There are five essential structural elements of a commercial corporation:
- Legal Personality;
- Limited Liability;
- Transferable Shares;
- Shared Ownership;
- Centralized Management.
Almost all economically significant jurisdictions have a fundamental statute that allows for the formation of companies/firms that meet all of these criteria. These attributes have strong complementary properties for many firms, as this pattern illustrates. They make the company particularly appealing for arranging productive activity when they work together. These traits, however, create tensions and choices that give the agency problems that corporation law must handle a distinctly corporate flavor.
Lord Denning, while dealing with the liability of a company, in his inimitable style, has expressed that a company may in many ways be likened to a human body. It has a brain and nerve center which controls what it does. It also has hands that hold the tools and act in accordance with directions from the center. Some of the people in the company are mere servants and agents who are nothing more than hands to do the work and cannot be said to represent the mind or will. Others are directors and managers who represent the directing mind and will of the company, and control what it does. The state of mind of these managers is the state of mind of the company and is treated by the law as such. In certain cases, where the law requires personal fault as a condition of liability in tort, the fault of the manager will be the personal fault of the company.
Legislators have rapidly introduced new amendments and regulations related to Companies Law which create hindrances for the establishment of a new business and also impact the day to day working of the established business. It has often been experienced that the concerned authorities under Companies Act also do not understand these new regulations and evade their responsibility; the authorities keep on passing the responsibility from one department to the other which results in harassment to the entrepreneurs/businessmen apart from the monetary losses.
The Law Codes team of corporate lawyers in Chandigarh represents major companies, institutions, and individuals in virtually every industry, from tech start ups and life sciences companies. The corporate lawyers provide a platform to incorporate litigation strategies and insights about the dynamics of a company, dealing and ranging from manufacturing & trading units, telecom industry, corporate houses, pharmaceutical companies, media and entertainment houses, and financial institutions.