Uk Separate Legal Entity Concept - 9457 Words

CORPORATIONS AND LEGAL PERSONALITY THE DOCTRINE OF INCORPORATION Module 4.1 COMPANY (artificial or abstract legal person) A company is an artificial (as opposed to a natural) person which is an entity in its own right with a legal personality separate from that and independent of its shareholders (members/owners) or directors (managers). V E I L SHAREHOLDERS (Members) DIRECTORS (Management) EMPLOYEES (natural legal persons) Relevant Case Authority O F MACAURA v NORTHERN LIFE ASSURANCE (1925) M sold his forest to a company in which he owned all the shares. M had previously insured the forest in his own name but omitted to change the relevant policy to state the name of the company as owner. The forest was later destroyed by†¦show more content†¦A company has the capacity to enter into contracts in its own name. (Because it has unlimited liability all its assets may be utilised to discharge debts). A company may have liability in tort vis a vis third parties who may have suffered injury, loss or damage by virtue of the acts or omissions of the company’s employees or agents. Cases in Point As previously observed, the SALOMON principle of separate legal personality has, benefited the shareholders of companies (refer LEE v LEE’s AIR FARMING LTD (1960). However: The price of such a benefit is sometimes borne by the creditors, in conformity with the general philosophy of the Companies Acts. (in that they cannot sue individual shareholders or directors) But! It is sometimes the case that a strict application of the SALOMON principle may result in a situation where the separate personality doctrine is likely to be abused or to lead to unjust consequences. In such circumstances, the courts and the legislature (Parliament) have intervened to lift the veil of incorporation with the result that a company will not be treated as a separate legal entity (it is said that the veil is â€Å"lifted†, â€Å"pierced† or â€Å"set aside† to reveal the identity of shareholders – or directors - with a view to ascribing liability on these individuals if cir cumstances warrant this) . Although in certain cases the courts have strictly applied the SALOMON principle, they have, on occasions, intervened toShow MoreRelatedThe Principles Of The Company Law, The Uk Cape Industries Line Of Cases1564 Words   |  7 PagesThe Salomon principle dictates that if the company is established in accordance with the requirements of the Companies Act 2006, it starts to operate as a separate legal entity. The corporate veil becomes the dividing line between this entity and its shareholders. However, it soon became obvious that this concept can be easily abused, therefore Courts fought hard in order to establish exceptions to the Salomon principle in the form of lifting or piercing the veil, allowing them to look behind theRead MoreThe Corporate Veil : Saloman And Beyond1269 Words   |  6 Pagesto promote the expansion of the economy. Humans are generally legal persons, they are bound by the legal system in which they find themselves. A dictionary definition of, ‘person refers to an individual human being, in law, however, the word has a more technical meaning ‘a subject of rights and duties A company, upon incorporation, becomes a corporate body under s.16 (2) of the Companies Act 2006, with which comes a separate legal personality distinct from its shareholders. Company law aimsRead MoreA Separate Legal Personality ( Slp )1604 Words   |  7 PagesYes I do agree with the judicial statement. A company is bestowed a separate legal personality (SLP) from its incorporators when created in accordance with the Companies Act 1985 and now in Companies Act 2006. This is crucial as it allows it to sue or be sued in its own name and to be liable for its own debts as in Lee v Lee Air Farming . As a separate legal entity, a company can enter into contractual relation with its member, shareholder or a director. It will not prohibit them from contractingRead MoreIasbs Conceptual Framework2891 Words   |  12 PagesA Report on the Significance of the IASB’s Conceptual Framework and the Exposure Draft ‘Conceptual Framework for Financial Reporting – The Reporting Entity’ Introduction This report is intended to discuss the significance of the IASB’s Conceptual Framework. It will layout the basis of the Conceptual Framework and then discuss its significance and relevance with regards to previous and future accounting industry standards. Findings The IASB’s (International Accounting Standards Board)Read MoreThe Ethics Of The Corporate Veil2801 Words   |  12 Pages‘Lifting the corporate veil’ has been the topic of the legal arguments for many years. The corporate veil refers to a principle where a registered company has a separate personality from its shareholders. As a result, the shareholder was not liable for any liabilities that his company had obtained. However, in some severe circumstances, it is important that the separate identity must not be allowed to use as a protection to wrongful act. In some situation, the corporate veil can provide harmfulRead MoreThe And Necessity Of Lifting The Corporate Veil3009 Words   |  13 Pages1. Introduction ‘Lifting the corporate veil’ has been the topic of interest for the legal profession. This principle mentions to the possibility of considering towards the company structureor the company’s separate personality to make the members liable towards their company’s debt. In respect of a limited liability company , this has been the most favoured business form for investors.Being a shareholder means that individuals obtain unlimited corporation’s profit whereas they are liable for company’sRead MoreWhat Circumstances Do, And Should, Uk Courts Lift The Corporate Veil?2812 Words   |  12 Pages‘In what circumstances do, and should, UK courts ‘lift the corporate veil?’ Introduction ‘Lifting the corporate veil’ has been the topic of the legal arguments for many years. The corporate veil refers to a principle where a registered company has a separate personality from its shareholders. As a result, the shareholder was not liable for any liabilities that his company had obtained. However, in some severe circumstances, it is important that the separate identity must not be allowed to use asRead MoreThe Doctrine Of Separate Personality And Lifting The Veil Of Incorporation2022 Words   |  9 PagesThe Doctrine of Separate Personality has been an important aspect in the Company Law for a long time. It had been discussed heavily in the Salomon v Salomon CO (1987) which was the leading case for this matter (Dine and Koutsias, 2009, p.17). In fact, it may be the most well-known case in the company law. Company law is simply any laws that related to organizations and businesses in the UK. However, the one that established the doctrine of separate persona lity is not from Salomon case, it simplyRead MoreFeatures Of Disputes Regarding The Company Act Of 2006961 Words   |  4 Pagesby using techniques known as â€Å"squeeze out† (Hollington, 2007). Thus, it is crucial to understand the concept of disputes of shareholders to better understand the barriers of collaboration with regard to the Company Act of 2006. 2.2 The company act 2006 Provisions such as limited liability on part of auditors, increased interest for shareholders, etc. are part of the Companies Act of 2006 in the UK. This Act includes limited liability by contract with regard to such an amount which is deemed reasonableRead MoreThe Principle of Separate Corporate Personality2932 Words   |  12 PagesThe Principle of Separate Corporate Personality The principle of separate corporate personality has been firmly established in the common law since the decision in the case of Salomon v Salomon Co Ltd, whereby a corporation has a separate legal personality, rights and obligations totally distinct from those of its shareholders. Legislation and courts nevertheless sometimes pierce the corporate veil so as to hold the shareholders personally liable for the liabilities of the corporation. Courts