Company Law
CSEA 2222
COMPANY LAW
GROUP ASSIGNMENT
INTRODUCTION
Principle of Separate Legal Entity
The principle of separate legal entity under the law is a company, upon incorporation, will becomes a body corporate that exists separately with its owner and distinct from its individual members and directors. This fundamental principle of company law was first established in the landmark case of Salomon v Salomon & Co Ltd (1897), and formed the foundation of company law in Malaysia. Besides, this principle distinguishes a company from a partnership.
In relation to the principle of separate legal entity, it is also enshrined in Section 16(5) of the Companies Act 1965, the effect of incorporation which reads:
“On and from the date of incorporation specified in the certificate of incorporation but subject to this Act the subscribers to the memorandum together with such other persons as may from time to time become members of the company shall be a body corporate by the name contained in the memorandum capable forthwith of exercising all the functions of an incorporated company and of suing and being sued and having perpetual succession and a common seal with power to hold land but with such liability on the part of the members to contribute to the assets of the company in the event of its being wound up as is provided by this Act.”
Case: Salomon V Salomon
In the case, Mr Salomon was a sole-proprietor of a manufacturing leather boots. The business was successfully operates. Later, Mr Salomon incorporated a company and sold his business to the company in consideration for 20,000 shares and issued £10,000 of debentures in favour of Mr Salomon. Mr Salomon ended up holding 20,001 of the total 20,007 shares issued. The remaining six shares were held by his wife and his five children as nominees for Mr Salomon.
Unfortunately, the company experienced financial difficulty and despite efforts by Mr Salomon, the company become insolvent and was compulsorily required to
COMPANY LAW
GROUP ASSIGNMENT
INTRODUCTION
Principle of Separate Legal Entity
The principle of separate legal entity under the law is a company, upon incorporation, will becomes a body corporate that exists separately with its owner and distinct from its individual members and directors. This fundamental principle of company law was first established in the landmark case of Salomon v Salomon & Co Ltd (1897), and formed the foundation of company law in Malaysia. Besides, this principle distinguishes a company from a partnership.
In relation to the principle of separate legal entity, it is also enshrined in Section 16(5) of the Companies Act 1965, the effect of incorporation which reads:
“On and from the date of incorporation specified in the certificate of incorporation but subject to this Act the subscribers to the memorandum together with such other persons as may from time to time become members of the company shall be a body corporate by the name contained in the memorandum capable forthwith of exercising all the functions of an incorporated company and of suing and being sued and having perpetual succession and a common seal with power to hold land but with such liability on the part of the members to contribute to the assets of the company in the event of its being wound up as is provided by this Act.”
Case: Salomon V Salomon
In the case, Mr Salomon was a sole-proprietor of a manufacturing leather boots. The business was successfully operates. Later, Mr Salomon incorporated a company and sold his business to the company in consideration for 20,000 shares and issued £10,000 of debentures in favour of Mr Salomon. Mr Salomon ended up holding 20,001 of the total 20,007 shares issued. The remaining six shares were held by his wife and his five children as nominees for Mr Salomon.
Unfortunately, the company experienced financial difficulty and despite efforts by Mr Salomon, the company become insolvent and was compulsorily required to
References: http://www.economic-truth.co.uk/?page_id=188 http://www.managementparadise.com/forums/principles-management-p-o-m/157701-smith-stone-knight-ltd-v-birmingham-corporation-1939-4-all-er-116-a.html http://www.scribd.com/doc/76926183/Adams-v-Cape-Industries-Plc-2003 http://www.applebyglobal.com/articles-2011/global-reference-guide-for-litigation-and-dispute-resolution---piercing-the-corporate-veil---by-katie-brown.pdf