Individuals have tried to theorize on Corporate Law, some of which include (in simple terms);
- Fiction Theory: That the company is a fictional personality distinct from its members. It is artificial, invisible and intangible… devoid of mental element.
- The concession /Grant Theory: that the company derives its personality and power from the concession granted to it by the State.
- Realist/Aggregagte Theory: That a company is not artificial but real.
- Economic Theory: That the company is nothing but a vehicle to make profit.
- Property Rights and Social Institutions Theory: That the company is established to uphold the rights of the Shareholders although it recognizes that, where the situation permits, the company may recognize the Stakeholders.
- Communitarianism Theory: That companies should seek to serve the entire stakeholders (i.e. the wider community) not just by giving preference to the shareholders.
- The Contractual Theory: Here the company is regarded as a less costly alternative to market transactions. Assets are more productive where they are combined by individuals as a joint team to increase profit.
- Team Production Theory: That the company is nothing but a team effort. Production is as a result of various input and team effort.
How can a company be formed?
1. By Charter or Law: formed under special legislations regarded as the enabling law/statute. E.g. PHCN, NNPC, the University of Lagos, etc.
2. By Registration: either as a private or public company. After dividing into Public or Private Company, there is a further sub division of Private/Public companies Limited by Shares, those limited by guarantee and those with Unlimited Liability.
2.A. Private Company: is a company whose number ranges from 1 – 50. It cannot invite the public to deposit money. invest or buy its shares.
2.B. Public Companies: A company stated to be public under its Memorandum who can generally make its shares available to members of the public and can have more than 50 members.
Registration of a Company is handled by the Corporate Affairs Commission after the requisite information and fees have been settled. A Certificate of Registraiton is then issued as a sign of Registration. The certificate of incorporation is rebuttable proof that the company is duly registered under the law. A person who asserts that the company was not incorporated should prove his assertion. Consequently, those who assert that a company has been incorporated should prove same by producing the certificate of incorporation.
Beyond the classification into Public and Private Companies, there is a further classification into “Limited” and “Unlimited Liability” Company with the former having its liability limited to the number of shares owned by each Shareholder and the latter having unlimited liability. A foreign company may transact business in Nigeria by incorporating as a local company or getting Government approval or acquiring an existing local Company.
Ref Updated: Isochukwu Michael (www.isochukwu.com)