Abiblo Law - Company (3)
The mid victorian legislation was conducted in such ideas where the differences between companies and partnership is based on the fact that in partnership it is useful to conduct small business / with small number of people while company is considered for large business.
The number of partner in partnership capped by statute.
Incorporation was compulsory for larger number of people associate for business purpose.
s716 (1) Companies Act 1985 is re enacting a provision introduced by the Joint Stock Companies Act 1844 ( which set the limits at 25 or more ) provided that an association of 20 or more person formed for carrying on a business for gain must formed a company.
Limited Liability Act 1855 indicated that the companies will need at least 25 members in the operation of limited liability companies.
The Joint Stock Companies Act 1856 reduced the number to 7 for companies.
The decision of House of Lord at the end of the 19th century in Salomon v Salomon allowed incorporation with a single member in the company while the other six are nominees for the seventh.
The decision preceded the adoption of EC Directive 89 / 667 for nearly a century which requires a private company to be formed with single member. This extend to Public Companies.
As for maximum limit of partnership, this was also eliminated over the past 2 decades.
The Companies Act contain no similarity as in s716 Companies Act 1985.
The eventual collapse of the Victorian segregation of two business form mean that they are equally adapted to different size of the business.
Where a large and fluctuating number of members involved, the company appears to be at advantage in term of organisational form.
This occurs due to the fact that the company consists of two distinct components which include management of the company which is vested on the board of directors and members of the company ( shareholders ).