Astaphans Goes Public
Information Leaflet No. IV
When we speak of a joint-stock Company or in everyday language a Company we
may refer either to a private company or a public company of which the word "limit.
ed" at the end forms an essential part.
A Company is an improvement on the sole proprietorship and the partnership. In
the eye of the law it acquires a separate existence trom the individuals who compose it.
It is therefore a "legal person" and constitutes a body corporate and may sue and be
sued as any individual. However the Company differs from an individual in that it is
endowed with "perpetual succession", that is to say, until it is legally dissolved, it nev-
In Dominica any two or more persons may form a private Company and in the
case of a public Company any five or more parsons by subscribing their names to a doc-
ument referred to as a Memorandum of Association and to the rules of the Company
referred to as the Articles of Association. The memorandum of Association among other
things states the objects of the Company, tie authorised share-capital and the corpor-
ate name of the Company.
The affairs of a Company are directed by a board of Directors who are responsible
to the shareholders for the general control and management of the Company's affairs.
Membership in a private Company may not generally exceed fifty persons; no invit-
ation must be issued to the general public for the subscription of shares and the right
to transfer shares in them are restricted.
An advantage which the private Company offers over both the sole proprietorship
and the partnership is that because of the increased though restricted number of per-
sons who may participate, the business is able to acquire more financial resources for
In brief the advantages of the Private Company are :
Because of increased membership it allows for greater specialization of managerial
It can provide for larger capital resources than either the sole proprietorship or
partnership. Liability of members are limited to the shares subscribed.
Its disadvantages are:
Restriction on number of members.
liestriction on transfer of shares.
Prohibition to invite the general public for subscription of shares.
The public Company is a further development on the forms of business ownership
previously discussed. Its advantages over them are many and you can easily realise
them from the following characteristic of the public Company.
The number of possible shareholders are unrestricted and as a consequence so is
the share-capital. The shareholders have the following rights :
To attend and vote at general meetings.
To receive the annual report of the Directors on the affairs of the business.
To elect Director- to office or not to re-elect those in office when their term of of-
fice expire. To amend and adopt the rules of the Company referred to as the articles
To alter by special resolution the memo-andum of Association (in certain particu-
To buy and sell shares of the Company;
To subscribe to additional share issues before new members;
To review and inspect Company records;
To sue officers and Directors for misuse .of powers or for fraud.
You will probably conclude that the basic difference between the private Company
and the Publc Company is that in the case of the latter the general public may be ap-
proached for the subscription of shares. Because of this privilege the Laws of the
United Kingdom and the U.S.A., but not that of Dominica, require all public compa-
nies (whether newly formed or not) inviting the public to subscribe for shares or de-
bentures must issue a document called a Prospectus.
The Prospectus generally g i v e s a detailed description of the business, its
properties, proposed capitalization and financial condition. A copy of the Prospectus
must be filed with the Registrar of Companies on or before the date of its publication.
(Nevertheless although the issue of a Prospectus is not required by the laws of Dom-
inca, we felt it was useful to do so and a Prospectus was accordingly issued).
We must emphasize, and point out to the public that the United Kingdom's Com-
panies Act of 1948 and 1967 which improve on and consolidate principles established
by a long series of Companies' Acts originating in the latter half of the nineteenth cen-
tury are not de facto applicable to the formation and operation of Companies in Dom-
inica. The Act which governs and controls the formation and operations of Companies
in Dominica is Chapter 318 of the Laws of Dominica.
Next week we shall discuss the considerations which give rise to a private Company