ABSTRACT
A company is a separate legal person whose members have limited liability so that their only obligation to contribute to the assets of the company is to pay the amount agreed to be paid on the allotment of their shares. Once their shares are ‘fully paid’, no further liability is owed to the company in respect of those shares. In this sense, the liability of members is limited and they cannot, in the normal course of events, be required to satisfy the debts of the company. In law, a division of power exists within every company; day to day management is in the control of the board of directors and major or constitutional decisions are reserved to shareholders by statute or the articles of association. The vast majority of companies are private companies limited by shares which have a small group of shareholders, some or all of whom are also involved in the day to day business of the company in some manner, either as directors, managers or employees. At the other end of the spectrum is a relatively small number of public companies limited by shares, of which about 3,500 have their shares listed on the Official List and are admitted to trading on the main market of the Stock Exchange. Companies whose shares are listed on the Official List are termed quoted companies. Broadly speaking, there are three categories of company: public companies, whose shares are listed on an investment exchange; public companies, whose shares are not so listed; and private limited companies. From the accounting perspective, the distinction determines the level of regulation that applies. Regulation, at all levels, exists as a consequence of the special nature of companies, the fact that they are legal persons, the need for accountability which arises from the legal and practical division of power and the fact that creditors cannot pursue members or officers personally for the debts of their company.
