A Company has an Independent Legal Existence and is a different legal person in the eyes of law. Therefore, just like a normal person, a company can own properties / assets in its own name and the assets are not needed to be purchased in the name of a shareholder. It is therefore said that separate property can be owned by the Company and accordingly the Company does not require a shareholder to own a property.
Unlike a partnership firm and a proprietorship firm, the assets that are owned by the Company are different from the assets that are owned by the shareholder / member of such Company. For example if there is a factory which is owned by a Company, it would not mean that a person who is a majority shareholder is the owner of that factory. The ownership of that particular factory would be only with the Company and the factory can be used / mortgaged / sold / leased / transferred / disposed of only by the Company itself. The shareholder has no right over the Factory like he may have a right over the property that is owned by the Partnership Firm / Proprietorship Concern.
It is therefore clear that the assets of the Company are different from that of the Shareholder of the Company. Now, unlike a Partnership Firm and a Proprietorship Firm, the assets / properties that are owned by the Company are not affected by the ownership of the Company i.e. the Composition of the shareholders. The change in the shareholders of a Company does not affect the properties that are owned by the Company. If at all it would have been the case that the change in shareholders of a Company would change the composition of the Company, then in that circumstance, no trading of shares was possible for listed Companies on the Sharemarket as lakhs of people buy and sell shares simultaneously. Therefore, unlike a partnership firm, if a partner sells his share to another person / partner or wants to exit the partnership, the property would have to be transferred in the name of the new firm / divided between the partners, as the case may be, the property owned by the Company is not affected by the change in the ownership of the Company.
The Hon’ble Supreme Court in the case of Subhra Mukherjee v. Bharat Cooking Coal Co. Ltd., (2000) 3 SCC 312, where the Coal mines of a Company were acquired by the Government under the Coal Mines (Nationalization) Act, 1973, it was found that a coal mine was sold by the Company to the wife of one of the Directors. The Supreme Court lifted the corporate veil of the Company and accordingly held the deal to be a sham and held that the coal mine continued to be the property of the Company.
In a case where the shareholder had tried to utilize the assets of the Company to pay off his personal loans, the Delhi High Court in the case of H.C. Shastri v. Dolphin Canpack Pvt. Ltd., (1998) 93 Comp Cas 201 (Del) observed that,
“…As noticed earlier, neither a shareholder nor a Director has any right in the property and assets of the company, which is a separate juristic entity distinct from the shareholders. The shareholder who buys shares does not buy an interest in the property of the company which is a juristic person, entirely distinct from the shareholder. The shareholder as an investor becomes entitled to participate in the profits of the company, and have a say in the management as per law. He can claim the left over assets of the company in case the company is wound up. …”
