国商全英课程第二章第二部分

2.3 Law of corporation

2.3.1 Definition of corporation

Corporation is a corporate body that generally is set up by two or more persons( shareholders) according to Contract law carrying on a business for profit.

Company and corporation

In English, company may or may not be a separate legal entity. Company is broader than corporation. Corporation has a strict legal meaning . The corporate form is the most important type of business organization. When it is registered that means

a corporation become separate legal entity.

2.3.2 Nature of corporation

Corporation is a separate legal entity and an independent enterprise legal person, which has independent property of a legal person and enjoys the property right of a legal person. The company shall be liable for its debts to the extent of its entire property, namely the company shall take a limited liability for its debts.

Shareholders contribute capital to incorporate a corporation, Once the company is formed legally, the company is separated from the shareholders. Shareholders of a company shall assume liability towards the company to the extend of the capital

contributions subscribed respectively by them. Shareholders take a limited liability for the debts of company.

Classification of corporation

1. Limited liability company

2. Company limited by share

2.3.3 Creation of corporation

1. Incorporation procedure

(1) Select a name of the company

(2) Draw up article of association

(3) Certificate of incorporation

(4) Appoint a director

(5) Complete and lodge the application form

2. Name and registration

Generally, company should have a name and is registered by the administration. If all shareholders are liable for limited liability, the name must include the word of limited (Ltd).

3. Article of association

Article of association is an important document of company, It generally regulates the company’s internal affairs and management . It is one of primary document required to incorporate a company in most counties. Article of association is also called a constitution of a company.

4. Tax

Corporations are taxable entity, corporations have a double tax problem, both corporate profit and shareholder dividends are taxed, but corporate profits are taxed at lower rate.

2.3.4 Corporate management

The corporation is a legal person，that has standing to sue and be sued. As an artificial person it is still a paper structure and company can only act through human agents. So it must act through its shareholders’ s general meeting and board of director 1. Shareholders’ general meeting

Shareholders’ general meeting is company’s highest organ

of power. The general meeting has a power to decide all major issues of company. Shareholders shall exercise their voting rights at the shareholders’meeting in proportion to their respective capital contributions, unless it is otherwise stipulated by the company’s article of association.

When any resolution is to be made at shareholders’ meeting It shall be adopted by the shareholders representing more than half of the voting rights.

Any resolution made at the shareholders’committee on the company’s increase or reduction of registered capital, division, merger, dissolution or change of corporate form