Separate Corporate Personality

Question- Critically discuss the principles of separate corporate personality and limited liability in relation to companies. Introduction- Overview of Separate Corporate Personality and Limited Liability This principle of a separate corporate personality has a long-standing concept which can be found before the landmark case of the Salomon v Salomon Co Ltd, although it typically is related with the decision. As a result, the case has been defined as a decision that demonstrated and clearly outlined the concept of separate corporate personality, that is grounded the notion that the company is at law a different person altogether from the subscribers to the memorandum. This corporate veil is therefore a mechanism which separates a company from its members. It grants limited liability to the companys shareholders, allows the company to acquire profits and suffer losses, enter into contracts and properties as a separate entity. The principle of separate corporate personality is now defined as a unyielding rock that has been concretised in the section 16(2) of Companies Act 2006. Limited liability, as a result of the separate and different corporate personality, has the foundation of the modern corporation and hence the company law. Limited liability is deemed necessary because it promotes commerce and industrial growth. It is still recognised that this distinction between respective legal personalities, rights and the liabilities of a company and those of its shareholders is still as valid today as it was when the House of Lords had decidedin Salomon. However, despite (or perhaps because of) the important, overarching nature of separate corporate personality, a number of exceptions have been developed allowing the corporate veil, in certain situations, to be set aside or pierced. This therefore means that the separate corporate personality is not absolute different to the statutory and the common laws justification which has indeed developed to uplift