The main purposes of company law are:
i) To protect the creditors, and
ii) To protect the investors of the company.
+ there are several fundamental legal concepts, pertaining to company law. They are:
a) Legal Personality
As we have mentioned in the previous post, a limited company is an artificial person and is regarded by law as having a separate legal entity distinct from its members (Salomon v Salomon & Co Ltd (1987)). A limited company has a legal capacity to make contracts, take legal action, own property, sue or be sued as a natural person.
b) Perpetual Succession
A company does not automatically dissolve with the death or bankruptcy of the owner or any of the partners. It will continue in existence until it is dissolved by a court order or by liquidation, e.g. Jardine Matheson Group over 100 years.
c) Limited Liability
It refers to the concept that members of a limited company have a limited liability to the extent of any amount unpaid on their shares.
d) Restriction of Business Activities
The business or activities of a company is restricted or regulated or regulated by its memorandum and articles of association, the Companies Ordinance, etc.