Commercial Law and Company Law: Formation, Organs, and Liability
Commercial transactions
Commercial law tests the status of traders, the commercial contract, and the rules on commercial paper and securities. Know the forms of business organisation: sole trader, general and limited partnership, limited liability company, and joint-stock company. Understand the constitutive acts (registration), legal personality, and the principle that a registered company acquires personality on registration.
Company governance
For each form, know the organs (assembly, management, supervisory board), their competences, the rules on convening and quorum, and the rules on conflicts of interest. Understand capital maintenance, distribution of profits, and the prohibition of returning contributions to members. Learn the liability of directors (duty of care, business judgment) and the piercing of the corporate veil.
Insolvency and commercial contracts
Know the basic features of insolvency proceedings and the effect of opening proceedings on contracts and enforcement. Understand the rules on late payment, default interest, and the commercial sale contract with its specific remedies.
Traps
Questions confuse the limited liability company with the joint-stock company on capital and governance. Another trap is the distinction between nullity of a company decision and its mere voidability, and the rule that a defect in convening may be cured by unanimous attendance.
Rule of thumb
For any company decision, check competence, convening, quorum, majority, and form. A defect in any of these is the first place to look.
Worked example
A director buys company property at a price below market without disclosure. The transaction is not automatically void, but the director is liable for the loss and the transaction may be challenged for conflict of interest.