Company Law (overview od development of company law in cwc Caribbean)

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Company Law Notbeook

Company Law (overview od development of company law in cwc Caribbean) 09/20/2013

  • Company law

  • What is the content of modern Caribbean company law

  • What is the nature of the relationship and it’s derivatives

  • What are the sources of modern Caribbean company law

  • Texts

  • Burgess of company law

  • Burgess and gower modern company law

  • Brenda hanegan company law

  • Artificial being created by statute it gains its person as a consequence of the statute that creates it

  • Two examinable areas

  • Formation of company

  • Corporation personality

  • Liability of promoters – what is meant by patchwork contracts?

  • 3rd examinable area

  • what is the company likely to do (corporate capacity) –less examinable

  • ultra vires confined to statutory corporations

  • relationship between company and corporate investors/ shareholders

  • director’s duties and the duties of the company’s secretary ( examinable)

  • fictitious entity – entity which is given life only by virtue of statute- outside the context of the company’s at, the company will not exist- it is not a real person- it is deemed to be a real person by company’s act – only a jurisprudential person

  • in cwc the first statute were all enacted – no state received company’s legislation because at the time the company’s act were being passed in the UK ( company law began developing) all cwc states were either settles or conquered or ceded territories of England thus there could be no question of reception of English company statutes

  • the result is that each state in the caribbean had to legislate adopting the provisions of one or the other of several company’s acts of England; Trinidad 1845 and last statute is 1931 english company’s act

  • Barbados passed act in 1982- base of law because they follow the Canadian interpretation

  • But beginning in 1990 and ending in 1995, all cwc states went to harmonize their laws

  • 3 hours out of 6


  • corporate personalities

  • trace law to early beginnings-law developed due to undeveloped coordination of company law in cwc-

  • no two territories had the same company law regime-patch work of legislation-

  • territories in cwc didn’t stick to one statute –

  • efforts of harmonization (bringing law moderately interline) began roughly around demise of federation

  • efforts of harmonization reached in 1990’s when Yusis the Cbean law institute project and around time Trinidad 1995 statute established-

  • first modern enactment came out of the efforts which forgoe the demise of federation 1982 barbados act

  • Purpose: to have universal trading rules

  • Harmoinization not intended nor did it achiecved uniformity

  • Intention: harmonization would result in law which were broadly similar through out the region

  • Broadly because of eg. Jamaica

  • Jamaican statute contains marked distinctions from those which exist in the other territories

  • Contemporary/ Modern CWC Company Law

  • First registered company were provided for by 5 critical pieces of English legislation

  • But even before, those enactments were legislated the company as a jurisprudential creation was in fact known to English law

  • So that the earliest companies were special purpose vehicles ( SPV) formed for one purpose or the other eg. the east india trading company- west indian trading company (SPV’s formed for one purpose)

  • Purpose of those two SPV’s was to simply relieve the state of the burden of enhancing doubtful expedition to what was then the New World

  • English developed companies for funding explorations initially away from the state from what we know today as the private sector

  • Did this by creating SPV’s

  • Were companies but were not registered companies- their use was limited for a specific purpose and to the individuals that the relevant charters to explore in case of east indian- west indian

The first registered companies are those which were created pursuant to 5 pieces of English legislation

  • These pieces were

  • 1. Joint Stock Companies Act 1844( statute of victoria)

  • with JSCA 1886 ( statute of victoria)

  • 3. companies Act 1862 25 26

  • 4.companies consolidation act 1908 ( statute of Edward the 8th)

  • 5.1948 companies act ( Statute of George , 11 and 12)

  • Form bedrock of modern company law – not exhausted

  • 1855 limited liability act – 18 and 19 of victoria for example expressly provided for limited liability for shareholders

  • All have to be read together but no single act in CWC the same

  • Patchwork-attempts of harmonization-largely accepted

  • Company law a creature of statute even though case law is important and has developed as a guide for legislative provisions

  • Iron rule- The company as a jurisprudential fixture can only exist by virtue of statute

  • Statue themselves are a function of societal needs that are easy to understand as was the East Indian and West Indian Trading Statute- functions as societal need to take financial responsibility away from state

  • SO to harmonization was for societal need for the interest of trade in CWC- legislation must be broadly similar in all territories

  • Shape of early Company shows definition of what is the shape of Modern companies

  • The early registered companies were created by a process of incorporation which is not dissimilar of which is employed today

  • Once registered, the early companies gained a separate legal personality meaning it ceased to associated with the real persons who actually incoroporated the company

  • Two principal organs were to be found in the early companies-

  • shareholders usually acted in general meetings ( who funded the company- capital) comprised one owner

  • Board of Directors who managed the company on behalf of shareholders who as a power seleceted them

  • Shareholders by a stake in fortune of the company- sometimes in profit is rewarded and vice verca

  • What is a company? Section 4 Companies Act – exhausted list of what is a company

  • “Means”- when something “means” something it is a exhausted list)

  • Definition is referential

  • It defines company by referring to something- “body corporate “

  • “Incorporated”- followed descriptions in the Act

  • “Continued”- act does not simply take place- legislated in a vacuum

  • non-exhaustive example: body corporate includes a company within the meaning of this section

  • ..”or other body corporate wherever or however incorporated other than corporation

  • Definition of body corporate non exhaustive ( wider than definition of company because it is not exhausted and 2. There is that phrase which includes the meaning of company and the word “or” ( or other body corpprate)

  • Definiation of company exhaustive

  • Under s 4 body corporate must be continued under this Act

  • Body corp included bodies of that type OR however/wherever incorporated

  • Eg, by statute, by special statute, by body of corporation- made by professor Burgess pg 18

  • What is a company by distinguishing what it is not a company

  • Company confers what is known in law as what is limited liability on its promoters/ shareholders

  • Company has a separate legal personality- distinct from promoters/shareholders

  • Separate Legal personality doctrine established in Soloman v soloman 1897

  • Prospered a long time to such an extent- sort out succession- thought of a means of bringing family into business- ensure family will benefit from good fortune he enjoyed as a sole trader

  • Decided to turn sole trading business into a limited liability company in obedience to the company’s acts he followed all of the formalities which were prescribed by statute- described what was then described as a memorandum of association- he fixed the nominal capital of his business- what he though business was worth ( 40,000 pounds)

  • Divided nominal capital into 40,000 shares- I pound each

  • Solomon would be director together with two eldest sons- two entities in exhistance;

  • Me solomon’s sole trading business

  • Company being formed

  • Mr Solomon as Sole proprietor and clothed by virtues of separate legal identity due to act- sale and paid to Mr S and pays to company in exchange for fully paid up shares

  • The paid of 10,000 shares is paid mr soloman sole trader to mr Solomon as a company by virtue of debentures

  • As soon as the business becomes a company and Solomon as a company scrambles to make funds –sells debentures to 3rd party- puts tht money into company- and company unable to pay that amount which is sold to third party0 i.e. unable to honor IOUS of debentures

  • 3rd party sues and alleges that all of this ( sale of Mr S as ST to Mr S as a corp is a sham) Judge Williams held purchaser is entitle by an order where mr S will stand in the shoes of the company ad thereby be obligated to pay all the amounts that are due and owing on the debenture

  • in essence, the trial judge refuses to think mr S as a separate legal entity

  • Lord Mcnorton? reverses decision and say only mr S and his family was involved in the party is irrelevant

  • Compliance with the registration formalities by any persons whether they are related or not would give rise to a new and separate entity which was represented by the company and as a consequence of that mr S could not be asked to be liable for the debts of the company which in law was a separate being from him, his debt were not those of the company and vice verca

  • AG v Antigua Times- whether company can enjoy fundamental right provisions in the Antigua constitution-]

  • Decision of Lord Frazer –

  • read decision of HOL in Macaura v northern insurance

  • constitution ins cro v kosmopolous

  • where taxation staute is involved the veil is lifted

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