Section 9 of the Companies Act, 1963 (Act 179) provides that a company limited by shares is “a company having the liability of its members limited to the amount, if any, unpaid on the shares respectively held by them”.
Required:
State and explain TWO (2) advantages that exist for a company limited by shares. (2 marks)
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- Property-The Company can acquire /own property and dispose such property as it wishes.
- Contractual relationship-A company on incorporation, has the capacity to enter into contractual relationship with a natural or legal persons.
- Suing and being sued– A company may sue natural or legal persons for breach of contractual obligations.
- Perpetual succession- A company will continue in existence despite the death of their members.
- Transferability of shares- The shares of a company can be transferred from a member to another person by sale.
- Legal Personality-On incorporation, a company acquires a legal personality.
- Figurative veil– On incorporation, there is the figurative veil, meaning it protects their officers and staff generally from legal risks.