Company Law 1-Types and Nature of Companies

MGMT 3046 Company Law: Introduction to Types and Nature of Companies

Lecturer: Arnaldo Brown

Page 1: Introduction to Company Law

  • Overview of the course and its focus on company law in Jamaica.

Page 2-4: The Modern Legislative Regime for Company Law in Jamaica

  • Primary Legal Source:

    • The Companies Act, 2004, effective from 2005.

  • Motivation for the 2004 Act:

    • Aimed to modernize the legal framework for companies in Jamaica.

Page 5-20: Reforms Recommended by the Committee

  • Review Process:

    • Commissioned by the government, led by Dr. Kenneth Rattray.

  • Key Reforms:

    • Simplification of Incorporation: Introduction of one-man companies.

    • Abolition of Memorandum of Association: Streamlining required documents.

    • Removal of Restrictive Doctrines: Ultra vires and constructive notice doctrines.

    • Pre-Incorporation Contracts: Improved rules for liabilities.

    • Capitalization Issues: Shift to a no-par value regime for shares.

    • Share Buybacks: Companies allowed to repurchase their shares.

    • Registration of Charges: Modifications to prevent invalidation during liquidation.

    • Directors' Conduct: Reforms reflecting trends in other jurisdictions.

    • Corporate Insolvency: Proposed reforms postponed for comprehensive review.

    • Uncertainty of New Provisions: Lack of judicial interpretation may lead to ambiguity.

Page 21-28: Definitions of Business Structures

  • Company:

    • An association formed for a common purpose, can be incorporated or unincorporated.

  • Legal Structure Considerations:

    • Personality, purpose, size, tax implications, management, and statutory requirements.

Page 29-44: Types of Legal Structures for Businesses

  • Types:

    • Sole Trader:

      • Easiest and least expensive to create, sole responsibility for debts.

    • Partnership:

      • Agreement between two or more persons to share profits and losses.

Page 45-60: Characteristics of Registered Companies

  • Major Features:

    • Legal entity separate from members.

    • Enjoys limited liability.

    • Perpetual succession.

    • Managed by directors.

    • Written constitution (Articles of Incorporation).

    • Must be registered with the Registrar of Companies.

Page 61-69: Differences Between Partnership and Company

  • Key Differences:

    • Partnership is not a separate legal entity.

    • No perpetual succession in partnerships.

    • Partnerships do not require registration.

    • Joint ownership of partnership property.

    • Partners are jointly liable for obligations.

Page 70-84: Private vs Public Companies

  • Formation and Registration:

    • Governed by Companies Act 2004.

  • Private Companies:

    • Membership restrictions, share transfer limitations, and no public fundraising.

  • Public Companies:

    • No such restrictions, can raise capital from the public.

Page 85-114: Limited Liability and Legal Personality

  • Limited Liability:

    • Members' liability limited to unpaid shares.

  • Legal Personality:

    • Companies are separate legal entities, distinct from their members.

    • Established in Salomon v Salomon and Co Ltd [1897].

Page 115-139: Consequences of Separate Legal Personality

  • Rights and Liabilities:

    • Companies can sue and be sued.

    • Members have no proprietary interest in company assets.

    • Directors are generally not liable for company wrongs.

  • Piercing the Corporate Veil:

    • Courts may disregard separate personality in cases of fraud or improper purpose.

    • Statutory provisions exist for liability of directors and officers under certain conditions.

Page 140: Conclusion

  • Summary of key points regarding company law, structures, and the implications of legal