 1956 company is defined as ‘a company form or registered under the Companies Act, 1956 or an existing company’. According to the definition by Lord Justice Lindey, “A company is an association of many persons who contribute money or money’s worth to a common stock and employs it in some trade or business and who share the profit and loss arising there from. The common stock so contributed is denoted in money and is the capital of the company. The persons who contribute it or to whom it belongs are members. The proportion of capital to which each is entitled is his share. The shares are always transferable although the right to transfer is more or less restricted”. Therefore it means that the formation of the company is not for the profit maximization purposes but to increase the wealth of the shareholders or the members. There have several factors that attract any persons to form a company because of the beautiful creatures of the company. It can be seen in terms of limited liability, perpetual succession, financing, taxation, and cost, formality and continuing obligations. The Act provides under section 14 (1) that ‘it subject to any Act or any two or more persons associated for any lawful purpose may be subscribing their names to a memorandum and complying with the requirements as to registration...
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