Image credit: Scroll.in, September 26, 2017
This is the fourth blog piece in our series entitled “Those Were the Days”, which is published monthly. We hope you enjoy reading this as much as we have enjoyed putting this together.
The world is becoming corporatised, and the time of the business owner living over his little shop are well-nigh over. The world is also becoming smaller and, as it does, a business’s reach spreads across multiple jurisdictions and through multiple subsidiary or group companies.
In this age of corporatisation, most jurisdictions recognise the concept of a company as a separate juristic person, with an identity distinct and independent of its shareholders, members or directors. This corporate existence separates a company’s identity from that of its promoters or shareholders. It enables the company to contract in its own name, with its shareholders and third parties, to acquire and hold property in its own name, and to sue and be sued in its own name. A company has perpetual succession; its life is not co-dependent with that of its shareholders and it remains in existence irrespective of any change in its members, until it is dissolved by liquidation. The shareholders of a company are not identified with the company and cannot be held personally liable for acts undertaken by, or liabilities of, the company.
This independence or distinction is not a new concept. In the late 19th Century, the judgment in the classic case of Salomon v. Salomon was passed, ruling that a company is a separate legal entity distinct from its members and so insulating Mr. Salomon, the founder of A. Salomon and Company, Ltd., from personal liability to the creditors of the company he founded.