Salmon Vs Salmon Case Study

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Recommended: The Necessity Of Piercing The Corporate Veil

（a）Introduction The case of Salomon v. Salomon & Co Ltd[ Salomon v. Salomon [1897] AC 22] is a classic case about the separate legal personality of a company , it is widely discussed in this condition . The company 's liquidators alleges that the debenture had been fraudulent, because he thought Salomon set up this company in order to evade debt. He also thought that the business had been invalidly transferred from Mr Salomon to the Company. The judge who knew the case first suggested that the company (Salomon & Co Ltd) was an agent of Mr Salomon, so Mr Salomon should compensate for agent.[ Broderip v. Salomon [1895] 2 Ch 323] However, the House of Lords has different viewpoint. House of Lords suggested that Salomon is not liable to the Company …show more content…

The independent personality of the legal person depends on the independence of property and the independence of responsibility. In company law, it is reflected between the company 's personality and the personality of shareholders is relatively independent of each other. The company has independent personality, so The company 's assest and shareholder’s assest can not be confused. Due to the personality of the company and the personality of the shareholders of the company are separated from each other, companies and members are the two part. The changes of memberships are not intrinsically linked to a company 's existence. So only the company will be investigate and affix legal liability, and shareholders will not be held liability. Lord Halsbury said that the company is either an independent legal entity or not; If it is, the business belongs to the company and not to Salomon; f it is not, then there is no one can be used as a proxy. At the same time it is impossible to say that the company exists and does not exist. Although Salomon is the owner of the vast majority of shares in the company, the company 's creditors are not Salomon 's individual creditors, Salomon has the right to priority over ordinary creditors get paid as a company secured creditors. Thus, Salomon got t more than 6,000 pounds which pay by company, while the other …show more content…

Salomon & Co Ltd[ Salomon v. Salomon [1897] AC 22] stablished the principle: In accordance with the law, a limited company is established. Then the company obtains an independent personality according to law, even if the company is controlled by only one or a few shareholders and the remaining shareholders have only symbolic benefits to the company.[ Brenda Hannigan, Company Law (1st edn, Oxford University Press).] It do not affect the independent corporate juridical. The judgment of Salomon v. Salomon & Co Ltd is also regarded as a troublesome unfortunate decision, it provides an opportunity for individual shareholders or minority shareholders to seek extrajudicial benefits and is unfair to the company 's creditors. In order to overcome this drawback, rectify some person abuse the corporate personality, court founded the "piercing the corporate veil" principle. In accordance with this rule, if the company 's capital is not sufficient to compensate the creditors or their claimants under certain conditions, the court may award that the individual shareholders of the company shall be liable for compensation. This essay will discuss the exceptions to the principle and the future of piercing the veil of

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