BLAW211: Company Nature/Veil
Limited (Ltd)
Liability of shareholders is limited to the capital they agreed to contribute
Not liable for debt of company
No Liability Company (NL)
Shareholders have no obligation to put more capital in
Unlimited Liability
- extremely rare
- shareholders agree to be fully liable for any debts
- NIKE NZ
Companies Act 1993
- Reserve a company name
- apply to register a company
- directors and shareholders sign consents
One Person Company
1955: Minimum two shareholders, + director, and company secretary
- One person can hold all the shares and be the sole director
Constitution
1955: refer to Memorandum of Association, Articles of Association
- Statutory Constitution
- Companies may adopt their own constitution
Major Transactions
- Gives shareholders greater control over major decisions
- Directors cannot carry out MT without consent of shareholders by special resolution
Solvency Test
1955: Capital Maintenance
- Directors pay money to shareholders, can only return money if they have enough to pay all creditors
- Protects creditors
- Liquidity Test
- Balance Sheet Test
Minority Shareholders
1955: No minority buy out rights
- MS may require the company to purchase their shares in circumstances;
- Major Transaction
-Amalgamation
- Certain changes to the company constitution
- change in shareholder rights
The Corporate Veil, s15
- Company is a seperate legal personality
- seperate from its shareholders
- own rights and liabilities
Liability of Shareholders, s97
- Unless Unlimited, shareholders have no liability of the company
- Liability is limited to anything under s131 to 137, or s100
- any amount unpaid on a share held by the shareholder