The Principle of Separate Corporate Personality
The Principle of Separate Corporate Personality
The principle of separate corporate personality has been firmly established in the common law since the decision in the case of Salomon v Salomon & Co Ltd, whereby a corporation has a separate legal personality, rights and obligations totally distinct from those of its shareholders. Legislation and courts nevertheless sometimes "pierce the corporate veil" so as to hold the shareholders personally liable for the liabilities of the corporation. Courts may also "lift the corporate veil", in the conflict of laws in order to determine who actually controls the corporation, and thus to ascertain the corporation 's true contacts, and closest and most real connection.
Throughout the course of this assignment we will begin by explaining the concept of legal personality and describing the veil of incorporation. We will give examples of when the veil of incorporation can be lifted by the courts and statuary provisions and incorporate the varying views of judges as to when the veil can be lifted. Finally we will state whether or not we agree with the given statement. “The principle of a separate corporate personality is a fundamental concept in Business Law. However, this does not stop the courts from lifting or piercing the veil to see what lies beneath.”
When a company receives a certificate of incorporation it has a 'separate legal personality '. In law the company becomes a legal person it its own right. The fundamental concept to become familiar with when starting up a business is the idea that the business has a legal personality in its own right, particularly when it assumes the form of a limited liability company. This essentially means that if one commences business as a limited liability company, then the corporation or company is a legal entity with distinct legal personality separate to that of the owners, members, or shareholders. This is known as the concept of legal personality.
The 'veil of incorporation
The principle of separate corporate personality has been firmly established in the common law since the decision in the case of Salomon v Salomon & Co Ltd, whereby a corporation has a separate legal personality, rights and obligations totally distinct from those of its shareholders. Legislation and courts nevertheless sometimes "pierce the corporate veil" so as to hold the shareholders personally liable for the liabilities of the corporation. Courts may also "lift the corporate veil", in the conflict of laws in order to determine who actually controls the corporation, and thus to ascertain the corporation 's true contacts, and closest and most real connection.
Throughout the course of this assignment we will begin by explaining the concept of legal personality and describing the veil of incorporation. We will give examples of when the veil of incorporation can be lifted by the courts and statuary provisions and incorporate the varying views of judges as to when the veil can be lifted. Finally we will state whether or not we agree with the given statement. “The principle of a separate corporate personality is a fundamental concept in Business Law. However, this does not stop the courts from lifting or piercing the veil to see what lies beneath.”
When a company receives a certificate of incorporation it has a 'separate legal personality '. In law the company becomes a legal person it its own right. The fundamental concept to become familiar with when starting up a business is the idea that the business has a legal personality in its own right, particularly when it assumes the form of a limited liability company. This essentially means that if one commences business as a limited liability company, then the corporation or company is a legal entity with distinct legal personality separate to that of the owners, members, or shareholders. This is known as the concept of legal personality.
The 'veil of incorporation
Bibliography: Cavendish Lawcards Series (2002) Company Law (3rd edn), Cavendish Publishing, London. Farrar, J and Hannigan, B (1998) Farrar 's Company Law (4th edn), Butterworths, London. Griffin, S (1996) Company Law Fundamental Principles (2nd edn), Financial Times Pitman Publishing, London. WEBSITES Cadwallader, N (2002) Lifting the Corporate Veil: Principles [online] (cited 26 December 2003) Available from Chandratre, K (2003) Piercing the Corporate Veil to Catch the Real Culprits [online] (cited 25 December 2003) Available from Dryland, C (2001) Liability of Directors [online] (cited 3 January 2004) Available from Griffiths, M (2003) Lifting the Corporate Veil: Mike Griffiths Discussed Lifting the Corporate Veil [online] (cited 17 December 2003) Available from Small Business Development: The Concept of Legal Personality [online] (cited 3 January 2004) Available from