Get premium membership and access questions with answers, video lessons as well as revision papers.

Discuss the consequences of incorporation.

      

Discuss the consequences of incorporation.

  

Answers


Maurice
(i) Limited liability: members are as a general rule not liable to make good the debts
of corporation. In registered companies, members can only be called upon to contribute
the amount unpaid on their share or the amount they undertook to contribute.

(ii) Perpetual succession: a corporation is a creation of law. It has no body, mind or
soul.Its life lies in the intendment of law. Death of a member has no effect on its
existence. It has capacity to exist in perpetuity.

(iii) Sue be sued: as a legal person with rights and subject to obligations, a corporation
has capacity to sue to enforce the rights and may be sued on its obligation. As was the
case in Foss V. Harbottle (1843).

(iv) Owning of the property: a corporation has capacity to own property. The property of a
corporation is vested in it and not on its members. It can therefore insure such property
as it has an insurable interest in it. It was so held in Macaura V. NorthernAssurance Co.
Ltd. (1925).

(v) Legal or corporate personality: corporations are legal persons in their own right
that is, they have an independent legal existence with distinct rights and subject to
obligations. In company law, once a company is formed it becomes a legal person,
distinct and separate from its members – it was so held in Salomon V. Salomon and Co.
Ltd.

(vi) Capacity to the contract: corporations have legal capacity to enter into
contractual relationships in pursuit of their objects. Additionally, they have capacity to
hire and fire. It was so held in Lee V. Lees Air Farming Co. Ltd (1961).
maurice.mutuku answered the question on May 3, 2018 at 08:04


Next: Identify and explain the various types of corporations.
Previous: “Both parliament and courts of law have in various ways attempted to control delegated legislation however, neither organ can effectively do so by reason of inherent...

View More CPA Commercial Law Questions and Answers | Return to Questions Index


Learn High School English on YouTube

Related Questions