Critically Assess the Effects of Corporate Separate Personality.

In: Business and Management

Submitted By nkaur3
Words 1123
Pages 5
Critically assess the effects of corporate separate personality.
The fundamental concept of corporate separate personality recognises that a company, once incorporated, becomes a ‘body corporate’, i.e. a legal entity distinct from its members and officers. The various effects of corporate separate personality shall be dealt with in turn.
1) Distinct legal identity from its members
One of the most significant effects of corporate separate personality is that the company assumes a separate identity from that of its members. Even if a company is owned outright by one shareholder, the company has a completely separate personality from that individual. This is confirmed by the leading case of Salomon v A. Salomon & Co Ltd in which the House of Lords held that the company’s acts were its own acts, not those of Mr Salomon personally. As a result, Mr Salomon was not personally liable for his company’s debts. It is worth noting, however, that the Court did recognise that there would be situations in which they would be prepared to move away from that principle and ‘lift the veil of incorporation’ and find individuals liable where they had acted dishonestly, fraudulently or unreasonably.
2) Limited liability
Due to the fact that the company is a separate legal individual, it follows that its members will not generally be liable for its debts and obligations. This gives the shareholders a great level of security, since it means that they are able to profit from the successes of the company whilst being safe in the knowledge that their personal liability is limited to the value of the shares they have purchased. However it should be noted that those members who participate in the management of the company will not necessarily be protected from personal liability. In addition, the concept of limited liability may not be attractive to potential creditors who may require…...

Similar Documents

Effects of Communication & Personality in Negotiations

...Communication and Personality in Negotiation The following discourse will offer an illustration of how communication and personality play a key role in negotiations. The discussion will center on one’s testimony surrounding their interview process to transition into a more desirable career opportunity with a targeted new employer. In this dialogue, the reader will be able to determine that communication and personality of the interviewee helped to position them to receive an initial offer, negotiate to make a, and accept a new win-win proposal. Inspiration of Goals About 10 years ago after employed for approximately two years with a leading financial institution in their retail credit card division, a customer service supervisor sought to establish a new career path. The first order of business after months of deliberation became his setting of some specific career objectives. The results produced four goals: higher compensation, job growth/opportunity for advancement, stability, and better working conditions. Prior to his current employer, he previously earned $15k more. Because of a corporate reorganization and his brief tenure compared to his peers who had on average 10-plus, he became first out because he was last in. His background work experience also incorporated his managing a mid-sized call center of 63 associates with five supervisors as direct reports. As a manager, his position offered favorable growth and exciting challenge because it involved the startup......

Words: 1296 - Pages: 6

Company: a Corporate Personality

...gratitude to our course instructor of BUS 361Md. K.I.M.MANZUR-E-MAWLA, Adjunct Faculty, Department Of Bachelor of Business Administration, East West University. Without him, preparing this report would be simply impossible for us. We also like to thank our seniors and classmates to giving advices and reliable information. We are paying our hearties appreciation to all of these people for their great co-operation, which will be always remembered by us. Letter of transmittal 22 April, 2010 K.I.M.MANZUR-E-MAWLA Adjunct Faculty Department of Business Administration East West University Dear Sir For the purpose of understanding the company law and corporate personality in the real life scenario and what are the cases that influence the company law. Therefore we have prepared a report on Company: A Corporate Personality. It is our honor to transmit to you the report and grateful to you for giving us the chance to prepare this report being a part of course works Legal Environment of Business (BUS 361). In spite of various limitations, we did our best to put rational analysis in this report through our collective effort. We hope that you will find some new quantitative and qualitative information and analysis in this report. It would be appreciated, if you please evaluate our report. We would like to thank you for your support and feedback. Thanking you, Sincerely; SHAH NAFESH FAYED xxx Xxxxx Ahmed Anis Uz Zaman Bhuiyan ASAD AL......

Words: 3402 - Pages: 14

The Effect of Corporate Restructuring

...The Effect of Corporate Restructuring on the Shareholders’ Value: The Case of GEC/Marconi Magdy Abdel-Kader 1 * and Vagia Mentzeniot 2 1 Brunel Business School. Brunel University. Uxbridge. Middlesex UB8 3PH. UK * Corresponding author: Tel: +44 (0)1895 266739. Fax: +44 (0)1895 269775. Email: 2 Finance Division, Piraeus Bank Group, Headquarters, Stadiou & Amerikis 4, Athens, 10557, Greece Abstract GEC/Marconi’s transformation from a diversified conglomerate to a focused telecommunications and information technology company was an eventful and rambling transmission that resulted in the deterioration of shareholders’ value. It represents one of the most dramatic falls from grace in British corporate history and one of the greatest corporate governance fiascos of all time. The study investigates the wealth effects of Marconi’s sell-offs and acquisitions on its shareholders’ value by calculating the abnormal returns on the announcement days of all the disposals/acquisition during 1996-2002. The results support the view that shareholders’ value increases when a company proceeds to corporate sell-offs to pursue a focus strategy. However, the authors conjecture that GEC/Marconi has destroyed shareholders’ value through these disposals/acquisitions because of several mistakes, such as being prone to heavy debt. © 2007 World Research Organization. All rights reserved Keywords: Marconi, GEC, Restructuring, Disposals, Acquisitions, Divestiture......

Words: 11306 - Pages: 46

Sox Effects on Corporate Fraud

...the FCPA of 1977 1. Detection method 2. Importance of Early Detection 3. Big problems for small corporations/organizations 4. Types of fraud and who is involved 1V. Sarbanes Oxley Act A. The effects of Sarbanes-Oxley Act on corporate culture (1) Increase in accounting costs (2) Increased records-management requirements (3) Salary increases (4) Increase in audit fees B. Need for Continuous Auditing/ Continuous Monitoring and its benefits C. Role of internal Auditing and Management. D. Identification of Control Deficiencies – What is the Act doing to minimize. E. Fraud/Scandal, Waste, and Abuse. What is the effect of the Act? 1. Securities and Exchange Commission missed the hints on Allen Stanford and Bernie Madoff cases. V. Conclusion A. It is imperative the chief audit executives (CAEs) find ways to respond effectively to the demands of a rapidly changing business environment and the burden of growing regulatory requirements. B. A firm in violation of the FCPA may be barred from doing business with the Federal government and other governmental agencies, excluded from federal agency programs, suspended from the securities industry and be deemed ineligible for export licenses. C. The application of Sarbanes-Oxley Act has enhanced the efforts to improve corporate accountability. Introduction of the Regulations An evolving regulatory environment, increased globalization of businesses, market pressure to improve operations, and rapidly changing......

Words: 3193 - Pages: 13

Dopamine’s Effect on Adolescent Personality

...Dopamine’s Effect on Adolescent Personality Dopamine’s Effect on Adolescent Personality Dopamine is defined as a neurotransmitter in the central nervous system, retina, and sympathetic ganglia, acting within the brain to help regulate movement and emotion. Researchers have become intrigued with this neurotransmitter especially its effect on the personality of adolescents. The effects of dopamine levels and the presence of certain dopamine receptors on the likelihood of adolescent alcohol consumption have developed quite a debate amongst researchers. Next, researchers have been studying the effect of dopamine on children’s personal incentive motivations, and the personality changes due to the neurotransmitter. Finally, the effect on dopamine on the personality of children diagnosed with attention deficit/hyperactivity disorder has been thoroughly tested. According to van der Zwaluw, Larsen, and Engels (2012), children are no longer assumed to be only influence by peers when it comes to alcohol consumption. The dopamine D4 receptor (DRD4) has been found to be associated with the susceptibility of alcohol consumption. This concept has been highly scrutinized and tested, because the researchers have seemingly found a genetic disposition for alcoholism. According to Lee and Humphreys (2014), not only does the presence of the DRD4 gene raise the likelihood of drinking, but it also allocates the adolescent a positive experience with alcohol. The positive experience is......

Words: 1071 - Pages: 5

The Causes and Effects of Corporate Scandals

...The Causes and Effects of Corporate Scandals Makenzie Derby ENG121 Lesa Hadley July 16, 2007 The Causes and Effects of Corporate Scandal In this day and age, there seem to be an overwhelming amount of company executives violating ethical standards. The question on many people’s minds is, “Why?” Everyone is familiar with Enron filing bankruptcy in December of 2001. The company “covered a wide array of activities, including accounting regularities, the defrauding of investors and employees, and the attempted cover-up, which involved the destruction of documents and the deletion of computer files” (Callan, 2003, p. 126). People joke around in their careers everyday, saying to other associates, “Could you imagine what would happen if I did this?” Of course, nobody ever means it. People are in shock when they hear about company scandals on the news. Who could commit such crimes and for what reason(s)? There were many companies throughout the year 2002 which were involved in scandals. “Scandals involved such US based companies as Worldcom, AOL, Tyco, and several others” (Callan, 2003, p. 126). It seems to be an international disease among large corporations. The pressure on corporations to succeed is tremendous. People care more about their own success than the affects on the people around them such as colleagues, friends, and family. Callan (2003) states, “It is not the achievement of a high status position or salary that determines career success, but......

Words: 628 - Pages: 3

Critically Assess the Claim That Religious Language Is Meaningless?

...Critically assess the claim that religious language is meaningless? Many philosophers have argued as to whether or not the ways in which we speak about religion are relevant or meaningful. This issue of religious language looks at the way we talk about God, debate ideas and communicate our theist or atheist ideologies. For some, religious language is meaningful and full of purpose while others see it to being incomprehensible and pointless. The verification principle a theory proposed by A.J. Ayer is a key argument, which addresses whether religious language is meaningful or not. Ayer was one of the logical positivists, a Viennese group of philosophers who were inspired by the theories of the early Wittgenstein and he sought to answer what makes a statement ‘meaningful’ as opposed to what makes it ‘true’. Ayer begins his thesis with the claim that language is only meaningful if it can be verified by a sense-observation. If you cannot demonstrate with sense-observations how a statement is true, then the statement is factually meaningless. A ‘putative proposition’ is the name Ayer gives to statements yet to be verified. A putative statement is either verifiable practically or in principle. For instance, a statement such as “that is a red car” is verifiable in practice by looking at the car. However, a statement such as “There is life in another universe” is verifiable in principle but not in practice, as we possess insufficient technology. Therefore Ayer then makes......

Words: 1356 - Pages: 6

Critically Assess the Effect of Social Media on Society

...Critically assess the effect of Social Media on society Social media as defined by Andreas M and Michael (2010, p. 61) is “a group of Internet-based applications that build on the ideological and technological foundations of Web 2.0, and that allow the creation and exchange of user-generated content.” Social media platforms include chat rooms, blogging web sites, social networking sites, forums, and also text messages and e-mail (Luxton, June and Fairall, 2012). The most popular social networking site, Facebook has made such an influence on society that from 2004 to 2011 the number of users registered to the site increased from 1 million to about 1 billion users worldwide (Yahoo Finance, 2012). With such vast figures social media is bound to have an impact on the way society operates, either positively or negatively, or both. These will be critically analyzed in this essay, identifying the most crucial impacts it has on our society. With the rapid increase in the awareness and use of social networking sites, it has provided positive contributions to how society functions. First and foremost, social networking has grown to become a critical part of a business’s marketing strategies, and if managed efficiently, will prove to be a major factor for its success. Social media networks such as Facebook and Twitter have provided an easy-to-access platform for people to share their views, preferences, and experiences about brands and products. Once this information gets widespread......

Words: 3119 - Pages: 13

Critically Analyse as to What Extent the Corporate Veil Has Maintained a Separate Legal Identity Between a Corporation and Its Incorporators and Critically Assess as to Whether T ‘Piercing of the Veil’ Doctrine Has Served Its Purpose.

...Critically analyse as to what extent the corporate veil has maintained a separate legal identity between a corporation and its incorporators and critically assess as to whether t ‘piercing of the veil’ doctrine has served its purpose. The case of Saloman v Saloman established the principle that the company is a separate legal identity from its share holders or owners. This simply means at law the company is viewed as a separate being from its incorporators. A company may incur a debt and only the company will be liable for that debt its incorporators will not have to reach into their personal assets to relieve the company of that debt even if they are in sole control of that company. This principle has coined the term “the veil of corporation”. The veil of corporation has been a strict rule in company law, however there have been instances where the courts are willing to pierce this veil and view a company and its incorporators as a single entity. The extent to which the courts will uphold the principle in Salomon will be discussed below. In Macaura v Macaura Macaura exchanged his timber and estate for shares in a company, the timber was insured in his name and subsequently got burnt, Macaura neglected to have the timber insured in the company’s name hence the insurers said he had no claim to the timber. Macura followed the decision in Soloman however my point of focus is on Lord Wrenburys statement “The corporator even if he holds all the shares is not the......

Words: 2002 - Pages: 9

Critically Assess Role of Marketing

...providing statistics which ultimately drive change for benefit. There is however, the issue surrounding quality of information; whilst there may be a vast amount of information available, there is the issue of “dirty data” which is a lack of quality and completeness that can, if used, lead to false findings and a detrimental effect (Karr, 2015) There is the temptation to use data for “quick wins”, opting for intermediary results that don’t necessarily tie to the organisations larger goals (Fishman, 2014). Additionally, and more importantly there is the issue of ethical and privacy concerns. Organisations do not want a lot of information about each individual customer; they want to know about the behaviours of groups and adapt to their behaviours accordingly. They want continuous discovery and analysis of what algorithms and trends are showing in order to react to the information they have been given and shift their product or service to meet the demands of their customers in a changing environment. Whilst this is the information they want, there is the conception (maybe a misconception) thanks to rising paranoia amongst society due to the “big brother effect” that businesses may abuse the data they collate or may not protect the information they are privy to (Ovsey, 2014). Organisations must ensure that data protection is a priority across the business and it is of paramount importance that companies have policies regarding data collation and use and communicate honestly......

Words: 2690 - Pages: 11

Critically Assess a Utilitarian Response to Environmental Ethics

...Critically assess a utilitarian response to environmental ethics. Utilitarianism is teleological, concerned with the end or purpose of actions. It is also consequentialist, judging actions right or wrong according to their outcome. Many scientists, politicians and philosophers have expressed concern that the world is facing an environmental catastrophe. If this is to be believed, an ethical theory that focuses on the results of our actions seems most appropriate. Utilitarianism is able to take into account the risks to the environment of global warming, ozone depletion, pollution, deforestation etc. Traditional utilitarianism would have done that using Bentham’s Hedonic Calculus. Bentham would have asked how likely it was that certain results would occur. He would have weighed up the benefits of any proposed action, such as the building of a new motorway, against the adverse affects, focussing on the pleasure and pain that resulted, and nothing else. This sort of calculation is practical and flexible, allowing for a different answer in every different set of circumstances. For example, building a road in Rwanda might lead to increased trade, a way of transporting important materials, medicines etc – in other words, a lifeline. The destruction of wildlife in such an underdeveloped country might be negligible, and the pollution minimal. However, a similar road in the UK might run through residential areas. The pollution from the thousands of cars might have a......

Words: 936 - Pages: 4

Lucifer Effect and Corporate Governance

...Module: Risk Management and Assurance ACCT 627 Introduction The Lucifer effect describes Philip Zimbardo’s experiment in 1971 in which college students under took the roles of guards and prisoners in a study that was originally intended to examine how prisoners would adapt to prison life. However, the study took on a different focus as the behaviour of the guards (and authoritative figures) become a key point of interest. Before the study commenced, participants were dutifully screened for abnormal psychological traits and were randomly assigned the roles of prisoners and guards. The experiment was to be conducted over two weeks with Zimbardo himself dual hatting as a prison supervisor and that of a researcher. Steps were taken conceal the identities of the guards, to create a sense of anonymity and deindividuation. The students were not given any form of training on how to perform as normal prison guard and rules were poorly defined. As part of the study process, the counts sessions were simply intended as a role call and to ensure that the prisoners were made aware of their identification numbers and the rules. However, the count sessions very quickly became abusive from the first day. The sessions went beyond the intended duration, during which prisoners were humiliated, physically abused, psychologically weakened and punished without reason. At one point, the abuse even turned sexual in nature. As a result of the rapid escalation of abuse, the study was......

Words: 1831 - Pages: 8

Merits of Corporate Personalities

...MERITS OF CORPORATE PERSONALITY A corporate person (s) is a separate legal business entity created under state laws by an owner or group of owners who become initial shareholders. According to Sec. 3 (1) (ii) of the Companies Act, 1956; a company means a business entity formed and registered under the Companies Act, 1956 or any of the preceding Acts. A Company comes into existence only by registration under the Act, which can be termed as incorporation. Thus, a company is a legal person. The primary advantage of a corporate form of business is that a corporation is a stand-alone entity, which means you are not personally liable for the assets and debts of the business. Incorporating protects your personal assets from lawsuits, debt collection and other business issues that can arise. Other merits of a corporate personality are as follows: 1)      Independent corporate existence- the outstanding feature of a company is its independent corporate existence. By registration under the Companies Act, a company becomes vested with corporate personality, which is independent of, and distinct from its members. A company is a legal person. The decision of the House of Lords in Salomon v. Salomon & Co. Ltd. (1897 AC 22) is an authority on this principle:      It was argued on behalf of the unsecured creditors that, though the co was incorporated, it never had an independent existence. It was S himself trading under another name, but the House of Lords held Salomon & Co. Ltd.......

Words: 3791 - Pages: 16

: Critically Assess the Declining Power in Parliaments

...Government Assignment Essay Title: Critically assess the declining power in Parliaments GV1102 Assignment Topic 2: Critically assess three reasons for the declining power of parliaments. Introduction Throughout the past few centuries, political structure and life has been changing ever so rapidly, so too has the power that parliaments possess. This decline in power is due to a number of reasons, but mainly through the power of the lay person. Nowadays, people outside of parliament have huge power and can have a rather large influence in decisions that are made within parliaments. People power aside, Government decisions are also influenced in other ways such as, mass media, European Union decisions and disciplined political parties. All of these issues dominate the Irish political landscape from week to week, and are becoming more prevalent since the Economic Crash of 2008/2009 and the IMF Bailout that followed it on that infamous November night of 2010. Since then, every move the Irish Government makes is not only being monitored by the Irish people but it is also scrutinised by the European Union and the huge influence of the media. Another issue which detracts from the power of parliaments is the workings of the traditional Political Party system, although politicians may sound to be very passionate on a subject, they may find it very hard to act on this unless their political party is in agreement. The idea of Diciplined Political Parties hasn’t gone......

Words: 1602 - Pages: 7

Critically Assess the Via Negativa as a Means of Knowing God

...Critically assess the Via Negativa as a means of knowing God In the Christian tradition, the via negativa (apophatic theology) refers to a way of speaking about God and his attributes through the way of the negative. Because God is beyond our capacity as human beings to comprehend, anything we can say of him is necessarily limited by our finite human understanding and his reality far surpasses our power of expression through our anthropocentric languages. It suggests that the closest way we can get to describing him is by saying what he is not, rather than what he is. We therefore can come to know God better through meditating on how much greater he is than anything we can conceive for as St. Thomas said: “This is the ultimate in human knowledge of God: to know that we do not know Him”. According to this way, we use words like “infinite,” “incorporeal”, “immutable,” and “ineffable” to describe God. Even to call God “perfect,” says St. Thomas, we do by way of negation, because we understand perfection as “lacking nothing.” Moses Maimonides believed that when it came to directly describing God’s nature, “silence is the best praise” and that even the Torah was an imperfect source for describing God as any descriptions are carried out using human language (“The Torah was written by the sons of men”). However he understood human need to describe and explain the characteristics of God, which he felt was impossible to do in a meaningful way; And so he suggested that we demonstrate......

Words: 1244 - Pages: 5