WEEK 1
Company law governs the creation, operation, governance, and dissolution of companies, which are
artificial legal persons created by law to organize economic activity by separating ownership, control, and
liability.
WHAT IS A COMPANY?
Classic legal definition
From Trustees of Dartmouth College v Woodward (1819):
A company (corporation) is an artificial being, invisible, intangible, and existing only in contemplation of
law. It possesses only those properties which the law confers upon it.
Meaning:
- A company is not natural
- It exists only because the law allows it
- It can act only within legally defined limits
This definition underpins:
- legal personality
- limited liability
- board powers
- shareholder rights
COMPANY ≠ BUSINESS ≠ ENTREPRENEUR
1. “Company” is a legal form, not an activity
- Business = economic activity
- Company = legal structure organizing that activity
One business can exist without a company (sole trader).
A company can exist without active business (dormant company).
trap:confusing “company” with “business”.
TERMINOLOGY ACROSS JURISDICTIONS (HIGH-YIELD COMPARATIVE POINT)
The course uses “company” as a functional umbrella term.
Examples you must be able to recall:
- US → Corporation (Inc.)
- UK → Public Company (PLC)
- Germany → Aktiengesellschaft (AG)
- France → Société Anonyme (SA)
- Netherlands → Naamloze Vennootschap (NV)
,Exam relevance:
Shows comparative awareness
Reinforces that company law is jurisdiction-based but conceptually similar
Definition of company law:
Company law is the body of law governing the creation, operation, governance, and dissolution of
companies.
Break it mentally into 4 verbs:
- Creation → formation, registration
- Operation → day-to-day functioning
- Governance → boards, shareholders, duties
- Dissolution → liquidation, winding up
Memory trick: C-O-G-D → Create, Operate, Govern, Die
SOURCES OF COMPANY LAW
You MUST know that company law does not come from one place.
1. National legislation (primary source)
- UK: Companies Act 2006
- Netherlands: Civil Code Book 2
- Germany: Aktiengesetz
Most company law is national.
2.Supranational law (IMPORTANT NUANCE)
(a) EU company law
- Directives harmonising national laws
- Example: Directive (EU) 2017/1132 (company law codification)
Directives ≠ directly applicable
They shape national company law
(b) US federal law
- Mainly securities regulation
- Corporate law itself → state level (e.g. Delaware)
3.Other influencing laws
Company law interacts with:
- Contract law
- Insolvency law
- Public law
- Securities law
Exam insight: company law does not exist in isolation.
,Case law
Courts interpret: directors’ duties / corporate personality / shareholder rights
Especially important in common law systems (UK, US).
Corporate Governance Codes (SOFT LAW)
This is a classic exam nuance.
- Not binding legislation
- Contain principles & best practices
- Apply via “comply or explain”
Examples:
- UK Corporate Governance Code
- Dutch Corporate Governance Code
Companies must either: Comply or explain publicly why they do not
WHY DO WE HAVE COMPANY LAW? (RATIONALE – VERY IMPORTANT)
Company law exists to:
1. Enable collective economic activity
2. Reduce transaction costs
3. Allocate risk and responsibility
4. Structure power and incentives
5. Protect weaker parties (minorities, creditors)
COMPARATIVE & FUNCTIONAL APPROACH
Why do jurisdictions adopt certain company law rules, and what problems do they solve?
Main legal families used:
- Common law (UK, US)
- Civil law (Germany, France, Netherlands)
Always think: problem → rule → effect
EXAM-READY SENTENCES
“A company is an artificial legal person that exists only by virtue of law.”
“Company law governs the creation, operation, governance, and dissolution of companies.”
“Company law is primarily national but increasingly influenced by supranational and soft-law sources.”
“Corporate governance codes operate on a comply-or-explain basis.”
“The course adopts a functional and comparative approach, focusing on the rationale behind company law
rules.”
, NOTES:
Q1:
The key point is not that it’s used for business.
The key point is that:
- Without law, the company does not exist at all.
- No law → no personality → no rights → no assets → no liability shield.
A company is a mere creature of law because it is an artificial legal person that exists only because the
law creates and recognises it. It has no physical existence and can only possess rights, obligations, and
powers that are granted to it by law.
“No law → no company.”
Q2 Four sources of company law:
I was:
Right about national and EU
[Wrong/unclear about international and customary]
Missing case law and corporate governance codes (very important)
Correct conceptual structure (THIS IS IMPORTANT)
Company law comes from five main sources, but you usually only need four.
The main sources of company law are:
1. National legislation (such as company acts or civil codes),
2. Supranational law, especially EU company law directives,
3. Case law, particularly in common law systems,
4. Corporate governance codes, which function as soft law on a comply-or-explain basis.
Memory trick:
L-E-C-G
Legislation – Europe – Courts – Governance
❗️Do not say “customary law” in this course. That would confuse examiners.
Q3 Why is company law mostly national but still harmonised?
You:
Correctly mentioned EU directives
Gave a vague intuition about “easier regulation”
Didn’t explain the division of competence
This question tests legal reasoning, not memorisation.
Company law governs the creation, operation, governance, and dissolution of companies, which are
artificial legal persons created by law to organize economic activity by separating ownership, control, and
liability.
WHAT IS A COMPANY?
Classic legal definition
From Trustees of Dartmouth College v Woodward (1819):
A company (corporation) is an artificial being, invisible, intangible, and existing only in contemplation of
law. It possesses only those properties which the law confers upon it.
Meaning:
- A company is not natural
- It exists only because the law allows it
- It can act only within legally defined limits
This definition underpins:
- legal personality
- limited liability
- board powers
- shareholder rights
COMPANY ≠ BUSINESS ≠ ENTREPRENEUR
1. “Company” is a legal form, not an activity
- Business = economic activity
- Company = legal structure organizing that activity
One business can exist without a company (sole trader).
A company can exist without active business (dormant company).
trap:confusing “company” with “business”.
TERMINOLOGY ACROSS JURISDICTIONS (HIGH-YIELD COMPARATIVE POINT)
The course uses “company” as a functional umbrella term.
Examples you must be able to recall:
- US → Corporation (Inc.)
- UK → Public Company (PLC)
- Germany → Aktiengesellschaft (AG)
- France → Société Anonyme (SA)
- Netherlands → Naamloze Vennootschap (NV)
,Exam relevance:
Shows comparative awareness
Reinforces that company law is jurisdiction-based but conceptually similar
Definition of company law:
Company law is the body of law governing the creation, operation, governance, and dissolution of
companies.
Break it mentally into 4 verbs:
- Creation → formation, registration
- Operation → day-to-day functioning
- Governance → boards, shareholders, duties
- Dissolution → liquidation, winding up
Memory trick: C-O-G-D → Create, Operate, Govern, Die
SOURCES OF COMPANY LAW
You MUST know that company law does not come from one place.
1. National legislation (primary source)
- UK: Companies Act 2006
- Netherlands: Civil Code Book 2
- Germany: Aktiengesetz
Most company law is national.
2.Supranational law (IMPORTANT NUANCE)
(a) EU company law
- Directives harmonising national laws
- Example: Directive (EU) 2017/1132 (company law codification)
Directives ≠ directly applicable
They shape national company law
(b) US federal law
- Mainly securities regulation
- Corporate law itself → state level (e.g. Delaware)
3.Other influencing laws
Company law interacts with:
- Contract law
- Insolvency law
- Public law
- Securities law
Exam insight: company law does not exist in isolation.
,Case law
Courts interpret: directors’ duties / corporate personality / shareholder rights
Especially important in common law systems (UK, US).
Corporate Governance Codes (SOFT LAW)
This is a classic exam nuance.
- Not binding legislation
- Contain principles & best practices
- Apply via “comply or explain”
Examples:
- UK Corporate Governance Code
- Dutch Corporate Governance Code
Companies must either: Comply or explain publicly why they do not
WHY DO WE HAVE COMPANY LAW? (RATIONALE – VERY IMPORTANT)
Company law exists to:
1. Enable collective economic activity
2. Reduce transaction costs
3. Allocate risk and responsibility
4. Structure power and incentives
5. Protect weaker parties (minorities, creditors)
COMPARATIVE & FUNCTIONAL APPROACH
Why do jurisdictions adopt certain company law rules, and what problems do they solve?
Main legal families used:
- Common law (UK, US)
- Civil law (Germany, France, Netherlands)
Always think: problem → rule → effect
EXAM-READY SENTENCES
“A company is an artificial legal person that exists only by virtue of law.”
“Company law governs the creation, operation, governance, and dissolution of companies.”
“Company law is primarily national but increasingly influenced by supranational and soft-law sources.”
“Corporate governance codes operate on a comply-or-explain basis.”
“The course adopts a functional and comparative approach, focusing on the rationale behind company law
rules.”
, NOTES:
Q1:
The key point is not that it’s used for business.
The key point is that:
- Without law, the company does not exist at all.
- No law → no personality → no rights → no assets → no liability shield.
A company is a mere creature of law because it is an artificial legal person that exists only because the
law creates and recognises it. It has no physical existence and can only possess rights, obligations, and
powers that are granted to it by law.
“No law → no company.”
Q2 Four sources of company law:
I was:
Right about national and EU
[Wrong/unclear about international and customary]
Missing case law and corporate governance codes (very important)
Correct conceptual structure (THIS IS IMPORTANT)
Company law comes from five main sources, but you usually only need four.
The main sources of company law are:
1. National legislation (such as company acts or civil codes),
2. Supranational law, especially EU company law directives,
3. Case law, particularly in common law systems,
4. Corporate governance codes, which function as soft law on a comply-or-explain basis.
Memory trick:
L-E-C-G
Legislation – Europe – Courts – Governance
❗️Do not say “customary law” in this course. That would confuse examiners.
Q3 Why is company law mostly national but still harmonised?
You:
Correctly mentioned EU directives
Gave a vague intuition about “easier regulation”
Didn’t explain the division of competence
This question tests legal reasoning, not memorisation.
