effect of legal personality on a registered company
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IMPACT OF LEGAL
PERSONALITY ON A
REGISTERED
COMPANY
A RESEARCH PROJECT WRITTEN IN THE DEPARTMENT OF
BUSINESS ADMINISTRATION, SCHOOL OF BUSINESS STUDIES.
SUBMITTED
IN PARTIAL FULFILMENT FOR THE AWARD OF HIGHER NATIONAL
DIPLOMA (HND) IN BUSINESS ADMINISTRATION.
NOVEMBER 2009
1
COLLEGE OF ACCOUNTANCY AND COMPUTER TECHNOLOGY
BLOCK B, FLAT 8, MASOJE ESTATE.
P.T.I ROAD, EFFURUN. DELTA STATE. NIGERIA.
2
CERTIFICATION
We certify that this work was carried out by Ugorji Festus
Chukwudi in the School of Business Studies, department of
Business Administration, AKWA IBOM STATE POLYTECHNIC for the
award of higher national diploma in Business Administration.
__________________ ________________
(Supervisor) Centre Co-ordinator
Date __________ Date __________
DEDICATION 3
I dedicate this project to Almighty God for his divine guidance,
grace and mercy throughout my academic pursuit. May all Glory,
Honour, Majesty and power be ascribed unto His Holy Name in
Jesus Name.
ACKNOWLEDGEMENT
4
I am most grateful to the Almighty God for giving me life, strength
and courage to sail through my educational career despite all
odds and obstacles.
In writing this project, I am indebted to my friends, colleagues and
my family for their contributions; support and encouragement in
making this project work a success.
I will like to use this opportunity to express my sincere thanks to
my parents, brothers and sisters, relatives, and loved ones for
their prayers, moral and financial support through this program.
My profound gratitude goes to my Supervisor
…………………………………..who despite his crowded schedule,
sacrificed time to read through the manuscript without which this
project would not have seen the light of the day.
My special thanks also goes to my wife for their advice,
encouragement and assistance.
In like manner, I wish to acknowledge the effort of all my lecturers
in accounting department for their principal knowledge imparted
on me during my period of study.
5
Finally, thanks to others I cannot remember during the course of
the write up, may God reward every effort of kindness and love
shown during my academic pursuit.
ABSTRACT
A company is a legally recognized organization designed to
provide goods and/or services to consumers. Businesses are
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predominant in capitalist economies, most being privately owned
and formed to earn profit that will increase the wealth of its
owners and grow the business itself. The owners and operators of
a business have as one of their main objectives the receipt or
generation of a financial return in exchange for work and
acceptance of risk.
A corporation or body corporate is a legal person created and
recognised by the law. In this sense it is an artificial legal person
as opposed to individuals who are known as natural persons. The
incorporation of a company has some legal effects: firstly, it
creates a legal person. Secondly, that legal person has "perpetual
succession", i.e., it lasts until liquidated by an order of court.
In this project, attempt was made to examine impact of legal
personality on a registered company.
The writer critically looked into the short comings/legal impacts of
few business enterprises and its management set-up, which lead
to the establishment of the objectives of the study which
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included; generating enough surplus to pay back the invested
capital to the investors as early as possible.
To generating surplus for — (i) Expansion, (ii) Improvement of
quality, (iii) Increasing efficiency through introducing new
technology, (iii) Innovative marketing to reach the deeper layers
of low-income people and disadvantaged communities and (v)
Undertake research and experimentation to improve and diversify
products and services.
In order to arrive at a conclusive decision on the above objectives
the writer carried out an empirical survey and library research
from which the various data were obtained. Based on the data,
two hypothesis formulated by the researcher was tested using
Chi-square analysis to arrive at a better conclusion. The
hypothesis testing was based on primary data while the
secondary data were further analyzed to portray the state of
affairs at various periods.
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CHAPTER ONE
INTRODUCTION
1.0 THE BACKGROUND OF THE STUDY
Corporate legal personality arose from the activities of
organisations such as religious orders and local authorities
which were granted rights by the government to hold
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property and sue and be sued in their own right and not to
have to rely on the rights of the members behind the
organisation. Over time the concept began to be applied to
commercial ventures with a public interest element such as
rail building ventures and colonial trading businesses.
However, modern company law only began in the
midnineteenth century when a series of Companies Acts
were passed which allowed ordinary individuals to form
registered companies with limited liability. The way in which
corporate personality and limited liability link together is
best expressed by examining the key cases.
The incorporation of companies in Nigeria normally involve the
following procedure:
i) taking instruction from the promoters/ clients
ii) preparing the incorporation documents
iii) stamping incorporation documents
iv) Filing the incorporation documents with the Corporate Affairs
Commission ("CAC" or the "Commission") and obtaining the
certificate of incorporation.
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1.1 STATEMENT OF RESEARCH PROBLEM
Corporate personality refers to the recognition by the state
that certain organizations have legal personality. Historically,
this meant that organizations such as religious orders and
local authorities could hold property rights and could sue and
be sued in their own right, without having to rely on the
rights of the members of the organization. In considering the
impact of legal personality on a registered company, the
questions that easily come to mind are-
What is business organization/company?
What are various forms of business organizations available?
What are various sources of funds available for business
organization?
What is legal personality
In what way can the law of the land affect a registered
company?
Why is corporate personality or body corporate?
What are the Consequences Effect Of Incorporation
What are the procedures for the registering a company in
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Nigeria?
1.2 THE SIGNIFICANCE OF THE STUDY
This research will be of great interest and benefit to the
following:
1. The manager and chief executives of the company under
consideration.
2. Producers, intermediaries, as well as management,
organizations/firms.
3. The students of marketing, accounting and business
administration and those reading law.
4. Likewise to aspiring businessmen and entrepreneur.
5. The diverse group of people and the dynamic marketing
partners as well as the society at large. The diversified group
of people above, must know how to adapt to the marketing
strategies, new technologies.
6. Lawyers and other legal practitioners.
1.3 OBJECTIVE OF THE STUDY
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It would have been a total waste of time, efforts, energy and
of course fund, in conducting this research if it was not
meant to achieve any meaningful objectives the research
would also have been seen as a fruitless exercise if there
were no fundamental objectives to be achieved at the end of
the study. The objectives of the study therefore were:
(i) To investigate the impact of legal personality on
registered company
(ii) To find out whether or not, incorporating a company in
Nigeria has any serious consequence on the promoters or
company itself.
(iii) To enable the researcher to avail himself of the
opportunity to contribute his quota to the pool of
knowledge on the formation, conduct and management of
company in Nigerian
(iv) To provide an objectively sufficient ground for the
researcher to make contributions to the "GREAT
DEBATE" of corporate personality?
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1.4 LIMITATION OF THE STUDY
Research work is subject to one form of limitation or the
other, mine is not an exemption.
It was the initial thought of the researcher that the exercise
was easy but the contrary was the case. As a student,
several academic demands compete with the limited but
precious time available.
This implies that none of the competing exercise could be
effectively handled without the others being worse off.
This was my situation. Although the time expended was too
small to do justice to the study. The opportunity cost in
terms of other equally important activities forgone or
cursorily attended to, was made.
The researcher faces some embarrassment arising from low-
level educated staff of the company completing the
questionnaire who could not understand the essence of the
research work as this.
1.5 HYPOTHESIS
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It is a conjectural statement of the relationships between two
or more variables. It is testable, tentative problem
explanation of the relationship between two or more
variables that create a state of affairs or phenomenon.
E,C, Osuola (1986 page 48) said hypothesis should always be
in declarative sentence form, and they should relate to them
generally or specially variable to variables.
HYPOTHESIS THUS:
1. Explain observed events in a systematic manner
2. Predict the outcome of events and relationships
3. Systematically summarized existing knowledge.
In essence, there exist NULL HYPOTHESIS set up only to
nullify the research hypothesis and the ALTERNATIVE
HYPOTHESIS for the purpose of the study. For the efficiency
of the study, the hypothesis is as follows:
Null Hypothesis (HO)
1. A company can die at anytime.
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2.` The property of the company is not separate from that
of the member/owner.
Alternative Hypothesis (HI)
1. A company does not die but continue to exist until its
name is dissolved through a legal process.
2. A company may own property distinct from the property
of its members.
1.6 THE STRUCTURE OF THE RESEARCH WORK
This research work is to be organized in five chapters as
follows:
1. Introduction
2. Review of Related Literature
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3. Research Methods and Producers
4. Data presentation and Analysis and
5. Findings, Summary and Conclusion
CHAPTER TWO
LITERATURE REVIEW
2.0 FORMATION OF COMPANIES AND BUSINESSES IN NIGERIA
Capacity to Form a Company
The major player in the formation of a company is the
promoter; he conceives the idea and takes all necessary
steps to accomplish it, and however he usually consults a
solicitor for professional guidance.
Section 18 of C.A.M.A
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Empowers any two or more persons to form and incorporate
a company as long as they comply with the requirements of
the Act in respect of companies. Also, an association of more
than 20 persons formed for the purpose of carrying on any
business for profit or gain must be registered under the Act
as accompany. The Act prohibits certain categories of
persons from joining in the formation of a company; namely:
a) persons that are less than 18 years of age, unless there
are two other persons of full age and capacity who have
already subscribed to the Memorandum of Association;
b) persons of unsound mind who have been so found by a
court in Nigeria or elsewhere;
c)any person who is an undischarged bankrupt;
d) Who is disqualified under Section 254 of C.A.M.A from
being a director of a company?
The Act prohibits a corporate body in liquidation from joining
in formation of a company. An alien or foreign company may
join in forming a company provided they comply with the
provisions of any enactment regulating their rights and
capacity to do so.
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2.1 INCORPORATION OF COMPANIES
Incorporated companies can generally be examined under twoheads;
a) Incorporation of local companies; and
b) Incorporation of companies with foreign participation
Incorporation of Local Companies
The incorporation of local companies in Nigeria normally
involve the following procedure:
i) taking instruction from the promoters/ clients
ii) preparing the incorporation documents
iii) stamping incorporation documents
iv) Filing the incorporation documents with the Corporate
Affairs Commission ("CAC" or the "Commission") and
obtaining the certificate of incorporation.
Taking instructions
The first step a legal practitioner takes when incorporating a
company is to obtain necessary information from his client
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regarding the company to be incorporated. For instance, he
must obtain the full names, addresses and occupation of the
client as well as every other person connected with the
promotion of the company. After this, he is to obtain, fill and
deliver to the CAC, the Availability and Reservation of the
Name form. Enabling him to conduct a search at the Registry
of the CAC to ascertain whether or not the proposed name is
available and does not fall within the prohibited and
restricted names stipulated in the Act.
Prohibited Names
The Act prohibits the registration of any company whose
name -
a) is identical with that by which a company in existence is
already registered or so nearly resembles such name as to
be calculated to deceive;
b) contains the words "Chambers of Commerce" unless it is a
company limited by guarantee;
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c) is capable of misleading as to the true nature or extent of
its activities or is undesirable, offensive, or otherwise
contrary to public policy.
d) would violate any existing trademark or business name
unless the consent of the owner of the mark or business
name has been obtained.
Restricted Names
The Act restricts the registration of any company with the
following names except with the prior consent of the
Commission:
a) where such name include the work "Federal", "National" ,
"Regional", "State", "Government", or any other name
suggesting the enjoyment of government patronage; or
b) where such name contains the "Municipal" or "Chartered"
or connected with any municipality or local authority, or
c) if the name contains the word "Co-operative" or the words
"Building Society", or
d) where such name contains the word "Group" or "Holding".
2.2 CORPORATE PERSONALITY AND LIMITED LIABILITY
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Corporate personality refers to the recognition by the state
that certain organizations have legal personality. This meant
that organizations such as religious orders and local
authorities could hold property rights and could sue and be
sued in their own right, without having to rely on the rights
of the members of the organization. Over time, however,
corporate personality came to be conferred on commercial
ventures such as trading companies and roadway
construction projects or parastatals (major statutory
corporations) in which there was a public interest. By the
mid nineteenth century, the difficulty involved in obtaining a
grant of corporate status from parliament forced businesses
to utilise the trust instrument to form "deed of settlement"
companies. These companies were extremely complex legal
entities that were sometimes used as instruments of fraud.
In order to remedy this, a series of mid-nineteenth century
Companies Acts were passed, creating a process whereby
ordinary individuals could easily form a registered company
with limited liability. As a result, within a few decades, the
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company went from being the privileged of a few to being
almost a right.
A company once incorporated becomes a separate legal
entity or personality and the liability of the members are
said to be limited. But there is a distinction between the two.
Limited liability is the logical consequence of the existence
of a separate personality. But however, that just as humans
can have restrictions imposed on their legal personality (for
example, in the case of children) so a company can have
legal personality without limited liability if that is how it is
conferred by statute. A company may still be formed today,
that is, as registered unlimited company without limited
liability… The logic of separate personality and limited
liability was not tested to its full extent until the late
nineteenth century as exemplified by the case of Salomon v
Salomon & Co. (1897) A C 22.
2.3 EFFECT OF INCORPORATING A COMPANY
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The incorporation of a company has two legal effects: firstly,
it creates a legal person. Secondly, that legal person has
"perpetual succession", i.e., it lasts until liquidated by an
order of court.
Unlike a partnership, a company is recognised as a person in
law. Thus, it is legally impossible to register a lease of an
office in the name of a partnership; whereas in the case of a
company, the lease can be registered in the name of a
company. The law treats the persons who own and control
the company as separate from the company itself. For
instance A, B and C set up ABC Sdn Bhd, the law considers
ABC Sdn Bhd to be separate person altogether. A company is
an "artificial person", as opposed to a human who is a
"natural person". Most of the advantages of companies stem
from their separate legal personality. Because a company is
a person in its own right, the following consequences ensue:
The resultants effects of incorporation are also stated in
section 16(5). The company:
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is capable forthwith of performing all the functions of an
incorporated company
is capable of suing and being sued
has perpetual succession
have a common seal
has power to acquire, hold and dispose of property
2.4 BODY CORPORATE
A corporation or body corporate is a legal person created
and recognised by the law. In this sense it is an artificial
legal person as opposed to individuals who are known as
natural persons. As a person, a company has:
the rights to take legal action
the rights to hold property
with powers and liabilities as an individual but is
distinguished from the members it may have from time
to time: Salomon v Salomon & Co Ltd (1897) AC 22.
2.5 SUING AND BEING SUED
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Because a company is a separate legal entity it follows that
it may enforce rights by suing and conversely it may incur
liabilities and be sued by others. In fact the rule in Foss v
Harbottle (1843) 2 Hare 461; 67 ER 189 requires the
company itself to be the person enforcing the rights.
Members generally cannot do this on their company’s behalf
although a company may sue and be sued by its own
members.
2.6 PERPETUAL SUCCESSION
A company does not die but continue to exist until its name
is struck off or dissolved through a legal process known as
winding up or liquidation even though without any directors,
members, employees, business etc.: Re Noel Tedman
Holdings Pty Ltd (1967) Qd R 561. Its members may come
and go but this does not affect the legal personality of the
company: Abdul Aziz Bin Atan & 87 Ors v Ladang Tengo
Malay Estate Sdn Bhd (1985) 2 MLJ 165.
2.7 COMMON SEAL
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A company is required to have a common seal: section 16
(5). At common law, a company could enter into a contract
only if there was a contractual document bearing the
impression of the company seal. Usually, the articles of a
company provide that the seal can only be used with the
authority of the board of directors: article 96, Table A.
Section 35(4) alters the common law so that a person with
the requisite authority can enter into a contract on behalf of
a company as if it were a natural person without the
company’s seal. Thus companies can enter into oral
contracts or written contracts without the common seal
where the law of contract and agency allows. Some
documents such as share certificates and instrument of
transfer of land require the seal of the company.
2.8 POWER TO OWN PROPERTY
A company may own property distinct from the property of
its members. The members only own shares in the company
but do not have a proprietary interest in the property of the
company: Macaura v Northern Assurance Co Ltd (1925) AC
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619. Therefore, a change in membership of a company will
have no effect on the ownership of the company’s assets.
2.9 LIABILITY OF MEMBERS
Section 16(5) states that members of a company have such
liability to contribute to the assets of the company in the
winding up, as is provided by the At. The company's debts
are separate from the debts of its members. For a company
limited by shares the liability of members is limited to the
amount, if any, unpaid on the nominal value of their shares:
section 214 (1)(d).
2.10 THE COMPANY AS A SEPARATE LEGAL ENTITY
A company has a dual nature, as an association of its
members but also as a person separate from its members.
As soon as necessary formalities of incorporation are
satisfied, a new entity comes into existence which is
separate and distinct from its directors and shareholders.
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2.11 ARTICLES OF ASSOCIATION
The Articles of Association embodies the rules and
regulations governing the internal management and
administration of a company. To a large extent, it
complements the Memorandum of Association to explain
ambiguities in the memorandum; and supplements it
(memorandum) on matters on which the memorandum is
silent.
Other Incorporation Documents
After the preparation of the Memorandum and Articles of
Association, the legal practitioner is equally expected to
prepare and deliver the following documents to C.A.C:
1) Form CAC 2.2: Notice of address of the registered office of
the proposed company and head office if different from the
registered office.
2) Forms CAC2.3 and C.O.7: A statement in the prescribed
form showing the list and particulars of the first directors of
the company together with their consent to be directors.
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3) Form CAC2.4: A statement of the authorised share capital
signed by at least one director.
4) Form C.0.1: A statutory declaration in a prescribe form of
compliance with all requirements of the Act
5) Form CAC 1 (Reservation and Availability of Name).
6) Form CAC 2.5: This is the form of Return of Allotment. It is
to be completed and delivered to CAC within one month of
the allotment of the company’s shares.
7) Other documents required to satisfy the requirements of
any law relating to the formation of company.
Stamping
After the incorporated documents have been prepared, the
next step is to get all the documents stamped. Stamps are
printed and fixed on incorporation documents like most legal
documents or instruments. The stamping gives the
document the legal authority, evidential recognition and
force of law.
Filing and Recognition
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Once the incorporation documents have been prepared and
duly stamped, the legal practitioner will deliver them to the
Commission for filing and registration upon payment of
appropriate filing and registration fees.
Companies with Foreign Participation
An alien or a foreign company may join in the formation of a
company in Nigeria. However, such alien or foreign company
must comply with all enactments regulating their rights and
capacities to undertake or participate in trade or business in
Nigeria. An alien or foreigners who intends to participate in
the formation of companies or business in Nigeria must
familiarize him/herself with the following laws:
1) The Nigerian Investment Promotion Commission Decree
No.16 of 1995
2) The Foreign Exchange (Monitoring and Miscellaneous
Provisions) Decree No. 17 of 1995
3) Investment and securities Act No. 45 of 1999.
4) Immigration Act Cap 171 LFN 1990.
5) Industrial Inspectorate Act 180 LFN 1990
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6) National Office of Technology Acquisition and Promotion Act
Cap 268 LFN 1990.
7) The Companies and Allied matters Act cap 59 LFN 1990.
Every foreign company intending to carry on business in Nigeria
must take all steps necessary to obtain incorporation for the
company as a separate entity in Nigeria and until so
incorporated; such foreign company cannot have a place of
business in Nigeria. However, such a foreign company may be
allowed a place of business only for receipt of notices and other
documents as matters preliminary to incorporation. Also, an
alien may freely invest and participate in the operation of any
enterprise in Nigeria except petroleum enterprises and
enterprises in the “ Negative List”. The alien may operate alone
or in joint venture with a Nigerian by means of a company
which must be first of all registered by the CAC and thereafter
registered with the Nigerian Investment Promotion Commission.
Procedure for Establishing Business between a Nigerian and an
Alien
a) The first step for the legal practitioner for him to prepare a
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joint venture agreement (where necessary) along with any other
pre-occupation agreement or documents between the Nigerian
and the alien.
b) After registering the company with the CAC, the legal
practitioner should apply to the Nigerian Investment Promotion
Commission for registration of the company.
c) Application is also made for business/work permits including
application to the Nigerian Embassy in the country of the alien
for grant of “ Business Visa”.
However an alien who does not intend to establish a
business in Nigeria may prefer to buy shares into Nigerian
company. Such investment must be effected with foreign
currency imported into Nigeria through an Authorised Dealer
and converted into the naira at the Autonomous Foreign
Exchange market.
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CHAPTER THREE
RESEARCH METHODS AND PROCEDURES
3.1 RESEARCH DESIGNThe research method selected for the study is a combination
of a survey and an industrial study. The survey research
method is described hereunder that:
(i) It is a design in which primary data is gathered from
members of the sample that represents a specific
population;
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(ii) It is a design in which a structure and systematic research
instrument like a questionnaire or an interview schedule is
utilized together with the primary data;
(ii) It is a method in which the researcher manipulates no
explanatory variables because they have already occurred
and so they cannot be manipulated;
(iii) Data are got directly from the subjects;
The subjects give the data the natural settings of their
workplaces;
(iv) The answers of the respondents are assumed to be largely
unaffected of the content in which they are brought;
(v) The impacts of the confounding factors are “controlled”
statistically; and
(vi) The aim of the research may span from the exploration
phenomena to hypotheses testing (stone 1995).
The survey research method has some merit, which are to
be articulated hereunder: In the survey research method,
the sample of the respondents are selected in such a way as
to make it low due to the utilization of big sample sizes,
which results in generally low sample errors.
35
The survey research method also has the merit that data
collection takes place in the “natural” settings of the
workplace rather than an activated laboratory. Data are got
directly from the respondents. The advantage that the
survey yields data that suggests new hypothesis is very
illuminating. There is also the merit that a set of systematic
data collection instruments such as questionnaire interview
schedules and observation gadgets can either be used alone
or in conjunction with other instruments (stone, 1995).
3.2 SAMPLING
Spiegel (1992) observes that sampling theory is a study of
the relationship existing between a population or universe
and the samples drawn from it. The population in this study
is from the senior junior staff of the firms. In order to make
conclusions of sample theory and statistical references to be
valid, a sample must be selected as to be representative of
the population (Spiegel,1992). One way in which a
representative sample may be got, is by the process of
stratified random sampling. In this research work, the
technique of simple random sampling is used to select the
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sample of 100 respondents from each group of the
personnel, making a total sample size of 200.
The list of all senior and junior staff of the firm is from the
personnel department of the company. The numbers were
written on a piece of paper, put in a basket and the papers
were folded to cover the numbers and one of the pieces of
paper was selected at a time without replacing it and any
name corresponding to the number becomes a number of
the sample. This method of sampling without replacement
was done until the sample of 100 respondents per group of
personnel was arrived at.
3.3 Population
The population, in this study is the totality of the senior and
junior staff of GONEL SYSTEMS LIMITED. PTI ROAD EFFURUN.
The sample size is 200 and this number of respondents was
chosen from the population. The rationale for studying a
sample rather than the population includes that:
1. Most empirical research work in the social science
involves studying a sample in place of the population.
37
2. Statistical Laws reveal that statistics composed from
the sample data are usually reasonably accurate.
3. Luckily, it is usually possible to estimate the level of
confidence that can be placed on the results.
We should note that above is only possible if the probability
sample size is large enough.
3.4 DATA COLLECTION
Questionnaire
As earlier stated, the primary data collection instrument in
this study is the questionnaire. In the questionnaire method
of primary data collection, heavy dependence is placed on
verbal reports from the subjects to get information on the
earnings per share and standard set.
The questionnaire has a lot of merits. It needs less skill to
administer. Questionnaire can be administered to a big
number of individuals at the same time. Also with a specific
research budget, it is usually possible to cover a broader
area. The impersonal nature of a questionnaire, its structure
and standardized wording, its order of question, its
38
standardized instructions for recording answers might make
one to conclude that it offers some uniformity from one
measurement occasion to another (Selltiz et al, 1976).
Another merit of questionnaire is that subjects may have a
bigger confidence in their anonymity, and thus feel freer to
express views they feel might be disapproved.
Another attribute of the questionnaire that is sometimes,
though not always desirable is that it might place less
pressure on the subjects for immediate response (Selltiz et
al, 1976).
The questionnaire also has some demerits. It has noted that
for purpose of giving dependable responses to a
questionnaire, respondents must be considerably educated.
Thus one of the demerits of the usual questionnaire is that it
is appropriate only for with a considerable amount of
education. There is also demerit that subject may be
reluctant and unable.
To report on the particular subject matter. Also, if a subject
misinterprets a question or give his or her answer in a
batting manner, there is often a little that can be done to
39
ameliorate the situation. In a questionnaire, the information
the researcher gets is limited to the fixed alternative answer
format, when a specific answer is not available, it can lead to
error (Selltiz, 1976).
There is also limitation of memory in reporting on past facts.
The researcher is not a policeman that can compel answers.
That is, the information may not be readily accessible to
subject and thus the subject may be reluctant to put forth
enough alternative information that he or she is only barely
conscious of (Selltiz et al, 1996).
In this research project, a structured and undisguised
questionnaire is utilized which is made up of two parts
namely, the personal data section and the section on the
data on the actual subject matter of the work. The
questionnaire was undisguised in the sense that the purpose
of the data collection which was to collect primary data for
writing up the researcher’s HND project was made know to
the 200 respondents. The questionnaire was structured in
the sense the questions are logically sequenced and are to
40
be asked to the respondents in the same manner and no
follow up questions are to be allowed. Some of the questions
are of the fixed alternative answer format type.
Ten (10) of the questions have yes or no answers,
Ten (10) of the questions have alternative answer for the
respondents to tick.
The structured questionnaire has the merit that it yields data
that is easier to analysis than data produced by an
unstructured questionnaire. Also the structured nature
diminishes both researcher’s and research instrument
biases. It however has the demerit that the rigidity of the
research instrument diminishes the amount of information
that could be got.
Interview
The method of communication of the research instrument is
by means of the personal interview. The method has the
merit that it produces a better sample of the population than
either mail or the telephone methods. It also has the merit
that it gives a very high completion and response rates. It
has the merit that the interview has a bigger sensitively
41
misunderstandings by the respondents and gives a chance
for clarification of misunderstood questions. It has the merit
that it is a very feasible method (Selltiz et al, 1976). The
personal interview method has the demerit that it is more
costly than the mail or the telephone methods of
communication of a questionnaire.
Observations
In addition to questionnaire and face-to face interviews,
observation was also carried out. This was to enable the
researcher to witness by herself the officers of this firm and
to interact with these people.
3.5 FIELD WORK
The researcher and three other field data collectors did the
fieldwork. The field data collectors were other classmates
also offering the Part-time HND program, who have also
offered research methodology. They had no problem gaining
entrance into the office under consideration since one of
them has a friend working there. They were to be trained by
42
the researcher on how to greet the respondents and how to
tick the questionnaire correctly and honestly.
3.6 DESCRIPTION OF DATA PRESENTATION AND ANALYSIS
TOOLS
The data presentation tools are simple bar charts,
histograms, and pictorial tables. The most important parts of
a table include;
(a) Table numbers
(b) Title of the table
(c) Caption
(d) Stub or the designation of the rows and columns
(e) The body of the table.
(f) The head note or prefatory note or explanatory just
before the title.
(g) Source note, which refers to the literally or scientific
source of the table (Mills and Walter 1995)
Anyiwe (1994) has observed that a table has the following
merits over a prose information that;
43
(f) A table ensure an easy location of the required figure;
(g) Comparisons are easily made utilizing a table than a
prose information;
(h) Patterns or trends within the figures which cannot be
visualized in the prose information can be revealed and
better depicted by a table; and
A table is more concise and takes up a less space than a
prose formation:
The data is to be analysed by means of percentage, cross
tabulation and the chi-square test of population proportions
for testing the two hypothesis. Percentages express the ratio
of two sets of data to a common base of 100. The researcher
made us of the computer program called SPSS (statistical
package for social science) to carry out the computation of
the hypothesis testing.
CHAPTER FOUR
DATA PRESENTATION AND ANALYSIS
44
4.1 INTRODUCTION
In the previous chapter, the research methods and
procedures have been handled. In this chapter the data
presentation and analysis are to be done. The data is to be
presented by means of tables, two simple bar charts, one
histogram and one pie chart to make it amenable for further
analysis. By analysis is meant the act of noting relationship
and aggregating the set of variables with similar attributes
and also breaking the unit of their components (Mills and
Walters 1995).
In this research work, the research accepts the contention of
Podsakoff and Dalton (1995) that the factual information
from the data can be used as a basis for reasoning,
calculation and discussion.
Apart from the heading above, the other headings in this
chapter include:
Data Presentation,
45
Percentage analysis
Cross-tabulated analysis
Hypothesis testing
4.2 DATA PRESENTATION
TABLE 4.1THE SUMMARY OF THE PERSONAL DATA
OF THE RESPONDENTS
46
1
2
3
4
SEXMale
FemaleTotal
Marital StatusMarriedSingleTotal
AGE21-30 years31-40 years41-50 years51-60 years
Total
HIGHEREDUCATIONAL
QUALIFICATIONDIPLOMA
ONDHND
FIRST DEGREESECOND DEGREE
NIMTOTAL
FREQUENCY15050
200
13070
200
90901010
200
103080204020
200
Anglessubtende
din degree
1854
144367236
360
The marital statuses of the 200 respondents it is found that
130 of them are married while 70 of them are single. For the
ages of the 200 respondents they are 21-30 years, 31-40
years, 40-50 years, 51-60 years with frequency of 90,10
47
respectively. For the educational qualification of the 200
respondents they are diploma, OND, HND, First Degree,
Second Degree, NIM. and they have frequencies of 10, 30, 80,
20, 40 and 20 respectively.
Figure 4.1 below shows the simple bar chart of the data on the
sex of the respondents.
FIGURE 4.1: THE SIMPLE BAR CHART OF THE DATA ON THE SEX OF THE RESPONDENTS
GENDER OF THE RESPONDENTS
TABLE 2. GENDER OF THE RESPONDENTS
48
Frequency
percentage
Valid Percent
Cumulative Percent
MAIL 150 75.0 75.0 75.0FEMAL
E50 25.0 25.0 100.0
Total 200 100.0 100.0
160
140
120
100
80
60
40
20
0
-
-
-
-
-
-
-
-
-
MAIL FEMALE
Fre
quen
cy
Gender
Source: from data in table 1 (generated from SPSS) statistical package for social science.
From figure 4.1 above, it is shown that male respondents
have the modal frequency of 150 out of the 200 respondents
while the female respondents have the frequency of 50 of
them.
Figure 4.2 below shows the simple bar chart of the data on
the marital statuses of the respondents.
FIGURE 4.2: THE SIMPLE BAR CHART OF THE DATA ON THE MARITAL STATUSES OF THE RESPONDENTS
49
140
120
100
80
60
40
20
0
-
-
-
-
-
-
-
-MARRIED SINGLE
Fre
quen
cy
Marital status
TABLE 4.3. MARITAL STATUS OF THE RESPONDENTS
From figure 4.2 above, it is shown that the married
respondents have the modal frequency of 130 out of the 200
respondents while the single respondents have the
frequency of 70 of them.
FIGURE 4.3: THE HISTOGRAM OF THE DATA ON THE AGES OF THE RESPONDENTS.
AGES OF THE RESPONDENTS
50
Status frequency
Percentage
Valid Percent
Cumulative Percent
MARRIED 130 65.0 65.0 65.0SINGLE 70 35.0 35.0 100.0Total 200 100.0 100.0
020
4060
8010
0
1.0 2.0 3.0 4.0
Fre
quen
cy
Age group
TABLE 4. AGES OF THE RESPONDENTS
SOURCE: From the data in Table 1.
From figure 4.3 above, it is shown that the age classes limit
are 20.5-30.5 years, 30.5-40.5 years, 40.5-50.5 years and
50.5-60.5 years with frequencies of 90, 90, 10, and 10 out of
200 respectively. This shows that this is bi-modal distribution
as the age classes of 20.5-30.5 years and 30. 5-40.5 years
have a frequency of 10.
Figure 4.4 below shows the pie chart of the data on the
highest educational qualifications of the 200 respondents.
FIG.4.4 THE PIE CHART OF THE DATA ON THE HIGHEST EDUCATIONAL QUALIFICATIONS OF THE 200 RESPONDENTS
51
Categories(years)
Frequency
Percentage
ValidPercentag
e
Cumulative Percent
21 TO 30 90 45.0 45.0 45.0
31 TO 40 90 45.0 45.0 90.0
41 TO 50 10 5.0 5.0 95.0
51 TO 60 10 5.0 5.0 100.0
Total 200 100.0 100.0
TABLE 4. 5 EDUCATIONAL QUALIFICATION OF THE RESPONDENTS
SOURCE: from the data in table 1.
52
Educational level
Frequency Percentage Valid Percentage
Cumulative Percentage
DIPLOMA 10 5.0 5.0 5.0
OND 30 15.0 15.0 20.0
HND 80 40.0 40.0 60.0
FIRST DEGREE
20 10.0 10.0 70.0
SECOND DEGREE
40 20.0 20.0 90.0
NIM 20 10.0 10.0 100.0
Total 200 100.0 100.0
15%
5%
10%
80%
10%
20%
FIRST DEGREE
OND DIPLOMA
FIRST DEGREE
OND
SECOND DEGREE
HND
From figure 4.4 above, the Educational Qualifications are
Diploma, O.N.D, First Degree, Second Degree and NIM and
the subtended angles in degrees are equal to 180, 540, 1440,
360, 720 and 360 and respectively at the center of the circle.
4.3 CROSS-TABULATED ANALYSIS
Table bellow show the analysis of the statuses of the 200
respondents
TABLE 6. CROSS- TABULATION 1
The above table shows that the total of 100 respondents (out
of 200 said YES. This proved that A company does not die
53
DIPLOMA OND HND
FIRST DEGREE SECOND DEGREE NIM
Total
A company does not die but continue to exist until its name is dissolved through a legal process.
YES NO DON’T KNOW
NOANSWER
Total
61960
-3121100
2
3110
43
2
9
11
2
7
9
39
12 19
91
263121200
939
but continue to exist until its name is dissolved through a
legal process.
TABLE 7. Cross-tabulation 2
The above table indicates that A company may own property
distinct from the property of its members, 104 respondents
out of 200 said yes. While 40 did not agree with the fact.
4.4 HYPOTHESIS TESTING
In attempting to arrive at decisions about the population, on
the basis of sample information, it is necessary to make
assumptions or guesses about the population parameter
involved. Such an assumption is called statistical hypothesis,
which may or may not be true. The procedure, which enables
the researcher to design on the basis, is sample regards
54
DIPLOMA 10 10 OND 19 19 HND 14 30 47 91
FIRST DEGREE 10 9 19 SECOND DEGREE 40 40 NIM 21 21
Total 104 40 47 9 200
A company may own property distinct from the property of its members.
YES NODON’TKNOW
NOANSWER Total
whether a hypothesis is true or not is called test of
hypothesis or test of significance.
The null hypothesis asserts that there is no significant
difference between the statistics and the population
parameters and what ever is observed difference is there, is
merely due to fluctuations in sampling from the same
population. Null hypothesis is thereby denoted by the
symbol H0. Any hypothesis, which contradicts the H0, is
called an alternate hypothesis and is denoted by the symbol
H1. The researcher used chi-square analysis.
CHI-SQUARE TEST
The c is one of the simplest and most widely used non-
parametric test in statistical work. It makes no assumptions
about the population being sampled. The quantity c
describes the magnitude of discrepancy between theory and
observation i.e. with the help of c test we can know whether
a given discrepancy between theory and observation can be
attributed to chance or whether it results from the
inadequacy of the theory to fit the observed facts. If c is
55
zero, it means that the observed and expected frequencies
completely coincide. The greater the value of c the greater
will be the discrepancy between observed and expected
frequencies.
The formula for computing chi-square is –
c =(O-E)2/E
Where,O=Observed frequency
E=Expected or theoretical frequency
4.5 SOFTWARE USED FOR DATA ANALYSIS:
For the data analysis and the interpretation, the researcher
has adopted advanced version of SPSS (statistical package
for social science). This application software has facilitated
the researcher to construct the frequency table, various
types of charts and to find out the valid percentage
responses from the sample. By this automated data analysis
it has minimized the researcher’s time constraints and
reduced human error and give also accurate outlay of
information.
56
Chi-Square Test (1)
A company does not die but continue to exist until its name is dissolved through a legal process.
Observed
F
ExpectedF
Residual Decision
YESNO DON’TKNOW NOANSWERTotal
10043
39
18 200
50.050.0
50.050.0
50.0 -7.0
-11.0
-32.0
AcceptReject
Reject
Reject
Chi-Square Test (2)A company may own property distinct
from the property of its members.
57
Observed
F
ExpectedF
Residual Decision
YESNO DON’TKNOW NOANSWERTotal
10440
47 9 200
50.050.0
50.0
50.0
54.0 -10.0
-3.0
-41.0
AcceptReject
Reject
Reject
Residuals
The observed value of the dependent variable minus the
value predicated by the regression equation, for each case.
Large absolute values for the residuals indicate that the
observed values are very different from the predicted
values.
SOURCE: From the questionnaires administered.
The formulated hypothesis that is subject to statistical test is
at 5% level of significance in testing hypothesis, the
calculated value of the test statistics is usually compared
with tables of value. The critical values of the test statistics
serve as criterion value. It afforded the basis for rejecting the
null hypothesis is a function of the value of the tested
statistic.
Reject the null hypothesis if the calculated value of the test
statistic is greater than the critical value.
Accept the null hypothesis if the calculated value of the test
statistic is less than the critical value.
58
TEST STATISTICS
note: df = degree of freedom
4.6 SUMMARY OF RESULT
Level of significance……….0.05
Critical value………………………43.0
Calculated value……………………73.880
From the above analysis, it could be seen that in the first
test, A company does not die but continue to exist until its
name is dissolved through a legal process, the calculated
value is greater than the critical value so we reject the
hypothesis.
59
A company does not die but
continue to exist until its
name is dissolved through a
legal process.
A company may own property
distinct from the property
of its members
Chi-Squaredf
73.880 3
94.120 3
In the second test which state that A company may own
property distinct from the property of its members, the level
of significance is 0.05, the critical value is 44 while the
calculated value from the test statistics table is 94.120.
Looking the data above, it shows very clear that the
calculated value is greater than the critical value so we
reject the hypothesis.
CHAPTER FIVE
60
FINDINGS, SUMMARY AND CONCLUSION
5.0 INTRODUTIONS
Having tested the research hypothesis formulated in the
course of this study, the chapter is therefore intended to
summaries the research findings, draw a conclusion on them.
The main focus of this study had been an examination of
the relative effect of legal personality on a registered
business.
5.1 FINDINGS
The statistical tests of the research hypotheses formulated in
the course of this study were successfully carried out by the
researcher. The researcher found that A "company" is a
business organisation that is registered (or "incorporated")
under the Companies Act, 1965 or its predecessor legislation.
Operationally, a small company may be run in exactly the same
fashion as partnership. Legally, the organisation created is
61
subject to quite different rules. The resultants effects of
incorporation are also stated in section 16(5). The company:
is capable forthwith of performing all the functions of an
incorporated company
is capable of suing and being sued
has perpetual succession
have a common seal
has power to acquire, hold and dispose of property
5.2 SUMMARY
Limited liability is the logical consequence of the existence
of a separate personality. The legal existence of a company
(corporation) means it can be responsible for its own debts.
The shareholders will lose their initial investment in the
company but they will not be responsible for the debts of
them company. Just as humans can have restrictions
imposed on their legal personality (as in the case of children)
a company can have legal personality without limited liability
if that is how it is conferred by the statute.
62
5.3 CONCLUSION
The term 'person' in law, means both recognizing and
acknowledging of an entity that has rights and interests.
Granting of 'personhood' enables an entity to commence
acts and relations that are recognized in the law. The impact
for legal personality is your liability for the company's debts
is limited; changes in membership do not affect the
company; (this is called perpetual succession); members can
be employed by the company; and taxation rates are more
favourable.
REFERENCES
63
1. Longenecker, Justin G.; Carlos W. Moore, J. William Petty, Leslie E.
Palich (2008) (Casebound). Small business management : launching
and growing entrepreneurial ventures. (14th ed.). Cengage Learning.
pp. 768. ISBN 0324569726. OCLC 191487420.
2. Small Business and Self-Employed One-Stop Resource
3. http://www.fbswllc.com/smallbusiness.html
4. The Small Business Economy - A Report to the President: 2001 pg. 84 -
Table A.3 (the last time data was granular enough for the figures for
less than 10 employees was 1998)
5. The Small Business Economy - A Report to the President: 2008 pg. 279
- Table A.6
6. Characteristics of Small Business Employees and Owners 1997, SBA
Office of Small Business Advocacy - INTRODUCTION pg. i
7. http://www.scorerochester.org/help/funding/sources.php
8. Steve Lohr, "Small-Business Forces Unite; Meeting Drafts Proposals For
Carter Memories of Earlier Gatherings Small-Business Forces Unite",
The New York Times , Special, Jan. 15, 1980, Business & Finance, Page
D1.
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