This paper examines the type of corporation which meets James’s best

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This paper examines the type of corporation which meets James’s best



This paper examines the type of corporation which meets James’s best

interest. A company can be set up with or without shares available to

the public, divided into the public company which is expensive to

obtain and maintain, and the private company which is appreciated by

most businesses to begin with. Also, there are limited and unlimited

companies. In addition, a company can be classified as limited by

guarantee or limited by capital shares which are in most companies’

favour. These are governed in the main by the Companies Act 1985 and

relevant case law.


There are several types of company. The most common company is a

limited company, the liability of the members being limited to the

amount they have previously agreed. According to Denis Keenan (1996),

a corporation is a succession or collection of persons having at law

an existence, rights and duties, separate and distinct from those of

the persons who are from time to time its members.

This paper explains the reasons to form a company, and the reasons why

a private company is more preferable than the public one, together

with the discussion of the company limited by guarantee and unlimited

company. Finally, the cases in Salomon v. Salomon Co. (1897) and

Marcaura v Northern Assurance Co. Ltd help to evaluate the principle

of personal succession which is the unique feature of being a

company. Across the paper, James is given recommendations to the type

of company which best suits his needs.

a) Advantages of Incorporation

Incorporating a company offers James many advantages, even if he is

doing one-person business. Some of these advantages are:

- Separate legal personality. A corporation is by law recognized as a

separate legal person. Since a partner in a general partnership

represents an agent of the business, when a change happens about

partners, it in most times differentiates the partnership. On the

other hand, a corporation is not dependent on the life of

shareholders, directors, and officers, and will not be affected by

changes in, deaths and retirement of its members since it is by law

recognized as a separate ‘person’.

Furthermore, the day-to-day business is running unaffected. As a

separate person, a company can enter into transaction i...

... middle of paper ...

... states that a shareholder is permitted to change the contents of the

article and memorandum by special resolutions. A quick company may be

born and improved to best meet James’s needs. It should be mentioned

that the company is better to be limited by a capital share, as the

limited by guarantee is not very keen on the profit-generating




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