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 __________

3
 DEDICATION

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.

4
 ACKNOWLEDGEMENT

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.

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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.

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.

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 ABSTRACT

A company is a legally recognized organization designed to

provide goods and/or services to consumers. Businesses are

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.

7
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

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

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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

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.

10
 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.

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?

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 • 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

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.

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 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

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

13
 (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?

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.

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 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

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.

15
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.

2.` The property of the company is not separate from that

of the member/owner.

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 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

3. Research Methods and Producers

4. Data presentation and Analysis and

5. Findings, Summary and Conclusion

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 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

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

18
 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.

2.1 INCORPORATION OF COMPANIES

Incorporated companies can generally be examined under two

heads;

a) Incorporation of local companies; and

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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

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

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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;

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.

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 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

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

22
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

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.

23
 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

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.

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 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:

• is capable forthwith of performing all the functions of

an incorporated company

• is capable of suing and being sued

• has perpetual succession

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 • 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

Because a company is a separate legal entity it follows that

it may enforce rights by suing and conversely it may incur

26
 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

27
 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

28
 company: Macaura v Northern Assurance Co Ltd (1925) AC

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

29
 satisfied, a new entity comes into existence which is

separate and distinct from its directors and shareholders.

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.

30
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.

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

31
document the legal authority, evidential recognition and

force of law.

Filing and Recognition

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

32
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

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

33
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

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.

34
 CHAPTER THREE

RESEARCH METHODS AND PROCEDURES

3.1 RESEARCH DESIGN

35
 The 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;

(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

36
(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.

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

37
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

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

38
 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.

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

39
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

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.

40
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

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).

41
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

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,

42
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

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

43
 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

the researcher on how to greet the respondents and how to

tick the questionnaire correctly and honestly.

44
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;

(f) A table ensure an easy location of the required figure;

(g) Comparisons are easily made utilizing a table than a

prose information;

45
 (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

4.1 INTRODUCTION

46
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,

Percentage analysis

Cross-tabulated analysis

47
Hypothesis testing

4.2 DATA PRESENTATION

TABLE 4.1
THE SUMMARY OF THE PERSONAL DATA
OF THE RESPONDENTS

48
 1 SEX FREQUENCY
Male 150
Female 50
Total 200
Angles
2 Marital Status subtended
Married 130 in degree
Single 70
Total 200

3 AGE
21-30 years 90
31-40 years 90
41-50 years 10
51-60 years 10
Total 200

4 HIGHER
EDUCATIONAL
QUALIFICATION
DIPLOMA 10 18
OND 30 54
HND 80 144
FIRST DEGREE 20 36
SECOND DEGREE 40 72
NIM 20 36
TOTAL 200 360

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

49
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

160-

140-

120-

100-
Frequency

80

60 --

40 -

20
-
0 -
Gender
MAIL FEMALE

TABLE 2. GENDER OF THE RESPONDENTS

50
 Frequency percentage Valid Cumulative
Percent Percent
MAIL 150 75.0 75.0 75.0
FEMALE 50 25.0 25.0 100.0
Total 200 100.0 100.0

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

MARITAL140
STATUSES OF THE RESPONDENTS

120
-
100
-
80
-
60
Frequency

-
40
-
20 51
-
0
- MARRIED SINGLE
-
 Marital status

TABLE 4.3. MARITAL STATUS OF THE RESPONDENTS

Status frequency Percentage Valid Cumulative

Percent Percent
MARRIED 130 65.0 65.0 65.0
SINGLE 70 35.0 35.0 100.0
Total 200 100.0 100.0

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.
Frequency

100

FIGURE 4.3: THE HISTOGRAM OF THE DATA ON THE AGES

80

OF THE RESPONDENTS.
60

AGES OF THE RESPONDENTS

40

52
20

1.0 2.0 3.0 4.0

Age group
0
 TABLE 4. AGES OF THE RESPONDENTS

Categories Frequency Percentage Valid Cumulative

Percent
(years) Percentage
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

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

53
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

OND DIPLOMA
FIRST DEGREE
5%
15% OND
SECOND DEGREE 10%

20%
HND
80%
FIRST DEGREE 10%

TABLE 4. 5 EDUCATIONAL QUALIFICATION OF THE RESPONDENTS

Educational Frequency Percentage Valid Cumulative
level Percentage 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 20 10.0 10.0 70.0
DEGREE
SECOND 40 20.0 20.0 90.0
54
DEGREE
NIM 20 10.0 10.0 100.0
Total 200 100.0 100.0
 SOURCE: from the data in table 1.

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

55
 Table bellow show the analysis of the statuses of the 200

respondents

TABLE 6. CROSS- TABULATION 1

A company does not die but continue to exist
until its name is dissolved through a legal process.

NO
YES NO DON’T ANSWER
KNOW
2 Total
12
19
91
DIPLOMA 6 2 2
OND 19 7
HND 26
FIRST
60 31 31
DEGREE - 10 9 21
SECOND 31 9 200
DEGREE 21
NIM
Total 100 43 11

39 939
The above table shows that the total of 100 respondents

(out of 200 said YES. This proved that A company does not

die but continue to exist until its name is dissolved through

a legal process.

TABLE 7. Cross-tabulation 2

A company may own property distinct from

YES the property DON’T NO
NO of its members.
KNOW Total
DIPLOMA 10
ANSWER 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

56
 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 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

57
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

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

58
 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.

Chi-Square Test (1)

59
A company does not die but continue to exist until its
name is dissolved through a legal process.
Observed Expected Residual Decision
F F
YES 100 50.0 50.0 Accept
NO 43 50.0 -7.0 Reject
DON’T
KNOW 39 50.0 -11.0 Reject
NO 50.0
ANSWER 18 -32.0 Reject
Total 200

Chi-Square Test (2)

A company may own property distinct
from the property of its members.
Observed Expected Residual Decision
F F
YES 104 50.0 54.0 Accept
NO 40 50.0 -10.0 Reject
DON’T
KNOW 47 50.0 -3.0 Reject
NO
ANSWER 9 50.0 -41.0 Reject
Total 200

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

60
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.

A company
TEST does not die but
STATISTICS A company
continue to exist until its
may own
property
name is dissolved through a distinct from
the property of
legal process. its members

61
Chi-Square 73.880 94.120
df 3 3
 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.

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.

62
 CHAPTER FIVE

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

63
 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

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

64
 • 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.

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

65
 company; (this is called perpetual succession); members

can be employed by the company; and taxation rates are

more favourable.

REFERENCES

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

66
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.

67