Separate Legal Personality Essay
1.1 Separate Legal Personality Legal personality refers to the general and abstract capacity of a certain entity to operate as a legal subject. It suggests that a company is to be treated as a separate legal entity with an independent existence …show more content…
It is, therefore, possible to have one company owning one or more company wholly or partially. The legal personality of a company is often the reason why a company has become an attractive vehicle for commercial purposes, as the liability rests with the company, rather than the shareholders, directors, members or company officers, and endowed the company with all the requisite attributes with which to become the powerhouse of capitalism. The separate legal personality has the consequence that a firm has perpetual succession - its legal existence survives its members and directors - its existence is ended when it is wound up.
As this concept is described as a corporate veil and thus it protects those who exist behind it, it is also known to become a device by unscrupulous shareholders in exploiting the separate legal personality of the company to commit a fraud or injustice. Therefore, there are occasions where the courts were forced to disregard the concept and to lift the veil, which will be further elaborated in Chapter 3