Separate Legal Entities

5151 Words Oct 30th, 2010 21 Pages
Introduction
Separate legal entity is principle law today, but in several cases, the principle is ignore and in justice is serve. The courts are willing asked to “lift the corporate veil” and ignore this principle when fairness and justice demand so.
A “company” is an organization that is registered under the companies Act 1965. The incorporation of a company is an artificial entity recognized by the law as a legal person that exists independently with rights and liability. This means that a company is treated as a separate person from its participants. The fact that a company was a legal entity separate from its participants was established in Salomon V Salomon & Co Ltd (1897) AC 22. However, members and the directors and others who
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1.10 Statutory Exception
1.11 Number of Members below Two
Under section 36 of the companies act1965 provide that if at any time the number of members of a company (except in the case of a wholly owned subsidiary) is fall below two and carries on business for more than six month, any member who knowingly carries on business for more than six months will incur personal liability for debts incurred after those six months and may be sued there for. The company and the member shall be guilty of an offence against this Act if the company carries on business after those six months. (By Anusuya Sadhu, _____)

1.12 Civil Liability for Misstatement in Prospectus
Under section 46, a person of a company who issues its prospectus and the information in it is untrue, each of the following person shall be liable to pay compensation to all persons who is the users of the prospectus who depended on the information in the prospectus for any loss or damage sustained by reasons of any untrue statement, or by the reason of the non-disclosure of which he had knowledge and which he knew to be material. That is to say every person who: (a) Is a director of the corporation at
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