corporate personality

Once incorporated, a company is a body corporate with perpetual succession and a common seal (where it has one), able to hold property, contract, and sue and be sued in its own name (s.9, Companies Act, 2013). Its property belongs to it, not to its shareholders, and its debts are its own. That is why shareholders' liability can be limited and why a company can contract with its own members.

The leading case is Salomon, where a one-man company was held to be a separate person from Salomon even though he held almost all its shares. Courts may lift or pierce the corporate veil where the form is used for fraud, tax evasion or to evade legal duties, or where a statute requires it.

Example

Because of corporate personality, the company's creditors cannot recover its debts from the managing director's personal property unless the veil is lifted for fraud.

In Indian law

• Section 9, Companies Act, 2013 (effect of registration)
• Salomon v. A. Salomon & Co. Ltd. (House of Lords, 1897)

See also

lifting the corporate veil · legal personality · memorandum of association · winding up

Read more in the study notes

• The company: history, nature and corporate personality (Company Law)
• Public corporations and public undertakings: status, classification, liability and control (Administrative Law)
• Sole proprietorship, partnership and limited liability partnership (Business Environment)
• The joint stock company and its classification (Business Environment)
• Co-operative societies (Business Environment)
• Winding up: concept, modes, grounds and the powers of the Tribunal (Company Law)