Essay about Busniess Law

Submitted By dodolala
Words: 1698
Pages: 7

The company is legally incorporated, there are different discussions, and the main point is whether the company has independent personality. Corporate company is a dominant type of business organization in he market economy and at law. Someone thinks it has no personality, while someone supports it is a reality with its own status in law. This essay will introduce the some points about the relationship between promoters and company, the promoters motive in setting up a company absolutely irrelevant in determine corporate liability, analyze the case of Salomon v. Salomon and if the members are liable the company’s liabilities. All of these, this essay will provide a simple theoretical explanation.
The Lord MacNaughten thinks the company is completely independent of the shares in the company's memorandum subscriber independent entity. Even after the establishment of the company did not occur before the establishment of substantial change in circumstances apply. For example, an individual, the company is set up and this person also is the manager, the company profits and also belongs to the owners. In this case, the person still cannot be regarded as the company's agent or trustee. Company law did not subscribe for any relationship between the requirements or restrictions. Therefore in this case, the stock subscription, as well as subscription method does not violate the law. The Lord MacNaughten points are investor is based on the company to make investment decision, and the kind of trust relationship is established with companies in the past on the basis of good communication. In other words, investors are carried out based on their own investment judgments, judgments and decisions should own risk and responsibility. Salomon has not it the deal with as an individual, on the contrary, he will be the name of the company's identity and to face partner. Salomon business as investors shift to informed. For creditors in the circumstances cannot be effectively guaranteed, it can only be attributed to lack of legislative acts. Therefore I generally agree this statement of Lord MacNaughten. In Salomon v. Salomon case, the promoter is Salomon. In equity a promoter stands in a fiduciary relationship towards the company he is promoting but is not a trustee. Thus he is not absolutely forbidden to make a profit out of the promotion so long as he has disclosed his interest in the transaction out of which the profit arose and the company consents to the retention of the profit. As a general rule any profits which he makes on the promotion and fails to disclose must be surrendered to the company. Due to the company was given possession of the rights and this subject, corresponding obligations, so the company absolutely irrelevant in determining corporate liability. If the company juridical person set up a company, but the company fraud the members and get the large asset, when the company bankrupt or debt crisis, then the company juridical person will incurred obligation. Opposite, the company juridical person set up the company and does the legal business, if the company bankrupt, then the company juridical person did not incurred obligation.
Separate legal personality and limited liability is not the same thing. Limited liability is the logical consequence of the existence of a separate personality. The legal existence of a company corporation means it can be responsible for its own debts. The shareholders will lose their initial investment in the company but they will not be responsible for the debts of the company. Just as humans can have restrictions imposed on their legal personality a company can have legal personality without limited liability if that is how it is conferred by the statute. In Lee v Lee’s Air Farming [1961] AC 12. “Mr. Lee incorporated a company, Lee’s Air Farming Limited, in August 1954 in which he owned all the shares. Mr. Lee was also the sole ‘Governing Director’ for life. Thus, as with Mr. Salomon, he was in…