LEGAL ENVIRONMENT OF BUSINESS WORKSHOP

REPORT SUBMITTED TO MRS L.SEEJORE BILTOO

FROM

KHEEMAWTEE AUNDOO (ID:1020726)

What is a company? A company is basically a vehicle for carrying on some sort of business. It is a legal entity, allowed by legislation, which permits a group of people, as shareholders, to apply to the government for an independent organization to be created, which can then focus on pursuing set objectives. A company is also empowered with legal rights which are usually only reserved for individuals, such as to sue and be sued, own property, hire employees or loan and borrow money.

Companies can be formed for different reason, but the main reason is to make profits. Sometime, people enter into partnership to form a company. This partnership can be informal. However, there are certain prescribe rules and regulations connected to the formation of any company. In Mauritius, all incorporation of companies is regulated by the Companies Act 2001.

Some key features of the Companies Act are as follows:

The Act introduced a simple form of incorporation enabling a company to be incorporated on the filing of a single application together with the necessary consents from the proposed directors and secretary and a notice of reservation of the proposed company name. It is not necessary to submit a constitution at the time of incorporation. If a company wants to depart from the standard requirements set out in the Act, then, either on incorporation or subsequently, it needs to file a separate constitution setting out the departures from the standard form. The new legislation also recognises the reality of 'nominee' shareholders by allowing companies to operate with just one shareholder.

The Act does away with the need for a separate objects clause, and provides that a company has the rights, powers and privileges of a natural person. Private companies continue to be prohibited from offering shares or debentures to the public, and are able to dispense with the holding of company meetings by passing resolutions by means of entry in the company minute book. Exempt private companies will not be required to appoint a qualified auditor or a qualified secretary and will be entitled to file only a summary statement of accounts with the Registrar.

The Act introduces no par value shares and permits a company to issue shares which are not designated with any monetary value.

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The Act incorporates the new procedure of self-purchase and holding of treasury shares introduced by the Finance Act 1999. The new legislation makes provision for a company to provide in its constitution for the company to have power to indemnify or insure its directors, secretary or employees in accordance with the limitations provided by the Act.

The Act contains a requirement that public companies and non-exempt private companies are required to prepare and present their accounts in accordance with international accounting standards and that exempt private companies are required to present their accounts in accordance with accounting practices and principles that are reasonable in the circumstances and having regard to any requirements set out in regulations made under the Act.

New provisions allow for the continuation in Mauritius of companies which are incorporated elsewhere and also provides for the incorporation of limited life companies.

We have also learned during the workshop that there are different types of companies: Company limited by shares; Company limited by guarantee; Company limited by shares and guarantee; An unlimited company A foreign company Limited Life Company

In addition, previous companies were supposed to have a memorandum and articles of association, which was then replaced by the constitution.

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What is a constitution? A constitution is the rules governing the company, and the directors and shareholders in the company, and their relationship with each other. The constitution may cover such matters as the rights, duties, powers and obligations of the company, directors and shareholders.

Constitution or Companies Act If a company does not have a constitution, the company, the board, each director and shareholder of the company have the rights, powers, duties and obligations set out in the Act section 41. If on the other hand, a company has a constitution, the company, the board, each director and each shareholder of the company have the rights, powers, duties and obligations set out in the Act, except to the extent that they are restricted, limited or modified by the constitution of the company in accordance with the Companies Act.

The content of constitution A constitution may contain matters determined by the Act for inclusion in the constitution of a company. It may also contain such other matters that a company wishes to include in its constitution.

Certain provisions in the Act may be restricted, limited or modified by the constitution of a company. These provisions usually include the words subject to its constitution or unless otherwise specified in the constitution Other provisions are optional and only apply to the company if it adopts them in its constitution. Some provisions are mandatory and cannot be restricted, limited or modified by the constitution of a company. E.g. the provision requiring a company to have a name, one or more shares, shareholders and directors.

The constitution of a company may contain a provision relating to the capacity, rights, powers or privileges of the company only if the provision restricts the capacity of those rights, powers or privileges. For example, where the constitution of a company sets out the objects of the company, there is deemed to be a restriction in the constitution on carrying on any business or activity that is not within those objects, unless the constitution expressly provides otherwise.
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The constitution of a company is binding as a contract between firstly, the company and each shareholder, and secondly, each shareholder in accordance with its terms.

The case

Companies are further protected by different laws, especially in Mauritius. Some of the regulations are:

The copyright Act 1997 The Patent Industrial Design an Trade Marks Act 2002 The Protection Against Unfair Practices (Industrial Property Rights) Act 2002 The Layout-Designs (Topographies) of Integrated Circuits Act 2002 The Patent, Industrial Designs and Trademarks Regulations 2004

To further explain how these acts protect the companies, let us take the following case: You are currently employed by a software company, and as employee of the company, you have invented a novel type of software. What are the different Intellectual Property Rights issues connected to this invention and how can your employer protect his interest.

Intellectual Property

Intellectual property is a term referring to a number of distinct types of creations of the mind for which a set of exclusive rights are recognizedand the corresponding fields of law. Under intellectual property law, owners are granted certain exclusive rights to a variety of intangible assets, such as musical, literary, and artistic works; discoveries and inventions; and words, phrases, symbols, and designs. Common types of intellectual property include copyrights, trademarks, patents, industrial design rights and trade secrets in some jurisdictions.

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As a term, intellectual property is increasingly being used today. However, its mechanism and business aspects are not well understood and to many companies, it remains an obscure legal concept of little relevance to day-to-day business. Yet, intellectual property in the form of information, technology, industrial designs, trademarks, formulas for new products and processes, inventions and know-how hold a tremendous potential for companies as a means of wealth creation. Moreover, with the cut-throat competition now prevailing on the global market, competitive advantage depends increasingly on innovation and creativity, which are encouraged by the mechanism of Intellectual Property Right.

In Mauritius, the legislative framework for IPR enforcement initially provided for the protection of copyrights, trademarks, patents, with the Patents Act 1875, the Trademarks Act 1868 and the Copyright Act 1956 being the oldest legislation. Our Intellectual Property Right enforcement mechanism took a new turn in 1995 when the TRIPS (Trade Related Aspects of Intellectual Property Rights) Agreement of the World Trade Organisation came into effect.

Under the Patent, Industrial Designs and Trademarks Act, an invention may be protected for a period of 20 years, subject to payment of an annual fee. Trademarks may be protected for an initial period of 10 years and may be renewed for consecutive periods of 10 years. The registration for industrial designs is for an initial period of 5 years and renewable for another period of 5 years. The Act also provides for renewal for 2 further consecutive periods of 5 years subject to certain conditions.

What is a Patent? A patent is a set of exclusive rights granted by a government to an inventor or applicant for a limited amount of time (normally 20 years from the filing date). It is a legal document defining ownership of a particular area of new technology. Patents are granted in many countries and are predicated on the theory that inventors are more likely to invent and disclose that knowledge to the public in exchange for a limited period of exclusivity. The right granted by a patent excludes all others from making, using, or selling an invention or products made by an invented process.
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What is Patentable?

To gain a valid Patent the invention must be new (novel), involve an inventive step or be nonobvious, and be capable of industrial application. An invention is considered new if it does not form part of the state of the art. The state of the art comprises everything that is known or used in public in any way, anywhere in the world, before the date of filing of the patent application. An invention is considered as involving an inventive step if it is not obvious to a skilled person having regard to the state of the art.

Trademark

On the other hand, Trademark can also be used to protect the right of the company as well as the newly developed software. A trademark is often defined as: a word, name, symbol or device that is used in trade with goods to indicate the source of the goods and to distinguish them from the goods of others. A service mark is the same as a trademark except that it identifies and distinguishes the source of a service rather than a product. The terms "trademark" and "mark" are commonly used to refer to both trademarks and service marks.

Trademarks provide their owners with the legal right to prevent others from using a confusingly similar mark.

Why register A Trademark?

Prudent business people register their Trademarks with Patent Offices to gain an official record of their rights to a particular mark. A Trademark registration also grants a statutory right, subject to certain conditions, to prevent others from using the trademark without the registered owner's permission - i.e. to prevent infringement.

One of the principal aims of a business is to build up the reputation of its goods or services and by applying for and gaining a Registered Trademark accelerates the process as it serves notice on would-be copiers of the serious intent of a business to defend its position in the marketplace.
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If a Trademark is properly promoted and protected it can be a very valuable asset for any business and can in some circumstances be worth more than the bricks and mortar of a business.

Employer/ Employee Relations In addition, a company is made of the employer and the employees. The employer needs the employees to drive the business and ultimately make profit. An employee contributes labor and expertise to an endeavor of an employer and is usually hired to perform specific duties which are packaged into a role. In most modern economies, the term "employee" refers to a specific defined relationship between an individual and a corporation, which differs from those of customer or client. The relationship between the employer and the employees is built on trust. There is a duty of confidence between them. An employee normally acts in the best interest and with a duty of good faith towards the company. As such, if I have developed a novel software while working for the company, then the invention will be for the company developed by its people. Moreover, the invention was done while I was on duty and with the consent of the employer. The employer can protect his interest by first of all applying for a patent with the Ministry concerned before it become public. It will be granted a patent after the application has been approved for 20 years after the filing date. No other company will be able to use this software for the coming 20 years. The software can also be protected by the Intellectual Property Right as explained above. Trade Marks can also help to protect the interest of the company where others will not be able to use the same software with the same name.

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