salomon v salomon
Introduction
This essay will examine the legal standing of the doctrine of 'separate legal personality ' as it was developed in Salomon v. Salomon & Co Ltd [1897] AC 22. Even though this doctrine is the stone head of the English company common law, the courts introduced several exceptions which undermined the 'veil of incorporation '. The exceptions were firstly introduced in the mid-60s by Lord Denning in Littlewoods Mail Order Stores Ltd. V IRC [1969], and allowed the court to lift the veil and hold the shareholders liable for the company 's actions. The main reason for the courts to lift the veil is where the shareholders had abused the privileges of limited liability and incorporation.
Corporate personality and incorporation
Incorporation is the procedure of stating a company as separate legal personality from its shareholders. At the time when a company is incorporated, it becomes a separate legal personality; namely it has legal existence in the eye of law. By corporate personality it is considered that the company has a different identification from its members and the members ' liability is extended only up to the amount they have to pay for their shares.
One of the main effects of limited liability is that the company carries its own contracts. The company 's creditors can take action only against the company even though sometimes they will not be able to retrieve their money back if the company is liquidated.
Furthermore, the company is not affected from the death or the decision of a member who withdraws. It might affect the functions of the company but it will still exist.
A company owns its own assets. The assets belong to the company; the members have no rights over company 's property. This provides security to the creditors as the shareholders will not be able to extract the assets out of the company and reduce company 's value.
Salomon v Salomon .Co Salomon had a business as a sole trader and decided to enlarge it to a
This essay will examine the legal standing of the doctrine of 'separate legal personality ' as it was developed in Salomon v. Salomon & Co Ltd [1897] AC 22. Even though this doctrine is the stone head of the English company common law, the courts introduced several exceptions which undermined the 'veil of incorporation '. The exceptions were firstly introduced in the mid-60s by Lord Denning in Littlewoods Mail Order Stores Ltd. V IRC [1969], and allowed the court to lift the veil and hold the shareholders liable for the company 's actions. The main reason for the courts to lift the veil is where the shareholders had abused the privileges of limited liability and incorporation.
Corporate personality and incorporation
Incorporation is the procedure of stating a company as separate legal personality from its shareholders. At the time when a company is incorporated, it becomes a separate legal personality; namely it has legal existence in the eye of law. By corporate personality it is considered that the company has a different identification from its members and the members ' liability is extended only up to the amount they have to pay for their shares.
One of the main effects of limited liability is that the company carries its own contracts. The company 's creditors can take action only against the company even though sometimes they will not be able to retrieve their money back if the company is liquidated.
Furthermore, the company is not affected from the death or the decision of a member who withdraws. It might affect the functions of the company but it will still exist.
A company owns its own assets. The assets belong to the company; the members have no rights over company 's property. This provides security to the creditors as the shareholders will not be able to extract the assets out of the company and reduce company 's value.
Salomon v Salomon .Co Salomon had a business as a sole trader and decided to enlarge it to a
References: 3. Ali Imanalin. (2011). C.S.L.R.. Rethinking limited liability. 7 4 5. Judge, S. (2009) Business law. 4th ed., London: Palgave macmillan,p 148-154 Cases