A Company is a Legal Entity Distinct from its Members." In What CasesDo the Courts Ignore This Principle.


In the Eye of Court, Company is an independent identity. It is an artificial person. There is no body, soul or brain but it works like an human being. It can buy and sell on its own name. No members have right on company except their invested share capital. So, no shareholder sells or buy the company's property. They can only sell their bought share at its current market value. It is not just association of persons like partnership. It has full independent legal entity. Death or birth of new shareholder will not affect the existence of a company. Shareholders are not also the agent of company.

Company will not die with the die of any shareholder. When any shareholder will die, his shares will transfer to other authorize party. You see Ganga. Water of Ganga is of rain but these water will change every time but Ganga is Ganga, it will never change. Like this, company is company, it just needs the management who are the permanent employees of company. Shareholders are changing from time to time, but company will not change.

There are some excepts when this rule will not apply. For example, controller of company is of enemy country. At that time, company and enemy will not be different. Company's legal entity will not exist when court finds that controller of company are the enemy of India. At that time, all activities of company will stop.

When any company starts acting like a agent of shareholders. At that time, company and its shareholders will not different. At that time, its liability will be unlimited.

Vinod Kumar

Educator

Prof. Vinod Kumar is an Indian Educator, Motivational Speaker, Naturopathic Practitioner and Entrepreneur . He is the founder of Svtuition... read more »

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