Erbonian company law

Erbonian company law is the field of law which regulates and governs companies and corporations in Great Nortend under both the chamber law as well as under statute, the most important statute being the Companies Act, 8 Edm. XII p. 77 passed in 1910. The principal regulatory body is the Chancery Registrar's Office which can take legal action by writ of scire facias to ensure compliance with the law.

Terminology

Per Gillivan v. Sandwood, et al., a distinction is made between partnerships and companies.

A partnership comprises two or more partners with articles of partnership binding upon the partners. A partnership is a legal nominality insofar as it can sue and be sued merely by naming partners, without the need to serve writs upon each partner individually. Furthermore, it can enter into contracts by the signature of any one partner. However, it is not a company as its members are not incorporated.

A company or corporation comprises of multiple entities joined and incorporated into one entity. This is usually two or more shareholding members together, known confusingly also as a 'company'. Most companies have directours which act on the company's behalf. The directours are also part of the company, separate from the company of shareholding members. The company, including the company of shareholders and the directours, has a separate legal personality from their individual personages and can sue, be sued and enter into contracts under its own name.

Not all companies consist of a company and directours. These terms may be replaced by terms appropriate to the corporation, such as fellows, provost, aldermen, councillours, directours, agents, masters &c. For example, the municipal corporation of Lendert-with-Cadell is known as “The Mayor, Aldermen and Commoners of the Cities of Lendert and Cadell” and the school Allord College is formally known as “The Abbot, Governours and Commoners of the King's College at the Abbey of our Lord in the Forest”.

Formation

Under the Companies Act, a corporation may only be formed by the issuance of a Royal charter, which brings about the incorporation of shareholders into a corporation. A typical corporation may receive a Royal charter by petition to the Chancery Registrar in accordance with the Companies Act; however, corporations may still receive a Royal charter by direct petition to the Crown, which is common for 'prestigious' companies and charities wishing for royal distinction. A corporation can also be directly formed by an Act of Parliament.

One important element to a corporation is the liability of its shareholders for the corporation's debts and losses. Most corporations have unlimited liability. This liability may be either unlimited in share or unlimited in gross. A shareholder with liability unlimited in share is severally liable for the debts and losses of the corporation to the proportion of his shares. A shareholder with liability unlimited in gross is wholly liabile for the debts and losses of the entire corporation.

For some companies, such as banks, financial companies, large trading companies and the like, a shareholder may have limited or even no liability for the corporation's debts and losses. A corporation may have liability limited by shares or by guarantee, where shareholds are liability only for the portion of unpaid shares or for a certain guaranteed sum respectively.

A corporation may be also be either proprietary or public. A public corporation is one whose stocks are freely traded on a stock exchange authorised by the Crown. A proprietary company is not listed on a stock exchange and can only privately trade shares.

Requirements

To obtain a charter from the Chancery Registrar, a future company must have a minimum of seven petitioners and minimum capital of £100·0·⅛. The charter must be purchased at a fee set by the Registrar of Chancery, starting at £28·5·0 and dependent on authorised capital, which includes the fee for the scribal engrossing of the Royal charter on vellum.

The charter includes the name of the corporation to be formed, the names of each petitioner, and the share capital of each, and the purposes of the corporation. The text of the charter explicitly states that a body corporate is formed of various persons with perpetual succession with legal personality to do enumerated things with a common seal. The charter also incorporates the original bye-laws of the company and the method for their alteration.

Directours

Most corporations are governed by appointed directours, who form either a Court of Directours or Board of Directours. The term 'court' is used in companies formed under chamber law and the term 'board' in companies formed under the Companies Act, although this is not strict and other terms can be used. Directours are normally appointed by the shareholders, although each corporation's Royal charter will specify the particular method and requirements.

Every corporation formed under the Companies Act is required to have at least two directours. However, companies formed under chamber law may have alternative forms of governance such as governance by a president and fellows, by a chairman and governours, by a provost and chapter, by a mayor and aldermen, &c.

Liability

The issue of liability has been cited as the major reason for the slow rate of development in Great Nortend since the 19th century. In essence, there is little incentive to invest in speculative or risky ventures as investors are generally liable for the company's debts and losses to the proportion of their shares. For example, if a corporation of ten shareholders holding one share each becomes insolvent with £100 worth of debt, each shareholder will be liable to contribute £10 as the proportion of his share.

One way around this issue is for a company to incorporate as a limited liability or nil liability company. However, successful petitions are rare as the Chancery Registrar requires that the company's limited liability or nil liability be 'essential' to the nature of the company. Generally, the Registrar is unlikely to grant a charter for limited liability, not to mention nil liability. Since the passage of the Companies Act, mostly only financial and charitable corporations have been granted charters of limited liability. A notable exception are the several industrial companies which have limited liability charters owing to their incorporation during the Great Astyrian War, limited liability status being an incentive during the war effort in return for war-time privileges for the Crown. These include Chaverleigh-Wells (motor vehicles and engines), Blue Cross Line (shipping), Helton-Dyshot (steel mill) and Tourneret Cooper (silk producers).

Shares

Most corporations are able to issue shares. Only corporations limited by guarantee and corporations sole are unable to issue shares. Shares have a minimum par value of £1. This limits the number of shares issuable by a corporation, as the authorised capital of a corporation is fixed upon incorporation and cannot be changed except by petition to the Crown or Chancery Registrar for a new charter.