Legal Persons & Corporate Personality
Exam Snapshot
Legal personhood is a core jurisprudence concept frequently tested in the TU LLB entrance. Key topics include definitions, types, and the landmark case of Salomon v. Salomon & Co. Ltd. regarding corporate personality.
Core Concept
A legal person is any entity recognized by law as having rights and duties (Natural: humans; Artificial: companies, state, trusts).
Corporate Personality
Corporate Personality means a company is a separate legal entity from its shareholders.
- Key Principles: Separate legal entity, perpetual succession, limited liability, and capacity to own property.
Nepal Law Anchors
- Company Act, 2063: Implicitly establishes corporate personality by granting registered companies the capacity to sue, own property, and enter contracts independently of shareholders.
Confusable Terms
| Term | Key Distinction |
|---|---|
| Legal Person | Broader category (Natural + Artificial). |
| Corporate Personality | Status of a company as a distinct entity. |
| Limited Liability | Benefit of corporate personality. |
MCQ Traps
- Liability: Shareholders have limited liability, not full personal liability.
- Assets: The company owns assets, not the shareholders directly.
- Succession: Companies enjoy perpetual succession; shareholder death doesn't kill the company.
Example
If a company defaults on a loan, shareholders' personal assets are generally protected because the company is a separate legal person with limited liability.
Memory Hook
Company = 'Legal Shield'. It protects owners by standing between them and the company's liabilities.
Quick Revision
- Types: Natural (human) vs Juristic (artificial).
- Landmark Case: Salomon v. Salomon.
- Features: Separate entity, perpetual succession, limited liability.
- Nepal: Company Act, 2063.