Separate Legal Personality

Words: 1628
Pages: 7
Open Document
Company Law cannot be understood without knowing what does the principle of separate legal personality. Separate legal personality is a fundamental principle that can be found in one way or another in all or almost all company laws around the word. This principle states that a company is a legal entity with rights and duties and a different existence from the one of the members that are part of it. What is meant by members of a company is any person or organization related to it: shareholders, employees, employers, directors or any other stakeholder. Therefore, in the case of the shareholders, they are only liable for the unpaid amount of their shares and for any other investment in the company and in the case of the directors, they may be …show more content…
Without entering into the contents of the case, the separate legal personality can be understood as the word held by Lord Halsbury at the House of Lords “once the company is legally incorporated it must be treated like any other independent person with its rights and liabilities appropriate to itself” or in a simpler way as “to take the profits without running the risk of debts and expenses” idea which was stated by Vaughan William J. at the High Court. Salomon’s case also let the opportunity to everyone to organise their business using any corporate legal form according to the law, even if this organization would mean a risk of default to …show more content…
There are some examples of how a parent company may have an obligation due to direct duty of care. One of these examples is the ones related to the employees of the subsidiary ‘in appropriate circumstances’ a parent company may owe a duty to safeguard the health of a subsidiary’s employees” . The cases where the parent company might be liable for the subsidiaries duties were stated by Arden LJ: “(1) the businesses of the parent and subsidiary are in a relevant respect the same; (2) the parent has, or ought to have, superior knowledge on some relevant aspect of health and safety in the particular industry; (3) the subsidiary’s system of work is unsafe as the parent company knew, or ought to have known; and (4) the parent knew or ought to have foreseen that the subsidiary or its employees would rely on its using that superior knowledge for the employees’
Show More

Related Documents: Separate Legal Personality

Concept of Separate Legal Entity and Consequences of Corporate Personality on a Company Essay

105000 COMPANY LAW AND SECRETARIAL PRACTICES- ACW 203/204 INDIVIDUAL ASSIGNMENT Discuss the concept of separate legal entity and consequences of corporate personality on a company; as part of the discussion present your opinion whether the judiciary can ignore the rule of separate corporate personality and how the said rule will affect group of companies. Under the concept of separate legal entity, a company will becomes a body corporate that exists separately with its owner and distinct from…

Words 2747 - Pages 11

Essay on Business Law Presentation

Separate Legal Personality & Limited Liability 16th April 2013 Content: 1. Separate Legal Personality a) Rights and Duties b) Legal Process c) Child Register d) Complexity e) Artificial Legal Person f) Incorporation g) Legal Process - Incorporated Advantages: * Limited Liability * Continues to exist * Better financial position * Corporation’s legal liabilities are its own and not its members’, so member are not generally liable for the…

Words 887 - Pages 4

Essay on Business Law

on the personality of a limited company through which the courts cannot see. But that is not true. The courts can, and often do, draw aside the veil. They can, and often do, pull off the mark. They look to see what really lies behind” - Lord Denning in Littlewoods Mail Order Stores v Inland revenue Commissioners [1969] 3 All ER 422. Introduction “Law is order, and good law is good order” - Aristotle 343 BC Incorporation is the act of a business achieving a separate corporate personality from…

Words 1964 - Pages 8

Characteristics Of A Family: A Society Or Domination Of India

MONEY FOR COMMERCIAL AND BUSINESS PURPOSES, AND SHARE THE PROFIT AND LOSS. A COMPANY MUST BE REGISTERED UNDER THE COMPANIES ACTS 1956 AND IF NOT REGISTERD IS AN ILLEGAL ASSOCIATION. MINIMUM NUMBER IS 7 PEOPLE. CHARACTERISTICS OF A COMPANY IS A SEPARATE ENTITY FROM THE MEMERS WHO CONSTITUTE IT. A COMPANY IS NOT AN AGENT OR TRUSTEE OF THE MEMBERS, BUT A MEMBER CAN ACT AS AN AGENT OR EMPLOYEE FOR THE COMPANY. A COMPANY HAS A NATIONALITY AND A DOMICILE BEING AN ARTIFICIAL PERSON, AND CAN ONLY ACT…

Words 876 - Pages 4

Essay about Busniess Law

The company is legally incorporated, there are different discussions, and the main point is whether the company has independent personality. Corporate company is a dominant type of business organization in he market economy and at law. Someone thinks it has no personality, while someone supports it is a reality with its own status in law. This essay will introduce the some points about the relationship between promoters and company, the promoters motive in setting up a company absolutely irrelevant…

Words 1698 - Pages 7

Corporate Capacity Essay

Corporate Law Lecture 3 Lecturer/stream details Legal nature of companies ► The separate entity doctrine ► Corporate capacity ► Limited liability ► Piercing the corporate veil ► Corporate liability Separate legal entity doctrine ► The company is a legal person separate from its participants ► This means that:  its obligations and property are its own and not those of its participants  its existence continues unchanged even if the identity of the participants changes Salomon v Salomon (1897)…

Words 682 - Pages 3

Essay on Brown v. Board

Brown v Board of Education The National Association for the Advancement of Colored People (NAACP) and its legal offspring, the Legal Defense and Educational Fund, developed a systematic attack against the doctrine of “separate but equal.” The campaign started at the graduate and professional educational levels. The attack culminated in five separate cases gathered together under the name of one of them—Oliver Brown v. Board of Education of Topeka, Kansas. Aware of the gravity of the issue and…

Words 476 - Pages 2

Dissociative Identity Disorder Analysis

would have on the legal system. He also goes on to state that the next “epidemic” of dissociation will be depersonalization disorder. Dissociative identity disorder, referred to as multiple personality disorder in the past, is when a patient seems to possess and show two or more distinct identities, also known as alter egos or ego states. These identities can alternate control over the consciousness, thoughts, and actions of the “host”. There is usually a form of amnesia that separates the experiences…

Words 579 - Pages 3

Capital Structure Of A Company

What is a company? * Come into existence through registration with ASIC (Australian Securities and Investments Commission) * They are artificial legal entities that have attribute of a separate legal entity. * Previously required multiple people, but now require only 1 member (If the company is limited by shares- the member will hold at least 1 share). * All companies must have at least 1 director, all public companies must have a secretary (although proprietary companies tend to…

Words 1179 - Pages 5

Law: Corporation and Salomon Essay

I. Introduction As a landmark case in UK company law, the judgments to the Salomon case1 gives effects on upholding the principle of corporate personality. As a result, company’s shareholders would not be liable for the debts of an insolvent company. Seeing the decision in Salomon v Salomon Ltd, a company is formed if it has separated legal personality and limited liability. Furthermore, shareholders, directors are divorced with the company itself. They are independent entity under the law. II…

Words 3053 - Pages 13