Corporate personality

ASST. PROF. DR. FJOLLA KAPROLLI ISMAILI

INTERNATIONAL BALKAN UNIVERSITY
Consequences of incorporation

Company is liable for its own debts

Limited Liability (separate person from its shareholders)

Company property (shareholders has no direct right to this or any share

connected with it)

Full contractual capacity – only the company can enforce the contracts
Crimes (company can be convicted of a crime, regardless of weather the
directors are also convicted). Not the crime which the only available
sentence is imprisonment. A company can as well be victim of crime

Separate personality (the company existence does not depend on the

existence of its members)

Can borrow money and grant security for a debt

Veil of incorporation

Separate legal personality operates as a shield – the courts will not

normally look beyond the façade of the company, or to the ones that
comprises ( shareholders)

The separation of the company from its individual shareholders and

directors is referred as “the veil of incorporation”

The situations of “lifting” the corporate vail by the Law or by the court
decision in the case of fraud
Corporate constitution

The constitution of a company is usually referred as “Articles of

association”

There is essential procedures that every constitution has (like when to

hold meetings, appointment of directors, or preparing accounts). These
rules may always be changed

Very similar to any business contract

Contains Memorandum of association and Articles of association

Memorandum of association
Name clause
(public limited company, private limited company…. PLC; LTD…)

The name of the company is the name under the company operates
and participates in the legal trade

Penalty if the company uses or carry the business under the name or
abbreviation to which is not entitled
Restriction about using the names

- Cannot be registered under the name which is identical to the name

already registered
- suggestion that is conceded with the government or other local
authority
- - name of the country; name of the persons; historical characters…
(special approve from Ministry of Justice)
The name can be changed with special resolution
Any change in the name should be notified at the Register
Every part of the company acts under on name (branches, units…) with
the sign in the name that will give notion that is part of the company
If it is liquidation – mark that is in the liquidation, notified in the
Register
Logo (can have) (photos, drawings, signs that are closely determining
the company)
Most famous companies names
Google LLC[5] is an American multinational technology company that
specializes in Internet-related services and products, which include 
online advertising technologies, search engine, cloud computing,
software, and hardware. Google was founded in 1998 by Larry Page
 and Sergey Brin while they were Ph.D. students at Stanford University
 in California. Together they own about 14 percent of its shares and
control 56 percent of the stockholder voting power through 
supervoting stock. They incorporated Google as a privately held
company on September 4, 1998. An initial public offering (IPO) took
place on August 19, 2004, and Google moved to its headquarters in
Mountain View, California, nicknamed the Googleplex. In August 2015,
Google announced plans to reorganize its various interests as a
conglomerate called Alphabet Inc. Google is Alphabet's leading
subsidiary and will continue to be the umbrella company for Alphabet's
Internet interests. Sundar Pichai was appointed CEO of Google,
replacing Larry Page who became the CEO of Alphabet.
Apple Inc. is an American multinational technology company
 headquartered in Cupertino, California, that designs, develops, and
sells consumer electronics, computer software, and online services. The
company's hardware products include the iPhone smartphone, the iPad
 tablet computer, the Mac personal computer, the iPod portable media
player, the Apple Watch smartwatch, the Apple TV digital media player,
and the HomePod smart speaker. Apple's software includes the macOS
 and iOS operating systems, the iTunes media player, the Safari web
browser, and the iLife and iWork creativity and productivity suites, as
well as professional applications like Final Cut Pro, Logic Pro, and Xcode.
Its online services include the iTunes Store, the iOS App Store and Mac
App Store, Apple Music, and iCloud.
Logo examples
Avoid similarity with other names!
The name should be printed on all business documents and must be
displayed at all business premises
Protection of the name
- Principle of accuracy
- Principle of exclusivity
- Principle of priority
-Principle of accuracy – the data in the Register is accurate
(responsibilities of the establishers and the managers)
-Principle of exclusivity – only one company with one name
-Principle of priority – the first entered into Register has the right to the
name

-International protection (Paris covenant for protection of intellectual

property, 1883; revised version Brussels 1990;
Registered office clause
The residence of the company, where the legal life of the company
is happening; were the management is and where the official
records are kept
It determinates the jurisdiction in which the company can be sued
It is address at which the notices and the documents can be send
It is address where the records are kept available for public
inspection
The change of the address should be notified at the Register of the
companies
Object clause
Clause which states the purposes or purposes for which the company is
created (main and additional)

Can be all the purposes except the ones forbidden by the Law

Sometimes special permission from the special authority

Can be changed by the special resolution of its members

Articles of association
Operate as contract between the company and its members

Each member in his capacity as member signs the Articles of association

and it is bound by this act

The Company is bound to towards each member by this act

Any change of the Articles of association need to be notified to the

Register of Companies
Usually – regulates power of the management in the board of directors,
delegation of tasks to other employees..

It should consist regulation how the constitution can be changed

defining the majority needed

Regulate the right to vote on the meetings

The connection of the right to vote with shares

Shareholders (those who invest in company, the capital investment)
have monopoly of governance rights

Shareholders have the right to change the company's constitution

usually with a three quarter majority vote unless they set higher
threshold

Institution investors like pension funds, insurance funds… have as well

shares although not vote or are not present on the general meetings,
they practice their power by supporting on the management of the
company
Employees rights

Employees make the company function

(syndicate unions)

Participation rights as members on the general meeting, or the right to

elect specific board members
Directors duties

Key duties:

-to follow the company's constitution and exercise powers for

"proper purposes“ (not to use the assets for personal enrichment)

-Should have care, skill and competence that is reasonable for

somebody carrying out the functions of the office and special
qualifications by the highest standards

- Avoid conflict of interest (loyalty; not accept benefits from the third
parties)

- Promote the success of the company

Liabilities of the company
- the company is liable with all its property
- principle of autonomy of the property of the company and the
property of the shareholder
- extension of the responsibilities towards the shareholders (depends of
the type of the company)
- lifting the vail of incorporation (in some cases the shareholder can be
responsible for the debts of the company)
Thank you!
 Homework!

What types of companies you have by the domestic law?

Basic clasification