QUESTION 1: “A private business corporation is a hybrid between a company and a partnership”. Give a critique of the above statement.
QUESTION 2: Explain fully through the use of statutory provisions and common law, the concept of limited liability in company law.
1. A PBC is not a hybrid between a company and a Partnership due to many reasons namely perpetual succession, limitation of liability and corporate body status. A PBC was born out of the Chritie/Fairbain Inquiry into Zimbabwe Company Law, Final Report , with the objective of creating a simplified legal framework for small business enterprises to avoid legal complexities associated with the Companies Act. Its creation have nothing to do with a partnership but have everything to with simplifying the Companies Act although some characteristics of a partnership at common law were incorporated namely maximum members up to 20, no need for annual returns and the scraping of membership register.
The PBC is more inclined to a company since it is governed by an act like a company resulting in it being a juristic person at law. The most notable differences of these acts is only natural persons can be members whilst in a company other companies can be shareholders. A comparison with a partnership is that the former is not a juristic person hence a PBC cannot be a hybrid between a company and a partnership.
The attribute of juristic person or legal person entails that a PBC have perpetual succession like a company but in contrast to a partnership. Death of a partner signifies an end to the partnership whilst death of a member in a PBC does not have any effect because it is a legal person governed by PBC Act Chapter 24:11 which came into effect on the 5th of May 1997 through Statutory Instrument 105/1997. The succession issues under PBC can simply be managed through rectification of the certificate of interest.
A PBC and a company enjoy limitation of liability in the absence of fraud or manifest of injustice...