In simple terms
Company law is the set of rules that governs how companies are formed, run, financed and closed down. In Sierra Leone the main source is the Companies Act 2009, read with English case law that the courts here treat as persuasive.
What a company is
A company is an association of people who join together for a common purpose, usually to carry on business, and who register it under the Companies Act. Once registered, it becomes a legal person separate from the people who formed it. It can own property, make contracts, sue and be sued in its own name, and it carries on after its members die or sell their shares.
Why people use companies
Limited liability: in a company limited by shares, a member risks only what he has paid, or agreed to pay, for his shares. His house and savings are not available to the company's creditors.
Perpetual succession: the company does not end when a member dies or leaves. The shares pass to someone else and the business goes on.
Raising money: a company can sell shares and issue , and it can give a over its changing assets. A sole trader or partnership cannot.
Separate ownership of property: the business assets belong to the company, not to the members, so they are not tangled up with the members' private affairs.
The sources of company law
The Companies Act 2009: this is the main statute. It covers incorporation, the memorandum and articles, shares, debentures and charges, meetings, directors, minority protection, accounts and . It was amended by the Companies Act 2014.
Case law: much of company law was made by English judges, for example in Salomon v Salomon, Foss v Harbottle and the cases on directors' duties. Sierra Leone courts treat these cases as persuasive, and the Act puts several of their rules into statutory form.
The company's own constitution: the memorandum and bind the company and its members, and set out how the company is run.
The regulator
The Act sets up the Corporate Affairs Commission to register companies and keep the register. Throughout the Act it is called the Commission.
Words and Latin in this note
- Articles of association
- The company's internal rules on shares, meetings, directors and dividends. With the memorandum they bind the company and its members like a covenant (section 37) and may be altered by special resolution (section 43). Open the note.
- Floating charge
- A charge over a changing class of a company's assets that it may deal with in the ordinary course of business until the charge crystallises. A fixed charge has priority over it: section 151. Open the note.
- Winding up
- The process of ending a company's life: collecting and selling its assets, paying its debts and distributing any surplus, before dissolution. It may be by the court, voluntary, or subject to the court's supervision: section 343. Open the note.
- Debenture
- A document that creates or acknowledges a debt owed by a company, often secured by a charge. A debenture holder is a creditor, not a member. Open the note.
Memory map
What company law is
Why people use companies
- Limited liability
- Perpetual succession
- Raising money
- Separate ownership of property
The sources of company law
- The Companies Act 2009
- Case law
- The company's own constitution
Key points
- A company is a registered association that…
- The main reasons for using a company are…
- The main source in Sierra Leone is the…
- English company cases are persuasive here
Cases
- Salomon v A Salomon and Co Ltd
Key terms
- Articles of association
- Debenture
- Floating charge
- Winding up
Take-home points
- A company is a registered association that becomes a legal person separate from its members.
- The main reasons for using a company are limited liability, perpetual succession, easier fundraising and separate ownership of assets.
- The main source in Sierra Leone is the Companies Act 2009, as amended in 2014.
- English company cases are persuasive here, and the Act puts many of their rules into statute.
- The memorandum and articles are the company's own constitution.
Cases in this topic
See also
- The Companies Act, 2009 · 2009
- The Companies Act, 2014 · 2014
- Foss v Harbottle · Lanbuk on the Law of Companies · (1843) 2 Hare 461
Lecture notes on this subject
No other Lanbuk notes on this module yet. Browse the law notes.
Other law notes by subject
Arbitration
Business and human rights
Civil procedure
- The Slip Rule and Judicial Finality: Correcting Errors in Court Orders in the UK and Sierra Leone
- Sierra Leone's Court System and Starting Civil Proceedings in the High Court
- Who Addresses the Court First in Closing Speeches, and Why
- Disposal of Cases on Points of Law under Order 17
- Garnishee Proceedings under Order 50
- Interlocutory and Final Judgments
Constitutional and administrative law
Contract law
Criminal procedure
- No Case Submission: Interpreting 'Otherwise Deals in or With' under the National Drugs Control Act 2008
- Legal Authorities for a No Case Submission on Drug Importation Charges
- No Case to Answer: Analysis of a Drug Importation Prosecution
- Criminal Procedure: Law School Notes
- Submission of No Case to Answer: Dealing in Prohibited Drugs
Environmental and climate law
Equity and trusts
Exam preparation
Family law
Human rights
International law
Radiation and nuclear safety law