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CA Foundation · Business Laws · The Companies Act, 2013

Vikram owns almost all shares of Vikram Cement Ltd. He insured the company's factory building in his own name. The factory is destroyed by fire and he claims the insurance money. What is the legal position, following Macaura v. Northern Assurance Co.?

Vikram cannot claim. Company property belongs to the company as a separate legal person, and a shareholder, however large his holding, has no insurable interest in its assets. This was the ruling in Macaura v. Northern Assurance Co.

  1. AVikram can claim since he holds nearly all the shares
  2. BVikram cannot claim as he has no insurable interest in the company's propertyCorrect
  3. CVikram can claim only half the amount
  4. DVikram can claim if he is also a director

Explanation

The company's property belongs to the company, not to its shareholders. A shareholder has no insurable interest in specific company assets, even if he holds almost all shares. Hence Vikram's claim fails, as held in Macaura's case.

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