Corporate Personality and Piercing the Corporate Veil
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Course
Company Law
Institution
Durham University (DUT)
Book
Company Law
First Class revision notes on Company law for the LLB, based on Durham University lectures. These notes contain over 50 academic references, cases and judge commentary, laid out on an easy-to-flow structure, a step-by-step guide and clear examples. Having these notes to hand will radically shorten ...
Summary Company Law, ISBN: 9780198704133 company law
Summary Company Law, ISBN: 9780198704133 company law
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Durham University
Company Law
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LAW CASES STATUE PERSON EXTRA
1. CORPORATE PERSONALITY & ‘PIERCING
THE CORPORATE VEIL’
Personality:
Salomon v Salomon 1897:
Famously and unanimously accepted that a properly formed company has its own
personality, and that it grants limited liability to its owners
Samuel Williston: a fictional legal person
Hansmann and Kraakman: Distinct from natural persons
Dignam and Lowry: humanity is not necessary for legal personality, it therefore
follow that it is possible for legal personality to be conferred on non-humans
FACTS:
Needed 7 SH in order for the company to be established, so he gave 1 share to 6
family members and kept the rest for himself as the managing D
The members of the family did not have an active role, and had no say in the
company.
DECISION:
Kay LJ in the CoA: the statutes were not intended the legalise a pretended association
for the purpose of enabling an individual to carry on his own business
HoL: Seemed like a 1-man business, but he made all the correct legal measures and
that’s all that mattered.
Para 42: distinct legal persona
Lord Macnaghten: Salomon was an agent of the company, not the company his agent
COMMENTARY:
Gregory Allan: this case is invariably still treated with reverence.
o It is widely held that this is the starting point for discussions relating to
separate corporate personality.
o It is striking to note the sheer length of time the courts have respected the
doctrine of separate corporate personality and refused to undermine limited
liability
John Lowry: cornerstone
There was some initial judicial hostility: Re London Health Elgilectrical: Lord Justice
Smith: he would wind up this kind of company and sweep it from the face of the
earth, because he was quite certain its continued existence could not benefit anyone
Halsbury: Independent person with rights
Moore: Laissez-faire approach
Collin: liability can be separate from responsibility when the person and the action are
separate
Lieu: Seminal
Page 1 of 12
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