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Exam (elaborations)

mrl questions and answers 100_ pass guarantee-2.

• When does a company acquire legal personality? Once a company is incorporated and a certificate of incorporation is issued, • With reference to case law explain the meaning and effects of separate legal personality Salomon v Salomon & Co Ltd: • The estate of the company is assessed apart from the estates of individual shareholders or members, therefore the debts of the company are the company’s debts and separate from those of its shareholders or members. They enjoy limited liability; • The profits of the company belong to the company and not its shareholders and only after the company has declared a dividend may the shareholders claim that dividend; • The assets of the company are its exclusive property and the shareholders have no proportionate proprietary rights therein; and • No one is qualified by virtue of his or her shareholding to act on behalf of the company. Only those who are appointed as representatives of the company in accordance with the articles (which has been replaced by the Memorandum of Incorporation) can bind the company.

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