Salomon V a Salomon
Salomon v A Salomon and Co Ltd (Salomon) has created an impressive case in English Law history. The decision of the House of Lords in Salomon has reaffirmed the separate legal personality of a company. A separate legal personality is also known as the corporate personality. It is one of the consequences of the Company Act 2006 which incorporated a sole trader company to a limited company. When a company has undergone incorporation, it simply means that the shareholders of the company are separated from the company. Therefore, the shareholders have limited liability. In an incorporated company, shareholders get a benefit of having limited liability. The assets of the company do not belong to its members and the company can only sue or be sued under its own name only. On the other hand, there are particular circumstances whereby the court is trying to abstain the principle of separate legal personality and limited liability to pinpoint the fact behind incorporation – it is called “the lifting or corporate veil”. From my point of view, I strongly agree with the decision made by Lord Macnaghten in House of Lords in the Salomon case because he alleged a true and fair view on the case. Mr Salomon had successfully appealed to the House of Lords and Mr Salomon managed to acquire his rights, which is to obtain a separate legal personality; he was only liable to the amount of company debts on the shares that he owned. In this essay, the doctrine and incorporation of the case of Salamon v A Salomon and Co Ltd and the lifting of corporate veil is critically discussed.
A promoter is a person who knows of the idea on how to incorporate a company and carries on with the procedures and registration to convert a sole proprietorship company to a limited company. Cockburn J. in Twycross v. Grant has enounced that a promoter is defined as a person who undertakes all the procedures of a project to achieve the objective of the project. In Salomon v A Salomon Co Ltd (Salomon), Mr
A promoter is a person who knows of the idea on how to incorporate a company and carries on with the procedures and registration to convert a sole proprietorship company to a limited company. Cockburn J. in Twycross v. Grant has enounced that a promoter is defined as a person who undertakes all the procedures of a project to achieve the objective of the project. In Salomon v A Salomon Co Ltd (Salomon), Mr
References: 1. Griffin. S (2000) Company Law: Fundamental Principles. 3rd Edition., Pearson Professional Limited 1994, 1996 2 6. “Lifting the Corporate veil: A reassessment of the fraud exception” Cambridge Law Journal (1977), pp284-290 [Online] [Accessed on 7th of February] http://moodle.mmu.ac.uk/file.php/2877/LIFTING_THE_VEIL_REASSESSING_THE_FRAUD_EXCEPTION.pdf [ 10 ]. Graham. T and Poole. J(2010) ‘Switching assets from one shadowy hand to another’: piercing the veil of company and trust. Trusts and Trustees, Vol. 16, no. 9, pp705-726 [Online] [Accessed on 9th of February 2012] [ 11 ]