Book Description

This historic book may have numerous typos and missing text. Purchasers can usually download a free scanned copy of the original book (without typos) from the publisher. Not indexed. Not illustrated. 1881 edition. Excerpt: ... t (2) Private, i.e., companies intended to be carried on without any such appeal. In the following pages it is proposed to deal exclusively with the conversion of business concerns into private companies, and, unless otherwise expressed, the word company signifies a company limited by shares. Before describing the mode of conversion we shall proceed to point out some of the inducements which commonly lead to such conversions. Limited Liability. There can be no doubt that the great inducement to conversion is the power which the Act gives to a person, or to a firm, converting his or their business into a private company, of trading with limited liability. It will be borne in mind that, at common law, a person who goes into business, whether on his own account or as partner in a firm, is liable for all the debts incurred in the business, to the full extent of his means. He may be held liable even for the fraud, negligence, or other wrongful act of his partner or clerk in connection with the business. "If," says the law, "you want to trade you must risk all you have." The law will not allow such a person to fix a limit to his liability. For example--(a) Suppose a man to have 20,000 invested in his business and 5000 otherwise invested. He desires to limit his liability to the 20,000, so that if the business fails the 5000 will at any rate remain intact. He cannot. (b) Suppose a man with a fortune of 50,000 to be partner in a concern in which he has invested 5000. He desires to limit his liability to the 5000. He cannot. If the firm fails the whole of his fortune may be swept away to pay the creditors, even though the failure This popular division is now well recognised even in the Courts of law: ...