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ACCA Applied Skills · Corporate and Business Law (Global) · Corporations and legal personality

Kestrel Ltd owns a warehouse. Its sole shareholder, Lin, believes the warehouse is partly hers and, without authority, takes stock from it for her own use. Which statement best reflects the legal position?

Kestrel Ltd owns the warehouse and its stock. Shareholders own shares, not the company's assets, because the company is a separate legal person. Lin's holding of all the shares gives her no direct property right in the company's assets.

  1. ALin owns the assets because she owns all the shares
  2. BKestrel Ltd owns the assets; a shareholder has no direct property interest in themCorrect
  3. CLin owns half because she is the sole member and director
  4. DOwnership passes to Lin automatically when she is the only member

Explanation

Company property belongs to the company, not its members (Macaura v Northern Assurance). A shareholder owns shares, not the company's assets. Sole ownership of shares does not change this, so the other options are wrong.

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