[Separation of legal personality and lifting the corporate veil ]

Topics: Corporation, Legal entities, Types of companies Pages: 4 (1189 words) Published: December 19, 2013

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This report covers the separation of legal personality and the lifting of the corporate veil from the cases of Salomon v A Salomon co ltd (1897), Catherine lee v Lee’s Air farming ltd (1960). Salomon v Salomon was the first principle case of its kind and its principle was that a limited company is a separate legal entity, in catherine lee v lee this case was reaffirmed, and Gilford Motors v Horne was the first law case to ‘pierce the corporate veil’. WHAT IS THE PRINCIPLE OF separate CORPORATE PERSONALITY?

There are 3 types of ownership generally speaking in the law context. There are sole traders, partnerships and companies. Sole traders are the sole owners to a business entity in which there is no legal distinction between the business and the owner. The owner receives all profits and is responsible for its debts as well. A partnership is when 2 or more parties agree to advance their interests. There are 2 types of partnership, which are the general partners and limited partners. General partners are liable for all debts and obligations whereas the limited partners contribute working capital and are not liable for the debts of the business entity. There are 2 types of companies:

Private limited company (LTD)
Public limited company (PLC)
Private limited companies is usually owned by fewer people and usually are smaller businesses who do not trade in the stock exchange, their business accounts don’t need to be audited and their statements are also private, whereas public limited companies need to public their financial statements and get audited. The advantage of this type of ownership over others is that there is a limited liability of the owners of business as the business is a separate legal personality. meaning of limited liability?


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