Theories of Corporate Personality - 4403 Words

Theories of Corporate Personality MANAS AGARWAL 5th Semester BA LL.B (B) School of Law Christ University Bangalore INDEX * Research Methodology * Introduction * The Common Law Perspectives * Fiction Theory * Concession Theory * The Purpose Theory * Bracket Theory * Realist Theory * Why Corporations? * Corporate Personality And Limited Liability Cases: * Macaura v. Northern Assurance Co. * Lee v. Lee’s Air Farming * Salomon v. Salomon amp; Co. ACKNOWLEDGEMENT I Manas Agarwal of B.A.LL.B (Hons.) is really grateful to Ms. Fincy V, without whose help and corporation this project would not have been possible. I am also grateful to the National Law School India University†¦show more content†¦W. Friedman stated that: â€Å"All law exists for the sake of liberty inherent in each individual; therefore the original concept of personality must coincide with the idea of man.† Even though there are many theories which attempted to explain the nature of corporate personality, none of them is said to be dominant. It is claimed that while each theory contains elements of truth, none can by itself sufficiently interpret the phenomenon of juristic person. Nonetheless, there are five principal theories, which are used to explain corporate personality, namely, the fiction theory, realist theory, the purpose theory, the bracket theory and the concession theory. Fiction Theory The fiction theory holds that corporations are simply legal fictions, created and sustained by an act of the state. They are endowed with corporate personality simply because this is a convenient form through which the natural persons behind the corporation may conduct their business. According to this theory, the legal personality of entities other than human beings is the result of a fiction. Hence, not being a human being, corporation cannot be a real person and cannot have any personality on its own. Originally, the outward form that corporate bodies are fictitious personality was directed at ecclesiastic bodies. The doctrine was used to explain that the ecclesiastic colleges or universities could not be excommunicated or be guilty of a delict as they have neither a bodyShow MoreRelatedLegal Personality And Limited Liability1576 Words   |  7 PagesIntroduction The doctrine of separate legal personality has been described as a double edge sword. This essay will argue that this is an apt analogy as separate legal personality while providing economic benefits and a shield of protection against liability for managers and shareholders it can also have harmful effects on other non-shareholder stakeholders such as creditors, involuntary creditors and employees. 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