The Bibliography of Aron Salomon - Essay Example

Company and Partnership Law al Affiliation) The Salomon principle To reach this point in this module, we must havetaken into consideration how the present firms went beyond the legal framework on associations that are unincorporated. It also defines how the company used the ideas that were identified with city corporations that were developed by the Royal Charter1. It also considers how the evolution occurred from parnering companies and how the ownerrs of the companies were issued that liability framework. One crucial element of the present firms, remainded to be on top. This is guided by the separate corporate roles that was developed by House of Lords in 1987. This principle is termed as the Salomon Principle. The paper first discusses the issue of Salomon litigation. The doctrine of the legal entity came from the Salomon case. The facts and findings from the case disclosed that the owner incorporated firms where the family members were the shareholders. The issue and problem came up when the business of the company turns to be bad. The assets value was not sufficient to pay the creditors of the company and that of the owner. The Salomon litigation The bibliography of Aron Salomon was a leather merchant and wholesale boot maker who initially ran their business having a single owner. In 1892, his children became interested in managing the business in consequentially making Aron decide to manage and convert the business as an organization called Salomon & Company Limited, with a aim of transforming his leather and boot-manufacturing business to the Company. The members (shareholders) of the Company were to be Aron Salomon and his family2. Aron Salomon engaged himself into an agreement with Adolph Anhalt. Adolph Anhalt is considered the trustee of the company. They settled the terms that assuming the case of transferring the business occur. The agreement included the part payment where the Aron Salomon was to receive £10,000 in debentures showing proof of money loaned out to the Company in that amount. During that period, the legal framework allowed that seven people subscribe to be the company members and owners of the company. As mentioned above, the members were Aron Salomon, Aron Salomon wife, and Aron Salomon children. His sons took control of the company with Aron Salomon as managing director He went ahead to sell his business to the Company for close to £39,000, with £10,000 being a debt to Aron and the debentures would serve as evidence. Salomon therefore became the Company’s main shareholder and creditor. On the following year (1893), the Company became liquidated; the arrangement claimed. The debenture program that was implemented by Aron Salomon. The debenture was used as debt collateral on fraud that could arise3. The verdict from the court panel first approved the case. This is because since the company was under sole management by Aron, where the business was transferred to a company. Practically, the representation of the company in the business as a manager of the company was answerable for the Company’s liabilities to its creditors Salomon went on to appeal that ruling to the Court of Appeal 3. It did not overrule the previous decision, rather, declined on the bases that the claimant had misused the incorporation and limited liability process, of where the Legislature planned only to discuss on ‘Self-sufficient and legitimate shareholders”4 The court of appeal judges described the firm as one of the mythical or fictional institution. They claimed that by incorporating the business Aron had been merely scheming to assist himself to move on like before, only now he would have limited liability. The House of Lords together overturned the decisions of the courts below, dismissing the arguments in relation to both agency and deceit. Lord Halsbury, the Lord High Chancellor of Great Britain, rested his opinion on the basis no legislation was found in the Companies Act 1862 about if the subscribers need to be free from the main shareholders5. The organization was justifiably offered for in the jurisdiction and it was never the responsibility of court of appeal decision to look into the legislation restrictions they saw as practical. The Companies Act 1862 allowed the companies rated as limited liability to act as jurisdictory persons that functions as a separate entity from the members and directors. Lord Halsbury also noted that the legislation implement nothing to the extent of interest which will be done by the shareholders or as to the fraction interest possessed by a fraction of the shareholders. Lord Herschell noted the potentially “far reaching” effects of the rule of law reasoning and that previously, majority of the companies had been established, and had more disinterested persons among the shareholders fail have influence significance over the management of the company. Any stakeholder that deal with the company was cognizant of the company’s nature such as the consultation of the shareholders and their distict responsibilities among the shareholders Lord Macnaghten questioned the reason why it was not right for the owner to take advantage of the guidelines that were specified in the legislation, as he rightky entitled. It was not within the responsibility of the judge to point out the limitation in the legislation based on the personal view. The point of concern, if the legal framework of the land enabled such a benchmark, that the state lamentable as Richard Malin VC had been outlined in the previous case, Re Baglan Hall Colliery Company where the House of Lords overturned6. The Salon Principle has always been relevant over the years, meaning that the companies have always had a practical utility. The principle brought forth the issues on share transferability, flexible financing methods, perpetual existence, and specialised management and other incorporation consequences. The corporation has various socially and economically beneficial functions7. Fundamentally, the principle enables investors to share their profits without involving themselves in the management of the company. It has also enables the small partnership and single traders in carrying out a business. Additionally, corporation’s offers structure for holding the assets of the family, structuring the joint venture, and find management. The principles has also marshalled the participants in commercial enterprise and acted as nominee in holding the legal tiles to the assets. At the top management level, the House of Lords decision was not considered a good decision. The case established an independent existence of corporates as one of the registered companies, to be one of the greatest importances to the partnership and company law. When the principle is applied, inflexibly, the parties are more likely to detriment the people that deal with the company. The company is regarded as a juristic person. The artificial person seen in companies does not possess the being of a natural person. It only happened in the law contemplation. The trait of an artificial person is dependent of the natural persons that are within a company8. These natural persons include officers, shareholders, officers, and corporate managers. However, the named persons only represent the firm and in response within the authority’s scope conferred on them and on behalf of the firm. One of the crucial advantages of working within the limited company is that the company members are liable in contributing towards the debt of the company. The litigations have been encourage in various cases for instance in Lee V Air Farming Lee. The corporate personality is lifted in certain areas as per the company law provisions. Consequently, the distinct entity may not be within the circumstance of the company. Such of this case include membership reduction, prospectus misrepresentation, and fraudulent conduct. The most uncertain region in firm law today is the situation where the court is willing in setting the legal personality of the company. The concept prevailing the case of Salomon is confined to the fact that an organization is separated from the shareholder. Meaning that the company is separate and independent from other entities related to the firm9. The fundamental technical and legal question that surrounds the present nature of the firm is how companies come to have the behavior of varied legal personality that they are entitled today. This is attributed to the decision of the court of appeal in Saloman which signifies that they have a distinct personality. One thing that lingered in the mind of the reader is the certainty of the evidence that was believed to be right. In 1984, Lord Pollex fen, critised the joint stock firm arrangement as one of the invisible merchant that a person do not know where to get. Therefore, is a law context, it has no conscience or soul to sooth the traders. Between 17th and 19th century, there has been judicial reconsideration that desires the company10. The company had no personal connection with the founders, therefore, they occupies their own life without involving the creditors and the employees. The decision in this case formed a foundation, which built the ideology of the firm as an economic factor, sentient, and artificial. This lifted the corporate veil. The corporate veil remained to be one of the separate personalities of the firm. The corporate veil will be attached to the circumstance. The outcome is lacking the clarity of the legal tight of shareholders and board of director’s interaction11. Issues in Salomon Principle The main issue behind the Salomon principle is if the case of Salomon caused the injustices on the business community. Essentially, the issue is also if the courts are reluctant to implement and lift the veil of the company’s law. Efficiency is considered the main benefit of the Salomon principle. Before, businesses were organised as partnership and the contracts were developed in not so simple ways that involve the partners to be part of the agreement. The main principle entails the obligation and rights nature of the partners the moment the company is recognised as distinct. The process of coming up with a contract with the firms became something very simple. The partners required to come up with one contract with human beings who were allowed in creating the contract on the company’s behalf. Practically, based on the large contract, the people are allowed to come up with contracts that are identified in the association or those that are in contractual terms with the Board of Directors. That distinct personality between the owners and the company makes the transactions to be very simple12. The problems with the principle The main problem with the principle revolves around the ethical issue. The problem is a direct converse of one of the benefits that was stipulated in the above section. This is referenced from the partners that handle the perspective of the company from the out available assuming the company is insolvent. Meaning that an entrepreneur within the Shoe business is likely to offers a lesser concern and the right attention to the fairness and honestry when the company deals with a different party for the simple reason that the partners are at high risk to incur loss. The company’s shareholders bared no personal risk assuming the company becomes insolvent. When the issues are kept in a single instance, we reach a position where people characterised by little or no personal responsibility for the management and the shareholders govern the economy. The economical ethics becomes something that is on doubt if no partners face the personal loss risk. The investors are more likely to lose their investment in the firm. The partner will later face the reputation loss with the traders and the investors. They only face the issues of losing their personal property13. Salomon Legacy Normally, companies occupy an alternative position in the life of an investor. The stigma is directly correlated to the firm will never be transferred to a person. For example, when a company commits an offence, which is widely accepted by English Law, the investors will not be attached to the liability. It is not common attaching the criminal and immoral activities to the shareholders and employees of the company. The companies enable the person hide behind the corporate personalities. There are various trainers with Salomon brand. The circles intertwined form an “S” style in the manufacturing of boots. The issue resulted to the most fundamental principle of the company’s law. Before this principle, most companies have had the legal persons. After the principle, they created a different personality aspect where they have an image and a brand name. The brand of the company became important because it defines the technological advances, energetic thrills, and reassurance. The legacy of the Salomon case led into a rapid scenario that shows a brand name and a life for the established firms as business avatars who want to market themselves globally14. The case therefore shows that the firm is termed as the legal person distinct and separate from the individual member of the company. According to the principle, the creditors of the companies need to consider the limited funding and the capital. The limited liability so encourage the shareholders from controlling and monitoring the operations of the company. The company creditors bears the risk of associating with limited firms. Various creditors have varied abilities in protecting themselves from the dangers. The financial creditors and the banks have defeated the risk. The workers are in a position that is more insecure. The company’s shareholders bared no personal risk assuming the company becomes insolvent. When the issues are kept in a single instance, we reach a position where people characterised by little or no personal responsibility for the management and the shareholders govern the economy15. Bibliography Anderson, H. Directors Personal Liability for Corporate Fault: A Comparative Analysis. London: Adventure Works Press.2008. Anonimo. Company Law. Chicago: Adventure Works Press.2011. Bourne, N. Essential Company Law. London: Cavendish Publishers.2000 Bourne, N. Bourne on Company Law. London: Cavendish Publishers.2009 Brian Pillans, N. B. Scottish Company Law 2/e. London: Adventure Works Press.2012. Goulding, S. Principles of Company Law. Wharton Street: Cavendish Publishing Limited.1993. Grantham, R.Corporate Personality in 20th Century. New York: New York Publishers. 2012. Hannigan, B. Company Law. London: Cavendish Publishers.2010. Hicks and Goos Cases and Materials on Company Law. Company Law. London: Cavendish Publisher.2012. Kershaw, D. 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