Some consequences flow from the incorporation of a Company. The most important of this is the Legal Personality bestowed on the Company from which other consequences or advantages flow. This includes
- Limited liability
- The right of Corporate Litigation (suing and being sued)
- Perpetual succession
- Power to borrow money
- Transfer of shares.
NB, as we have merits, so do we have de-merits of Corporate Legal personality. It also has restrictions and limitations. These include:
- The properties or assets of the company belong to the company and not the shareholders or members or management of the business of the company belongs has been given by CAMA to the board of directors and not the owners or shareholders. See S63 (3) of CAMA. “Except as otherwise provided in the company’s articles, the business of the company shall be managed by the board of directors who may exercise all such powers of the company as are not by this Act or the articles required to be exercised by the members in general meeting.”
- The doctrine of principles of ultra vires is automatically applied to a registered number or incorporated company. See S.39 (1),(3). S.39 (1) A company shall not carry on any business not authorized by its memorandum and shall not exceed the powers conferred upon it by its memorandum or this Act.
S 39 (1) Notwithstanding the provisions of subsection (1) of this section, no act of a company and no conveyance or transfer of property to or by a company shall be invalid by reason of the fact that such act, conveyance or transfer was not done or made for the furtherance of any of the authorized business of the company or that the company was otherwise exceeding its objects or powers. 3. It may lead to incident of double taxation.