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

Kofi is the only shareholder of Delta Ltd. He insured his own personal warehouse stock, but the warehouse building and stock were owned by Delta Ltd, and fire destroyed them. Kofi claims on his own policy for the loss. Which principle leads to his claim failing?

His claim fails because the stock and warehouse belong to Delta Ltd, a separate legal person. A shareholder, even a sole one, has no insurable interest in the company's assets, as decided in Macaura v Northern Assurance.

  1. ABecause he holds all the shares, he has an insurable interest in the company's assets
  2. BBecause the company's assets belong to the company, not to Kofi, he has no insurable interest in them as a shareholderCorrect
  3. CBecause the policy was personal, the loss is automatically covered
  4. DBecause Delta Ltd is a sole-member company, its assets are treated as his partnership property

Explanation

In Macaura v Northern Assurance, a shareholder had no insurable interest in company property, which belongs to the company as a separate person. Holding all the shares gives rights in the company, not in its assets. Option A is therefore wrong.

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