Corporate Law Personality

One of the key legal features of corporations are their separate legal personality, also known as "personhood" or being "artificial persons".
Separate legal personality allows corporate groups flexibility in relation to tax planning, and management of overseas liability. However, the court will look beyond the corporate form where the corporation is a sham or perpetuating a fraud. The most commonly cited examples are:

• Where the company is a mere façade.
• Where the company is effectively just the agent of its members or controllers.
• Where a representative of the company has taken some personal responsibility for a statement or action.
• Where the company is engaged in fraud or other criminal wrongdoing.
• Where the natural interpretation of a contract or statute is as a reference to the corporate group and not the individual company.
• Where permitted by statute (for example, many jurisdictions provide for shareholder liability where a company breaches certain laws).

Corporate Governance

Corporate governance is primarily the study of the power relations among a corporation's senior executives, its board of directors and those who elect them (shareholders in the "general meeting" and employees), as well as other stakeholders, such as creditors, consumers, the environment and the community at large.

Purpose

The concept of personality for corporatin is important for several reasons. among them:

• Limited Liability

  One of the primary reasons for corporate legal personality is to provide limited liability to the owners (shareholders) of the corporation. Limited liability means that the personal assets of shareholders are generally protected from the debts and liabilities of the corporation. If the corporation faces financial difficulties or legal issues, the personal assets of individual shareholders are not typically at risk beyond their investment in the company.

• Perpetual Existence

  A corporation has perpetual existence, meaning it can continue to exist and operate irrespective of changes in ownership. The death, departure, or change in ownership of shareholders does not affect the continuity of the corporation. This perpetual existence is vital for the stability and continuity of business operations.

• Contractual Capacity

  As a separate legal entity, a corporation has the capacity to enter into contracts, sue, and be sued in its own name. This allows corporations to engage in various business transactions, such as entering into agreements, acquiring assets, and taking legal actions, without relying on the personal capacities of individual shareholders.

• Property Ownership

  A corporation can own property, both tangible (such as real estate and equipment) and intangible (such as intellectual property). Corporate legal personality allows the company to hold and manage assets independently of its shareholders.

• Access to Courts

  Corporate legal personality enables a corporation to access the legal system. The corporation can bring lawsuits or defend itself in court, participate in legal proceedings, and be held accountable for its actions.

• Taxation

  The concept of corporate legal personality also affects how corporations are taxed. In many jurisdictions, corporations are subject to separate taxation from their owners, and the income and expenses of the corporation are distinct from those of the individual shareholders.

• Ease of Transfer of Ownership

  The shares of a corporation can be easily transferred from one shareholder to another without disrupting the ongoing business activities of the corporation. This facilitates the buying and selling of ownership interests.

Medium

Paper

Authoring Date

700 AB

Ratification Date

792 AB

Signatories (Organizations)

• Rich Shore of Abaisgar