Commercial and company law
Commercial and company law
This domain tests business entities, corporate personality, governance, and commercial transactions. The exam focuses on who owns what, who decides, and who is liable.
Core rules
- A company is a legal person separate from shareholders; it owns assets and contracts in its own name. Shareholders have limited liability except for unpaid capital or statutory exceptions.
- Incorporation requires constitutive documents, registration, and compliance with capital and disclosure rules; defects may lead to nullity or de facto recognition.
- Directors owe duties of loyalty, care, and disclosure; self-dealing requires approval and fair procedure.
- Shareholders exercise rights through meetings, voting, information, and derivative actions; minority oppression may be remedied.
- Agency binds the principal where authority is actual or apparent; the agent's undisclosed principal may be liable.
- Insolvency prioritizes secured creditors, expenses, employees, and unsecured creditors according to statute; preferences may be avoided.
Worked example
A director buys company land for himself without board or shareholder approval. The company may rescind the sale, recover the profit, and claim damages for breach of loyalty. The director cannot rely on separate personality to keep the benefit; the transaction is with the company, not with him.
Traps
Piercing the veil as a routine remedy; confusing shareholder assets with company assets; ignoring disclosure; treating a director's approval as shareholder approval; missing insolvency priority rules.