Organization Law Article - Cavendish University Legislation Lecturers Notes
DEFINITION OF FIRM:
The Companies Action Cap one hundred ten definition section states that " company” means an organization formed and registered underneath the Act or perhaps an existing firm.
The companies Act would not sufficiently define what a company is yet authors have developed a meaning of a company. Professor David Bakibinga in his book company law in Uganda at webpage 2 defines a company because an man-made legal entity separate and distinct from the members or shareholders.
This legal person can be distinguishable from natural character. Natural folks are created by natural people/persons and the lives end at death, artificial people (corporations) are set up by law and the existence is usually ended by law.
Carefully of a legal personality signifies that a company has the ability to of experiencing rights and being susceptible to duties, individually from its members. As an artificial legal person, a firm is capable in the following; -- * It includes an presence separate as a result of the associates and as such; - * It includes its own term by which it can be recognised.
2. It can very own its own home ie possessions like complexes, land, checking accounts. etc 5. It can prosecute or be sued in its own brand.
* Even if an associate or all of the members die, the company will still remain in existence, in other words it has perpetual succession. 5. It can take out a loan in its individual name and use the assets because security and it will be responsible for paying back such debts.. * It may employ its own employees, including its users or shareholders. i) This principle of legal personality was first noticeably articulated in the British House of Lords Judgment in the matter of Salomon Or Salmon & Company Limited (1897) ALTERNATING CURRENT 22 In the court of first occasion and appeal court, it had been held That therefore the business was a legal entity in a position of a separate existence and liable to pay out its own financial obligations, and Salomon was not personally liable to spend the financial obligations of the company.
ii) That a company is at regulation a different person completely from the members although it could possibly be that after incorporation, the business is exactly the same as was before, similar persons are definitely the managers, as well as the same hands receive the profits. TYPES OF COMPANIES.
Underneath the Companies Work, provision is perfect for two significant types of registered Corporations, which can be lawfully formed in Uganda. Principally these can always be further divided into 2 extensive categories. 1 . Private firm.
2 . Public company.
The firms Act describes a private organization as
2. A Company, which by the articles restricts the privileges to transfer shares in the company. 5. Secondly, it limits the quantity of its people to 50 including past and present employees in the company whom are shareholders. * Additionally, a private business prohibits any invitations to the public a subscription for any shares or debentures of the business (investments inside the company). 5. Here the mandatory minimum quantity of members is definitely 2 people. This position was laid straight down in the case of LUTAYA Vs . GANDESHA (1987) HCB 49 where a man great wife shaped a private business and of the 1500 stocks of the business, the wife held simply 2 stocks. This position was also set by the case of Salomon Or Salomon & Co (1897) AC twenty two. The second person needed might not be an independent person. He could be the nominee of the first person. In which a private Company does not abide by these requirements, it seems to lose exemptions and privileges conferred on a exclusive company. This kind of failure can easily be remedied upon demonstrating court that it was caused by incident or inadvertence or some additional sufficient cause. Under the Companies Act, Companies in Uganda can also be further divided into:
* Limited by stocks
* Restricted to guarantee
5. Unlimited companies
(a) A firm limited by stocks.
This is a firm where the users enjoy limited liability.
This means that in the case of winding up of the company in case the company's possessions are...