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INCORPORATION AND ITS EFFECT (REGISTRATION FOR INCORPORATION (Section 19…
INCORPORATION AND ITS EFFECT
REGISTRATION FOR INCORPORATION
Section 19 of Companies Act 2016 - Notice of registration as conclusive evidence that company registered and all requirements of the Act have been complied
Section 17 of Companies Act 2016 - Application by company and on payment, Registrar issue a certificate of incorporation in a manner as Registrar will determine
Section 15 of Companies Act 2016 - Registrar issue notice of registration in form and manner
PRINCIPLE OF SEPARATE LEGAL PERSONALITY SALOMON V SALOMON & CO (1897)
once company incorporated, courts do not look behind veil
this principle known as the veil of incorporation
this case is separate legal person from its members/ shareholders
EFFECT OF INCORPORATION
Section 18 of Companies Act
Date of incorporation as in notice of registration
If company has share capital, every person become shareholder
Name stated as member in application of incorporation shall become members
Section 20 and Section 21 of CA 2016
body corporate, have legal personality separate from its members
capable of suing and be sued
has power to enter into transaction
APPLICATIONS OF THE PRINCIPLE OF SEPARATE LEGAL PERSONALITY
debts of company are the responsibility of the company and not its shareholders/members
own assets and the shareholders have no share in assets
company can enter into a contract with a shareholder
LIFTING THE CORPORATE VEIL
i. Statutory exceptions
Section 131 of Company Act 2016 - Offence relating to distribution out of profit
Section 123 of Companies Act 2016 - Offence relating to financial assistance to purchase shares
Section 132 of Companies Act 2016 - Offence relating to unauthorized distribution
ii. Judicial exceptions
Evasion of Legal Obligation
Enemy in Times of War
Holding and Subsidiary Companies - A group of companies may be treated as a single corporate entity
Perpetration of Fraud
Tax Avoidance