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Advantages And Disadvantages Of Incorporation

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LeLegal benefits of incorporation
ProteIntroduction
Company or Corporate law originally was derived from the Common Law of England, but has evolved significantly in the 20th Century. Many countries have forms of business entity unique to their countries. The doctrine of the veil of incorporation was demonstrated From the age long decision of House of Lords in the case of Salomon v. Salomon & Co Ltd (1897) The effect of the House of Lords' unanimous ruling was to uphold firmly the doctrine of corporate personality, as set out in the Company Act (1862) so that creditors of an insolvent company could not sue the company's shareholders to pay up outstanding debts.. The principle behind the veil of incorporation is what is referred to as limited liability that is that a company's creditors can
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Salomon & Co Ltd (1897). In a corporation, however, stockholders, directors and officers typically are not liable for the company's debts and obligations. They are limited liabilities in a way that only the amount which was invested in the corporation will be lost and not their personal assets. For instance if a shareholder purchased a stock wealth K100 no more than K100 can be lost.. When a corporation which is a limited company holds assets and real estates if a shareholder of this corporation is personally involved in a lawsuit or bankruptcy, the assets and real estates of the company will not pay for that lawsuit of that particular individual or shareholder, , the assets will be protected. There will be no creditor who will seize those assets because they company assets. However, the creditor can seize ownership shares in the corporation, as they are considered a personal
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