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ABSTRACT

COMPANY HAS A SEPARATE LEGAL ENTITY- AN ANALYSIS

A company is a separate legal entity as distinct from its members and therefore it is
separate at law from its shareholders, directors, promoters etc. and as such is conferred with
rights and is subject to certain duties and obligations. These central principles of company law
were first laid down in the case Salomon v Salomon & Company Ltd. in very clear terms by
House of Lords. The ruling outlined in part in the quoted text of the assignment from Lord
Macnaghtens ruling has several important consequences. Under the concept of limited liability
the owners of the company under normal circumstances, are not answerable or responsible for
the obligations of the company therefore making the owners/ shareholders liable only for the
amount of their unpaid shares and not the obligations of the company. The principle from the
Salamons case firmly established that a company has a separate legal identity to that of its
shareholders and has been applied over a wide range of cases which shall be dealt in this project.

Aims and Objective-

The main aim of the project is to study that how any company has a separate legal
personality even if they are controlled by the people who are Managing Directors or Board of
Directors or Shareholders who have a separate personality in law.

Research Methodology-

Doctrinal method of research has been used for the completion of the project as no need
of empirical study was felt necessary by the author.

Scope-

The Scope of the project is limited only to the Companies Act and both the Act of year
1956 and 2013 shall be referred in this particular topic for a better understanding of the project.
Various theories regarding the personality shall also be dealt in the study.

By- Purnesh Upadhyay/ 201281


Corporate Law I