THE COMPANY

Question 1

What is a juristic person according to Section 1 of the Companies Act 2008?

Answer 1

A company incorporated by this Act or registered under the Companies Act of 1973 or Close Corporations Act.

Question 2

What is the Memorandum of Incorporation (MOI)?

Answer 2

The single document that regulates companies under the Companies Act 2008.

Question 3

What is the principle of separate legal personality?

Answer 3

Upon registration, a company becomes a juristic person separate from its members.

Question 4

What does Section 19(1)(b) state about a company’s powers?

Answer 4

A company has all the powers of an individual except as limited by the MOI.

Question 5

What does Section 19(2) indicate about liability of incorporators, shareholders, or directors?

Answer 5

They are not liable for the company’s debts except as provided by the Act or MOI.

Question 6

What is limited liability?

Answer 6

Liability of shareholders is limited to the amount paid for their shares.

Question 7

What is the significance of Salomon v Salomon & Co Ltd?

Answer 7

It established that incorporation legitimizes the separate legal personality of a company.

Question 8

What does perpetual succession mean for a company?

Answer 8

A company continues to exist despite changes in membership or the death of members.

Question 9

Who owns the property and assets of a company?

Answer 9

The company owns its property and assets, not the shareholders.

Question 10

What was decided in Macaura v Northern Assurance Co Ltd regarding insurable interest?

Answer 10

A member of a company does not have an insurable interest in the property owned by the company.

Question 11

What did the court rule in Dadoo Ltd v Krugersdorp Municipal Council regarding property ownership?

Answer 11

The property owned by a company is not owned by its shareholders, even if they hold all shares.

Question 12

What is the liability of a company for delicts it commits?

Answer 12

A company can be sued for damages caused by its delicts.

Question 13

Can a company enter into transactions with its shareholders?

Answer 13

Yes, a company can contract with its shareholders as a separate legal entity.

Question 14

What was the outcome of Lee v Lee’s Air Farming Ltd regarding dual capacities?

Answer 14

The Privy Council held that Lee could be both a director and an employee of the company.

Question 15

Fill in the blank: A company enjoys _______ existence.

Answer 15

perpetual

Question 16

True or False: Shareholders are personally liable for the debts of the company.

Answer 16

False

Question 17

What is the primary reason for the concept of limited liability?

Answer 17

To encourage the growth and expansion of companies.

Question 18

What happens to a shareholder’s shares when they die?

Answer 18

The shares pass to the executor of their estate.

Question 19

What is the legal relationship between a company and its goods?

Answer 19

The company has a separate legal personality, and members do not have a legal interest in the company’s goods.

Question 20

What is the effect of the Companies Act 2008 on previous acts?

Answer 20

It applies to companies formed under the Companies Act of 2008 and the Companies Act of 1973.

Question 21

What is a personal liability company?

Answer 21

A type of company where directors are jointly and severally liable for the company’s debts.

Question 22

What does the term ‘delict’ refer to in corporate law?

Answer 22

A wrongful act or infringement of a right leading to legal liability.

Question 23

What is the legal status of a company’s debts?

Answer 23

Debts are the responsibility of the company alone, not its shareholders.

Question 24

What does ‘limited liability’ help avoid for business owners?

Answer 24

The risk of personal bankruptcy.

Question 25

What was the main legal issue regarding Lee's employment?

Answer 25

Whether Lee could be regarded as a ‘worker’ under the Workers’ Compensation Act 1922 ## Footnote This was central to the appeal regarding entitlement to compensation.

Question 26

What was the initial decision made by the Court of Appeal of New Zealand?

Answer 26

Lee was not entitled to compensation as he could not be regarded as a ‘worker’ ## Footnote This decision was later reversed by the Privy Council.

Question 27

What did the Privy Council conclude about Lee and the company?

Answer 27

Lee and the company were entirely distinct and separate persons ## Footnote This distinction allowed Lee to be contractually employed by the company.

Question 28

Did Lee's position as sole managing director prevent him from being a servant of the company?

Answer 28

No, it did not prevent him from being a servant of the company ## Footnote The court recognized dual capacities in individuals.

Question 29

What case did the court reference to support its decision about dual capacities?

Answer 29

Salomon v Salomon & Co Ltd ## Footnote This case established the principle of corporate personality.

Question 30

What was the outcome of the case regarding the appellant's entitlement to compensation?

Answer 30

The appellant was entitled to receive compensation under the Workers’ Compensation Act 1922 ## Footnote This was based on the finding that Lee was an employee of the company.

Question 31

How does Lee’s case illustrate the relationship between a company owner and their company?

Answer 31

An individual can own all shares, be the sole director, and also be employed under a contract of service ## Footnote This highlights the advantages of corporate personality.

Question 32

What does Gower state about Lee's situation?

Answer 32

He could be master and servant at the same time and benefit from both and limited liability ## Footnote This succinctly summarizes the implications of corporate personality.

Question 33

What are some limitations of a company as a legal entity?

Answer 33

A company cannot marry or make a will ## Footnote Despite having the same legal status as an individual, there are actions it cannot perform.

Question 34

Fill in the blank: The legal status of a company is similar to that of an _______.

Answer 34

individual ## Footnote This reflects the concept of corporate personality.