Abstract
A limited company is formed under the Companies Act 1985 or under an earlier Act. At law, a limited company is an artificial person with its own legal rights and privileges quite distinct from those of the members who compose it. This is a vital distinction from the sole trader and partnership forms of organization where there is no separate legal entity. The chapter discusses the two documents, which must be filed with the Registrar of Companies: Memorandum of Association and Articles of Association. Membership of a company is obtained by subscribing towards the share capital of the company. A share may be purchased direct from the company upon an initial issue or in the case of a public company, on the Stock Exchange from a member wishing to dispose of part or all of his holding. A company may raise capital by means of a loan in addition to the issue of shares. A debenture is a document, which acknowledges such a loan and stipulates the terms for repayment, the interest payable and the assets, if any, upon which the loan is secured.
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