In the eyes of the law, once registered, a company has its own legal identity separate from its members. Case study

... In the eyes of the law, once registered, a company has its own legal identity separate from its members. This has been the case since businesses started to become incorporated. However, it was not until the case of Salomon v Salomon & Co Ltd [1897] A.C. 22), that this was recognised by the court and became the case law which introduced the phrase the veil of incorporation between a company and its shareholders, acting as a screen between them. In 1892 Salomon formed a limited company to take over his business as leather merchant and boot manufacturer. Each member of his family, wife, daughter and four sons, signed the memorandum of association and subscribed for one share each. Salomon was paid in 20,000 shares of £1, a £10,000 debenture, secured by a floating charge on the company's assets and the balance, up to £39,000, in cash. Unfortunately the business went into

want to read more? →