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PP Lecture 3 legal personality

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TOPIC 3 : JURISTIC PERSONALITY THE COMPANY SEPARATE LEGAL ENTITY Acquisition of legal personality: • A juristic person has the capacity and powers of a natural person (except for those things that only a natural person can do eg marriage) • Are different ways to acquire legal personality • A company is a juristic person from the date it is incorporated (section 19 (1)) Effect of legal personality : • The company is a separate legal subject (Salomon v Salomon & Co Ltd; Dadoo v Krugersdorp Municipal Council ) – – – – – It is liable for its own debts (see s 19(2)) It owns its own property Any profits belong to the company The company must sue and be sued in its own name The company enjoys perpetual succession. Lifting the corporate veil • Separate legal personality is not absolute • In exceptional circumstances it will be ignored eg if there is an abuse of the separate entity the ‘corporate veil’ will be lifted Circumstances in which the courts will lift the corporate veil • If the company is used to commit fraud or illegality; • If the directors/shareholders treat the assets of the company as their own. NB: these categories are not set in stone and are not the only factors the court will look at. See and compare: Cape Pacific Ltd v Lubner Controlling Investments and Hülse- Reutter v Gödde Section 20(9) of the Companies Act 20084 It is important to consider and analyse the section set out below. (Compare section 65 of the Close Corp ...
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