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Part II: Foundation of a Company |
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Chapter 1: Incorporation |
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Article A: Right of
Incorporation |
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2. Any person may found a
company, provided that none of the purposes of the company is illegal,
is immoral or contrary to public policy. |
The right to incorporate
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3. A company can have a
single shareholder. |
One-person company
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Article B: Legal
Personality |
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4. A company shall be a legal personality having
capacity for any right, duty or act consistent with its character and
nature as an incorporated body. |
Legal personalityof a company
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5. A company shall exist from the date of its
incorporation as set out in its certificate of incorporation, until its
incorporation is ended upon its dissolution. |
Existence of company
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6. (a) Lifting the corporate veil shall take place in any one
of the following ways:
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Lifting the corporate veil
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(1) attribution of rights and
obligations of the company to one of its shareholders;
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(2) attribution of qualities,
rights or obligations of a shareholder to the company.
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(b) Notwithstanding the provisions
of section 4, the court may lift the corporate veil if a condition relating
thereto is prescribed under any enactment, or if it is just and right in the
circumstances of the case to do so, or if the conditions prescribed in
subsection (c) prevail:
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(c) The court hearing a proceeding
against a company may, in exceptional cases and for special reasons, lift the
corporate veil if any one of the following conditions prevails:
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(1) the use of
the separate legal personality of the company is intended to frustrate
the intent of any law or to defraud or discriminate against any person;
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(2) in the circumstances of the
case, it is just and right to do so, taking into account the fact that there was
a reasonable basis for presuming that the management of the company’s affairs
was not in the company’s best interest and that it involved the taking of an
unreasonable risk in respect of the company’s ability to pay its debts.
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(d) The lifting of the veil in
order to attribute the debts of the company to one of its shareholders shall be
effected while taking into account the company’s ability to pay its debts.
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(e) Nothing in the provisions of
this section shall prevent a court from granting other remedies, including the
suspension of the rights of a certain shareholder in the company from being paid
his debt until the company fulfilled all of its other undertakings.
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7. Where the court has ordered that the debts of the company
are to be attributed to one of its shareholders under the provisions of section
6(c), or to one of its office holders under the provisions of section 54(b), the
court may order that during such period as it may determine, which period shall
be no greater than five years, such person may not be a director or general
manager of a company nor be involved, directly or indirectly, in the founding or
management of a company.
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Restriction of employment
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Article C: Establishment and Registration of a Company
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8. A person seeking to register a company shall submit an
application to the Registrar in the form prescribed by the Minister, to which
shall be attached:
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Application for registration
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(1) a copy of the articles of association;
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(2) a declaration by the first directors that they are
willing to serve as directors, to be prescribed by the Minister.
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9. (a) A person wishing to
register a company shall pay a fee (hereinafter the “registration fee”) on
submission of the application.
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Fees
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(b) A company shall pay an annual
fee every year.
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10. (a) The Registrar shall register a company if he
considers that all the requirements of this Law in respect of registration, and
any matter that is a precondition therefor, have been fulfilled.
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Certificate of incorporation
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(b) The Registrar shall give every company a
registration number, as provided in section 38(c), and shall enter it on the
certificate of registration.
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(c) On registration, the Registrar shall deliver to
the company a certificate of registration.
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(d) A certificate of registration delivered to a
company shall serve as conclusive evidence that all of the requirements under
this Law regarding registration, and any matter that is a condition thereof,
have been fulfilled.
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(e) Nothing in the provisions of subsection (d)
shall remedy any fault in the articles of association or preclude the need to
remedy such fault.
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Article D: Purpose of Company
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11. (a) The purpose of a company shall be to operate in
accordance with business considerations in realizing its profits, and within the
scope of such considerations, the interests of its creditors, its employees and
the public; may inter alia be taken into account; similarly, the company
may donate a reasonable sum for a proper object, even if such donation is not
within the scope of business considerations as aforesaid, if a provision for
such is laid down in the articles of association.
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Purpose of company
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(b) The provisions of subsection
(a) shall not apply to a company the articles of association of which provide
that it was established for public purposes only, and such articles of
association prohibit the distribution of profits to shareholders.
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Article E: Acts Performed by a Promoter
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12. (a) A company may approve the
act of a promoter performed on behalf of or in place of the company prior to its
incorporation.
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Approval of act
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(b) Approval ex post
facto shall be regarded as authorization abinitio, provided that no
right acquired by any other person (in this Article “a third party”) bona
fide for value prior to the approval, is prejudiced.
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13. (a) Where a third party knows, at the time of an act
referred to in section 12, of the existence of a promotion, such party may
regard the promoter as his opposite number or may withdraw from the act, and
claim damages from the promoter, in any one of the following events:
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Status of a third party regarding a promotion
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(1) the company did not ratify the act within a year
of the date of its being performed;
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(2) the circumstances show that the company is not
likely to become incorporated, provided that the third party has so notified the
promoter thirty days in advance;
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(3) the company did not ratify the act within thirty
days of the date on which the third party so required.
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(b) Where the company has ratified
the act, the promoter shall not have any rights or obligations in respect of it.
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(c) The promoter and the third
party may contract out of the provisions of this section.
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14. Where the third party did not know of the existence of
the promotion at the time of the act, the following provisions shall apply:
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Lack of awareness of promotion
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(1) the promoter’s act shall oblige or benefit the promoter
as the case may be;
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(2) once a company is incorporated, it may ratify the act,
provided that such ratification is not inconsistent with the essence of the act,
its conditions or the circumstances of the matter; where the company ratifies an
act, the promoter’s act shall bind both the company and the promoter, jointly
and severally, and shall benefit the company alone.
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