13 - Legal Personality Flashcards
how can a business be carried out in an unincorporated manner
- sole tradership
- simple partnership
what is another type of partnership
INCORPORATED limited liability partnership
liability is limited to amount of capital put in
what does incorporation mean
- entity created in its own right
- separated by law from its owners
what is the veil of incorporation
where the members of a company were separate legal persons to the company itself
what are the consequences of separate legal personality
- members liability limited to amount unpaid on share capital
- perpetual succession arises as company will need to be formally wound up
- company itself can own property
- company can sue and be sued
- company can contract in its own name
- management is separate from ownership
what are the common law exceptions
- where a company is being used to evade legal duties
- to recognise alien enemy character of a company
- to identify the controlling mind of a company in cases of corporate manslaughter
- recognising the breakdown of a quasi-partnership relationship
- where a group of companies is operating as a ‘single economic entity’
what do these exceptions mean
the veil is lifted; members/directors of a company can be held personally liable for debts
what is the role of statute in lifting of the veil
statute provides for the lifting of the veil in the circumstances:
- failing to correctly disclose companys full name on documents
- fraudulent trading; continuing to trade a company with intent to defraud creditors
- wrongful trading; trading with an insolvent company with no intent
advantages of incorporated
- limited liability
- perpetual succession
- separate legal entity
- transferability of interest
- company owns its own assets
- company may sue/be sued
- ease of borrowing
- no limit on no of members
advantages of unincorporated
- less formality upon running the business
- less publicity/loss of formality
- less expensive
- no formal procedures
- no restrictions on withdrawal of capital
