Company Law Essay Example | Topics and Well Written Essays - 1000 words

Company Law - Essay Example Further, company law largely interprets business law to the affected parties. Business just like any other discipline, which involves interaction between two or more parties, cannot be wholly exonerated from instances of conflicts (Emerson, 2009). Business law attempts to address diverse issues in a business. It enables swift and efficient enforcement of contracts. In addition, it ensures adequate legal protection to both private and personal property; it ensures clear framework and mechanisms for transferring and registering property. Furthermore, it also sees to it that intellectual property get due protection and enforcement. Business law ensures stability and the existence of a framework able to accommodate the management, operations, and establishment of companies. Company law puts in place a legal framework on how companies operate. It handles issues such as company formation, regulations in terms of limiting liability of members and general company’s functions and perfo rmance. Company law protects both investors and the public in their daily business transactions. Investment law offers grant to some businesses irrespective of their legal form. It also contains regulations in respect to transfer of shares in the Capital market. The company law foresees functions and the capacity of an individual since this is very essential during company formation (Kenneth & Clarkson, 2010). Corporate personality implies that as far as the company law is concerned, the personality of a company exist differently from its owners. Therefore, the state recognizes that certain business or firms contain legal personality. As a result, the company has the legal right to sue an individual or be sued in its property, name or be held accountable for its debts. It is this idea that allows limited liability for company shareholders to take place because the debt does not belong to them but to the company. Limited liability is the rational aftermath of the existence of separat e or dual personality. However, just like people in some cases can have limits placed on their legal personality, so as a firm or an organization can have legal personality with no restricted liability if that is the way it is granted by the law. Therefore, it is vital to note that a firm can be formed with no restrictions or in absence of limited liability. The rationale of the ideas of corporate personality and limited liability were well presented in the case of Salomon v Salomon & Co. Ltd in the year 1897. In this case, Salomon conducted his business as leather trader. In the year 1892, he formed his firm or company which he called Salomon& Co. Ltd. Salomon, his five children and wife each had one share in the newly formed company (Hannigan, 2009). Therefore, the family members were forced to hold shares on behalf of Salomon because the policy at that time required that for any company to be registered there must be at least seven shareholders. The Company bought the sole operat ion of leather business, which was valued at E 39,000.00. This showed Salomon determination for success in the leather business. Salomon paid E 10,000.00 in form of debentures for the assets of the company. He decided to pay in debentures so that he could be a secured creditor. Salomon offered a charge over the assets of the company at E 20,000.00 in E 1 per share and E 9,000 in cash.