Assignment On Company Law

Assignment on Company Law
NAME : ADIBA BINTE FAISAL

COURSE : LAW200
ID : 1912792030
Part 1 of the first question -
A company is an association of persons formed under the companies Act, 1994 with a view to
achieving some common objectives. Even though a company is regarded as a legal person, it
possesses similar rights and owes similar obligations like a natural person.
There are certain advantages and disadvantages to a company when being compared to other
business forms.
Firstly the advantages are discussed below:

1) Distribution of workload - it refers to how all the functions in an organization is distributed
among the workers. Despite the fact that an organization may have a ton of work, they are
typically divided among all the workers who work in different departments. Every department
specializes in different works.
It is a lot easier for partnership as the workload and responsibilities will be shared among the
partners. Thus the pressure will be less.
On the other hand, sole trading business would imply that one individual will handle all the work.
The workload will be on him solely and if he decides to redistribute the work it will be
unquestionably expensive.
2) Professional management - refers to the prepared methodology in regulating an organization,

also having authoritative and specialized abilities, expert capabilities and a great measure of
involvement in running the business. In sole proprietorship and partnership the business does
not get to avail of the effective and efficient management due to the absence of workers and
assets.
In a company form of a business the organization enlists specialists, who are best in their
respective fields, people who can pinpoint the smallest of the details that can help improve the
business cycle, managers who can guarantee the dependability, progress and development of
the business. Regardless of whether a sole proprietorship and partnership runs easily, it is still
underestimated in comparison to a company formation in terms of adequacy and productivity.
3) Limited liability: refers to the fact that liability of the shareholders are limited to the extent of
the value of their shares held by them. Thus their personal or private property cannot be
attached for debts of the company.
In contrast to a sole proprietorship and partnership, a company enjoys a limited liability. In
partnership and sole proprietorship, the individuals will be held liable for any debts of the
business. Sole proprietorship is a bit more complicated as the individual is personally fully liable
for the whole business.
4) Funds - in business funds are referred to as the pool of money related assets that are
accessible for immediate use. This includes both current and noncurrent assets, such as cash in
hand and other liquid assets that can be turned into cash when needed immediately.
Company has an immense favorable position over different types of business associations
because the company enjoys more financial support through huge amounts of funds by issuing
shares and debentures and falling back on different intentions to pool funds which different
business associations can't.
Sole traders and partnerships struggle raising assets since investors commonly favor
businesses that they know have higher and stronger financial records including other forms of
security.
5) Perpetual existence - refers to the trait of business organizations of having no expiration date,
boundless term of presence in other words.
The company doesn't get affected by death, bankruptcy, inadequacy of any member, unlike sole
proprietorship and partnership businesses. Also dissimilar to the partnership business, it doesn't
get disrupted if any shareholder or partner decides to leave the company. It still continues to
exist in the eyes of the law.
Then again, on the off chance that anything happens to the proprietor of a sole ownership, at
that point his business ceases to exist as he is in preeminent control of the element and bears
all the liabilities of the ownership.
Secondly the disadvantages of starting a business as a company are discussed below:

1) Mismanagement - refers to how insufficiently and inefficiently the business is being operated.
Company because of its enormous and inclusion of workers and individuals can get more
exposed to risks such as money laundering, prudence etc., which would affect the business’s
reputation negatively. Due to less complicated business formats and small size in nature other
business associations does not have to face much discrimination claims as much a company.
One of the primary reasons why partnerships and sole proprietorships don't face much
administrative problems because there is practically no bureaucracy in small business
structures.
2) Secrecy - refers to refers to any classified data that runs over throughout the business.
Three main types of data are the information on employees collected by the managers, client’s
personal information and other proprietary information.
A company legally needs to publish its accounting records and statements for it to be available
for all its stakeholders. So as a matter of fact there is no secrecy in company matters as anyone
can have access to this information. It’s not the same for sole proprietorship or partnership.
3) Costs - There are expenses in the beginning of starting up any business. Sole proprietors
and partnership businesses have fewer costs in comparison to a company. A company has to
pay yearly state expenses, documenting expenses etc.
The start-up costs and running a company is much greater than what it is for other business
associations. Companies do not get to enjoy much tax benefits.
4) Restrictions - it refers to specific guidelines and rules that a business must follow to run and
shape a company. Companies face a lot of legal limitations and government interference and
also have to go through different legal prerequisites such as documentations, various laws etc.
companies are more inclined to investigations and audits than sole proprietorship and
partnership businesses. Such issues don’t arise when it comes to partnerships and sole
proprietorship. Since these types of business are not needed to keep budget reports things can
be more loosened up while overseeing cash.
Part B: Explain corporate veil lifting including directors’ liability in light of Bangladesh
Companies Act 1994.
A company is a legal person and distinct from its members according to the judicial point of view. This
principle is referred as ‘Veil of Incorporation.’.
In many situations the court will penetrate or overlook the corporate veil to reach out to the
person behind the veil. This is to reveal the real form of the company.
Often individuals use the corporate veil for extortion or fraud. Thus it is mandatory for courts to
get through to reveal the corporate veil and investigate the real beneficiaries of the company.
This implies to any place where deceitful and exploitative use is made of any legal entity,the
people won't be permitted to take cover behind the corporate character.
This unquestionably affects the investors. The shareholders will be held liable for the acts of the
company. In any case, the matter of concern is whether in all cases the company is acting as an
agent for its shareholders.
In regard to the Bangladesh Company Act 1994, can be restricted shares, guarantee and can
be unlimited company. A company limited by guarantee means the liability of its members are
limited by the memorandum to such amount as the members may respectively thereby
undertake to contribute to the assets of the assets of the company on the event of its being
wound up. While unlimited company means where a company has no restrictions on the risk of
its individuals.
Meaning, companies limited by shares will not be affected by the lifting of veil of incorporation.
However, unlimited companies and companies limited by guarantee will be affected.
Bibliography
Posted By Rifkind Patrick LLC || 2-Nov-2015. (n.d.). How Do I Choose Between the 4 Major Business
Organization Forms; advantages and disadvantages; Retrieved September 26, 2020, from
https://www.rifkindpatrick.com/Blog/2015/November/The-4-Major-Business-Organization-
Forms.aspx
(n.d.). Retrieved September 26, 2020, from http://bdlaws.minlaw.gov.bd/act-788.html
Forms of Business Organizations: Advantages and Disadvantages. (n.d.). Retrieved September

26,2020,from https://www.indeed.com/career-advice/career-development/forms-of-businesses

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Assignment on Company Law

NAME : ADIBA BINTE FAISAL

Part 1 of the first question -

Firstly the advantages are discussed below:

2) Professional management - refers to the prepared methodology in regulating an organization,

Secondly the disadvantages of starting a business as a company are discussed below:

(n.d.). Retrieved September 26, 2020, from http://bdlaws.minlaw.gov.bd/act-788.html

Forms of Business Organizations: Advantages and Disadvantages. (n.d.). Retrieved September

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