Shareholders of business concerns now have a limited liability for the debts of the company, compared to the sole ownership of, or partnership in the company. This could be well documented by glancing at Salomon vs Salomon & Co. It is a legislation providing organizations their own legal existence.
Salomon v Salomon & co is a legislation providing organizations their own legal existence. The legislation was given effect in the Companies Act of 1962, passed by the House of Lords.Limited Liability laws allow the organizations to socialize their expenses so that shareholders could receive the primary benefits.
Having limited liability means that the shareholders never lose more than what they have invested in the company by way of purchasing shares or dues.Limited Liability helps generate funds for companies by grouping together, funds from owners of stocks in the company.
If the companies can issue their properties for dissolution and distribution then they are able to achieve consistent collection of funds which might be utilized in larger projects. They are able to do this because the properties and structures of the concern exist beyond their bondholders, shareholders, or employees.
Individuals and trusts are allowed to vote or lay claim to shares of corporations. However there are variations with regards to the different kinds. In case of a non-stock corporation, the members are supposed to vote on company operations. The voters in a for-profit company are also the shareholders.
Throughout the world these laws, also called commercial laws, govern corporate contracts, hiring practices, besides making and selling of commercial products. In the US both the Congress, with its control on interstate commerce and, the individual states, with their police have a say on these laws.
The common adaptation of the Unified Commercial Code has been the most successful attempt to create a unified corporate code throughout the US.
Going by the corporate laws the companies are better off than other financial institutions as rules against mortmain and perpetuity are inapplicable against them, unlike trusts. As provided by laws, they can go on existing for almost an eternity.
By the virtue of being commercial entities the companies are in a better position to utilize the financial matters and hold an edge over individual or partnership concerns in this aspect.
Last Updated on : 1st August 2013