Separate Legal Entity Doctrine in Corporations Law

1
Title page
Name of the student
Student ID

2
Contents
Topic 1 - Separate Legal Entity Doctrine........................................................................................3
Explain the ‘separate legal entity doctrine’ in Corporations Law...................................................3
Solution 2 - Types of Companies in Australia.................................................................................4
(a) Differences between a company limited by shares and a company limited by guarantee4
(b) Differences between a proprietary company and a public company................................5
(c) The meaning and main obligations of an ASX-listed company.......................................5
Topic 3 – Duties of Directors of Companies in Australia...............................................................6
Bibliography....................................................................................................................................8

3
Topic 1 - Separate Legal Entity Doctrine
Explain the ‘separate legal entity doctrine’ in Corporations Law
The leading case of (Salomon v A Salomon And Co Ltd [1897], is a landmark case in the law of
contract which has laid the foundatyion for the standard of Separate Legal Entity.
In 1897, Salomon v A Salomon And Co Ltd was decided. In the given case, Mr Saloman was
running a business as a soel trader. Llatyer he formulated a compoany and the business is moved
to the company wherein he is the majpor shareholder and there are 6 other shareholders who are
his family meembers. He soiught debenmtures and shares of the company and is also the
cvreditor of the company agiant the assets of the company. When the company is lioquiadted, the
court held that when Mr Saloman formed the company, then, it is a company which can be
regarded as separte from his sharehjolders and creeditors. Thus, the compoany and Mr Salo,man
are distimct persons who ahev their own personality in law. (Radin, 1932)
The concept of separte legal persoanlity was laid and the cpoiurt held that a company have its
own personlity in law ands thus is not reagaded as the same of its shareholders or creditors.
Separate legal personality
Section 124 of the corpoatrtion Act 2001 submits that when any company is formulated then
there are various attributes that can be associated with the same, that is, a company has perperual
succession, can enter into contracts, can acquire and sell property and has a separate legal entity
and is evaluted in the leading case of Gas Lightning Improvement Co Ltd v IRC (1923).
The basis and fundamental of separate legal entityy signifies that a veil is present which brings a
distinction between a company and its shareholdesrs and directors. A companty is considered to
be having its own personalty in law and has the power to carry out all the functions that can be
assocaited with a normal human being. Any act that is carried out by the officers or the directors
of the company are carried out in the name of the company and the directors and officers are not
held liable for the same.
Justificatrion for the concept of separate legal entity
With the coming of the decision of Salomon v A Salomon And Co Ltd, the law is very clear that a
company is totally distinct from its members and any acts of the company is carried out in its