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A Company Is A Separate Legal Entity

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The concept of a company being a separate legal entity is the most striking illustration in separating the company from its owners. A paramount principle of corporate law is that no shareholder or member of a company is made liable for the obligations incurred by such incorporations A company is different from its members in the eyes of law. In continuations to this the opposite also holds true in the sense that neither can the company be held liable for the acts of its members. It is a fundamental distinction that a company is distinct from its members. The words, “corporate entity is not imaginary or fictitious but quite real, whereas corporate personality is a fiction whose origin is to be found in the psychological tendency towards personification” gives an idea that the legal doctrine of corporate personality was built around the idea of a sovereign grant of certain attributes of personality to a definable group, which was engaged in an enterprise. When a company is incorporated it is treated as a separate legal entity distinct from its promoters, directors, members, and employees, which confers the benefit of not being responsible for the companies debt on the members on the company. However even though a company is a separate legal entity and it attains the advantage of not laying the responsibility of company’s debt on the…show more content…
Unlike partnership, a company is distinct from the members and is capable of enjoying rights and duties in its own capacity, which is not the same as those of its members. As Lord Macnaughten in Solomon v Solomon & Co Ltd case quotes “the company is at law a different person altogether from the subscribers and the company in law is not the agent of the subscriber or trustee for them. Nor are the subscribers as members liable, in any shape or form, except to the extent and in manner provided by the
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