浙江科技大学：《国际经济法》课程教学课件（International Economic Law）Chapter 4 Company Law

Chapter 4 Company law

Chapter 4 Company law

LearningobjectivesAfteryouhavestudiedthischapter,youshouldbeabletoknowUnderstand the basic concept of a company;Explain thetwotypes of companies undertheCompany law andtheirdifferences,Know the general requirements to set up a company;Understandthemethodsfor a companyto raisefinance;。Knowthe corporate governance ofa company;Knowinwhat situationthecompanywouldbedissolved

Learning objectives After you have studied this chapter, you should be able to know ◦ Understand the basic concept of a company; ◦ Explain the two types of companies under the Company law and their differences; ◦ Know the general requirements to set up a company; ◦ Understand the methods for a company to raise finance; ◦ Know the corporate governance of a company; ◦ Know in what situation the company would be dissolved

Content4.1Overviewofacompany4.2The establishmentand alteration of a company4.3Running a company:raisingand maintainingcapital4.4The managementandgovernance of companies4.5Company Dissolutionsand LiquidationsoCompanyLawofthePeople'sRepublicofChinaPromulgatedin1993,amendedin2006,2018,2023

Content ◼ 4.1 Overview of a company ◼ 4.2 The establishment and alteration of a company ◼ 4.3 Running a company: raising and maintaining capital ◼ 4.4 The management and governance of companies ◼ 4.5 Company Dissolutions and Liquidations ◦ Company Law of the People’s Republic of China ◦ Promulgated in 1993, amended in 2006,2018,2023

4.1 Overview of a company4.1.1Historyofcompany/Corporation4.1.2Definitionofcompany。4.1.3NatureofcompanyEurope4.1.4TypesofCompaniesamazon$1.5TAAsiaCintelAlphabetP&G$711BY$969B中BH5VISAPOceanla54296MicrosoftAaAs$1.5T$637B$1.9T$1.8Tin-S729BNorthAmericaMarketcapitalization.($)Dtsiorbe8r250202

4.1 Overview of a company ◦ 4.1.1 History of company/Corporation ◦ 4.1.2 Definition of company ◦ 4.1.3 Nature of company ◦ 4.1.4 Types of Companies

4.1.1HistoryofcompanylCorporationTherootsofthecorporateformcanbetracedbacktoantiquity,withearlypredecessorsofthemoderncompanyexistingduringthetimesofHammurabi,ancientGreece,andtheRomanEmpire.However,wewillprimarilyfocusonthemorecontemporarydevelopmentofthisconceptOriginsofthecompanyThe conceptof a company as a legalentityseparatefrom its owners can be tracedback tomedievalEurope,wheremerchantsandtradersformedpartnershipstoconductbusinessventures.Thesepartnershipsallowedindividualstopoolresourcesandsharerisksintradeexpeditions.EarlyJoint-StockCompaniesThe17thcenturysawtheemergenceofjoint-stockcompanies,liketheDutchEastIndiaCompanyandtheBritishEastIndiaCompany.Thesecompaniesweregrantedchartersbygovernmentstoengageintrade,exploration,andcolonization,providinginvestorswithlimitedliabilityandtheopportunityto invest inlarge-scaleventures

4.1.1 History of company/Corporation The roots of the corporate form can be traced back to antiquity, with early predecessors of the modern company existing during the times of Hammurabi, ancient Greece, and the Roman Empire. However, we will primarily focus on the more contemporary development of this concept. Origins of the company The concept of a company as a legal entity separate from its owners can be traced back to medieval Europe, where merchants and traders formed partnerships to conduct business ventures. These partnerships allowed individuals to pool resources and share risks in trade expeditions. Early Joint-Stock Companies The 17th century saw the emergence of joint-stock companies, like the Dutch East India Company and the British East India Company. These companies were granted charters by governments to engage in trade, exploration, and colonization, providing investors with limited liability and the opportunity to invest in large-scale ventures

RapidgrowthduringIndustrialRevolutionThe18thand19thcenturieswitnessedsignificantgrowthincompaniesduetotheIndustrialRevolution.Aseconomiesshiftedtowardsindustrialization,theneedformoresubstantialcapitalinvestmentsandlimitedliabilityforinvestorsledtotheproliferationofbusinesscorporations.Companylawbegantodevelopinthe19thcentury,providingguidelinesandregulationsfortheformation,structure,andgovernanceofcorporations.RiseofMultinationalCorporationsInthe2Othcentury,technologicaladvancementsandglobalizationfacilitatedtheriseofmultinationalcorporations.Thesecompaniesexpandedtheiroperationsbeyondnationalborders,establishingsubsidiariesandbranchesinvariouscountries.ModernCorporateGovernanceOvertime,theconceptofcorporategovernanceevolvedtoaddressissuesofaccountability,transparency,andethicswithincompanies.Variousregulationsandbestpracticeswereimplementedtoprotecttheinterestsofstakeholders,includingshareholders,employees,andthepublic

Rapid growth during Industrial Revolution The 18th and 19th centuries witnessed significant growth in companies due to the Industrial Revolution. As economies shifted towards industrialization, the need for more substantial capital investments and limited liability for investors led to the proliferation of business corporations. Company law began to develop in the 19th century, providing guidelines and regulations for the formation, structure, and governance of corporations. Rise of Multinational Corporations In the 20th century, technological advancements and globalization facilitated the rise of multinational corporations. These companies expanded their operations beyond national borders, establishing subsidiaries and branches in various countries. Modern Corporate Governance Over time, the concept of corporate governance evolved to address issues of accountability, transparency, and ethics within companies. Various regulations and best practices were implemented to protect the interests of stakeholders, including shareholders, employees, and the public

4.1.2DefinitionofCompanylCorporationCompany(Oxforddictionary)oAnassociationformedtoconductbusiness or otheractivities inthenameoftheassociation.Acorporationis“born out"of law,whichis called incorporated,theoriginal meaning of whichis united in one bodyThereforeithasalegalpersonalitydistinctfromthoseof theirmembers.Someformoflegalprocessmustbecompletedbeforeitcomes into existence.。Shareholders and directors are generally protected when the companygoes outofbusiness

4.1.2 Definition of Company/Corporation Company ( Oxford dictionary) ◦ An association formed to conduct business or other activities in the name of the association. ◦ A corporation is “born out” of law, which is called incorporated, the original meaning of which is united in one body. ◦ Therefore it has a legal personality distinct from those of their members. Some form of legal process must be completed before it comes into existence. ◦ Shareholders and directors are generally protected when the company goes out of business

ChineseCompanylawoAcompanyisanenterpriselegalperson,whichhasindependentlegal personpropertyand enjoys therighttolegal personproperty.Itshall bear liabilityfor its debts withall its assets.For alimited liabilitycompany,ashareholdershallbeliableforthecompanytotheextentofthe capital contributions it has paid.For a joint stock limited company,ashareholder shall be liable forthe companytotheextent of theshares ithas subscribedto.InChina,acompanyis afor-profit enterpriselegal person,whichisdifferentfromthosenon-profitlegalperson suchasauniversity

Chinese Company law ◦ A company is an enterprise legal person, which has independent legal person property and enjoys the right to legal person property. It shall bear liability for its debts with all its assets. For a limited liability company, a shareholder shall be liable for the company to the extent of the capital contributions it has paid. For a joint stock limited company, a shareholder shall be liable for the company to the extent of the shares it has subscribed to. ◦ In China, a company is a for-profit enterprise legal person, which is different from those non-profit legal person such as a university

4.1.3NatureofcompanyCompaniesmayvarybycountryandjurisdiction,buttheysharesomecommoncharacteristicsthat definetheirlegal nature andoperations:(1)Legalpersonality:Companiescomeintoexistencethroughalegalprocess,grantingthemtheirowndistinctlegal personality.Thislegal status isseparate from that of its members. The rights and duties of the company aredetermined bythelaws underwhich it was created.Aslong as the appropriatelegalproceduresarefollowed,thecompanywill continuetoexist(2)Limitedliability:Onesignificantfeatureofregisteredcompaniesisthelimitedliabilityenjoyedbytheirmembers.Limitedliabilitymeansthatmembersarefinanciallyresponsibleonlytotheextentof theiragreedinvestment.Even ifthecompanyfaces financial difficultiesandcannotfulfilitsobligationstocreditors,thepersonalassetsofthemembersremainprotectedminimizingtheirindividualrisks

4.1.3 Nature of company Companies may vary by country and jurisdiction, but they share some common characteristics that define their legal nature and operations: ◦ (1)Legal personality: Companies come into existence through a legal process, granting them their own distinct legal personality. This legal status is separate from that of its members. The rights and duties of the company are determined by the laws under which it was created. As long as the appropriate legal procedures are followed, the company will continue to exist. ◦ (2)Limited liability: One significant feature of registered companies is the limited liability enjoyed by their members. Limited liability means that members are financially responsible only to the extent of their agreed investment. Even if the company faces financial difficulties and cannot fulfil its obligations to creditors, the personal assets of the members remain protected, minimizing their individual risks

(3)Separatepropertyrights:Uponincorporation,acompany'sassetsbecomeitsownproperty.Thisseparationofassetsisadvantageousinseveralways.Forexample,whenamemberleavesthecompany,theycannotclaimownershipofspecificassets,ensuringthebusiness'scontinuity.Moreover,ifthecompanygoesintoliquidation,thememberscannotbeheldpersonallyliablebeyondtheirfinancialstakeinthecompany.(4)Transferabilityofshares:Membersofacompanyhavetheflexibilitytotransfertheirownershipinterests,commonlyknownasshares,tootherindividualsthroughsalesorothermeans.Inlistedpubliccompanies,theserightsoftransferareunrestricted,andsharesmaybetradedontheStockExchange.(5)Continuity:Onceacompanyisregistered,itsexistenceremainsunaffectedbychangesinmembership.This continuityallowscompaniestopursuelong-termgoalsbeyondthelifetimeofanyindividual member.Thecompanycanendureandthriveunlesswinding-upproceedingsareinitiatedtobring ittoanend

◦ (3)Separate property rights: Upon incorporation, a company's assets become its own property. This separation of assets is advantageous in several ways. For example, when a member leaves the company, they cannot claim ownership of specific assets, ensuring the business's continuity. Moreover, if the company goes into liquidation, the members cannot be held personally liable beyond their financial stake in the company. ◦ (4)Transferability of shares: Members of a company have the flexibility to transfer their ownership interests, commonly known as shares, to other individuals through sales or other means. In listed public companies, these rights of transfer are unrestricted, and shares may be traded on the Stock Exchange. ◦ (5)Continuity: Once a company is registered, its existence remains unaffected by changes in membership. This continuity allows companies to pursue long-term goals beyond the lifetime of any individual member. The company can endure and thrive unless winding-up proceedings are initiated to bring it to an end