BCL – May 2018 – L1 – Q5b – Types of Capital and the Financing of Companies

Explain whether members can claim ownership in an incorporated company.

Question

Explain whether any of them can claim ownership of the company. (6 marks)

Answer

An incorporated company may be a company limited by shares, a company limited by guarantee, or an unlimited company. Kaskala Company Limited under the Companies Act, 1963 ACT 179 (section 16(a)) becomes a company limited by shares with the word “Limited” as the last word of the name. (1.5 marks)
An incorporated company—a company limited by shares—is a company with a separate legal personality, distinct from its members with the powers of a natural person (Salomon v Salomon), a body corporate (section 14(5) of ACT 179) with all the powers of a natural person of full capacity (section 24 of ACT 179). (1.5 marks)
Bugi, Palas, and Togi are at best members/shareholders/subscribers to the Regulations of the Company (section 30 of ACT 179). (1.5 marks)
None of them can claim ownership of the company since the company, by its legal personality, exists on its own. (1.5 marks)