Introduction to the Concept of Separate Legal Personality: It has been long established law that the key characteristic of a properly incorporated company is that it possesses separate legal personality. However a company would be held liable nonetheless for wrongful acts done by human beings acting on behalf of the company. Section 7(1), (2) and section 16(2) of the CA 2006, provides for the registration and incorporation of a limited liability company so long as the aim legal. Separate Legal Personality To have legal personality means to be capable of having legal rights and duties within a certain legal system, such as to enter into contracts, sue, and be sued. Separate legal personality also enables a company to enjoy perpetual succession which means that notwithstanding any changes in membership, the company will retain its legal identity and continue to exist. By this natural persons will not be held personally liable if an act is done in the name of a company. In other sense it distinct from third party as well. In the first instance the court will prevent from escaping liability when the court imposes specific performance on such a person. It was then discovered that the sum of £39m had gone missing and £20m was traced to a company owned by the defendant where the court pierced the veil and found out that the defendant company was a mere facade owned by the former managing director of the claimant company who had only created the company to create the illusion of separate legal personality. Its difference will be highlighted via reference to the facts of the case. The case of Salomon v Salomon (supra) established that an agency relationship cannot exist between a company and its shareholders however in some rare situation an agency relationship may be imputed into a relationship between a company and the shareholders as was decided in the case of Gramophone & Typewriter Ltd v Stanley however this relationship in most cases will arise between a parent company and its subsidiary. The doctrine of ‘separate legal personality’ is an essential principle of English company law and an intrinsic part of the act of incorporation. Being an artificial person a company cannot do acts which are only possible with natural persons. See the case of R v Birmingham and Gloucester Railway Co and Great North of England Railway Co where the court established that criminal proceedings can be brought against a corporate personality. The Doctrine of Separate Legal Personality The doctrine of separate Legal personality 1.1: Introduction A company under Company regulation or business regulation is expressly mentioned to as a "legal person"- as a subject of privileges and obligations that is adept of owning genuine house, going into agreements, and having the proficiency to litigate and be litigated in its own name. [3] Legal personality is a prerequisite to legal capacity, the ability of any legal person to amend (enter into, transfer, etc.) See the case of EBM Co Ltd v Dominion Bank where the court stated that, “Their Lordship of the privy [of the Privy Council] believe it to be of supreme importance that the distinction should be clearly marked, observed and maintained between an incorporated company’s legal entity and its action, assets, rights and liabilities on the one hand, and the individual shareholder and their actions, assets, rights and liabilities on the other hand.”, However the courts have experienced some difficulties in deciding what term best suits the situation of describing the act of denying corporate status. Firstly, separate legal personality and limited liability. This is the first time in our law that there has been statutory recognition of the remedy to pierce the corporate veil of a company. This has significant implications in tort cases, wherein tort creditors of a company in a group could only enforce their legal right against the debtor company. Contrast the situation in New Zealand with the situation as it is here in the United Kingdom where there are no express parliamentary provisions however the courts have used discretion and caution to imply a similar reasoning to cases that involve Corporal punishment. See also the case of R v Murray Wright Ltd where the court pointed out that it has been statutorily provided under the New Zealand that an artificial person cannot be held liable for manslaughter. Salomon v Salomon was the first case to establish the principle that a company is a separate legal person quite distinct from its shareholders and directors and that because of this, the directors and shareholders cannot be liable for the debts and liabilities of the company. Where natural persons have acted in their capacity as employees of a company it is only reasonable that liability goes to the company. However in some cases that have come before the courts the court has thought it wise to attribute act or thought than have been done by individuals who do not form part of the directing body of the company as acts forming part in order to make the company liable. 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[1], whereby a corporation has a separate legal personality, rights and obligations totally distinct from those of its shareholders. We have seen how the principles of separate legal personality and limited liability sometimes result in circumstances that may seem favourable to the Company’s shareholders and detrimental to its creditors. CONSEQUENCES OF INCORPORATION Separate Legal Personality. stemming. When this was discovered the claimant company had sought to recover the money of which the defendant denied personal liability. A company is defined in section 1 of the Companies Act as a juristic person incorporated in terms of the Act and in terms of section 19(1)(b) of the Companies Act, a company is a legal person with separate legal personality. The separate legal personality of a corporation is often the reason why a corporation has been favoured for the conduct of commercial enterprise or social organisation. See the case of R v Philippou where the court held the accused persons guilty for carrying on fraudulent business as a result of concealing information about the financial status in order not to be deprived of their licence. The court furthermore confirmed the balancing act approach taken in Cape Pacific which requires weighing up the importance of giving effect to juristic personality against the adverse and moral effects of countenancing an unconscionable abuse of the separate legal personality. It is therefore necessary that something is done to reduce if possible eliminate such vagueness. “The sanctity of a separate entity is upheld only in so far as the entity is consonant with the underlying policies which give it life.”1 The key concept of ‘separate legal personality’ has been proven to be one that hasn’t been able to be done away with; given how very well it has established itself over the years. 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