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(b)
In the words of Lord MacNaghten in Salomon V. Salomon and Co. Ltd.(1897). 'The company's at law a different person altogether from the subscribers to the memorandum'
This is the ratio decided in Salomon's case and constitutes one of the fundamental principles of company law.
In simple legal parlance the principle of legal personality of the company is to the effect that when a company is incorporated it becomes a legal person, distinct and separate from its members and managers. It becomes a body corporate or a juristic person. It acquires an independent legal existence with rights and subject to duties with certain capacities and subject to in capacities.
The principle of corporate legal personality is now exemplified by the words that 'From the date of incorporation mentioned in the certificate of incorporation, the subscribers to the memorandum together with such other persons as may from time to time become members of the company shall be a body corporate'
The most fundamental attribute of incorporation from which all other consequences flow is that on incorporation a company becomes a body corporate – a different legal entity. This principle manifests itself through the principle of:
i) Limited liability: Sec 4 (2) (a) and (b) of the Companies Act.
ii) Perpetual succession: Sec 16(2) of the companies Act.
iii) Sue or be sued: Foss V. Harbottle (1843)
iv) Owning of property: section 16(2) of the ActMacaura V. Northern Assurance Co.(1925)
v) Capacity to contract: Lee V. Lee's Air Farming Co. Ltd(1961)
vi) Common Seal: section 16 (2) of the Act.
A critical analysis of the Judicial and statutory authority demonstrates that the principle of corporate legal personality is incontrovertibly an important and fundamental aspect of company law.
This problem is based on the concept of piercing the corporate shell or simply put lifting the veil of incorporation or modifying the rule in Salomon's case. Both parliament and courts of law have recognized circumstances in which the veil of incorporation may be lifted and regard had to the individual members of the company and its subsidiaries are treated as one of regard it had to the economic realities of the group. These circumstances are exceptions to the rule in Salomon's case.
- Legislative or parliamentary or statutory exceptions
- Reduction in number of members: section 33 of the Companies Act.
-Non-publication or mis description of the Companies name: section 109 (4) of the Act. Group accounts: section 150-152 of the Companies Act.
- Investigation of companies affairs: section 167 of the Act.
- Investigation of company membership: section 173 of the Act.
-Fraudulent trading: section 323 (1) (a) of the Act. - Common law or judicial exceptions
- Agency trustee or nominee:
-Inre F. G. Films Ltd.
-Smith Stone and Knight V. Birmingham Corporation
- Firestone Tyre and Rubber Co V. Llewellin
-Group enterprises: Harold Holdsworth and Co V. Caddies
marto answered the question on February 7, 2019 at 06:10
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(i) General proxies.
(ii) Special proxies....(Solved)
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Date posted: February 7, 2019. Answers (1)
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Explain the meaning of a trust deed and outline its advantages
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Date posted: February 7, 2019. Answers (1)
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Discuss.
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Date posted: February 7, 2019. Answers (1)
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Date posted: February 7, 2019. Answers (1)
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Date posted: February 7, 2019. Answers (1)
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Date posted: February 7, 2019. Answers (1)
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Date posted: February 7, 2019. Answers (1)
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Date posted: February 7, 2019. Answers (1)
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Tama Quin Ltd., a company manufacturing pharmaceutical drugs is about to make a new issue of 400,000 shares of Sh. 40 each at the current market price of Sh. 50 each.
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Allan, who has not read the prospectus, applied for shares and is allotted 2000 at the price of Sh. 50 each.
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Charles, who read the report of the interview in the national newspaper, bought 5000 shares at the stock exchange at Sh. 55 per share.
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(i)State the circumstances under which the objects clause of a company may
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(ii) Explain the procedure to be followed in...(Solved)
(b)
(i)State the circumstances under which the objects clause of a company may
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(ii) Explain the procedure to be followed in altering the objects clause.
Date posted: February 6, 2019. Answers (1)
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Company Limited (1925) illustrate the corporate entity theory.(Solved)
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Date posted: February 6, 2019. Answers (1)
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Mr. and Mrs. Matanguta intend to form a limited company known as M and M Hardware Limited. They approach you and seek you advice.
Advise them on the following issues:
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Date posted: February 6, 2019. Answers (1)