Please enable JavaScript.
Coggle requires JavaScript to display documents.
Incorporation and Its Effect - Coggle Diagram
Incorporation and Its Effect
REGISTRATION FOR INCORPORATION
Section 15 of Companies Act 2016 The Registrar will issue notice of registration in the form and manner as the Registrar may determine.
Section 19 of Companies Act 2016 Notice of registration serve as conclusive evidence that a company has been duly registered and all requirements of the Act have been complied with.
Section 17 of Companies Act 2016 Upon an application by a company and on payment of a prescribed fee, the Registrar may issue a certificate of incorporation in a manner as the Registrar will determine.
EFFECTS OF INCORPORATION
A body corporate
Have legal personality separate from its members
Capable of exercising all functions as an incorporated company
Has power to acquire, own, hold, develop or dispose of property
Capable of suing and be sued
Has power to acquire, own, hold, develop or dispose of property
Has power to enter into transaction
APPLICATIONS OF THE PRINCIPLE OF SEPARATE LEGAL PERSONALITY
The debts of a company are the responsibility of the company and not its shareholders/members
A company can own assets and the shareholders have no share (proprietary interest) in those assets
A company can enter into a contract with a shareholder
A company must sue in its own name, and not in the names of its members, for any wrong committed against it
LIFTING THE CORPORATE VEIL
Judicial exceptions
Perpetration of Fraud
Enemy in Times of War
Holding and Subsidiary Companies - A group of companies may be treated as a single corporate entity.
Tax Avoidance
Evasion of Legal Obligation
Statutory exceptions
Offense relating to distribution out of profit
Section 131 of Company Act 2016
A company may only distribute to the shareholders out of profits of the company if the company is solvent.
An offense relating to the unauthorized distribution
Section 132 of Companies Act 2016
Before a distribution is made by a company to any shareholder, such distribution shall be authorized by the directors of the company.
Offence relating to financial assistance to purchase shares. Section 123 of Companies Act 2016
A Company shall not give any financial assistance for the purchase of its own shares to its own officers of the company.