The “corporate personality,” which provides a unique identity generally attributed to actual beings, is an important element of firms and corporations, whether state-owned or private. Corporate personality refers to the legal status accorded to registered firms and corporations, which grants them legal independence from their executives, directors, and shareholders. It refers to a corporation’s ability to have its own name, sue and be sued in its own name, and purchase, sell, lease, and mortgage its property in its own name.

This means that a company as a legal person can be held liable for the acts and ommissions of the natural persons it employs. The term legal persons refers to a business entity (often a corporation, but possibly other legal entities, as specified by law) that has both legal rights (e.g. the right to sue) as well as legal obligations. 

Salomon Vs. Salomon [1897] AC 22 is widely regarded as the cornerstone of company law, as it established the now universally recognized principle that a company is distinct from its shareholders and should be treated as an independent entity with perpetual succession and the right to sue and be sued. While this case established a corporation’s independence, it also bolstered the now-accepted theory of company law that a firm is liable for its acts regardless of whether they were performed by human instrumentation. Indeed, a company’s right to sue and be sued implies that it can be sued for both civil and criminal obligations.

However, while incorporation can minimize the accountability of people who are behind the company, this idea should not be abused. Courts have ruled that “the law considers the substance of things, not just their legal form.” A company cannot be used to “justify wrongdoing, protect fraud, or defend criminality,” Certain conditions, known as ‘piercing the corporate veil,’ necessitate the removal of this veil.

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