BRIEF HISTORY OF COMPANY LAW

LIST OF NOTIFICATIONS REPRODUCED IN THE <!--[if gte mso 9]> BRIEF HISTORY OF COMPANY LAW By Rana Aneel Arshed, Advocate The word `Company' is an amalgamation of the Latin word `Com' meaning "with or together" and `Pains' meaning, "bread". Originally, it referred to a group of persons who took their meals together. A company is nothing but a group of persons who have come together or who have contributed money for some common person and who have incorporated themselves into a distinct legal entity in the form of a company for that purpose. Under Halsbury's Laws of England, the term "company" has been defined as a collection of many. individuals united into one body under special domination, having perpetual succession under an artificial form and vested by the policies of Law with the capacity of Acting in several respects as an individual, particularly for taking and granting of property, for contracting obligation and for suing and being sued, for enjoying privileges and immunities in common and exercising a variety of political rights, more or less extensive, according to the design of its institution or the powers upon it, either at the time of its creation or at any subsequent period of its existence. "They (Corporations) are not novelties. They are institutions of very ancient date." {Marshal (J) Bank of US v. Dandridge. 12 wheat (25 US 64, 92)}. We can divide History of .Company Law in following different eras: 1. Until 1720 2. Era from 1720 to 1825 3. Era from 1825 to 1855 4. Era from 1855 to 1908 5. Era from 1908 to 1948 5. Present Era (from 1948) 1. Until 1720:-‑ The earliest trade associations existed in medieval times. They were guilds of Merchants. Trading on joint account was accomplished through forms of Partnership known as COMMENDA and the SOCIETAS. The COMMENDA was a Partnership in which one of partners supplied the capital (in money or goods) without personally taking part in the management of the Venture. (Modern sleeping partnership). Societas was a partnership in which all partners were equally responsible for liabilities and profits. (This kind of partnership became Company Law). Trading Company enjoying corporate status became companies. At that time there were two methods of incorporation, either By character By special Act of Parliament At common law the Crown has always had the right of granting charters of incorporation non-trading Companies such as the always society and the institute of chartered accountants, are the kind of company now incorporated by charter but trading companies had in the past been formed in this way. The right was first used for creating commercial corporations at the end of the 16th and the beginning of 17th centuries, when such companies as the 1. Levant Company, 2. The East India Company (1600), 3. The Hudson's Bay Company, 4. The Notorious South, Sea (1711) Company (afterwards incorporated by Special Act of Parliament) were incorporated. Charters of incorporation governmental powers over foreign stations. The Crown, too, benefited. By the end of the 17th century, charters of incorporation became prized. Such a charter conferred certain advantages e.g.:‑ i. The Company could sue outsider in its own name. ii. A distinction was drawn between the Company's acts and those of its members. iii. Its shares could be readily transferred. But Company did not possess the main advantage of modern companies i.e. "Limitation of members liability. In the 2nd half of the 17th century the large monopolistic companies began to decline and there was a boom in the formation of companies concerned with domestic trade. 2. Era from 1720 to 1825:-‑ Early in 1720 there was a boom in share prices. Many stock ventures had no charter or had obtained a charter for quite different purposes. In April 1719 a Committee of House of Commons, which had been appointed to investigate "bubbles", reported, recommending legislation to prevent the misuse of charters and to restrain the rush of highly speculative undertakings. This led to the passage of the famous Bubble Act. It had been passed by a "Panic-stricken" Parliament. The Bubble Act, 1720 was really enacted for the benefit of the South Sea Company (1711), as it was expected that the suppression of other Companies would result in more capital being available for investment in it. Bubble Act prohibited unincorporated trading companies from acting or purporting to act as corporation. It further prohibited the use of charters, for purposes other than those for which they were granted. In addition its (Sec 18) said, brokers dealing in securities of illegal companies were liable to penalties. Proceedings by SCIRE FACIAS were started under the Bubble Act against 4 Chartered companies, except against South Sea Company. The shares of all companies, including the South Sea Company, fell within a few months from the ridiculously high prices to which speculation had been driven them to equally ridiculously low price. The effect of Bubble Act was to suppress business associations and make it difficult for them to obtain corporate form. The state of the market in short term and the Bubble Act in the long term made it impossible for companies to raise capital by invitations to public, and for next 100 years capital was obtained wholly by the private solicitation of affluent persons. Although the Bubble Act held up the development of a capital market for a century, it did not destroy the unincorporated Company. Between the passing of the Bubble Act and its repeal on 1825, various types of `Partnerships' were formed; particularly common was the Deed of Settlement Company, which made use of Trust Law. The rights and obligations of members were settled in the deed. Trustees, who could be persons other than the Directors, were appointed to hold the property of those who were parties to the deed, while the business was managed by Directors. Disputes were referred to arbitration or to counsel for advice. Deed of Settlement therefore, contained detailed rules concerning the management of the Company. These companies were recognized by the Court of Chancery as possessing most of the characteristics of companies. However, these associations were still only partnerships and the members did not have limited liability. Indeed, many of these Deeds of Settlement dating from the late 18th and early 19th centuries, were as comprehensively and soundly framed as the best modern Memoranda and Articles of Association, and the familiar ring of many of their clauses leaves little as to origin of the standard clauses we use today. 3. Era 1825 to 1855:- (Formative Years) The history of modern Company Law begins in 1825.This period also known as formative years. In this era following developments took place: (i) Repeal of the Bubble Act, 1825. (ii) Chartered Companies Act, 1837 (iii) Joint Stock Companies Act, 1844 (i) Repeal of the Bubble Act, 1825:-- In the 19th Century, the difficulties, obscurities and deficiencies of the law led to parliamentary action. The Bubble Act was repealed in 1825 and the Crown was given the power to grant charters, which declared the extent of member's liability. When the Bubble Act was repealed, three main types of companies were known:-- (i) Companies incorporated by Royal Charter. (ii) Companies incorporated by Special Act of Parliament. (iii) Deed of Settlement Companies. Of these, the former two types have survived to the present day but 3rd one is no longer in use. (ii) Chartered Companies Act, 1837:-‑ In 1837, the Chartered Companies Act empowered the Crown to grant letters patent, i.e. to grant the privileges of incorporation without actually granting a charter. However, such associations were not regarded as corporate bodies and although members liability was limited, any judgment against the Company could be enforced against every member until 3 years after his membership has ceased. (iii) Joint Stock Companies Act, 1844:-‑ In 1844 as the result of Gladstone's initiative as President of the Board of Trade, Parliament passed the Joint Stock Companies Act, 1844, which prohibited large unincorporated companies and for the first time admitted the creation of Joint Stock Companies by registration without the need to obtain a royal charter. The office of Registrar provided for the documents registered with him which included the Deed of Settlement and annual returns. The Company had right to transfer its shares. However, this Act, retained member liability as described in Chartered Companies Act, 1837. In addition, this Act drew a distinction between companies and partnership by requiring registration as companies of all partnership with more than 25 members (now 20). The period from 1825 to 1855 saw considerable developments in the rules of common law and equity relating to companies. In equity the fiduciary duties of I. Promoters in [Hichens v. Congreve (1828) 4 Russ 562], and 2. Duties of Directors in [Benson v. Heathorn (1842) 1 Y & C Ch Case 326] to their companies were established. 4. Period from 1855 to 1908:-‑ During this period following Acts had been passed by the Parliament in the field of Company Law: (i) Limited Liability Act, 1855 (ii) Joint Stock Companies Act, 1956 (iii) Companies Act, 1862 (iv) The Indian Companies Act, 1866 (v) Companies Act, 1867 (vi) The Indian Companies Act, 1882 (vii) The Directors Liability Act, 1890 (viii) The Companies (winding-up) Act, 1890 (ix) The Companies (Memorandum of Association) Act, 1890 (x) The Companies Act, 1900 (xi) The Companies Act, 1907. (i) Limited Liability Act, 1855:--‑ After Joint Stock Companies Act, 1844, the next step was the attainment of limited liability for Registered Companies. Persons investing in such companies did so at the risk of their fortunes. The result was at least a partial divorce between capital and enterprise. By 1854 the debate was turning on fundamental issues. Some companies enjoyed limited liability under private Acts of Parliament or Charters; others were denied it. Limited liability would open fresh field to private investments. After considerable parliamentary opposition in 1854, the Government in 1855 rushed through a bill for limited liability despite a protest from the Lords. By the Limited Liability Act 1855, a company could secure the limited liability of its members to the nominal amount of the shares held by them respectively upon certain conditions, the most important of which were:-‑ That the Company should have at least 25 members holding at least 3/4 of the nominal capital, each member having paid up to at least 25%. That the word "Limited" was the last component of the Company's name. That the auditor of the Company should be approved by the Board of Trade. (ii) Joint Stock Companies Act, 1856:-‑ The Act of 1856 marks the beginning of the new era in Company Law. This Act was revised form of Joint Stock Companies Act, 1844 and it superseded the Limited Liability Act, 1855. It introduces the modern constitution of the Company, requiring a Memorandum of Association and a set of Articles of Association, the Company could register articles or adopt the model articles attached to the Act. These Constitutional documents, on payment of a fee, were to be registered and a certificate of incorporation to be given, and thereupon the Company was at liberty at once to commence business. The principle of the Act was to allow the greatest freedom both in the formation and working of a Limited Liability Company. (iii) The Companies Act, 1862:-‑ It was the first modern Companies Act, and the first enactment to bear the short title "Companies Act", described by Sir Francis Palmer as the "Magna Carta of Cooperative enterprise". It contained over 200 sections and consolidated the Joint Stock Companies Act, 1856 with a consideration number of other Acts, amongst them 5 Acts passed between 1856 and 1862. This was a first great consolidation Act. It introduced: The model set of articles which a Company could adopt instead of registering its own articles appeared in Table A of the First Schedule. Companies limited by guarantee and unlimited companies were admitted, and the provisions relating to winding-up were elaborated. The Companies Act, 1862 was amended by 17 later Acts. (iv) The Indian Companies Act, 1866:-‑ This was first Act for companies in British India, based upon the Companies Act, 1862. (v) The Companies Act, 1867:-‑ This Act contained a power to reduce share capital. (vi) The Indian Companies Act, 1882:-‑ It was second Act for companies in British India. (vii) The Directors Liability Act, 1890:-‑ This Act introduced the principle of the liability of the Directors to pay compensation to persons who have been induced to take shares on the strength of false statement in the prospectus. (viii) The Companies (winding-up) Act, 1890:-‑ The provisions relating to winding-up of companies were introduced by this Act. (ix) The Companies (Memorandum of Association) Act, 1890:-‑ This Act enabled the Company to alter its object clause in M.O.A. for some purpose, with the leave of Court, after a special resolution had been passed by the members in general meeting. (x) The Companies Act, 1900:-- The Companies Act, 1900 was first Act, which contained provisions relating to the contents of prospectuses, the compulsory audit of the Company's accounts and the registration of charges with the Registrar. (xi) The Companies Act, 1907:-‑ This Act of 1907 was based upon Loreburn Report 1906 (Cmd. 3056). It introduced the Private Company, which could be incorporated with only two members, defined under sec. 37(1) of this Act. 5. Period after 1908 to 1948:-‑ In this era of Company Law following Reports and enactments came before world by British Parliament: (i) The Companies Act, 1908 (ii) The Companies Act, 1913 (iii) The Indian Companies Act, 1913. (iv) The Companies (Particulars of Directors) Act, 1917 (v) Wrenbury Committee Report 1918 (vi) The Companies Act, 1928 (vii) Greene Committee Report 1926 (Cmd. 2657) (viii) The Companies Act, 1929 (ix) The Cohen Committee Report 1945 (CMD. 6659) (x) The Companies Act, 1947 (xi) The Companies Act, 1948 (i) The Companies Act, 1908:-- (Consolidation) Although the Act of 1862 marked considerable progress, the modern company was still in its experimental stage. Following the recommendation of the Loreburn Committee, which were published in 1906 (Cmd. 3052), Parliament passed the Companies Act, 1907, which incorporated many important alternations of the law. The Act of 1907 was then consolidated with that of 1862, the Companies Acts passed between 1862 and 1908 and other relevant enactments, in the Companies (Consolidation) Act 1908, the second great companies consolidation enactment. The outstanding feature of the Company reform culminating in the Act of 1908 was the introduction of the private company which was not required to file its balance-sheet with its annual return because, in the words of the Loreburn Report, as they do not appeal to the public for subscription, there is no need for publishing their private affairs, and the disclosure involved in the filing of the documents would, or might, seriously prejudice their interest". Apart thereform, the general tendency of the 1908 reform was greatly to strengthen the requirements relating to prospectuses, the publication of accounts and the registration of charges and mortgages. The Reform of 1908 set the pattern for the Company Law Reforms of 1929 and 1948. (ii) The Companies Act, 1913:-‑ This Act made some amendments in previous one i.e. The Companies (Consolidation) Act, 1908. (iii) The Indian Companies Act, 1913:-‑ In 1913 the British Government introduced new Companies Act in British India. This Act was copy of the Companies (Consolidation) Act, 1908. (iv) The Companies (Particulars of Directors) Act, 1917:-‑ By this Act, the British Parliament introduced new provisions relating to the Particulars of Directors of Companies in Company Law. (v) The Wrenbury Committee Report 1918:-‑ Wrenbury Committee presented its report before Parliament in 1918. Report dealt only with matters limited in scope and was not acted upon. (vi) Greene Committee Report 1926;- (Cmd. 2657) Committee' presented its recommendations before parliament in 1926. The approach of the Greene Committee to the reform of Company Law was cautious, as is demonstrated by the numerous topics, which the Committee considered, and which it recommended not to change but which had to be altered subsequently, e.g. group accounts, private companies as subsidiaries of public companies and share hawking. (vii) The Companies Act, 1928:-‑ Parliament adopted most of Greene Committee's suggestions and passed Amending Companies Act, 1928. (viii) The Companies Act, 1929:-‑ The Companies (Consolidation) Act, 1908 was amended by the Companies Act, 1913, the Companies (Particulars of Directors) Act, 1917, and the Companies Act, 1928. The Companies Act, 1929, which came into operation on 1st November, 1929 repealed those Acts and certain other enactments. It was founded upon the recommendations of Greene Committee. It provided for the first time for the alteration of objects, and laid down provisions as to the matters to be stated in prospectus. It also prohibited the provision by a company of financial assistance for the purchase of its own shares and introduced the principle of redeemable preference shares and other matters relating to the capital of a company, which are today common place. It provided provisions on the duties of the auditors of companies. It also gave the Board of Trade power to investigate the affairs of a company. (ix) The Cohen Committee Report 1945:-- (Cmd. 6659) On 26th of June, 1943, the President of the Board of Trade appointed a Committee under the chairmanship of Mr. Justice Cohen (as he then was) whose terms of reference were "to consider and report what major amendments are desirable in the Company Act, 1929 and in particular, to review the requirements prescribed in regard to the formation and affairs of companies and the safeguards afforded for investors and for the public interest." The Committee presented its report on 11th June, 1945. The Reforms suggested by the Cohen Committee were resolution and far-reaching. In the Words of the Report the aim of the Reform was two-fold. First, "Without placing unreasonable fetters upon business which is conducted in an efficient and honest manner,-----to ensure that as much information as is reasonable required shall be made available both to share holders and to the creditors of the companies concerned and to the general public". And secondly, "to find means of making it easier for shareholders to exercise a more effective general control over the management of their companies." (x) The Companies Act, 1947:-‑ Following on the Cohen Report, the Companies Act, 1947, which received the Royal Assent on 6th of August, 1947, amended the 1929 Act, mainly on the lines of recommendations contained in that report. 6. Present Era from 1948:-‑ In present era following some important Reports and Acts have been presented by the Parliaments or Governments of British, India and Pakistan within their jurisdictions: (i) The Companies Act, 1948 (ii) The Companies Act, 1956 (Indian) (iii) The Jenkins Report 1962 (Cmd. 1749) (iv) The Companies Act, 1967 (v) The Companies Act, 1976 (vi) The Companies Act, 1980 (vii) The Companies Act, 1981 (viii) The Cork Committee Report 1982 (Cmd. 8558) (ix) The Companies Ordinance, 1984 (Pakistan) (x) The Gower Report 1984 (xi) The Companies Act, 1985 (xii) The Companies Consolidation (Consequential Provisions) Act, 1985 (xiii) Companies (Table A to F) Regulations 1985 (xiv) Insolvency Act, 1985 (xv) Insolvency Act, 1986. Company Directors Disqualification Act, 1986. (xvi) The Companies Act, 1989 (xvii) The Companies (Single Member Private Limited Company) Regulation, 1992 (xviii) The Companies (Amendment) Ordinance, 2002 (Pakistan) (xix) Companies (Single Member Private Limited Companies) Rules, 2003 (i) The Companies Act, 1948:-‑ This Act provided basis for the present legislation. It contained over 450 sections. It was founded on the report of the Cohen Committee, which was published in 1945. The great majority of the recommendations of that Committee was enacted by Parliament in the Companies Act, 1947, which was consolidated with the Companies Act, 1929 and other relevant enactments in the Companies Act, 1948. The outstanding feature of the 1948 Reform was its emphasis on the public accountability of the Company. The 1948 Act, for the first time required the auditor of a public or a private company to have a professional qualification. (ii) Bhaba Committee Report 1952 and the Companies Act, 1956:-- (Indian) In 1956, at last Indian Parliament passed first Companies Act after its independence (from British) known as the Companies Act, 1956 on the basis of Bhaba Committee Report 1952 followed by some amendments in 1960, 1963, 1965, 1974, Company Secretaries Act 1980, the Companies (Amendment) Act, 1988, the Company (Amendment) Ordinance, 1999 and The Companies (Amendment) Act, 2000 etc. This Act abolishes following Acts:- The Indian Companies Act, 1866 The Indian Companies Act, 1882 The Indian Companies Act, 1913 The Registration of Transferred Companies Ordinance, 1942 (iii) The Jenkins Report 1962: - (Cmd. 1749) On 10th of December, 1959, the President of the Board of Trade appointed a Committee under the chairmanship of Lord Jenkins whose terms of reference were "to review and report upon the provisions and working of the Companies Act, 1948, the prevention of Fraud (Investments) Act, 1958, to consider in the light of modern conditions and practices, including the practice of take-over bids, what should be the duties of Directors and the rights of shareholders; and generally to recommend what changes in the law are desirable. The Committee's Report was submitted on 30th of May, 1962 and published in June, 1962 (Cmd. 1749). The Committee took the view that, on the whole the existing law worked well, except in relation to the disclosure of information by companies. This Report provided base for next the Companies Act, 1967. (iv) The Companies Act, 1967:-‑ The Companies Act, 1967 adopted and considerably extended in some respects, the recommendations of the Committee as to disclosure. The Act abolished the exempt private Company and required all limited Companies to file accounts. The powers of the Department of Trade to investigate the affairs of a company were extended and in order to discourage the irresponsible formation of new companies, the fees on registration were substantially increased. A large proportion of the Act was devoted to special provisions relating to insurance companies. (v) The Companies Act, 1976: This Act attempted to remedy a variety of defects which had become evident in the application of the Acts of 1948 and 1967. Three innovations introduced by the Act. First: It was made a criminal offence for a Director of the Company knowingly or recklessly to make a false statement to the auditor. Secondly: A Company with shares listed at the Stock Exchange was given right to compel the registered holders of its voting shares to disclose the beneficial interests in those shares. Thirdly: The Court was given power to disqualify aperson, who was persistently in default in relation to the requirements of the Companies Act, from being connected with the management of a company for a period not exceeding 5 years. In addition, companies with registered offices in Wales were authorized to use the Welsh Language in their names and company document. (vi) The Companies Act, 1980:-‑ This Act provided for the time a major distinction between public and private companies, including minimum financial requirements for the public companies It also contained new provisions relating to the issuing of shares and the payment for them. Payments of dividends become the subject of statutory rules. Insider dealing was made a criminal offence; the shareholders were given a right of pre-emption in the case of new issues of shares in specified circumstances. The protection of the minority shareholders was extended by enabling them to petition the Court for relief if their position was unfairly prejudiced. (vii) The Companies Act, 1981:-‑ This Act gave effect in the U.K. to the provisions of the Fourth EEC Directive on Company Law Harmonisation of July 25, 1978. Under this Act, the Company was authorized, subject to certain conditions, to issue redeemable equity shares and to purchase its own share. The provisions relating to the disclosure of interest in shares and investigations into shareholders and the affairs of the Company were strengthened. The 1981 Act abolished the registered business names, which had to be kept under the Registration of Business Names Act, 1916. (viii) The Cork Committee Report 1982:-‑ In January, 1977, a wide range of insolvency law and practice was set up by the then Secretary of State for Trade and Industry, Mr. Edmund Dell, under the chairmanship of Sir Kenneth Cork. Its terms of reference included consideration of "less formal procedures as alternatives to appropriate circumstances". Its magisterial Report, published in June, 1982 (Cmd. 8558) including proposals for Revised Procedures. It provided Basis for next Insolvency Act, 1985. (ix) The Companies Ordinance, 1984 (Pakistan):-‑ This is first main enactment in field of Company Law in Pakistan. This Ordinance abolished all previous Acts i.e. the Companies Act, 1913, the Companies Act, 1948 etc. Ordinance consists of 514 sections with 8 Schedules including at least 154 provisions. Before this Ordinance Modaraba Companies were also introduced by President of Pakistan Mr. Zia-ul-Haq (late) through Ordinance, 1980. (x) Gower Report 1984:-‑ This report presented by Gower in 1984 in British Parliament provided basis for next principal Companies Act, 1985 for England. (xi) The Companies Act, 1985:-‑ Now a days this Act is playing a principal role in British Company Law. This is the most substantial Act ever passed. It has 747 sections and 25 Schedules, but it is arranged in a very logical manner and its provisions are expressed in as straightforward language as the subject allows. (xii) The Companies Consolidation (Consequential Provisions) Act, 1985:-‑ This Act makes provision for transactional matters, savings and repeals, and the consequential amendment of other Acts. The consolidation of main company legislation is supported by the consolidation and amendment of subordinate legislation. This was necessary because references to the main enactments became out of date. (xiii) Companies (Table A to F) Regulations, 1985:-‑ Six new sets of regulations came into operation on 1st July, 1985. The most important of these is the Companies (Table A to F) Regulations, 1985. It contains model sets of articles for the companies. These were previously appended to the Companies Act, 1948. The new table A (the model form for companies limited by shares) is based on recommendations of the Law Societies, and it is quite different form the Table A in the 1948 Act. (xiv) Insolvency Act, 1985:‑‑ This made important changes to the rules concerning Company liquidation and receivership. It also introduced a completely new administration procedure as an alternative to liquidation or receivership. Although the Companies Act, 1985 had only been in force for a few months a number of its provisions were repealed by the Insolvency Act, 1985. (xv) Insolvency Act, 1986 Company Directors Disqualifica tion Act, 1986:‑‑ Insolvency Act did not change the law, it merely consolidated most of the insolvency provisions in the Companies Act, 1985 and the Insolvency Act, 1985, and it repealed the Insolvency Act, 1985. Provisions connected with the disqualification of Directors of insolvencies are contained in a short separate Act. The Company Directors Disqualification Act, 1986. (xvi) The Companies Act, 1989:‑‑ It was passed to implement the EC Seventh Directive on consolidated accounts and the Eighth Directive on the regulation and qualification of auditors. However, the Government also took the opportunity to make a number of other important changes in the law, concerning for example ultra vires, company resolutions, investigations and registration of charges. (xvii) The Companies Single Member Private Limited Companies) Regulations, 1992:‑‑ It was passed to implement the EC Twelfth Directive, specifies that a private company limited by shares or guarantee may be formed by one person and has one member. (xviii) The Companies (Amendment) Ordinance, 2002 (Pakistan):‑‑ This Amendment Ordinance introduced single member company in Pakistan requiring only one Director for any Private Company. This Ordinance also made difference between non‑listed public Company and listed Public Company through requiring minimum 3 Directors for Non‑listed Public Company and 7 for listed Public Company. By this Ordinance, Modaraba, leasing companies investment bank, venture capital company etc. fall 'under the definition of financial institutions. Amounts of fines and compensations also have been increased. (xix) Companies Single Member Private Companies) Rules, 2003: (Pakistan):‑ Single Member Company established under the Companies (Amendments) Ordinance, 2002 regulated by these rules. These rules provide provisions for Directors meeting, general meetings, authentication of balance‑sheet, company Secretary and penalties for contraventions of rules for SMC CASE LAW DEVELOPMENTS Throughout the later half of the 19th Century judicial decisions played a very important part in the development of many principles of Company Law, for example:‑‑ Foss V Harbottle (1843): Where a wrong is done to a company, the company, rather than any individual member, is the proper plaintiff in the action. Royal British Bank V Turquand (1855) When a person deals with a company in a transaction which is not inconsistent with the registered documents he can enforce the transaction against the company despite any irregularity of internal management. This has now been superseded. Ooregum Gold Mining Co. V Roper (1892): A company cannot issue shares at a discount. Salomon v. Salomon & Co. (1897): Which establishes the legality of the incorporation of small businesses where one person holds the vast majority of the shares. The role of modern Judges in the field of Company Law also should not be underestimated. Although Company Law is mainly based in statute, there will always be opportunity for judicial influence on the development of Company Law through the interpretation of statutes.