By Stephen Griffin
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Additional resources for Company Law: Fundamental Principles
Accordingly, a company is said to have perpetual succession. The legal rights and duties of shareholders, in respect of their relationship with the company and fellow shareholders, are determined by the company’s constitution (see Chapter 5). Despite the fact that a person may have exclusively owned the property and assets of a business prior to its incorporation as a registered company, the property vested in the company belongs to the company; a shareholder has no right of ownership in respect of the company’s property or assets.
The chartered joint stock company Chartered joint stock companies were developed in the seventeenth century, largely as a result of the expansion in the world shipping trade, examples of which included the East India Company formed as a joint stock company in 1612, the Massachusetts Bay Company formed in 1629 and the Hudson’s Bay Company formed in 1670. A sophisticated form of a partnership concern, the joint stock company was created by royal charter and comprised an association of members; each member contributed capital towards speciﬁc trade ventures.
Re George Newman & Co  1 Ch 674 and Farrar v Farrar (1889) 40 Ch D 395). The facts of the Salomon case were as follows. The proprietor of a small but successful leather business, a Mr Salomon, incorporated the business as a limited company in accordance with the registration provisions contained within the Companies Act 1862. Section 6 of the 1862 Act provided that seven or more persons together could incorporate a business, provided that it was associated for a lawful purpose. The seven subscribers to A Salomon Ltd were Mr Salomon, his wife and their ﬁve children.