Company Law – Core Vocabulary

Vocabulary flashcards covering fundamental terms related to company formation, structure, governance and taxation from the lecture notes.

Company

A legal structure separate from its owners, possessing its own legal personality to own property, enter contracts, sue and be sued.

Legal Personality

The recognition of a company as a separate ‘person’ in law, distinct from its shareholders.

Merchant (in Company Law)

Every company is classified as a merchant and subject to the Commercial Code, regardless of its main operations.

Shareholder / Partner

An investor who owns shares in a company; may be active (involved) or silent (not involved in management).

Certificate of Incorporation

Official document issued by a government authority that brings a company into legal existence.

Memorandum of Association

Founding document stating a company’s name, objects, registered office, liability and share capital details.

Articles of Association

Internal rulebook of a company, covering share issues, directors’ powers, meetings, dividends, and more.

Limited Liability

Principle shielding shareholders’ personal assets from company debts, established in Salomon v Salomon (UK).

Salomon v Salomon

Landmark 1897 UK case confirming the company’s separate legal personality and shareholders’ limited liability.

Share Capital

Funds raised by issuing shares; also the total number and classes of shares a company can issue.

Preferential Allotment

Selective issue of shares to a specific investor group, often at a pre-agreed price.

Employee Stock Option

Right granted to employees to buy company shares at a set price in the future.

Rights Issue

Offer allowing existing shareholders to buy additional shares in proportion to their holdings.

Differential Voting Rights Shares

Shares that carry more or fewer votes than ordinary shares, allowing flexible control structures.

Contribution in Cash

Capital provided to a company in monetary form.

Contribution in Kind

Capital provided as tangible assets, immovable property, or intangible rights rather than cash.

Active Partner

Partner who takes part in management and is publicly identified with the business.

Silent Partner

Partner who invests capital but does not participate in day-to-day management.

Sole Proprietor

Single individual conducting business, personally liable for all debts.

General Partnership

Business where all partners contribute and are jointly liable for debts; no minimum capital required.

Professional (Public) Partnership

Partnership among self-employed professionals who share profits and are equally liable for debts.

Limited Partnership

Structure with at least one managing partner (fully liable) and one silent partner (liability limited to investment).

Private Limited Company (BV)

Dutch company with shareholders holding ultimate power while directors manage daily operations; liability limited to company assets.

European Economic Interest Grouping (EEIG)

EU legal form facilitating cross-border cooperation and resource pooling among businesses.

European Cooperative Society (SCE)

EU entity enabling cooperatives whose members are based in different member states.

Group of Companies

Parent company and its subsidiaries; each remains a separate legal entity with its own directors.

Holding (Parent) Company

Company owning controlling stakes (51%+) in subsidiaries; cannot hold shares in another holding company.

Board of Directors

Elected body responsible for strategic oversight; powers and composition set by the articles.

General Assembly (Shareholders’ Meeting)

Annual meeting where shareholders approve accounts, elect directors, and decide on profit distribution.

Extraordinary General Assembly

Meeting called to decide major changes such as amending articles, altering capital, or dissolving the company.

Auditor

Independent professional appointed by shareholders to examine accounts and ensure legal and statutory compliance.

Corporate Governance

Framework of rules, practices and processes by which a company is directed and controlled.

Transparency and Disclosure

Open communication of financial and governance information enabling informed decisions by stakeholders.

Object Clause

Section of the memorandum stating the specific purposes for which a company is formed.

Rule Book

Collective term (articles, memorandum, constitution) detailing how a company is run.

Director Liability

Extent to which directors may be personally responsible for company losses due to gross negligence or fraud.

Corporate Legal Personality

Status of certain legal structures where the entity, not the owners, bears liability for debts.

Partner Share

A partner’s contribution to a company—cash, materials, or work—excluding reputation or influence.

Decision-Making Organs

Primary forums—board of directors and shareholders’ meetings—where company decisions are made.

Tax Avoidance (EU Tech Context)

Strategy where large tech firms book revenues in low-tax states like Ireland or Luxembourg, reducing tax in customer locations.