Commercial Laws

Key components of commercial laws that affect the sound functioning of financial institu­tions and markets include laws that define the regime for formation of companies, corpo­rate governance of both financial and nonfinancial firms, and consumer protection in the financial system. The scope of those components is outlined below.

9.1.1 Company Law

A regime for the creation and operation of companies is a key element of any commercial system. Laws providing for the formation and registration of different types of compa­nies—including joint stock, limited liability, closed and open partnerships (limited and special), and other forms of corporate entities—should be in place. Those types of laws should deal with the operation of the company registrar, procedures for registering compa­nies, public access to the register, minimum capital requirements, procedures for the issue and transfer of shares, meetings of shareholders, rights and duties of shareholders, provi­sions for annual meetings, extraordinary meetings, role of the board of directors, duties of directors, role of auditors and audit procedures, accounting and auditing requirements, and penalties for infringements of the law.

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