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Questions and Answers
What is the purpose of the statement of Nominal Capital in the process of incorporation of the Company?
What is the return paid or given to a shareholder on their investment in a company known as?
Which of the following companies is an example of a statutory company in Uganda?
The case of Salomon v Salomon illustrates the principle that a company is an agent of the members who have formed it.
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Which of the following is NOT a characteristic of a company in liquidation?
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A business arrangement where two or more companies are combined to constitute one entity is called what?
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Which type of meeting is held only once in the company's lifetime?
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For one to qualify as a director in the company, which of the following is NOT a requirement?
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Study Notes
Company Incorporation
- Nominal Capital: Reflects the total number of shares and their nominal value.
Shareholders and Returns
- Dividend: The return paid to a shareholder for their investment/shareholding in a company
Types of Companies
- Statutory Company: A company established by a specific Act of Parliament, e.g., Public Procurement and Disposal of Public Assets Authority.
Salomon v Salomon
- This case establishes the principle that a company is a separate legal entity from its owners (the members). This means the company is a distinct legal person and can enter contracts, sue or be sued in its own name, and the members' liability is limited to their shares.
Companies in Liquidation
- Liquidation: A process where a company's assets are sold to pay off debts, the company ceases to operate, and the existence of the company is formally terminated.
- During liquidation, the company's management is taken over by a liquidator, who handles the winding-up process.
Business combinations
- Merger: A business arrangement where two or more companies combine to form a single new entity, typically resulting in a new legal structure.
Company Meetings
- Statutory Meeting: A meeting legally required for newly formed companies within a specified period after incorporation.
- Annual General Meeting (AGM): A yearly meeting of shareholders to discuss the company's affairs.
Investment and Shares
- Prospectus: A legal document that details the company's financial information, performance, and plans, providing potential investors with information before buying shares.
- Uganda Stock Exchange: A platform for trading shares of public companies.
Directors
- A director must be of sound mind and above 18 years old, a discharged bankrupt is NOT eligible.
Debentures
- A debenture represents a company's acknowledgment of debt owed to another person.
Managing Director
- For statutory companies, the Board of Directors typically has the power to appoint the Managing Director.
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Description
Explore the fundamental concepts of company law, including nominal capital, shareholders' returns, and the different types of companies. Understand landmark legal cases like Salomon v Salomon and the process of liquidation. This quiz covers essential principles that govern corporate entities.
