Company law I 2008 2009 semester one lecture outline I an overview of our company Law Course

(a) Consequences of the Salomon decision

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(a) Consequences of the Salomon decision
See Cohn & Simitis (1963) 12 LCLQ 215-225: Kahn-Freund 7 MLR 54-59
(i) Status of one-person companies

Lee v Lee's Air Farming Ltd [1961] AC 12

Companies (Single Member Private Limited Companies) Regs 1992 SI 1992/1699 implementing Directive 89/667/EEC OJ No. L395 30.12.89, p40.
(ii) Possibility of Limiting Liability –even for a small business owned by one person

(iii) Debentures as a means of minimising risk.

(b) Main Consequences of Companies’ Corporate Personality
(i) Companies can sue and be sued in their own name

(ii) Companies enjoy perpetual succession

(iii) Companies can hold property and members have no property interest in company property: Macaura v. Northern Assurance Co Ltd [1925] AC 619
"Shareholders are not, in the eyes of the law, part owners of the undertaking. The undertaking is something different from the totality of the shareholding.” Evershed LJ in Short v Treasury Commissioners [1948] 1 KB 116 122
Tate Access Floors Inc v. Boswell [1991] Ch 512. per Browne-Wilkinson V-C at 531
“If people choose to conduct their affairs through the medium of corporations, they are taking advantage of the fact that in law those corporations are separate legal entities, whose property and actions are in law not the property or actions of their incorporators or controlling shareholders. In my judgement controlling shareholders cannot, for all purposes beneficial to them, insist on the separate identity of such corporations but then be heard to say the contrary when discovery is sought against such corporations.”

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