国商全英课程第二章第二部分
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2.3 Law of corporation2.3.1 Definition of corporationCorporation is a corporate body that generally is set up by two or more persons( shareholders) according to Contract law carrying on a business for profit.Company and corporationIn English, company may or may not be a separate legal entity. Company is broader than corporation. Corporation has a strict legal meaning . The corporate form is the most important type of business organization. When it is registered that meansa corporation become separate legal entity.2.3.2 Nature of corporationCorporation is a separate legal entity and an independent enterprise legal person, which has independent property of a legal person and enjoys the property right of a legal person. The company shall be liable for its debts to the extent of its entire property, namely the company shall take a limited liability for its debts.Shareholders contribute capital to incorporate a corporation, Once the company is formed legally, the company is separated from the shareholders. Shareholders of a company shall assume liability towards the company to the extend of the capitalcontributions subscribed respectively by them. Shareholders take a limited liability for the debts of company.Classification of corporation1. Limited liability company2. Company limited by share2.3.3 Creation of corporation1. Incorporation procedure(1) Select a name of the company(2) Draw up article of association(3) Certificate of incorporation(4) Appoint a director(5) Complete and lodge the application form2. Name and registrationGenerally, company should have a name and is registered by the administration. If all shareholders are liable for limited liability, the name must include the word of limited (Ltd).3. Article of associationArticle of association is an important document of company, It generally regulates the company’s internal affairs and management . It is one of primary document required to incorporate a company in most counties. Article of association is also called a constitution of a company.4. TaxCorporations are taxable entity, corporations have a double tax problem, both corporate profit and shareholder dividends are taxed, but corporate profits are taxed at lower rate.2.3.4 Corporate managementThe corporation is a legal person,that has standing to sue and be sued. As an artificial person it is still a paper structure and company can only act through human agents. So it must act through its shareholders’ s general meeting and board of director 1. Shareholders’ general meetingShareholders’ general meeting is company’s highest organof power. The general meeting has a power to decide all major issues of company. Shareholders shall exercise their voting rights at the shareholders’meeting in proportion to their respective capital contributions, unless it is otherwise stipulated by the company’s article of association.When any resolution is to be made at shareholders’ meeting It shall be adopted by the shareholders representing more than half of the voting rights.Any resolution made at the shareholders’committee on the company’s increase or reduction of registered capital, division, merger, dissolution or change of corporate formshall be adopted by shareholders representing two-thirds of the voting rights.2. Board of directorsBoard of directors is a decision-making organ of company. It decides the major issues of company. The one- person one- vote system shall be practiced for voting on resolutions of the board of directors .3. Corporate governanceCorporate governance is the system arrangement that links and regulates the relationship、interest and accountability among the shareholders’ meeting、board of directors、board of supervisors and managers. It includes the organization structure and operating mechanism of the company. The operating mechanism is that the organizational structures of the company, namely shareholders’ meeting、board of directors、board of supervisors and managers, motivate and supervise and check and balance each other in the course of the operation and management of company.2.3.5 Winding upWinding up is the process of bringing a company to an end, and it is also called as dissolution. or liquidation, It occurs when the company is unable to pay its debts or shareholders will notcontinue to run the company or is prohibited by court of law on the ground of public good. Under this legal process,the creditors are paid out, the surplus, if any, are distributed among the shareholders, and the company is deregistered. Liquidations generally come in two forms, either compulsory liquidation or voluntary liquidation.Review and Exercise1 What is the definition, nature and feature of partnership?2. How to understand limited liability partnership?3. What is the definition, nature and feature of company?4. How to understand the corporate governance structureand its role in the operation of company?5. What kinds of business organization , do you considerwhen you plan to set up a venture? What factors will you think in establishing a business organization ?。