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Law For Business Students

Law For Business Students

     Business is based on at least four (4) factors: capital, labour, materials or services and entrepreneurship. Put another way, starting up and operating a business requires financing, manpower, product and the possibility of making a profit.

     The fundamental structures are: the sole proprietor (one man operation), the partnership and the corporation. Corporations are established to avoid the personal liability of the persons operating the corporation and to gain tax advantages such as low corporate tax rates. Variations of these three (3) themes include the joint venture (a mix of partnership and corporation) and the franchise (a mix of corporations, lease, licence and sale).

     Legal structures and concepts not only give form to business, but also lay down guidance. This book deals with these structures and concepts in as practical a manner as possible.

     A corporation is a legal person, meaning that it has all the rights and duties of a natural physical person, save for those disqualifications and disabilities arising for its incorporeal nature. This is embodied in the famous Salomon principle (based on the legal discussion Salomon v A. Salomon & Co Ltd [1897] AC 22, which held that the founder, shareholder or director of a corporation may be a secured creditor of the same corporation, since the corporation is a separate and distinct person.

     Depending on the corporation legislation, the director may be defined as the incorporators of the corporation, the persons named in the notice of directors submitted with the incorporating documents, and those persons elected as directors by the shareholders of the corporation. The director is a natural person, who may or may not be a shareholder, charged with the power of carrying on the business of the corporation, alone or in concert with a minimum number of co‐directors, together called a board and acting as the agent or representative body of the corporate entity. The directors are subject to the election, termination and ultimate control of the shareholders, and rely upon the officers they designate to manage the business of the corporation.

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