EFFECTS OF INCORPORATION

Effects of incorporation- company law

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EFFECTS OF INCORPORATION by Mind Map: EFFECTS OF INCORPORATION

1. Section 20(1) of CA 2016- gives effect of artificial legal person

1.1. Have legal personality separate from that of its members;

1.2. obtain the status of a legal person, which entails rights and liabilities

2. Section 21(1) (a) to (c)- seperate legal entity

2.1. Have the right to sue or be sued, to acquire and to sell property and to do any act in order to enter into transactions.

2.2. Salomon v Salomon & Co Ltd [1897]- a company is a separate entity therefore, has the right to enter into transaction even with its members.

3. Perpertual succession

3.1. Continue in existence until it is removed from the register

3.2. Re Noel Tedman Holdings Pty Ltd (1967) QdR 561- the company continued to existed even after all the shareholders died.

4. Power to Acquire and Sell Property

4.1. obtain the right to acquire and sell property.

4.2. Any property acquired by the company belongs to the company.

4.3. Macaura v Northern Assurance Co Ltd (1925) - the appellant a had no interest in the logs after he sold them to the company. The company and Mr Macaura were separate legal entities.

5. Right to Sue and Be Sued

5.1. the company is a legal person hence it can sue and be sued in its own name

5.2. Foss v Harbottle (1843)- the injury complained was an injury to the company and not to the members, therefore, the members could not take action. Only the company had the right to sue.

6. Section 192 (1) of CA 2016- liability of Members

6.1. a member shall not be liable for an obligation of the company

6.2. Salomon v Salomon & Co Ltd [1897]- As the debts were incurred by the company, the creditors can only claim from the company, and not from its members