The Importance Of A Complete Law System

1882 Words Nov 26th, 2015 8 Pages
As the rapid development of the business, Today, the company law is increasingly becoming important to protect companies’ right and regular their behaviors in the business activities. The company is particularly set up for the purpose of concerning companies and other business organizations regarding sole proprietorship, limited liability companies, unlimited liability companies, etc. According to Black’s Law Dictionary,‘a company is an association of persons interested in a common objective for industrial undertaking or other legitimate business’. Moreover, modern companies are the most profitable organizations than other forms of organization, which it highlights the importance of a complete law system. Basically, modern companies are …show more content…
Over the twentieth century, with the rapid development of companies in which have became the dominant force in UK’ economy. Thus, Act of 1948 was insufficient to address the raised problems about accountancy. In 1948 enacted another featuring Act, companies are forced to prepare the balance sheet and profit and loss account. The company Act 1977 is the 1948 extended legislation that gave shareholders more power to involve in the company;s affairs, especially, the director could be removed by the shareholders with a simple majority vote.

In the case of Salmon v Salmon & Co Ltd [1896], Mr, Aron Salmon is a leather businessman who was the director of a limited company with seven shareholders, and who had the majority of shares in the company. In 1892, The limited company purchased salmon’s business by issuing him with 20,000 shares at 1 pound each, of which 10,000 pounds were debentures secured by a floating charge on the company’s asset, which meant Salmon would have priority on getting paid off before unsecured creditors in the failure of the company. However, the company fell soon that the assets were not enough to pay off the unsecured creditors after paid off the debentures of Salmon and a liquidator was appointed. So, the unsecured creditors sued Salmon and the company that they were one. In the House of Lords, they stated that Salmon did not have to pay
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