COMPANIES.

there are a number of business associations;(overview of business associations, course will

cover companies)
-First is a sole proprietorship or a one-man business, here an individual carries on a
business personally, without partners or associates and is said to be a sole proprietor of the
business. a professional person is described as a sole practitioner while a person solely
involved in trade is called a sole trader.

In sole proprietorship, there's no legal separation between the business and personal affairs
of the proprietor. s/he is directly responsible for the debts incurred in carrying on the
business, i.e., the proprietor bears the loss himself.

The next type is clubs and society. these are unincorporated associations, which are subject
to statutory regulations. like partnerships clubs have no legal existence separate from their
memebers, but there's a distinction between club property and property of the memebers,
the members of a club elect a committee and it is this committee vested with powers to hold
the club property as trustees. The relation betweem the club memebers is contractual and
they conduct their activities in accordance with club rules.

Trust. This is an arrangement whereby a person called a settlor, vests property in the name
of another person called a trustee. The trustee is to hold and apply such property to the use
and benefit of another person called a beneficiary.

Co-operative Societies. These are governed by law known as the co-perative societies Act,
cap 112, a co-perative society may register with or without liminted liability, and upon its
registration, the society becomes a corporate body with rights like companies. Members of a
co-operative society are those with similar interests and the control of the society is
democratic and every memeber is entitled to one vote. Unlike companies, shares in a co-
operative society are not freely transferrable and are held in the name of the member only.

COMPANIES.
BACKGROUND
the body of company law in Uganda is constituted by the Uganda Companies Act, the
English common law doctrines of equity and case law, the Uganda Companies Act is similar
to the English Companies Act and Ugandan Courts generally rely on English decisions
where sections of the Act being interpreted are the same.
THE CONCEPT OF LEGAL PERSONALITY.
A legal person is not always human. it can be any person human or otherwise who has
rights and duties at law, where as all human persons are legal persons, not all legal persons
are human persons. The non or non-human legal persons are called corporations.
The word corporation is derived from a latin word corpus which means body. A corporation
is therefore a legal person brought into existence by a process of law and not by natural
birth, owing to these artificail processes, companies are sometimes referred to as artificial
persons not fictitious persons.

CONCEPT OF LIMITED LIABILITY.

Liability means the exetent to which a person can be made accountable by the law/by law.
s/he can be made accountable either for the full amount of his/her debts or pay towards that
debt only to a certain and not beyond it. So in the context of company law, liability may be
limited either by shares or by guarantee.

Under section 4(2) a of the Companies Act, A company limited by shares, the members
liability to contribute to companies assets is limited to the amount, if any, paid on their
shares. Under Section 4(2) b. For companies limited by guarantee, the members undertake
to contribute a certain amount to the liability of the company. In the event that the company
is being wound up. it should be noted that it's the memebers' liability that is limited and not
the companies'. As long as there are adequate assets, the company is liable to pay all its
debts. without any limitation to liability. in case the assets are not adequate, then the
company can only be wound up as a human being who fails to pay for his/her debts.
Therefore, almost all statutory rules in the companies Act, are intended for two main
objecties;
1.To protect the company's creditors.
2.Protect investors in instances where there are members.
FORMATION AND REGISTRATION OF THE COMPANY.
A company may either be statutory, chartered or a registered company. The latter is one
formed under the Companies Act and is the commonest. Statutory Companies are formed
under an enactment of the law, NWSC, Uganda Railways Corporation.

Section 4 of the Companies Act provides that anyone or more persons may for a lawful
purpose form a company by subscribing their names to a memorandum of association and
complying with the requirements of the companies Act in form of registration to form an
incorporated compny with or without limited liability.
look at subsection 2.

It should be noted that if you choose to incorporate a company limited by shares, you have
to choose between a public or private company, these two companies have different
economic purposes. The public Limitd Company mainly raises capital from the public to run
the corporation, whereas a private limited company has limitations as to raising capital from
the public.

A Private limited company is defined under Section 5 (1)to mean, a company which by its
articles;
a.Restricts the right to transfer its shares and other securities;
b. Limits the number of its memebers to 100 not including the persons employed by the
comapny.
c.Prohibits any invitation to the public to subscribe to any shares or debentures of the
company.

Section 5(2). Where two or more persons hold one or more shares jointly, they shall for the
purpose of this section be treated as a single memeber.
Section 6 defines a Public Limited Company as one not a Private Company under Section
5.

THE MEMORANDUM OF ASSOCIATION

Document where memebers express their desire to be formed into a company with specific
names and objectives. The memorandum is the primary document which sets out the
Constitution of the Company and its objectives, the articles of Association. These contain
the rules and regulations bywhich the internal affairs of the company are governed and
dealings with such matters as share capital, meetings, directors et.c(memorandum and
Articles).
READ SECTION 7 ,8 9 and 10, 11,16, 18 and 19
PROVISIONS OF COMPANIES ACT

Memorandum of association
7. Requirements with respect to memorandum
(1)The memorandum of every company shall be printed in the English language and shall
state—
(a)the name of the company, with “limited” as the last word of the name in the case of a
company limited by shares or by guarantee;
(b)that the registered office of the company is to be situated in Uganda; and
(c)may also state the objects of the Company.

8. Signature of memorandum
(1)The memorandum shall be dated and shall be signed by each subscriber in the presence
of at least one attesting witness who shall state his or her occupation and postal address.
(2)Opposite the signature of every subscriber there shall be written in legible characters his
or her full name, occupation and postal address.

9. Restriction on alteration of memorandum

A company may not alter the conditions contained in its memorandum except in the cases
in the mode and to the extent for which express provision is made in this Act.

10. Mode in which and extent to which objects of company may be altered
(1)A company that has included in its memorandum its objects, may, by special resolution,
alter its memorandum with respect to the objects of the company, so far as may be required
to enable it to—

(a)carry on its business more economically or more efficiently;

(b)attain its main purpose by new or improved means;
(c)enlarge or change the local area of its operations;
(d)carry on some business which under existing circumstances may conveniently or
advantageously be combined with the business of the company;
(e)restrict or abandon any of the objects specified in the memorandum;
(f)sell or dispose of the whole or any part of the undertaking of the company; or
(g)amalgamate with any other company or body of persons, except that if an application is
made to the registrar in accordance with this section for the alteration to be cancelled, it
shall not have effect except in so far as it is confirmed by the registrar.

Articles of association
11. Articles prescribing regulations for companies
It shall be lawful for a company to register in addition to its memorandum and articles of
association, such regulations of the company as the company may deem necessary.

MEMORANDUM AND ARTICLES OF ASSOCIATION.

The details must be availed in the memorandum and articles for reasons that notices and
notifications may have to be made by the members.
see, Section 8 of the Companies Act
-Section 9 of the Companies Act put a restriction on the amendments to the information in
the memorandum. It provides that The company may alter the conditions in its memo except
in the cases in the mode and the extent to which the Act is made(see provision)
-The mode of alteration of the objects is provided in Section. 10. It provides that the
alteration must be made by a special resolution but the test is that the alteration must be for
the benefit of the company to carry on business more economically efficiently.

This means that there are two conditions to fulfill before amending the objects of the
company;
1. The alteration must be made by a special resolution.
2. The alteration must be made for the benefit of the company to carry out the business
more economically.

Section 11 provides that the Articles of Association can be altered but by a special
resolution, section 16 however provides that Articles of Association can be altered by
special resolution but it is not mandatory to register the Articles of Association.

REGISTRATION.
Section 8 provides that a company shall be registered by filling in the particulars contained
in the registration form in the 2nd Schedule of the Act.
1. The process starts off by first reserving the name.
Section36 provides for the reservation of a company name. A company name must be
distinctive, unique and not in existence and with no intention og confusing customers.
Java House v Cafe Javas
This, after a High Court ruling on February 9, 2016, compelled the Registrar of Companies
to allow registration of the trademarks Java House, Java Sun and Nairobi Java House.”
The Uganda Registration Services Bureau (URSB) had rejected the registration of these
trademarks after Mandela Auto Spares – owners of Café Javas – filed an objection.
URSB rejected the registration on the grounds that with entry of the Nairobi Java House in
the market, it would lead to confusion by members of the public.

Java House appealed the decision on nine grounds and Justice Christopher Madrama
Izama ruled in their favour.
“The registrar erred to rely on the evidence of Mohammad Mohideen after finding that there
was no evidence of reference to the restaurants of the respondent (Café Javas) as Javas by
an average or reasonable customer. Furthermore, the trademarks of parties are visually
very different,” the ruling reads.

The ruling further reads: “In any case my finding on the evidence is that the two marks are
dissimilar and likelihood of confusion is not supported by evidence and therefore the
conclusion of the registrar is not supported.”
A key point of contention was whether there could be a trademark on the use of the word
“Java” which Mandela Auto Spares had registered in Uganda.
However, the ruling by the court insisted that the word Java is commonly used globally in
reference to services offered by coffee shops.

Coca Cola v Riham Cola-cola is generic

Bolton v Bolton Case

Apply to the registrar(URSB)
name /trademark
Name shouldn't be confusing, and the for the registrar to reserve a name for a company, it
must be desirable.

In Polaris Capital (Pty) Ltd v The Registrar of Companies, where court stated that it has the
discretion to decide;
1. If a name is desirable and uses a test as to whether the name of the company is the
same/similar to that of another.
2.whether there's a likelihood of confusion that by the public when dealing with competing
companies.

2. File with the registrar form A1, that form has the nominal share capital of the company. It
also has a declaration of compliance with the requirements of the company's act.
-You give the particulars of the directors and company secretaty.
-You also give the registered office and registered postal address of the company.
-The importance of this is to avoid against ghost comapnies that defraud people..
-You need to file the particulars of the shareholders.
3. File the memorandum, and Articles of Accociation, if it is a public company you file a
prospectus/statement in lieu of the prospectus.
4.For a public company, you adopt the code of of a corporate governance in accordance
with Table F,
This givs guidelines directors have to follow, e.g.,disclosure, transparency, honesty etc.

Section 19 of the Companies Act, The memorandum and Articles (memarts) when delivered
to the registrar, s/he shall retain and register them and shall assign a registration number to
each company if so registered.

-A company shall indicate its registration number on all its official documents, Section 18
(3)CA. The registrar shall issue a certificate signed by him/her that the company is
incorporated and in the case of a limited liability Company(LLC) that the company is limited.

-Under Section22 the certificate issuedby the registrar is conclusive that all the
requirements of the Act in respect of registration/incidental to registration have been
complied with.
-Upon registration the company is born ans can commence business.
ADVANTAGES OF REGISTERING A COMPANY.
1. Under the Beneficial ownership requirement, prevents financial fraud.. money laundering
et al.
2. Avoid conflicts over names.
3.Taxation and insurance purposes
5.limited liabilty
6. Perpetual Succession/continuity of existence
7. Employment.

DISADVANTAGES.
1.Long procedure(Bureaucracy)
2.Complex procedure
3.Costly
4.Limits the activities of the company.

MEMBERSHIP.
One can become a member by;
1. Acquiring shares by subcription at the time of incorporation of the company.
2.By allotment of shares by the directors, usually when a company decides to do an IPO.
3.By purchase of shares from a shareholder/transmission of a share upon death.

Note; Issue,
can someone be a member of a company if they haven't paid?
What defines a member, is it payment.? and
A what point does someone become a memeber
1.The issues that have cropped up in regard to membership is whether a person who
hasn't paid for shares, subscribed to them/alloted to them is a member with full rights.
2.Whether a member's register is conclusive proof of membership of a company.
In Amin Mohammed Mohammed Alibhai v Bugerere Property Ltd. That payment can be
non-cash but a mamber must give the registrar proof to that effect.
Cliff Masagazi v Afriland First Bank (U) Ltd.
The Plaintiff claimed to have offered a non-cash consideration for shares.
Held; For this to happen, the company has to deliver to the registrar a contract of sale of
services/other consideration in respect of that allotment and in this case, court found that
there was no evidence that the company had awarded the petitioner shares in exchange for
services and so the petitioner was not a memeber.

In Olive Kigongo v Mossa Courts,

Court said that payment of shares was irrelevant as the company financed its activities
through a loan.

Locus. Rukikaire Mathew V Incafex

Held; That the obligation of a memeber to pay for shares arises when a member is called
upon by the company to make payment for the unpaid shares during its operations. The
lack of evidence of non-payment didn't affect the applicant's membership rights.

TEST;
For one to be a member, you don't have to pay for shares, obligation only arises when the
company calls upon a person to pay. As such if you haven't paid, it doesn't take away your
rights.
Section .47(1) The Company's Act defines a member as a subscriber to the memorandum
who shall be taken to have agreed to become a member of a company and who on
registration shall be entered a mamber in the register.

Section 47(1) provides that The subscribers to the memorandum of a company shall be
taken to have agreed to become members of the company, and on its registration shall be
entered as members in its register of members

Section 47(2) A person who agrees to become a member of a company, and whose name
is entered in its register of members shall be a member of the company.

This means that a member is one who subscribes to the memorandum or one who is later
admitted after incorporation.

If a person isn't entered on the company register yet s/he is a member, the remedy is
provided under Section 125 where court has the power to rectify the register and add the
member and the company will pay damages sustained by the aggrieved party.
Mawogola Farmers & Growers ltd v Kayanja.
Held; A share certificate is conclusive evidence that one is a member of the company and
therefore his/her name should appear on a register.

Thus if you have been given a share certificate you're a member and when you're not on the
register, you can sue and have your name added.
READ.
Salmon v Salmon
Lee v Lee
Makawura v Northern Assurance Co.Ltd.
Note,
1.For one to be a member, they don't have to pay for shares, they have to prove that they
appear on the register.
2.Section125. Members who have paid for shares but not on the register can sue to have
their names appear on the register.
GENERAL PROCESS OF INCOPRPORATION AND ADVANTAGES AND
DISADVANTAGES OF INCORPORATION, DOCUMENTS, EFFECT OF
REGISRATION/CERTIFICATE OF INCORPORATION, ISSUES OF MEMBERSHIP,
SECTION 47 CA and CASE LAW, APPEAR IN REGISTER, MEMBERS THAT ARE NOT
ENTERED REGISTER AGTER PAYING SEC125, PRINCIPLE OF CORPORATE
PERSONALITY
HIATUS
PRINCIPLE OF CORPORATE PERSONALITY,
A company or a corporation is a legal entity, separate from its members or shareholders,
legal personality enables a company enjoy rights of a natural person and subjects a co to
liabilities separate from its memebers. thus if a company has one shareholder, there exists
two legal persons i.e., the company and the member.

The principle of corporate personality as established in Salmon v Salomon and co limited.

(asked us to read it), s Carried on a business as a leather merchant, in 1892, he converted
the business into a Limited liability company by forming Salomon and Co. Ltd. The shares in
the company were held by Salomon, his wife and 5 children. but Salomon held the majority
shares, the company then bought Salomon's business at 39,000pounds, part of which was
made of debentures another part unfully paid shares, and snother in cash. immediately after
incorporation, the company experienced difficulties and a year later it was wound up. The
company had sufficient assets to satisfy the debentures but had nothing left for the
unsecured creditors, the unsecured creditors sued and contended that for all intents and
cos, Salomon was the company and could therefore not owe money to himself, HOL
decided against unsecured creditors, stating that in law, Salomon and the company were
two different persons, that Salomon was therefore entitled to the available assets in his
preffered position as a secured creditor. Lord McNaughton in his judgement "The company
is at law a different person altogether from the subscribers to the memorandum and
although it may be that after incorporation, the business is precisely the same as it was
before and the same persons are managers and the same hands receiving the profits, the
company is not in law the agent of the subscribers or trustee for them." priority a
later Salomon Lee v Lee Air Farming in that case, Lee held, 2999 of the 3000 shares of the
Company, he was the managing director and chief pilot at a salary, while working for the
company he was killed in an aircrach and his widow claimed compensation from the co, on
the ground that Lee had been an employee under a contract of service. Court held that the
company and Lee were separate persons in law, and therefore the claim of his widow was
upheld.

In another case, Macaura v Northern Assurance Co.(reading list)

Macaura was the owner of Kilimoon Estate, he sold the whole of the timber in the estate to
a co called, Irish Canadian Saw mills, in consideration for an allotment to him, of 42,000
fully paid shares. all the company's shares were held by Macaura and the nominees, he
was also an unsecured creditor of the company, following the sale, Macaura effected
insurance policies in his own name, with the northern assurance company, covering the
timber against fire, when the timber was destroyed by fire, a claim by Macaura against the
insurance company was rejected on grounds that he had no insurable interest in the timber
since it belonged to the Irish Canadian Saw Mills Limited, so this case established the
principle that the property of a company, belongs to the company and not its shareholders.
i.e., no creditor, whether secured or unsecured can have any insurable interest in the
company property, that although Macaura owned almost all the shares in the company, and
the company owed him a good deal of money, neither as a creditor nor as a shareholder
could he insure the company's assets. But what was exposed to the fire was not his debt or
his shares, but timber that belonged to the company. -Property of the company, it was
supposed to be in the company's name(insurance)

There have been a number of cases decided, invoking the decision in Salomon v Salomon,
these cases highlight the conseqences of corporate personality.
CONSEQUENCES/ATTRIBUTES OF CORPORATE PERSONALITY
1.The company becomes a legal entity distinct from its memebers and therefore capable of
enjoying rights and incurring liabilties, in Salomon v Salomon, the words of Lord, Halsbury
"Once the company is legally incorporated, it must be treated like any other independent
person with its rights and labilities appropriate to itself.
2. A company can enter into a contract with one of its own, Lee v Lee Air Farming. The
Company property belongs to the company and not its members, see Macaura v Northern
Assurance Co. Ltd, see Also, Cosmopolus v Constitutional Insurance Company of Canada.
- has similar facts to Macaura, read it.

3. As an artificial person, a company has no racial attributes , religion, gender etc see,
Katete v Nyakatura. Here the respondent sued petitioner for recovery of certain sums of
money due to the Ankole African Commercial Society Limited in which the petitioner was a
director and also the deputy chairman. The respondent conceeded that in filing the action,
he was acting entirely on behalf of the society which was therefore the proper plantiff. The
action was filed in the central Native Court, under the relevant, Native Court Ordinance, the
Central NC had jurisdictin in civil cases, in which all the parties were natives. ISSUE,
WHETHER AACSL of whom all the shareholders were natives, was also a native. HELD;
Limited liability company is a corporation and as such it has existence that is distinct from
that of the shreholders who own it. being a distinct legal entity and an abstract in nature, it
was not capable of having racial attributes. and therefore the court had no jurisdiction to
hear the case.

KAJJUBI v KAYANJA,
Where the respondent claiming to act under Power of Attorney, in his own name sued the
appellant in the Buganda Principal Court for misappropriation of 8650 shillings of the
KB(Kabaka of Buganda) coffee growers company. It was clear from the proceedings that
the real plaintiff was the Limited Company itself. Appellant objected to the jurisdiction of the
Principal court, but that court after inspecting the Power of Attorney gave judgment for the
repondent. On appeal, Appellant contended jurisdiction of the Principal Court being
restricted to disputes between africans and court held the Principal Court had no jurisdiction
to entertain a suit of a limited liability company within the meaning of the Buganda Court's
Ordinance.

NATIONAL AND GRINDLAYS V KENT TILES AND COMPANY

5.The members attain Limited liability since the company is a separate person from its
members, its memebers are not liable for its debts. Ssentamu v UCB. The Plaintiff was a
Managing director of a company and was commissioned by the company to negotiate a
loan with the defendant bank. The bank later caused the arrest of the plaintiff in order to
recover repayment of the loan, and the
ISSUE, Whehter individuals are liable for company debts and court held that a Limited
Liability Company is a separate legal entity from its directors, shareholders and other
memeber.

Individual memebers of the company are not liable for company debts. even as a Managing
Director, Plaintiff could not be personally liable for the debts of his company.

6. Suing and being sued. As a legal person, a company can take action in its own name, to
enforce its legal rights. conversely, the company may be sued for breach of its legal duties.
Wani v Uganda TIMBER AND JOINERS LIMITED. The plaintiff applied for a warrant of
arrest, to be issued against the MD of the defendant company in order that he may be
called upon to show cause why he should furnish security for his company's appearance at
the hearing of a suit where the company was a defendant.
Held; A managing Director is not a company and cannot be sued personally, if there's a
case against a company, then the company is the right person to be sued and not its
Managing Director and in this case, the right defendant in the suit was Uganda Timbers
Limited and not the MD.

24-2-2023
recap.
corporate personality, salmon v salmon, distinct, rights and duties, and certain attributes;
person, distinct entity as in Salmon v Salmon, can contract and enter into contracts with
outsiders, Lee v Lee(Pilot), Company Property Macaura v Macaura, No racial attribute,
religion or political attribute-Companies' Act doesn't provide this-Katete v Nyakatura,
Attains limited liability-Sentamu v UCB. can sue or be sued. Wani v Uganda Timber

7. PERPETUAL SUCCESSION.
As an artificial person, co has no mind, body or soul. it has therefore been said that a co is
inviible or immortal, and can only cease to exist by the same process of the law that brought
it into existence, otherwise it is not subject to the death of a natural human or body, even
though the members may come and go, the company continues to exist.

8.TRANSFERRABILITY OF SHARES.
Under the companyies' Act, the shares or any other interests of the memebers in a
company shall be movable property transferrable in the manner provided by the Articles of
Assoc of the Company. This means therefore that shares in a company are transferrable
and upon the transfer the assignee steps into the shoes of the assignor as a shareholder of
the co with full rights. it should be noted that this transfer of shares is limited to public cos
and not private cos.
(8 attributes, read these and understand them, distinguish partnerships and companies, the
two are very distinct)

LIFTING THE CORPORATE VEIL.

Altough Salmons case finally established that a co is a separate and distinct entity from the
members or shareholders, there are circumstances in which this principle of corporate
personality is itself regarded. In such a situation, it can be regarded as an exception to the
principle in Salmon's case. So the consequences of incorporation can be curtailed by lifting
the veil of incorporation and in this instance, the company's separate legal personality is
ignored and this happens under the following two instances;
1. Under Judicial lifting of the corporate veil
2. Statutory liftng of the corporate veil.

JUDICIAL LIFTING OF THE VEIL.

This can be done in cases of fraud and improper conduct.
Where there's fraud or improper conduct, court will immediately disregard the corporate
entity of the company. this happens mainly where companies are formed for a fraudulent
purpose, or where they are formed to facilitate the evasion of a legal obligation.
see; GILFORD MOTOR CO V HORNE.
D WAS A FORMER EMPLOYEE OF D company and had covenanted/agreed not to solicit
the plaintiff's customers. the D formed a company which ran a competing business. The
company did the soliciting, the defendant was not a memeber nor a director in that
company. When he was sued, the defendant argued that he had not breached this
agreement witht the P because the soliciting was done by a company which was a
separate legal entity from him. Courtheld that the defendant's company was a mere
cloak/sham and that it was the D himself through this device who was soliciting the plaintiff's
customers.

Court stated that "the D company is a creature of the D, a device and a sham which he
holds before his case in an attempt to avoid recognition by the eyes of equity and the law.

JONES V LIPMAN
D entered into a contract for the sale of property to the plaintiff. subsequently, he refused to
convey the property to the plaintiff, and formed a company for the purpose of acquring that
property and actually transferred the property to the company, in an action for specific
performance, the defendant argued that he could not convey the property to the plaintiff as it
was already vested in a third-party. Russo J, stated that the D co was merely a device and a
sham, a mask which he holds before his face in an attempt to avoid recognition under the
law. and court granted an order for specific performance against the defendant to convey
the land to the plaintiff.

RE;DARBY,
STANBIC BANK V DUCAT LUBRICANTS MSC APP 845 2013, WHERE court held that the
corporate veil ought to be lifted where there's proof of involvement of the directors in fraud.
So where directors who are the acting mind and body of the company are involved in an act
of dishonesty, the veil of incorporation will be lifted.

see, Lubega Matovu v Mikwano Investments Ltd. Msc App 156 2012.
Where court held that the allegation of fraud must be adequately proved for the veil of
incorporation to be lifted.
2.wher compay as an agent or nominee,
In reality there's no reason as to why a company may not be an agent of its shareholders,
however there have been occasions in which the courts have held that registered
companies were not carrying on businesses in their own right but rather were carrying on
businesses as agents of their holding companie

see, Re. FG Fills Limited wher justice Baisy held that an English Company with no
signficant assets or employees of its own, was merely an agent or nominee for it's American
Parent Company.

See, Smith Stone and Knight Limited v Birmingham Corporation.

STATUTORY LIFTING OF THE CORPORATE VEIL

Section 20. Gives the High Court jurisdiction to lift the corporate veil in certain instances.
1. Where the number of company members goes below the legal minimum,
Under section 49, if a company carries on busines for more than 6months after its
membership has fallen below the required minimum. Every memeber during the time of
infringement and with the knowldge of infringement is severally liable for the debts of the
company incurred during the time.

2. Holding and subsidiary companies andgroup accounts.

the law requires that where a co has a subsidiary co/s, the group a/cs should be presented
at the general meeting of the holding company. In this regard, the holding and subsidiary co
are regarded as one. this is dobe for accounting purposes and the legal entity of the
subsidiaries is disregarded.

3.For purposes of taxation.

Under the income-tax act, veil of incorporation may be lifted to ascertain where
management and control of the company is exrcised in order to determine whether it is a
resident company for income-tax purposes.

4. Fraudulent trading.
At the winding up of the company, if it appears that the business of the company has been
conducted fraudulently, with an intention to defraud the creditors of the company or any
other person, those responsible for such fraudulent conducts may be held personally liable
and this can be doneby lifting the corporate veil.

see, William Reitch Bros Ltd. 1932 2 ch 721, it was held " a company that is said to be
carrying on business fraudulently and it incurrs debts at the time, yet with the knowledge of
the directors, there's no reasonable prospect that the creditors will ever receive payment of
those debts.

5. Investigation into related companies.

The corporate veil can be lifted in instances wher an inspector has been appointed, by the
registrar of companies to investigate the affairs of the company. e.g., for banks,under the
FIA BOU sends inspectors and supervisors to look into the dealings of the company.
Cranebank.

6.Commencement of a business by a public co, before obtaining a certificate of

Incoporation.
A public co cannot commence business before obtaining a trading license or a certificate of
incorporation. ss