Analyzing Separate Corporate Personality: Company Law Case Study

This case study analyzes the concept of separate corporate personality within company law, focusing on the landmark case of Saloman v Saloman. It explores the implications of this principle, particularly the limited liability of shareholders and the separate legal status of a company. The assignment examines how courts may 'pierce the corporate veil' in cases of moral impropriety or fraudulent intent, referencing cases like Gilford Motor Company v. Horne and DHN Food Products Ltd. v. Tower Hamlets. The study advises Alan on the legal implications of establishing a company, emphasizing the importance of ethical conduct and the potential application of the separate corporate personality doctrine. The analysis also considers the impact of not being a director or shareholder on legal challenges to the company's activities. The assignment provides guidance on the legal and ethical considerations related to establishing a company, using legal precedents to support the arguments.

Running head: COMPANY LAW
Separate Corporate Personality
Name of the student:
Name of the university:
Author note

1COMPANY LAW
Separate corporate personality is the main theme of the case and it is advisory
in nature. The principle was held in the case of the Saloman v Saloman (Saloman v Saloman
Co Ltd. [1897] AC 22). It was held that the shareholders of an insolvent company could not
personally be liable for the outstanding debts of the company. Status of the company could
not be harmed at any way (Bainbridge 2013).
The court has observed that where the moral principle of the corporation is
involved, court may pierce the corporate veil. Alan is thereby advised to point out the moral
dilemma, if any, present in the incorporation of the company. it is also stated by the court that
if the company is established to defraud the others, this doctrine can be applied. Alan is
advised not to adopt any fraud purpose. The necessary provision has been mentioned in the
case of Gilford Motor Company v Horne.
In DHN Food Products Ltd. v Tower Hamlets, court has decided that if the
nature of the company depicts similar economic entity than the principle could be applied.
Alan is advised to analyse the economic entity of his company. In the light of the decision
held in Saloman v Saloman [1897], it can be said that Alan could get the benefit under the
doctrine of separate corporate personality (Lo 2017) if not all the previous stated provisions
are match up. It is a fact that he is not the director or the shareholder of the company.
Therefore, it can be advised that the officials could not stop him trading or prove the illegality
of the new company.

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Reference:
Allen, W.T. and Kraakman, R., 2016. Commentaries and cases on the law of business
organization. Wolters Kluwer law & business.
Bainbridge, S.M., 2013. Using Reverse Veil Piercing to Vindicate the Free Exercise Rights of
Incorporated Employers.
Hopkins, B.R., 2017. Starting and managing a nonprofit organization: A legal guide. John
Wiley & Sons.
Kraakman, R., Hansmann, H., Hertig, G., Kanda, H. and Pargendler, M., 2017. The anatomy
of corporate law: a comparative and functional approach. Oxford University Press.
Lo, S.H., 2017. Piercing of the corporate veil for evasion of tort obligations. Common Law
World Review, 46(1), pp.42-60.
Saloman v Saloman Co Ltd. [1897] AC 22.

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