Company Law- An Overview Case Study Example | Topics and Well Written Essays - 2250 words

Company Law- An Overview - Case Study Example Generally, the company law recognizes two types of persons, namely natural which is confined to human beings and secondly artificial persons which refers anything other than the human being which the law recognizes as having duties and rights. Scholars have constantly explored the issue on the recognition of corporation/company as a "legal person" (Farrar, (1991) (1) A company, when legally speaking, is an association of a number of individuals for the purpose of carrying on some legitimate business i.e. entity for profit which may be a corporation, a partnership, association or individual proprietorship. It is the name given to the body of legal rules relating to the creation, management, financing and operation of companies. The various status of companies, like separate legal entity, limited liability etc has been contributed a number of recognition for English law, by which a company, as well as its members, possess some rights and liabilities. organizations such as religious orders and local authorities which were granted rights by the government to hold property and sue and be sued in their own right and not to have to rely on the rights of the members behind the organization. Later on, this concept began to apply to commercial ventures with a public interest element such as rail building ventures Farrar (Company law, 1991) (3) has described the concept of separate legal personality as a metaphorical use of language, clothing the formal group with a single separate legal entity by analogy with a natural person. The decision of the House of Lords in Salomon v Salomon & Co Ltd (4) rightly molded the concept of legal entity nature of a company and it provided new principles to the Company law. It firmly established that upon incorporation, a new and separate artificial entity comes into existence. Hence corporation/company is a distinct person with its own personality separate from and independent of the persons who formed it, who invest money in it, and who direct and manage its operations. (Ford, Austin, and Ramsay, 1997)(5) The decision uprooted in the law by the later decision in Lee v Lee's Air Farming (6).