Creditors’ right to the payment of debt and the Limited Liability feature of a company limited by shares

A company limited by shares construct produces an entity bestowed with legal personality, limited liability, transferability of shares, delegated management and investor ownership according to Reinier Kraakman. 

Globally, these distinct features backed by legislation and practice have become common features of such companies – and similarly, the Companies Act, 2019 (Act 992) recognises these features. 

An incorporated company limited by shares enjoys the privilege of limited liability - creating a corporate shield and protecting shareholders against personal liabilities for the debts of the company. Whilst there is growing advocacy for companies to offer more social value for this continuing privilege, its rationale remains to incentivise risktakers (entrepreneurs) to invest in businesses and promote economic growth, innovation, create employment among others.

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