[pic][pic][pic]Corporate Personality is the creation of law. Legal personality of corporation is recognized both in English and Indian law. A corporation is an artificial person enjoying in law capacity to have rights and duties and holding property.
A corporation is distinguished by reference to different kinds of things which the law selects for personification. The individuals forming the corpus of corporation are called its members. The juristic personality of corporations pre-supposes the existence of three conditions : (1) There must be a group or body of human beings associated for a certain purpose. (2) There must be organs through which the corporation functions, and (3) The corporation is attributed will by legal fiction. A corporation is distinct from its individual members. It has the legal personality of its own and it can sue and can be sued in its own name. It does not come to end with the death of its individual members and therefore, has a perpetual existence. However, unlike natural persons, a corporation can act only through its agents. Law provides procedure for winding up of a corporate body. Besides, corporations the banks, railways, universities, colleges, church, temple, hospitals etc. are also conferred legal personality. Union of India and States are also recognized as legal or juristic persons.
In certain cases, the corpus of the legal person shall be some fund or estate which reserved certain special uses. For instance, a trust – estate or the estate of an insolvent, a charitable fund etc; are included within the term ‘legal personality’.
Corporations are of two kinds:
1. Corporation Aggregate: Is an association of human beings united for the purpose of forwarding their certain interest. A limited Company is one of the best examples. Such a company is formed by a number of persons who as shareholders of the company contribute or promise to contribute to the capital of the company for the furtherance of a common object. Their liability is limited to the extent of their share-holding in the company. A limited liability company is thus formed by the personification of the shareholders. The property is not that of the shareholders but its own property and its assets and liabilities are different from that of its members. The shareholders have a right to receive dividends from the profits of the company but not the property of the company. The principle of corporate personality of a company was recognized in the case of Saloman v. Saloman & Co.
2. Corporation Sole : Is an incorporated series of successive persons. It consists of a single person who is personified and regarded by law as a legal person. In other words, a single person, who is in exercise of some office or function, deals in legal capacity and has legal rights and duties. A corporation sole is perpetual. Post – Master- General, Public Trustee, Comptroller and auditor general of India, the Crown in England etc are some examples of a corporation sole. Generally, corporation sole are the holders of a public office which are recognized by law as a corporation. The chief characteristic of a corporation sole is its “continuous entity endowed with a capacity for endless duration”. A corporation sole is an illustration of double capacity. The object of a corporation sole is similar to that of a corporation aggregate. In it a single person holding a public office holds the office in a series of succession, meaning thereby that with his death, his property, right and liabilities etc., do not extinguish but they are vested in the person who succeeds him. Thus on the death of a corporation sole, his natural personality is destroyed, but legal personality continues to be represented by the successive person. In consequence, the death of a corporation sole does not adversely affect the interests of the public in general.
Advantages of Incorporation
1) Independent Corporate Existence: A corporate person shall...