In civil-law countries, company law consists of statute law; in common-law countries, it consists partly of the ordinary rules of common law and equity and partly statute law. Two fundamental legal concepts underlie the whole of company law: the concept of legal personality and the theory of limited liability. Nearly all statutory rules are intended to protect either creditors or investors. There are various forms of legal business entities ranging from the sole trader, who alone bears the risk and responsibility of running a business, taking the profits, but as such not forming any association in law and thus not regulated by special rules of law, to the registered company with limited liability and to multinational corporations. In a partnership, members "associate," forming collectively an association in which they all participate in management and sharing profits, bearing the liability for the firm's debts and being sued jointly and severally in relation to the firm's contracts or tortuous acts. All partners are agents for each other and as such are in a fiduciary relationship with one another.
Limited-liability Companies or Corporations
The company or corporation, unlike the partnership, is formed not simply by an agreement entered into between its first members; it must also be registered at a public office or courts designated by law or otherwise obtain the official acknowledgment of its existence. Under English and American law the company or corporation is incorporated by filing the company's constitution (memorandum and articles of association, articles or certificate of incorporation) signed by its first members at the Companies Registry in London or, in the United States, at the office of the state secretary of state or corporation commissioner.
THE LEGAL FRAMEWORK GOVERNING BRITISH [companies overview]
In Britain, the vast majority of companies are incorporated under the Companies Act 1985. The Act creates a distinction between private companies and public limited companies. Only a tiny fraction of companies incorporated in Britain are registered as public limited companies.Nevertheless, from a corporate governance perspective, they are of primary importance. A private company cannot apply to have its equity traded on a stock exchange, and debates about corporate governance in the United Kingdom have focused almost exclusively on companies that are publicly quoted.
In the United Kingdom, most public companies that have their shares quoted for trading have been admitted to the Official List maintained by the Stock Exchange and are known as "listed" companies. A listed company is obliged to comply with the Listing Rules of London's Stock Exchange (commonly referred to as the "Yellow Book").The Yellow Book regulates the conduct of key transactions and imposes substantial disclosure obligations on listed companies.