The company articles are mandatory legal documents to register a company. Under the old Companies Ordinance, Cap.32, the company articles consisted two documents, namely the memorandum of association and the articles of association . The memorandum contained basic information of the company and stated business objectives of the company, while the articles of association set out the rules for internal management that governs company. Amendments and updates of the Companies Ordinance have been made frequently in order to modernize the law in enhancing corporate governance, and also to provide Hong Kong a distinctive business environment, benchmarking Hong Kong as a global business and financial hub . As a result, a new Companies Ordinance …show more content…
Rapid growth of business and commercial activities had a significant impact on the object clause that diminished the importance of the clause. Shareholders of companies became less concerned with how the assets and resources were spent within the scope of intended business objects, as long as the companies involved in business that generated profits and provided positive dividend, raising the companies’ share values. In fact, the object clause could result in limiting companies’ authority to participate in business pursuits to generate profits.
Moreover, the ultra vires doctrine at the same time had placed creditors at high risks. In case when creditors provided goods or financial services to a company in which the purpose was not included in the company’s object clause, while at a later time if the company encounter into winding up liquidation, the creditors could be refused to claim from the company as such transaction would said to be ultra vires and void and left with bad debts .
As a result, companies tried to draft as many objects into the memorandum in order to broaden its powers and allowed the companies to undertake a large variety of business activities. In particular, the House of Lords of a UK company law case Cotman v Brougham [1918] AC 514 held that “a person who deals with a company is entitled to assume that a company can do everything which it is expressly authorized to do by its
The articles of incorporation may also indicate the names and addresses of those who initially served as directors. It can also set forth the purpose
Managers and shareholders are the utmost contributors of these conflicts, hence affecting the entire structural organization of a company, its managerial system and eventually to the company's societal responsibility. A corporation is well organized with stipulated division of responsibilities among the arms of the organizational structure, shareholders, directors, managers and corporate officers. However, conflicts between managers in most firms and shareholders have brought about agency problems. Shares and their trade have seen many companies rise to big investments. Shareholders keep the companies running
Corporate capacity and authority were essential legal concepts which contained rules for when and how a company ought to be legally recognised as having validly acted and entered into a binding contract with third parties. Broadly speaking, the rules which applied to corporate capacity were the ultra vires doctrine and the doctrine of constructive notice. In regard to the concept of corporate authority, both the ultra vires doctrine and the doctrine of constructive notice also applied however their application was curtailed by the Turquand rule. The Turquand rule therefore only applied when the authority of directors was in question. A definitional overview of the concepts of corporate capacity and authority will be provided below, along with brief description of the doctrine of constructive notice and the Turquand rule.
In some companies who are not highly set in their ways this can lead to necessary changes being made in those companies. For others who are set in their ways may give a the case a positive vote.(Book)
There are potential limits that can be placed upon corporate power, one of them could be
The definition of company is 'A legal entity, by legislation, which permits groups of people, as shareholders, to apply to government for an independent organization to be created, which can then pursue set objectives ' (Duhaime, 2014).
6. With respect to an interest in a proprietorship, partnership, limited liability company, business trust, corporation, or other form of business or enterprise, continue the business or other enterprise and take any action that may be taken by shareholders, members, or property owners, including merging, dissolving, or otherwise changing the form of business organization or contributing additional
In the corporate form of ownership, the shareholders are the owners of the firm. The shareholders elect the directors of the corporation, who in turn appoint the firm’s management. This separation of ownership from control in the corporate form of organization is what causes agency problems to exist. Management may act in its own or someone else’s best interests, rather than those of the shareholders. If such events
The article addresses affects in which the Sarbanes-Oxley Act incur on American Businesses and whether or not the Sarbanes-Oxley Act serves harm or justice to business owners. The article lists business changes, the type of company costs associated with the Act, the ways the investors chose to conduct transactions with businesses since the passing of the Sarbanes-Oxley Act, and how it affects it had on the financial markets.
The instructor may vary the emphasis on different issues by altering the study questions and by the choice of video clips. The case is well suited for courses and classes concerning corporate governance, valuation, mergers and acquisitions, and corporate social responsibility. The following objectives of the case allow students to:
In light of the recent scandals that rose around big multinationals such as Enron and WorldCom, it has become evident that reform in the traditional corporate operations and objectives was to be encompassed in the organisations corporate strategies. Indeed throughout the years, companies main objectives were defined primarily as being economic objectives, Multinationals developed with sight of profit maximisations regardless to the other incentives, Friedman considered that to be the foundation for a well-managed company, it was further considered that the financing of any other sort of social corporate activities rather unnecessary. The expenses were regarded as expenditures for the owners and investors; this was a time where shareholders rights were regarded as conflicting with other constituents namely the employees, creditors, customers or the community in general. However this interpretation is seen as rather inadequate due to the nature of the amalgamated relation between both constituents. Stakeholders in modern corporate doctrine are considered as a core apparatus for the well functioning of a business. It is however often argued that the only way for a corporation to achieve better results and maximise its profits is to include other people in the process, individuals or organisations with direct or indirect interest in the well performance of the company, that is the reason why modern regulations and codes include a number of stakeholders other than the
Some of the main effects of the Companies Act on private companies are: an individual and simplified model of Articles of Association; individual requirements for accounting and reporting; no requirement for a company secretary; no requirement for an annual meeting; and simplified rules about share capital, (companieshouse.gov.uk, 2014). The key benefits of the Companies Act for shareholders
After suitable research,briefly explain the structure of business organisations and give the legal requirement as far as informing stakeholders as to the business financial activities.
Discuss in detail the ramifications the Sarbanes-Oxley Act has had on business in the United States.
One often stumbles upon such statements while reading about shareholders value or maximization of shareholders wealth. This is also a typical answer to questions such as “what is the best and primary objective of a company in a competitive market”. But should it be the only and most important objective in a firm? Must it be fulfilled first and foremost, or is there the possibility of generating more wealth for company, shareholders and stakeholders with other, different approaches? It has