Meaning of trade: mutual trading and members clubs: incorporation: difficulties associated with having shareholders
A number of the early cases on mutuality involved companies limited by guarantee. Being limited by guarantee, the companies had no share capital. The insertion of a company between the contributors and their activities presented no difficulties to the courts when considering the question of mutuality. This is because the contributors were normally identical to the members and got back what was not wanted. The courts felt able to look through the fact of incorporation.
However, as the case of The Liverpool Corn Trade Association Ltd v Monks  10TC442 - see BIM24160 made clear, where a company has share capital and the shareholders a chance of a dividend, one cannot ignore the fact of incorporation. As Rowlatt J. said, at page 453:
‘When you have got…a case…where there is not any share capital…then it does not matter if there is an incorporation, because the corporation is merely an entity which stands at the back, and all it is doing is to collect from a certain body of people certain funds and hand them back to them as far as they are not wanted…In a case like that it does not matter whether there is an incorporation or not, because there is nothing belonging to the corporation which is severable from what belongs to the aggregation of the individuals - nothing. But in a case…where there is share capital, with a chance of dividends, a chance of a right to dividends if declared, upon the share capital, and to one side of that a dealing with people who happen to be the owners of the share capital…there is no reason at all for saying that you are to neglect the incorporation, or that you can regard otherwise than as profits the difference which is obtained by dealings between that corporation and people who happen to be its members.’
As explained in BIM24410 a company that trades only with its shareholders is not necessarily carrying on a mutual trade.