With reference to the relevant case law and appropriate sources, explain the legal consequences of a company separate legal personality.

Question: With reference to the relevant case law and appropriate sources, explain the legal consequences of a company separate legal personality.

The principle of separate legal personality means that a company is recognized as a distinct legal entity, independent of its shareholders and directors. This concept was firmly established in the landmark case Salomon v. Salomon & Co. Ltd (1897), which confirmed that a company has its own rights and liabilities separate from those of its owners.

Legal Consequences:

Limited Liability – Shareholders are only liable for the company's debts up to the amount they invested, protecting personal assets from corporate creditors.

Capacity to Sue and Be Sued – A company can initiate legal proceedings and also be sued in its own name, ensuring contractual enforcement without involving shareholders.

Ownership of Property – The company can own assets independently, meaning shareholders do not have direct claims over corporate property.

Perpetual Succession – The company continues to exist despite changes in ownership or the death of shareholders, ensuring business continuity.

Taxation – Companies are taxed separately from their owners, leading to distinct tax obligations and benefits.