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Question
Which of the following cases, clearly establishes the principle that company is a legal person distinct from its members?
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Solution
The correct option is B Salomon Vs Salomon & Co. Ltd
From the decision of the House of Lords in the case of Salomon v. Salomon, the doctrines of corporate personality and limited liability have emerged. These two doctrines are recognized as the twin pillars on which modern company law rests, and the courts have largely been keen to maintain and sustain it despite an overwhelming number of attacks on it. The fundamental attribute of corporate personality from which all the consequences flow is that the corporation is a legal entity distinct from its members. Hence, it is capable of enjoying rights and of being subject to duties which are not the same as those enjoyed or borne by its members. In other words, it has legal personality and is often described as an artificial person in contrast with a human being or natural person. Therefore, a corporation or company registered under the Companies Act is an entity distinct from the persons who compose it or the corporators.
From the decision of the House of Lords in the case of Salomon v. Salomon, the doctrines of corporate personality and limited liability have emerged. These two doctrines are recognized as the twin pillars on which modern company law rests, and the courts have largely been keen to maintain and sustain it despite an overwhelming number of attacks on it. The fundamental attribute of corporate personality from which all the consequences flow is that the corporation is a legal entity distinct from its members. Hence, it is capable of enjoying rights and of being subject to duties which are not the same as those enjoyed or borne by its members. In other words, it has legal personality and is often described as an artificial person in contrast with a human being or natural person. Therefore, a corporation or company registered under the Companies Act is an entity distinct from the persons who compose it or the corporators.
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