Separate Legal Entities
Introduction
Separate legal entity is principle law today, but in several cases, the principle is ignore and in justice is serve. The courts are willing asked to “lift the corporate veil” and ignore this principle when fairness and justice demand so.
A “company” is an organization that is registered under the companies Act 1965. The incorporation of a company is an artificial entity recognized by the law as a legal person that exists independently with rights and liability. This means that a company is treated as a separate person from its participants. The fact that a company was a legal entity separate from its participants was established in Salomon V Salomon & Co Ltd (1897) AC 22. However, members and the directors and others who manage a company can produce unsatisfactory result in certain circumstance. Thus some exceptions to this principle have evolved. Courts are sometimes seems quite willing to lift ‘the veil of incorporation’ and when the justice of the case so demands.
Separate Legal Entity of a Company
The rule in Salomon v Salomon & Co Ltd (1897) AC 22 is that a company upon incorporation becomes a separate legal entity distinct from its members. This is so, even if the company is absolutely under the control of one/more person. The effect of incorporate is set out in Section 16 (5) of the Companies Act 1965.
A company’s obligation and liabilities are its own, and not those of its participants. Creditors of the company cannot ask the member of the company to pay the debt because a company is separate entities. In Fair Schools Bhd. v Indrani Rajaratnam & Ors (1998) 1 CLJ 285, shareholders of the limited companies are not exposed to unlimited liability for the company’s debt.
A company can sue and be sued in its own name. It may enforce rights by suing or incur liabilities and be sued by other parties. This means the liabilities of the company is not the liabilities of its members, creditors can sue the company but not the members if the
Separate legal entity is principle law today, but in several cases, the principle is ignore and in justice is serve. The courts are willing asked to “lift the corporate veil” and ignore this principle when fairness and justice demand so.
A “company” is an organization that is registered under the companies Act 1965. The incorporation of a company is an artificial entity recognized by the law as a legal person that exists independently with rights and liability. This means that a company is treated as a separate person from its participants. The fact that a company was a legal entity separate from its participants was established in Salomon V Salomon & Co Ltd (1897) AC 22. However, members and the directors and others who manage a company can produce unsatisfactory result in certain circumstance. Thus some exceptions to this principle have evolved. Courts are sometimes seems quite willing to lift ‘the veil of incorporation’ and when the justice of the case so demands.
Separate Legal Entity of a Company
The rule in Salomon v Salomon & Co Ltd (1897) AC 22 is that a company upon incorporation becomes a separate legal entity distinct from its members. This is so, even if the company is absolutely under the control of one/more person. The effect of incorporate is set out in Section 16 (5) of the Companies Act 1965.
A company’s obligation and liabilities are its own, and not those of its participants. Creditors of the company cannot ask the member of the company to pay the debt because a company is separate entities. In Fair Schools Bhd. v Indrani Rajaratnam & Ors (1998) 1 CLJ 285, shareholders of the limited companies are not exposed to unlimited liability for the company’s debt.
A company can sue and be sued in its own name. It may enforce rights by suing or incur liabilities and be sued by other parties. This means the liabilities of the company is not the liabilities of its members, creditors can sue the company but not the members if the
Bibliography: Abu Bakar bin Munir, 1994. [1994] 1 MLJ cxlvi Malayan Law Journal Articles 1994, LIFTING THE CORPORATE VEIL AND THE CRIMINAL LIABILITY OF A COMPANY. Source: Lexis.com Anusuya Sadhu, ____ CLEMENT CHIGBO, 2007. Lifting The Veil Of Incorporation. Source: http://www.jonesbahamas.com/?c=135&a=11675 Dr Gower, 1985. Source: http://www.ipsofactoj.com/archive/1985/Part5/arc1985%285%29-013.htm Ian M Ramsay, David B Noakes, 2001