- 5 Marks
BL – March July 2020 – L1 – SB – Q2c – Company Law
Involves a case regarding the liability of the company and its shareholders when the company is winding up.
Question
Chief Ochoma was a very successful electronics dealer as a sole proprietor. Two years ago, he incorporated a limited liability company with the name “Ochoma and Sons Limited” to take over the business. Ochoma and his sons are the subscribers of the 1,000,000 equity shares of the company at ₦1.00 per share. Chief Ochoma subscribed 970,000 shares and each of the three sons subscribed to 10,000 shares.
The company’s warehouse was razed by fire last year, and all the stock of electronics was burnt, resulting in the company’s huge indebtedness to unsecured trade creditors. In the process of winding up Ochoma and Sons Limited, the unsecured creditors insisted that Chief Ochoma should pay the debts the company owes them because he is the de facto owner of the company.
Required:
Advise Chief Ochoma, stating the legal issues involved.
Find Related Questions by Tags, levels, etc.
- Tags: Company Law, Corporate Veil, Limited Liability Company, Shareholding, Unsecured Creditors
- Level: Level 1
- Topic: Company Law
- Series: MAR/JULY 2020