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The most important concept that flows from the incorporation of a company is that of limited liability whereby the shareholders tend to be liable only to the unpaid amounts of shares and so the company as a separate legal entity is held accountable for its own debts.
Corporate personality has been in use for a long period of time but the area of law developed when small businesses used the notion so as to create limited liability. The turning point of corporate personality was the decision of Salomon v Salomon1. In Salomon, a leather merchant incorporated a company and completed the formalities by appointing his family members as shareholders which was a requirement of the Companies Acts at that point in time. In his personal capacity, he appointed himself as managing director and subsequently purchased the sole trading business. The main concern was the over valuation of the business placed by him, but this was mainly due to his confidence in the success of the business. The company subsequently went in to liquidation and a liquidator was appointed by the court who in turn evaluated that the company was a sham and had been used as an instrument to defraud creditors. The Court of Appeal accepted the evaluation of the liquidator, however, the House of Lords reversed the decision stated that the Court of Appeal had used a moralistic approach and went on to say it was irrelevant that some of the shareholders were used merely to fulfill a technicality and so the use of corporate personality could be made by any person who intended to pursue what was his own business and thus the company set up in this case found to be a separate legal entity and not an agent or trustee of the person controlling it.2
The case set a cornerstone for the doctrine of separate legal entity and separated the company from its shareholders. This concept has
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This essay seeks to critically analyse the circumstances under which the corporate veil can be lifted as well as analysing the effectiveness of the law in piercing this veil when necessary. The essay starts by outlining the overview of the concept of legal personality through analysing different court cases that have influenced the development of the law and the decisions made by the courts.
The law is considered for the companies all across the United Kingdom. England and Wales have been found to have certain provisions that are not available for all other countries. The primary purpose of the corporate laws is to ensure efficient functioning of their operations and their measurements of ethical principles as well (Slorach & Ellis, 2007, p.42).
As such, they will bear responsibility for any matter pertaining to the business1. Tinky, Lola and Daphne wish to expand Platini into a series of restaurants. Converting their current business into a chain of bistro and restaurants will require considerable funding necessitating a better legal basis for the business.
ts and the attitude of the courts will be discussed in the following paragraphs and the reasons for such an application will follow and finally a conclusion as to the position would be provided.
Corporate personality as stated above refers to the existence of a company and due
The business legal system perceives that these businesses are not separate from their owners. By contrast, an incorporated business is an entity separate from its owners and members. The incorporated businesses may be limited or
nd limited liability was confirmed by the ruling in Salomon v Salomon and Company.2 However, there are exceptions to the corporate shield under both statutory and common law. This paper analyses some examples where the corporate veil can be lifted under both common law and
y, I have come to the clear conclusion that section 7 applies where a child or young person enters into a transaction of sale, whether as a principal or on behalf of someone else, whether disclosed or undisclosed and whether or not property passes to him…”.
In order to get
Transfer also terminates ownership. Personal savings, gifts, donations, and loans are the sources of capital (Miller 2012, p. 496).
Partnership is formed by agreement among partners who contribute capital. It
6 Pages(1500 words)Essay
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