2013教务处通识课程Lecture5商主体法研讨.ppt

The consequences of separate legal personality for the company are as follows: (a) Members’ liability is limited. (b) Perpetual succession arises as the company will need to be formally wound-up. (c) The company itself can own property. (d) The company can sue, and be sued in its own name. 4. Capital and Financing of Companies 4.1 Share Capital (1) Definition of share “The interest of a shareholder in the company measured by a sum of money, for the purpose of liability in the first place, and of interest in the second, but also consisting of a series of mutual covenants entered into by all the shareholders inter se.”(Borland’s Trustee v Steel Bros Co Ltd 1901) Key points: The share must be paid for (“liability”). The nominal value of the share fixes this liability. It gives a proportionate entitlement to dividends, votes and any return of capital (“interest”). It is a form of bargain (“mutual covenants”) between shareholders which underlies such principles as majority control and minority protection. 4.2 Types of Shares A company can issue shares of differing types, each having differing values and rights attaching to them. (a) Ordinary shares: shares which entitle holders to remaining divisible profits (and, in a liquidation, the assets) after prior interests (eg creditors) have been satisfied. Ordinary shareholders are the owners of the company and are usually entitled to vote. (b) Preference shares: shares carrying one or more rights such as a fixed rate of dividend or preferential claim to any company profits available for distribution. The most common rights of preference shareholders are a prior right to receive a fixed dividend and a prior right to receive a repayment of capital in the event of winding up. Feature Ordinary Preference Dividends Variable Fixed, usually cumulative Voting rights Yes Restricted General meetings May attend and vote Restricted Liquidation Rank last Entitled to capital and share of surplus Rank above ordinary shares Entitl