JURISPRUDENCE

CORPORATE PERSONALITY

Nemil ShahRoll No.49, 2nd Year,BSLS, Faculty of Law,The M. S. University of Baroda

Corporate Personality A Corporation is an artificial person enjoying in Law

capacity to have rights and duties and holding property.

There must be three conditions : Firstly, there must be a group or body of human beings

associated for a certain purpose; Secondly, there must be organs through which the corporation

functions; Thirdly, the corporation is attributed will by legal functions.

There are two types of Corporation : Corporation Aggregate Corporation Sole

Corporation Aggregate A corporation aggregate is an association of human

beings united for the purpose of forwarding their certain interest.

For certain reasons company has an independent existence from those of its members. It is for this reason that the company may become insolvent but its members may still rich and wealthy.

Lifting or Piercing the Corporate Veil

Where the legal entity of the company is being used for fraudulent and dishonest purpose, the individuals concerned will not be allowed to take the shelter behind the corporate personality.

The corporate veil of a company may be lifted to ascertain the true character and economic realities behind the legal personality of the company. This may be disregarded in the following cases :

1. Where the corporate personality has been used for fraud or improper conduct, the courts have lifted the veil and looked at the realities.

2. The corporate veil of the company may be lifted where its a corporate facade is in reality only an agency.

3. Corporate veil may be lifted where the company is engaged in activities which are against the public policy.

4. For determining the real character and status of the company, the court may ignore its separate entity and lift the corporate as held in Daimler Co. Ltd. V. Continental Tyre & Rubber Company.

5. Where the corporate facade of the company has been used for evasion of taxes or duties.

6. Where it is found that the sole purpose of the formation of the new company was to use it as a device to avoid or reduce payment of bonus to workers, the Supreme Court pierced into the corporate veil to look into the real transaction.

7. The courts have sometime lifted the corporate veil in quasi-criminal cases relating to companies in order to look behind the legal person and punish the real persons who have violated the law.

Corporation Sole Corporation sole is an incorporated series of successive

persons. Corporation sole are the holders of a public office which are

recognised by law as corporation. The chief characteristic of a corporation sole is its “continuous entity endowed with a capacity for endless duration”.

In corporation sole single person holding the public office holds the office in a series of successions means his rights, liabilities and property do not extinguish but they are vested in the person who succeeds him. So after the death of the person his natural personality is destroyed but legal personality continues to be represented by the successive person.