The Advantages of Changing a Business Into a Company

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The Advantages of Changing a Business Into a Company James wants to change his business into a company; James will receive many benefits if he chooses to take this option. I am going to talk about the main advantages of changing his business into a company which includes the limited liability that James will be entitled to. A company is a business organisation that is registered under the Companies Act 1965[1], this legislation means that the organisation created is subject to different rules. If James incorporates his business into a company it will have two legal effects. The two legal effects are; the company becomes a separate entity or a legal person and secondly the company has perpetual succession which means the company will last until it is liquidated by an order of court. The law treats the persons who own and control the company as separate from the company itself. A company is an artificial person as opposed to a human who is a natural person. Most of the advantages which I am going to talk about stem from this separate entity which is created by means of incorporation. A company does not die but continues to exist until its name is struck off or dissolved through a legal process known as winding up or liquidation even though without any of its stakeholders. Perpetuity is a major advantage of incorporation as the company can live forever even without its stakeholders. In Re Noel Tedman Holding Pty Ltd (1967) the only two shareholders and directors of the company, a husband and wife died in a traffic accident. The company’s articles required the approval of the directors before shares could be transferred. Since the... ... middle of paper ... ...Modern Company Law (2003) Brenda M Hannigan Company Law (1993) [1] Company Law, Fundamental Principles (Stephen Griffin) 3rd edition - ISBN 0-273-64221-9 [2] Company Law (Mayson, French and Ryan) 2001-2002 eighteenth edition - ISBN 1-84174-199-X [3] http://www.rlrouse.com/incorporating.html - 02/01/2005 [4] The Principles of Modern Company Law 2003 (Gower and Davies) [5] http://www.companyregistrations.co.uk/companies-limited-by-guarantee.asp - 02/01/2005 [6] Company Law (Mayson, French and Ryan) 2001-2002 eighteenth edition. ISBN 1-84174-199-X [7] http://www.startinbusiness.co.uk/flowchart/5flowchart_offshelf.htm - 02/01/2005 [8] Company Law (Mayson, French and Ryan) 2001-2002 eighteenth edition. ISBN 1-84174-199-X

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