1. Formation of the company
1.1. Company and corporation
What is a company? Trustees of Dartmouth College v. Woodward
(US definition) (1819) (US Supreme Court)
“A corporation (company) is an artificial being, invisible, intangible, and existing only in
contemplation of law (only because of the fact that there is law that allows Companies to
created).
Being a mere creature of law, it possesses only those properties which the
charter of its creation confers upon it, either expressly, or as an incidental to its very
Existence”
Definition contains many elements (intangible, charter, law),
which will be later explored
→ company = corporation ?
The difference between company and corporation Corporation means approximately the same thing as a
company (european word for corporation)
US: Corporations Code (also Australia)
UK: Companies Act (also India, Ireland, NZ)
=law identifies all specificities and characteristics of what
qualifies a company or a corporation
- Generally, US corporate lawyer identifies
corporation, UK lawyer identifies as
company
- Only small differences
US: e.g. Pfizer = corporation
UK: e.g. AstraZeneca = company
Legal entities = artificial beings similar to corporation (US)
, and companies (UK)
• US: corporation (Inc.)
• UK: public company (PLC)
• Germany: Aktiengesellschaft(AG)
• France: Société anonyme (SA)
• The Netherlands: Naamloze Vennootschap (NV)
• Italy: Società per azioni (SPA)
1.2 Company and other business forms
US: different business forms UK: different business forms
1. Corporations: 2 kinds, issues as number of people, → Similar to US but not identical forms, as law created
taxation them
2. Companies: more people than partnership, similar to 1.Companies: Companies Act divides private and public,
partnerships and corporations also in Germany, France,...
2.Partnerships:
3. Partnerships: share shop, different work, working together 3.Sole Trader:
with partner, all partners (mostly 2 or 3 people working
together) responsible for common shared organization
- Limited partnership and limited liability partnership
identifies someone behind it and responsible but not
liable for all debts
-
4. Sole proprietorship: pay taxes, alone responsible
, AG< SA< NV = similar to public company (UK) Vice versa
1.3 Company law
What is company law? = law governing the creation and operation of companies
- Only way of having companies in existence through law
- Companies exist by the law (common Act of Parliament) → national law
⇒ due to national law we have companies
Source of Law / Rules
1. Jurisdiction:
1) common at national level: UK, France, Germany, NL
2) state level: e.g. US
California Corporation Code, Texas Business Corporation Act
⇒ due to national law we have companies
2. Supra-jurisdiction level:
Influence existence of companies and corporations
e.g. EU Law
Company law Directives, securities regulation
Directive (EU) 2017/1132 of the European Parliament and of the Council of 14 June
2017 relating to certain aspects of company law (codification), Pb. L. 169 of 30 June
2017.
, → harmonize jurisdictions
E.g. US Federal: Securities regulation governing corporations stock exchange listed
3. Other influential laws at jurisdiction level
Influencing behaviour of companies
- Insolvency law
- Public law
- Contract law
⇒ because corporation has legal personality and is acting in that jurisdiction
has to comply with public law
4. Case law
- Company law is influenced by case law
- After court decision companies have to organise and behave
- Depends on jurisdiction
5. Corporate Governance codes
- Each code for MS in the EU
- E.g. UK Corporate governance code
- Soft law with principles and best practices that must be complied with or explain
why deviate from it e.g. why in this company the articular rule is not applicable
- Depends largely on the jurisdiction
- Sometimes by government
What needs to be disclosed?
- Sanctioning mechanisms by governments (e.g. environmental issues) → kick
out Chief Executive
- set of voluntarily rules to help companies establish corporate governance and
control systems
- Codes can contain implementations from the EU commission e.g. through a
Recommendation
- framework for the management and control of enterprises
http://www.ecgi.org/codes/all_codes.php)
Introduction to the jurisdictions: US
⇒ each state in the US has own corporate jurisdiction
- Companies are free to incorporate in any state regardless of whether they are doing business there
or have any contact with this state
- Most corporations are incorporated under the law of the state Delaware!
- Delaware General Corporation Law (DGCL), http://delcode.delaware.gov/title8/c001/
Why Delaware?
- Corporation law is very well developed in Delaware
1.1. Company and corporation
What is a company? Trustees of Dartmouth College v. Woodward
(US definition) (1819) (US Supreme Court)
“A corporation (company) is an artificial being, invisible, intangible, and existing only in
contemplation of law (only because of the fact that there is law that allows Companies to
created).
Being a mere creature of law, it possesses only those properties which the
charter of its creation confers upon it, either expressly, or as an incidental to its very
Existence”
Definition contains many elements (intangible, charter, law),
which will be later explored
→ company = corporation ?
The difference between company and corporation Corporation means approximately the same thing as a
company (european word for corporation)
US: Corporations Code (also Australia)
UK: Companies Act (also India, Ireland, NZ)
=law identifies all specificities and characteristics of what
qualifies a company or a corporation
- Generally, US corporate lawyer identifies
corporation, UK lawyer identifies as
company
- Only small differences
US: e.g. Pfizer = corporation
UK: e.g. AstraZeneca = company
Legal entities = artificial beings similar to corporation (US)
, and companies (UK)
• US: corporation (Inc.)
• UK: public company (PLC)
• Germany: Aktiengesellschaft(AG)
• France: Société anonyme (SA)
• The Netherlands: Naamloze Vennootschap (NV)
• Italy: Società per azioni (SPA)
1.2 Company and other business forms
US: different business forms UK: different business forms
1. Corporations: 2 kinds, issues as number of people, → Similar to US but not identical forms, as law created
taxation them
2. Companies: more people than partnership, similar to 1.Companies: Companies Act divides private and public,
partnerships and corporations also in Germany, France,...
2.Partnerships:
3. Partnerships: share shop, different work, working together 3.Sole Trader:
with partner, all partners (mostly 2 or 3 people working
together) responsible for common shared organization
- Limited partnership and limited liability partnership
identifies someone behind it and responsible but not
liable for all debts
-
4. Sole proprietorship: pay taxes, alone responsible
, AG< SA< NV = similar to public company (UK) Vice versa
1.3 Company law
What is company law? = law governing the creation and operation of companies
- Only way of having companies in existence through law
- Companies exist by the law (common Act of Parliament) → national law
⇒ due to national law we have companies
Source of Law / Rules
1. Jurisdiction:
1) common at national level: UK, France, Germany, NL
2) state level: e.g. US
California Corporation Code, Texas Business Corporation Act
⇒ due to national law we have companies
2. Supra-jurisdiction level:
Influence existence of companies and corporations
e.g. EU Law
Company law Directives, securities regulation
Directive (EU) 2017/1132 of the European Parliament and of the Council of 14 June
2017 relating to certain aspects of company law (codification), Pb. L. 169 of 30 June
2017.
, → harmonize jurisdictions
E.g. US Federal: Securities regulation governing corporations stock exchange listed
3. Other influential laws at jurisdiction level
Influencing behaviour of companies
- Insolvency law
- Public law
- Contract law
⇒ because corporation has legal personality and is acting in that jurisdiction
has to comply with public law
4. Case law
- Company law is influenced by case law
- After court decision companies have to organise and behave
- Depends on jurisdiction
5. Corporate Governance codes
- Each code for MS in the EU
- E.g. UK Corporate governance code
- Soft law with principles and best practices that must be complied with or explain
why deviate from it e.g. why in this company the articular rule is not applicable
- Depends largely on the jurisdiction
- Sometimes by government
What needs to be disclosed?
- Sanctioning mechanisms by governments (e.g. environmental issues) → kick
out Chief Executive
- set of voluntarily rules to help companies establish corporate governance and
control systems
- Codes can contain implementations from the EU commission e.g. through a
Recommendation
- framework for the management and control of enterprises
http://www.ecgi.org/codes/all_codes.php)
Introduction to the jurisdictions: US
⇒ each state in the US has own corporate jurisdiction
- Companies are free to incorporate in any state regardless of whether they are doing business there
or have any contact with this state
- Most corporations are incorporated under the law of the state Delaware!
- Delaware General Corporation Law (DGCL), http://delcode.delaware.gov/title8/c001/
Why Delaware?
- Corporation law is very well developed in Delaware
