The directors or officers that pays or permits to pay the dividend, was liable to the creditors of the company. The directors involved will be liable for the compensation of loss or damage. The incorporation of a company is an artificial entity recognized by the law as a legal person that exists independently with rights and liability. For example, a director resigned from a company and signed a contract to not compete with the company he just left for a period of time. The court held that the county could be sued under the law as a legal person.
A declaration by the person who has agreed to be the company secretary The application for the registration of the company must be made within the three months of the application for the reservation of the name of the company. The limited liability of a company has been said cost involved in the separation of ownership of the shares and control of the company. It is also generally accepted that consent is central to the formation of an arbitration agreement. So there are of two kinds of legal entities, human and non-human: also called physical persons and also called juridic, juristic, artificial, legal, or fictitious persons, : persona ficta , which are other entities such as corporations that are treated in law as if they were persons. As a company is incorporates under the Act, it will automatically has the perpectual succession, its own common seal and the power to hold land. The former refers to human beings while latter to other human beings which law recognised as having duties and rights. This basic tenet of company law ensures that businesses can structure their transactions to take advantage of benefits conferred by law.
And nothing was left for unsecured creditors. The concept of juridical personality is not absolute. As such the members could not take action. Whether or not it is acting in such capacity does not depend on the existence of an independent mind to control the company, as was shown in Lee v. It is entirely at the discretion of the state to recognise or not to recognise a juristic person the theory closely resembles the fiction theory as it also believes that there is no juristic personality apart from the creation of law.
They died in an accident, leaving behind an infant child. After that, the greater part of the estate caught fire but the respondent refuse to pay the appellant by argued that he had no insurable interest towards the estate. Perpetual Succession After a company is incorporated, it continues to exist until it is dissolved according to the law or it is struck off the register. Thus, it clearly creates a double-edged sword, which literally means it has both good and bad elements. As a separate legal entity is subject to limited liability and defined by some attributes of incorporation, the corporation has many economically and socially beneficial functions. It is distinct from its members and capable of surviving even after all the members have ceased to exist.
The concept of a juridical person is a fundamental. Next, the third circumstance is signing of bill of exchange or other similar documents. The company did not change its identity or personality. Sole traders and partnerships are not separate legal, entities from the owners. Macaura's name rather than the company's name. Under the business entity concept, a business holds separate entity and distinct from its owners. L could not file a claim as the forest was owned by the company.
Special purpose vehicles or special purpose entities are a good example of accounting entities regularly used in the financial sector. Liabilities and contract form the former group of shareholders to the present group. The problem that arose was, as the shareholders and directors had died, the shares could not be transferred as according to the will of the deceased to the infant child. In conclusion, in accordance with the principle of separate entity, company is regarded as separate legal entity. Like the man, the corporation is forgive this compound adjective a right-and-duty-bearing unit. Liability of the Members Once a company is incorporated it is liable for its own debts and obligations.
In the case of Gilford Motor Co Ltd v. In this view it may lead to dictatorship and arbitrary restrictions on corporate bodies, particularly the political entities. By being a debenture holder, Salomon becomes a secured creditor of the company. This liability extends to those who has left the company but was a member within a year before the company wound up. Ø Prohibit any invitation to the public to deposit money with the company. The formation of a company introduces a new legal persona which owns vehicles and receives money for coal that does not belong to it In modern law therefore there is a clear cut distinction between the personality of a company and the personality of its members. If we postulate that the company may have a distinct persona separate from that of is shareholders or directors, it is difficult to attack the logic of this distinction.
However, members and the directors and others who manage a company can produce unsatisfactory result in certain circumstance. Jim intends to add the car to the of the pizza shop. Corporate personality: Meaning Corporate personality is a creation of law. This is where a corporation or any other business organization has a separate legal personality; obligations as well as rights are totally different from those of the shareholders Weissman, 2012. It consists both of an association of members, which may themselves be corporate bodies; and of an entity possessing independently of its membership the legal capacity to exercise proprietary, contractual and other powers. The following are the important accounting concepts: Separate entity concept ; Realization concept; These accounting concepts have been explained in accounting concepts article.
Unfortunately, these are not business expenses. The individuals forming the corpus of the Corporations are of two kinds distinguished in English law as corporations aggregate and corporations sole. When the company went into liquidation, S was sued by creditors in his personal capacity as they claimed S was, in effect, the company. Clearly, as an association of members it has as real an existence as any other formally constituted society, and the above terms must therefore refer primarily to the nature of its legal rights and obligations. How are the liabilities of an entity which is treated as person only by a fiction of law to be enforced against it? The law being concerned with regulating the human conduct, the concept of legal personality constitutes an important subject matter of jurisprudence because there cannot be rights and duties without a person. Like a natural person it has its own name and can own property.