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104-434: Mahindra Renault Limited was a joint venture between India 's largest utility vehicle manufacturer Mahindra & Mahindra Limited & Renault S.A. of France (51% & 49% respectively). The joint venture was formed in 2007. On 15 April 2010 Mahindra & Mahindra and Renault together announced restructuring plans by which Mahindra would buy Renault's share in the joint venture and Renault would continue to provide

208-439: A 2.2 percent average ROA, while wholly owned and controlled affiliates in the U.S. only realized a 0.7 percent ROA." In European law , the term "joint venture" is an exclusive legal concept, better defined under the rules of company law . In France , the term "joint venture" is variously translated as "association d'entreprises", "entreprise conjointe", "coentreprise" or "entreprise commune". A JV can be brought about in

312-713: A JV aimed at defining standards or serving as an "industry utility" that provides a narrow set of services to industry participants. Some major joint ventures include United Launch Alliance , Vevo , Hulu , Virgin Media O2 , Penske Truck Leasing , and Owens-Corning . According to Gerard Baynham of Water Street Partners, there has been much negative press about joint ventures, but objective data indicate that they may actually outperform wholly owned and controlled affiliates . He writes, "A different narrative emerged from our recent analysis of U.S. Department of Commerce (DOC) data, collected from more than 20,000 entities. According to

416-584: A board of directors, except as may be otherwise provided in this chapter or in its certificate of incorporation. In Germany , §76 AktG says the same for the management board, while under §111 AktG the supervisory board's role is stated to be to "oversee" ( überwachen ). In the United Kingdom , the right to manage is not laid down in law, but is found in Part.2 of the Model Articles . This means it

520-445: A certain way. Conceptually a shareholders' agreement fulfills many of the same functions as the corporate constitution, but because it is a contract, it will not normally bind new members of the company unless they accede to it somehow. One benefit of shareholders' agreement is that they will usually be confidential, as most jurisdictions do not require shareholders' agreements to be publicly filed. Another common method of supplementing

624-447: A company generally have rights against each other and against the company, as framed under the company's constitution. However, members cannot generally claim against third parties who cause damage to the company which results in a diminution in the value of their shares or others membership interests because this is treated as " reflective loss " and the law normally regards the company as the proper claimant in such cases. In relation to

728-465: A company is said to represent its equity capital . Most jurisdictions regulate the minimum amount of capital which a company may have, although some jurisdictions prescribe minimum amounts of capital for companies engaging in certain types of business (e.g. banking , insurance etc.). Similarly, most jurisdictions regulate the maintenance of equity capital, and prevent companies returning funds to shareholders by way of distribution when this might leave

832-526: A company. By its formation, the JV becomes a new entity with the implications that: On the receipt of the Certificate of Incorporation, a company can commence its business. This is a legal area and is fraught with difficulty as the laws of countries differ, particularly on the enforceability of "heads of" or shareholder agreements. For some legal reasons, it may be called a Memorandum of Understanding . It

936-541: A nominal or par value, which is the limit of the shareholder's liability to contribute to the debts of the company on an insolvent liquidation. Shares usually confer a number of rights on the holder. These will normally include: Companies may issue different types of shares, called "classes" of shares, offering different rights to the shareholders depending on the underlying regulatory rules pertaining to corporate structures, taxation, and capital market rules. A company might issue both ordinary shares and preference shares, with

1040-527: A pension fund), or companies limited by guarantee (like some community organizations or charities). Corporate law deals with companies that are incorporated or registered under the corporate or company law of a sovereign state or their sub-national states . The defining feature of a corporation is its legal independence from the shareholders that own it. Under corporate law, corporations of all sizes have separate legal personality , with limited or unlimited liability for its shareholders. Shareholders control

1144-406: A potential takeover bid, that would be an improper purpose. Ronald Coase has pointed out, all business organizations represent an attempt to avoid certain costs associated with doing business. Each is meant to facilitate the contribution of specific resources - investment capital, knowledge, relationships, and so forth - towards a venture which will prove profitable to all contributors. Except for

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1248-496: A principal disadvantage is absence of an interested and influential Chinese party. As of the 3rd Quarter of 2004, WFOEs had replaced EJVs and CJVs as follows: (*)=Financial Vventures by EJVs/CJVs (**)=Approved JVs These enterprises are formed under the Sino-Foreign Investment Act. The capital is composed of value of stock in exchange for the value of the property given to the enterprise. The liability of

1352-500: A substitute for corporate law, business law means the law relating to the business corporation (or business enterprises), including such activity as raising capital, company formation, and registration with the government. Academics identify four legal characteristics universal to business enterprises. These are: Widely available and user-friendly corporate law enables business participants to possess these four legal characteristics and thus transact as businesses. Thus, corporate law

1456-411: A voluntary liquidation where the company is insolvent will also be controlled by the creditors, and is properly referred to as a creditors' voluntary liquidation ). Where a company goes into liquidation, normally a liquidator is appointed to gather in all the company's assets and settle all claims against the company. If there is any surplus after paying off all the creditors of the company, this surplus

1560-592: Is a stub . You can help Misplaced Pages by expanding it . Joint venture A joint venture ( JV ) is a business entity created by two or more parties, generally characterized by shared ownership , shared returns and risks , and shared governance. Companies typically pursue joint ventures for one of four reasons: to access a new market, particularly emerging market ; to gain scale efficiencies by combining assets and operations; to share risk for major investments or projects; or to access skills and capabilities. Most joint ventures are incorporated, although some, as in

1664-509: Is a default rule, which companies can opt out of (s.20 CA 2006 ) by reserving powers to members, although companies rarely do. UK law specifically reserves shareholders right and duty to approve "substantial non cash asset transactions" (s.190 CA 2006), which means those over 10% of company value, with a minimum of £5,000 and a maximum of £100,000. Similar rules, though much less stringent, exist in §271 DGCL and through case law in Germany under

1768-399: Is a response to three endemic opportunism: conflicts between managers and shareholders, between controlling and non-controlling shareholders; and between shareholders and other contractual counterparts (including creditors and employees). A corporation may accurately be called a company; however, a company should not necessarily be called a corporation, which has distinct characteristics. In

1872-404: Is allowed to enter into contracts with appropriate government authorities to acquire land use rights, rent buildings, and receive utility services. In this it is more similar to a CJV than an EJV. WFOEs are expected by PRC to use the most modern technologies and to export at least 50% of their production, with all of the investment is to be wholly provided by the foreign investor and the enterprise

1976-585: Is between a two-tier and a one tier board. The United Kingdom, the United States, and most Commonwealth countries have single unified boards of directors. In Germany, companies have two tiers, so that shareholders (and employees) elect a "supervisory board", and then the supervisory board chooses the "management board". There is the option to use two tiers in France, and in the new European Companies ( Societas Europaea ). Recent literature, especially from

2080-604: Is described below. The EJV Law is between a Chinese partner and a foreign company. It is incorporated in both Chinese (official) and in English (with equal validity), with limited liability. Prior to China's entry into WTO – and thus the WFOEs – EJVs predominated. In the EJV mode, the partners share profits, losses, and risk in equal proportion to their respective contributions to the venture's registered capital. These escalate upwardly in

2184-470: Is done in parallel with other activities in forming a JV. Though dealt with briefly for a shareholders' agreement , some issues must be dealt with here as a preamble to the discussion that follows. There are also many issues which are not in the Articles when a company starts up or never ever present. Also, a JV may elect to stay as a JV alone in a "quasi partnership" to avoid any nonessential disclosure to

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2288-432: Is often divided into corporate governance (which concerns the various power relations within a corporation) and corporate finance (which concerns the rules on how capital is used). Directors also owe strict duties not to permit any conflict of interest or conflict with their duty to act in the best interests of the company. This rule is so strictly enforced that, even where the conflict of interest or conflict of duty

2392-401: Is primarily the study of the power relations among a corporation's senior executives, its board of directors and those who elect them ( shareholders in the " general meeting " and employees ), as well as other stakeholders, such as creditors , consumers , the environment and the community at large. One of the main differences between different countries in the internal form of companies

2496-458: Is purely hypothetical, the directors can be forced to disgorge all personal gains arising from it. In Aberdeen Ry v. Blaikie (1854) 1 Macq HL 461 Lord Cranworth stated in his judgment that, However, in many jurisdictions the members of the company are permitted to ratify transactions which would otherwise fall foul of this principle. It is also largely accepted in most jurisdictions that this principle should be capable of being abrogated in

2600-542: Is that in America, directors usually choose where a company is incorporated and §242(b)(1) DGCL says any constitutional amendment requires a resolution by the directors. By contrast, constitutional amendments can be made at any time by 75% of shareholders in Germany (§179 AktG) and the UK (s.21 CA 2006). Countries with co-determination employ the practice of workers of an enterprise having the right to vote for representatives on

2704-565: Is that interest payments to debt is tax deductible whilst payment of dividends are not, this will incentivise a company to issue debt financing rather than preferred stock in order to reduce their tax exposure. A company limited by shares, whether public or private, must have at least one issued share; however, depending on the corporate structure , the formatting may differ. If a company wishes to raise capital through equity, it will usually be done by issuing shares (sometimes called "stock" (not to be confused with stock-in-trade)) or warrants . In

2808-439: Is that of retained profits Various combinations of financing structures have the capacity to produce fine-tuned transactions which, using the advantages of each form of financing, support the limitations of the corporate form, its industry, or economic sector. A mix of both debt and equity is crucial to the sustained health of the company, and its overall market value is independent of its capital structure. One notable difference

2912-414: Is then distributed to the members. As its names imply, applications for compulsory liquidation are normally made by creditors of the company when the company is unable to pay its debts. However, in some jurisdictions, regulators have the power to apply for the liquidation of the company on the grounds of public good, i.e., where the company is believed to have engaged in unlawful conduct, or conduct which

3016-470: Is what will happen if the firm is dissolved, if one of the partners dies, or if the firm is sold. Often, the most successful JVs are those with 50:50 partnership with each party having the same number of directors but rotating control over the firm, or rights to appoint the Chairperson and Vice-chair of the company. Sometimes a party may give a separate trusted person to vote in its place proxy vote of

3120-515: Is within his total control. WFOEs are typically limited liability enterprises. Like with EJVs, but the liability of the directors, managers, advisers, and suppliers depends on the rules which govern the Departments or Ministries which control product liability, worker safety or environmental protection. An advantage the WFOE enjoys over its alternates is enhanced protection of its know-how but

3224-654: The Tulip Bulb Bubble in the Dutch Republic ) in the 17th century, which set the development of companies in the two leading jurisdictions back by over a century in popular estimation. Companies returned to the forefront of commerce, although in England to circumvent the Bubble Act 1720 investors had reverted to trading the stock of unincorporated associations, until it was repealed in 1825. However,

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3328-486: The World Trade Organization (WTO) around 2001 has had profound effects on foreign investment. Not being a JV, they are considered here only in comparison or contrast. To implement WTO commitments, China publishes from time to time updated versions of its "Catalogs Investments" (affecting ventures) prohibited, restricted. The WFOE is a Chinese legal person and has to obey all Chinese laws. As such, it

3432-410: The board of directors , what duties directors owe to the company or when a company must be dissolved as it approaches bankruptcy. Examples of rules that members of a company would be allowed to change and choose could include, what kind of procedure general meetings should follow, when dividends get paid out, or how many members (beyond a minimum set out in the law) can amend the constitution. Usually,

3536-426: The common law of England , and has evolved significantly in the 20th century. In common law countries today, the most commonly addressed forms are: The proprietary limited company is a statutory business form in several countries, including Australia . Many countries have forms of business entity unique to that country, although there are equivalents elsewhere. Examples are the limited liability company (LLC) and

3640-439: The community , and the environment interact with one another. Whilst the term company or business law is colloquially used interchangeably with corporate law, the term business law mostly refers to wider concepts of commercial law , that is the law relating to commercial and business related purposes and activities. In some cases, this may include matters relating to corporate governance or financial law . When used as

3744-406: The limited liability limited partnership (LLLP) in the United States. Other types of business organizations, such as cooperatives , credit unions and publicly owned enterprises, can be established with purposes that parallel, supersede, or even replace the profit maximization mandate of business corporations. There are various types of company that can be formed in different jurisdictions, but

3848-464: The oil and gas industry , are "unincorporated" joint ventures that mimic a corporate entity. With individuals, when two or more persons come together to form a temporary partnership for the purpose of carrying out a particular project, such partnership can also be called a joint venture where the parties are " co-venturers ". The venture can be a business JV (for example, Dow Corning), a project/asset JV intended to pursue one specific project only, or

3952-450: The "constitution" of a company in these countries. The articles of association regulate the interaction between shareholders and the directors of a company and can be a lengthy document of up to 700,000 or so pages. It deals with the powers relegated by the stockholders to the directors and those withheld by them, requiring the passing of ordinary resolutions , special resolutions and the holding of Extraordinary General Meetings to bring

4056-459: The DOC data, foreign joint ventures of U.S. companies realized a 5.5 percent average return on assets (ROA), while those companies' wholly owned and controlled affiliates (the vast majority of which are wholly owned) realized a slightly lower 5.2 percent ROA. The same story holds true for investments by foreign companies in the U.S., but the difference is more pronounced. U.S.-based joint ventures realized

4160-640: The Founder at board meetings. Recently, in a major case the Indian Supreme Court has held that Memorandums of Understanding (whose details are not in the articles of association) are "unconstitutional" giving more transparency to undertakings. A JV is not a permanent structure. It can be dissolved when: Joint ventures are risky forms of business partnerships . Literature in business and management has paid attention to different factors of conflict and opportunism in joint ventures, in particular

4264-464: The JV's life, giving the option to the foreign investor, by holding higher equity, obtains a faster rate of return with the concurrent wish of the Chinese partner of a later larger role of maintaining long-term control. The parties in any of the ventures, EJV, CJV or WFOE prepare a feasibility study outlined above. It is a non-binding document – the parties are still free to choose not to proceed with

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4368-536: The US) covering know-how and trademarks and supply-of-equipment agreements. The minimum equity is prescribed for investment truncated, where the foreign equity and debt levels are: There are also intermediary levels. The foreign investment in the total project must be at least 25%. No minimum investment is set for the Chinese partner. The timing of investments must be mentioned in the Agreement and failure to invest in

4472-509: The United States, a company may or may not be a separate legal entity, and is often used synonymous with "firm" or "business." According to Black's Law Dictionary , in America a company means "a corporation — or, less commonly, an association, partnership or union — that carries on industrial enterprise." Other types of business associations can include partnerships (in the UK governed by the Partnership Act 1890), or trusts (such as

4576-422: The United States, has begun to discuss corporate governance in the terms of management science . While post-war discourse centred on how to achieve effective "corporate democracy" for shareholders or other stakeholders, many scholars have shifted to discussing the law in terms of principal–agent problems . On this view, the basic issue of corporate law is that when a "principal" party delegates his property (usually

4680-561: The altering or extinguishing of the corporation. If unable to discharge its debts in a timely manner, a corporation may end up on bankruptcy liquidation. Liquidation is the normal means by which a company's existence is brought to an end. It is also referred to (either alternatively or concurrently) in some jurisdictions as winding up or dissolution . Liquidations generally come in two forms — either compulsory liquidations (sometimes called creditors' liquidations ) and voluntary liquidations (sometimes called members' liquidations , although

4784-694: The amount of capital they had invested. The beginning of modern company law came when the two pieces of legislation were codified under the Joint Stock Companies Act 1856 at the behest of the then Vice President of the Board of Trade, Mr Robert Lowe . That legislation shortly gave way to the railway boom, and from there the numbers of companies formed soared. In the later nineteenth century depression took hold, and just as company numbers had boomed, many began to implode and fall into insolvency. Much strong academic, legislative and judicial opinion

4888-450: The balance of power between the board of directors and the members of the company. Authority is given or "delegated" to the board to manage the company for the success of the investors. Certain specific decision rights are often reserved for shareholders, where their interests could be fundamentally affected. There are necessarily rules on when directors can be removed from office and replaced. To do that, meetings need to be called to vote on

4992-411: The board is "classified", meaning that directors only come up for re-appointment on different years. If the board is classified, then directors cannot be removed unless there is gross misconduct. Director's autonomy from shareholders is seen further in §216 DGCL, which allows for plurality voting and §211(d) which states shareholder meetings can only be called if the constitution allows for it. The problem

5096-402: The board of directors in a company. In most jurisdictions, directors owe strict duties of good faith , as well as duties of care and skill, to safeguard the interests of the company and the members. In many developed countries outside the English speaking world, company boards are appointed as representatives of both shareholders and employees to " codetermine " company strategy. Corporate law

5200-461: The cases, the status of the formed enterprise is that of a legal Chinese person which can hire labor directly as, for example, a Chinese national contactor. The minimum of the capital is registered at various levels of investment. Other differences from the EJV are to be noted: Convenience and flexibility are the characteristics of this type of investment. It is therefore easier to find co-operative partners and to reach an agreement. With changes in

5304-552: The closest recognizable ancestors of the modern company did not appear until the 16th century. With increasing international trade, Royal charters were granted in Europe (notably in England and Holland ) to merchant adventurers. The Royal charters usually conferred special privileges on the trading company (including, usually, some form of monopoly ). Originally, traders in these entities traded stock on their own account, but later

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5408-427: The common law, whilst a shareholder is often colloquially referred to as the owner of the company - it is clear that the shareholder is not an owner of the company but makes the shareholder a member of the company and entitles them to enforce the provisions of the company's constitution against the company and against other members. A share is an item of property, and can be sold or transferred. Shares also normally have

5512-465: The company financially exposed. Often this extends to prohibiting a company from providing financial assistance for the purchase of its own shares. Events such as mergers, acquisitions, insolvency, or the commission of a crime affect the corporate form . In addition to the creation of the corporation, and its financing, these events serve as a transition phase into either dissolution, or some other material shift. A merger or acquisition can often mean

5616-541: The company through a board of directors which, in turn, typically delegates control of the corporation's day-to-day operations to a full-time executive . Shareholders' losses, in the event of liquidation, are limited to their stake in the corporation, and they are not liable for any remaining debts owed to the corporation's creditors. This rule is called limited liability , and it is why the names of corporations end with " Ltd. " or some variant such as " Inc. " or " plc ." Under almost all legal systems corporations have much

5720-412: The company to incur a loss. In many jurisdictions, where a company continues to trade despite foreseeable bankruptcy , the directors can be forced to account for trading losses personally. Directors are also strictly charged to exercise their powers only for a proper purpose. For instance, were a director to issue a large number of new shares, not for the purposes of raising capital but in order to defeat

5824-635: The company's objects , and the extent of the objects are referred to as the company's capacity . If an activity fell outside the company's capacity it was said to be ultra vires and void . By way of distinction, the organs of the company were expressed to have various corporate powers . If the objects were the things that the company was able to do, then the powers were the means by which it could do them. Usually expressions of powers were limited to methods of raising capital, although from earlier times distinctions between objects and powers have caused lawyers difficulty. Most jurisdictions have now modified

5928-420: The company's activities with the outside world. It states which objects the company is meant to follow (e.g. "this company makes automobiles") and specifies the authorised share capital of the company. The articles of association (or by-laws ) is the secondary document, and will generally regulate the company's internal affairs and management, such as procedures for board meetings, dividend entitlements etc. In

6032-414: The company's constitution. The standard of skill and care that a director owes is usually described as acquiring and maintaining sufficient knowledge and understanding of the company's business to enable him to properly discharge his duties. This duty enables the company to seek compensation from its director if it can be proved that a director has not shown reasonable skill or care which in turn has caused

6136-407: The company's management and business is the board of directors , but in many jurisdictions other officers can be appointed too. The board of directors is normally elected by the members, and the other officers are normally appointed by the board. These agents enter into contracts on behalf of the company with third parties. Although the company's agents owe duties to the company (and, indirectly, to

6240-515: The corporate constitution is by means of voting trusts , although these are relatively uncommon outside the United States and certain offshore jurisdictions . Some jurisdictions consider the company seal to be a part of the "constitution" (in the loose sense of the word) of the company, but the requirement for a seal has been abrogated by legislation in most countries. The most important rules for corporate governance are those concerning

6344-758: The country's statutes: in the US, usually the Delaware General Corporation Law (DGCL); in the UK, the Companies Act 2006 (CA 2006); in Germany, the Aktiengesetz (AktG) and the Gesetz betreffend die Gesellschaften mit beschränkter Haftung (GmbH-Gesetz, GmbHG). The law will set out which rules are mandatory, and which rules can be derogated from. Examples of important rules which cannot be derogated from would usually include how to fire

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6448-409: The court will look beyond the corporate form where the corporation is a sham or perpetuating a fraud. The most commonly cited examples are: Historically, because companies are artificial persons created by operation of law, the law prescribed what the company could and could not do. Usually this was an expression of the commercial purpose which the company was formed for, and came to be referred to as

6552-622: The death of Mao Zedong in 1976, initiatives in foreign trade began to be applied, and law applicable to foreign direct investment was made clear in 1979, while the first Sino-foreign equity venture took place in 2001. The corpus of the law has improved since then. Companies with foreign partners can carry out manufacturing and sales operations in China and can sell through their own sales network. Foreign-Sino companies have export rights which are not available to wholly Chinese companies, as China desires to import foreign technology by encouraging JVs and

6656-455: The directors' decision to bear. A Certificate of Incorporation or the Articles of Incorporation is a document required to form a corporation in the U.S. (in actuality, the state where it is incorporated) and in countries following the practice. In the US, the "constitution" is a single document. The Articles of Incorporation is again a regulation of the directors by the stock-holders in

6760-522: The economic crisis. In the UK, the right of members to remove directors by a simple majority is assured under s.168 CA 2006 Moreover, Art.21 of the Model Articles requires a third of the board to put themselves up for re-election every year (in effect creating maximum three year terms). 10% of shareholders can demand a meeting any time, and 5% can if it has been a year since the last one (s.303 CA 2006). In Germany, where employee participation creates

6864-463: The event of any inconsistency, the memorandum prevails and in the United States only the memorandum is publicised. In civil law jurisdictions, the company's constitution is normally consolidated into a single document, often called the charter . It is quite common for members of a company to supplement the corporate constitution with additional arrangements, such as shareholders' agreements , whereby they agree to exercise their membership rights in

6968-432: The exercise of their rights, minority shareholders usually have to accept that, because of the limits of their voting rights, they cannot direct the overall control of the company and must accept the will of the majority (often expressed as majority rule ). However, majority rule can be iniquitous, particularly where there is one controlling shareholder. Accordingly, a number of exceptions have developed in law in relation to

7072-471: The following major ways: In the UK , India , and in many common law countries, a joint-venture (or else a company formed by a group of individuals) must file its memorandum of association with the appropriate authority. This is a statutory document which informs the public of its existence. It may be viewed by the public at the office in which it is filed. Together with the articles of association , it forms

7176-655: The general principle of majority rule. Through the operational life of the corporation, perhaps the most crucial aspect of corporate law relates to raising capital for the business to operate. The law, as it relates to corporate finance, not only provides the framework for which a business raises funds - but also provides a forum for principles and policies which drive the fundraising, to be taken seriously. Two primary methods of financing exists with regard to corporate financing, these are: Each has relative advantages and disadvantages, both at law and economically. Additional methods of raising capital necessary to finance its operations

7280-423: The government or the public. Some of the issues in a shareholders' agreement are: There are many features which have to be incorporated into the shareholders' agreement which is quite private to the parties as they start off. Normally, it requires noтуОЧ submission to any authority. The other basic document which must be articulated is the Articles, which is a published document and known to members. This repeats

7384-567: The indicated time, draws a penalty. Co-operative Joint Ventures (CJVs) are permitted under the Sino-Foreign Co-operative Joint Ventures. Co-operative enterprises are also called Contractual Operative Enterprises. The CJVs may have a limited structure or unlimited – therefore, there are two versions. The limited-liability version is similar to the EJVs in status of permissions – the foreign investor provides

7488-539: The influence of parent control structure, ownership change, and volatile environment. Government procurement regulations, such as the Federal Acquisition Regulation (FAR) in the United States, may specify how joint ventures are to be approached as suppliers or confirm that a joint venture or other form of contractor partnering is seen as a "desirable" arrangement for supplying to government. The FAR states that The Government will recognize

7592-405: The integrity and validity of contractor team arrangements [including joint ventures], provided the arrangements are identified and company relationships are fully disclosed in an offer or, for arrangements entered into after submission of an offer, before the arrangement becomes effective. The Government will not normally require or encourage the dissolution of contractor team arrangements. Under

7696-418: The internal management of the company was being conducted properly, and the rule has now been codified into statute in most countries. Accordingly, companies will normally be liable for all the act and omissions of their officers and agents. This will include almost all torts , but the law relating to crimes committed by companies is complex, and varies significantly between countries. Corporate governance

7800-449: The issues. How easily the constitution can be amended and by whom necessarily affects the relations of power. It is a principle of corporate law that the directors of a company have the right to manage. This is expressed in statute in the DGCL , where §141(a) states, (a) The business and affairs of every corporation organized under this chapter shall be managed by or under the direction of

7904-719: The latest technologies. Under Chinese law, foreign enterprises are divided into several basic categories. Of these, five will be described or mentioned here: three relate to industry and services and two as vehicles for foreign investment. Those five categories of Chinese foreign enterprises are: the Sino-Foreign Equity Joint Ventures (EJVs), Sino-Foreign Co-operative Joint Ventures (CJVs), Wholly Foreign-Owned Enterprises (WFOE), although they do not strictly belong to Joint Ventures, plus foreign investment companies limited by shares (FICLBS), and Investment Companies through Foreign Investors (ICFI). Each category

8008-480: The law, it becomes possible to merge with a Chinese company for a quick start. A foreign investor does not need to set up a new corporation in China. Instead, the investor uses the Chinese partner's business license, under a contractual arrangement. However, under the CJV, the land stays in the possession of the Chinese partner. There is another advantage: the percentage of the CJV owned by each partner can change throughout

8112-402: The majority of funds and technology and the Chinese party provides land, buildings, equipment, etc. However, there are no minimum limits on the foreign partner which allows him to be a minority shareholder. The other format of the CJV is similar to a partnership where the parties jointly incur unlimited liability for the debts of the enterprise with no separate legal person being created. In both

8216-499: The members came to operate on joint account and with joint stock, and the new Joint stock company was born. Early companies were purely economic ventures; it was only a belatedly established benefit of holding joint stock that the company's stock could not be seized for the debts of any individual member. The development of company law in Europe was hampered by two notorious "bubbles" (the South Sea Bubble in England and

8320-400: The most common forms of company are: There are, however, many specific categories of corporations and other business organizations which may be formed in various countries and jurisdictions throughout the world. One of the key legal features of corporations are their separate legal personality, also known as "personhood" or being "artificial persons". However, the separate legal personality

8424-517: The need for greater boardroom stability, §84(3) AktG states that management board directors can only be removed by the supervisory board for an important reason ( ein wichtiger Grund ) though this can include a vote of no-confidence by the shareholders. Terms last for five years, unless 75% of shareholders vote otherwise. §122 AktG lets 10% of shareholders demand a meeting. In the US, Delaware lets directors enjoy considerable autonomy. §141(k) DGCL states that directors can be removed without any cause, unless

8528-705: The order and was separate and distinct from him. And in Macaura v. Northern Assurance Co Ltd a claim under an insurance policy failed where the insured had transferred timber from his name into the name of a company wholly owned by him, and it was subsequently destroyed in a fire; as the property now belonged to the company and not to him, he no longer had an "insurable interest" in it and his claim failed. Separate legal personality allows corporate groups flexibility in relation to tax planning, and management of overseas liability. For instance in Adams v. Cape Industries plc it

8632-435: The partnership, all business forms are designed to provide limited liability to both members of the organization and external investors. Business organizations originated with agency law , which permits an agent to act on behalf of a principal, in exchange for the principal assuming equal liability for the wrongful acts committed by the agent. For this reason, all partners in a typical general partnership may be held liable for

8736-453: The position by statute, and companies generally have capacity to do all the things that a natural person could do, and power to do it in any way that a natural person could do it. However, references to corporate capacity and powers have not quite been consigned to the dustbin of legal history. In many jurisdictions, directors can still be liable to their shareholders if they cause the company to engage in businesses outside its objects, even if

8840-502: The process of obtaining Royal charters was insufficient to keep up with demand. In England there was a lively trade in the charters of defunct companies. It was not until the Joint Stock Companies Act 1844 that the first equivalent of modern companies, formed by registration, appeared. Soon after came the Limited Liability Act 1855 , which in the event of a company's bankruptcy limited the liability of all shareholders to

8944-474: The project. The feasibility study must cover the fundamental technical and commercial aspects of the project, before the parties can proceed to formalize the necessary legal documentation. The study should contain details referred to earlier under Feasibility Study (submissions by the Chinese partner). There is basic law of the PRC concerning enterprises with sole foreign investment controls, WFOEs. China's entry into

9048-549: The rules applicable to public procurement in the European Union , public bodies may insist that suppliers intending to provide goods and services through a joint partnership accept joint liability for the execution of the contract. According to a 2003 report of the United Nations Conference on Trade and Development , China was the recipient of US$ 53.5 billion in direct foreign investment, making it

9152-616: The same legal rights and obligations as individuals. In some jurisdictions, this extends to allow corporations to exercise human rights against real individuals and the state, and they may be responsible for human rights violations. Just as they are "born" into existence through its members obtaining a certificate of incorporation , they can "die" when they lose money into insolvency . Corporations can even be convicted of criminal offences, such as corporate fraud and corporate manslaughter . Although some forms of companies are thought to have existed during Ancient Rome and Ancient Greece ,

9256-440: The same proportion as the increase in registered capital. The JV contract accompanied by the articles of association for the EJV are the two most fundamental legal documents of the project. The Articles mirror many of the provisions of the JV contract. In case of conflict the JV document has precedence. These documents are prepared at the same time as the feasibility report. There are also the ancillary documents (termed "offsets" in

9360-442: The shareholder's capital, but also the employee's labour) into the control of an "agent" (i.e. the director of the company) there is the possibility that the agent will act in his own interests, be "opportunistic", rather than fulfill the wishes of the principal. Reducing the risks of this opportunism, or the "agency cost", is said to be central to the goal of corporate law. The rules for corporations derive from two sources. These are

9464-435: The shareholders agreement as to the number of directors each founder can appoint to the board of directors; whether the board controls or the founders; the taking of decisions by simple majority (50%+1) of those present or a 51% or 75% majority with all directors present (their alternates/ proxy ); the deployment of funds of the firm; extent of debt; the proportion of profit that can be declared as dividends; etc. Also significant

9568-456: The shareholders) to exercise those powers for a proper purpose, generally speaking third parties' rights are not impugned if it transpires that the officers were acting improperly. Third parties are entitled to rely on the ostensible authority of agents held out by the company to act on its behalf. A line of common law cases reaching back to Royal British Bank v Turquand established in common law that third parties were entitled to assume that

9672-496: The shareholders, including debt, is equal to the number of shares purchased by each partner. Company law While the minute nature of corporate governance as personified by share ownership , capital market , and business culture rules differ, similar legal characteristics and legal problems exist across many jurisdictions. Corporate law regulates how corporations , investors , shareholders , directors , employees , creditors , and other stakeholders such as consumers ,

9776-503: The so-called Holzmüller-Doktrin . Probably the most fundamental guarantee that directors will act in the members' interests is that they can easily be sacked. During the Great Depression , two Harvard scholars, Adolf Berle and Gardiner Means wrote The Modern Corporation and Private Property , an attack on American law which failed to hold directors to account, and linked the growing power and autonomy of directors to

9880-425: The statute will set out model articles , which the corporation's constitution will be assumed to have if it is silent on a bit of particular procedure. The United States, and a few other common law countries, split the corporate constitution into two separate documents (the UK got rid of this in 2006). The memorandum of association (or articles of incorporation ) is the primary document, and will generally regulate

9984-600: The support for M&M through license agreement and continue to be supplier of key components. Mahindra Renault Limited utilized Mahindra's manufacturing plant in Nashik , Maharashtra with a capacity of 50,000 vehicles per year. Renault-Nissan have invested Rs 4,500 Crores to build a manufacturing plant in Chennai which will have a capacity of 400,000 vehicles per annum divided equally between Mahindra Renault Limited and Nissan Motor India Private Limited . The Renault Logan

10088-402: The transactions are still valid as between the company and the third party. And many jurisdictions also still permit transactions to be challenged for lack of " corporate benefit ", where the relevant transaction has no prospect of being for the commercial benefit of the company or its shareholders. As artificial persons, companies can only act through human agents. The main agent who deals with

10192-447: The two types having different voting and/or economic rights. It might provide that preference shareholders shall each receive a cumulative preferred dividend of a certain amount per annum, but the ordinary shareholders shall receive everything else. Corporations will structure capital raising in this way in order to appeal to different lenders in the market by providing different incentives for investment. The total value of issued shares in

10296-426: The world's largest recipient of direct foreign investment for the first time, to exceed the US. Also, it approved the establishment of nearly 500,000 foreign-investment enterprises. The US had 45,000 projects by 2004 with an in-place investment of over 48 billion. Until recently, no guidelines existed on how foreign investment was to be handled due to the restrictive nature of China toward foreign investors. Following

10400-470: The wrongs committed by one partner. Those forms that provide limited liability are able to do so because the state provides a mechanism by which businesses that follow certain guidelines will be able to escape the full liability imposed under agency law. The state provides these forms because it has an interest in the strength of the companies that provide jobs and services therein, but also has an interest in monitoring and regulating their behaviour. Members of

10504-446: Was held that victims of asbestos poisoning at the hands of an American subsidiary could not sue the English parent in tort. Whilst academic discussion highlights certain specific situations where courts are generally prepared to " pierce the corporate veil ", to look directly at, and impose liability directly on the individuals behind the company; the actual practice of piercing the corporate veil is, at English law, non-existent. However,

10608-542: Was launched 2007 and became the Mahindra Verito after the ending of the joint venture in 2010. Mahindra Renault Limited uses Mahindra & Mahindra Limited 's network for the sales and service of Renault branded vehicles in India. It currently has more than 140 dealerships across 125 cities in 24 states and 3 Union Territories of India . This article about an automotive industry corporation or company

10712-510: Was not confirmed under English law until 1895 by the House of Lords in Salomon v. Salomon & Co. Separate legal personality often has unintended consequences , particularly in relation to smaller, family companies . In B v. B [1978] Fam 181 it was held that a discovery order obtained by a wife against her husband was not effective against the husband's company as it was not named in

10816-535: Was opposed to the notion that businessmen could escape accountability for their role in the failing businesses. The last significant development in the history of companies was the decision of the House of Lords in Salomon v. Salomon & Co. where the House of Lords confirmed the separate legal personality of the company, and that the liabilities of the company were separate and distinct from those of its owners. The law of business organizations originally derived from

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