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Company Law Hnd

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Company Law
2.1.1 Separate Legal Personality of a Registered Company

Currently at Page & Plant, neither person has been able to reach an agreement as to how their business should be organised. Under Scottish business law, their current business relationship would be classified as a Partnership, which results in both partners being liable for any situation e.g. account defaults, liquidation or lawsuits. Not only would the liability extend to the assets of the business but would also include personal assets e.g. their homes and cars.

In order for Page & Plant to limit or minimise their liability, they must separate the legal personality and legal consequences of the business. In order to do this, Page & Plant can become a registered company as a corporate body. They must be incorporated under the Companies Act 2006 or previous company legislation.

Private and Public Limited companies must be registered under the Companies Act in order for the company to become an independent legal person which means the registered company becomes a person capable of taking on duties recognised and enforced by courts. A separate corporate personality means:

* The company is able to raise its’ own legal actions and be the subject of legal actions * The company’s members enjoy limited liability * Even with changes to the company’s membership, the company continues to exist, as opposed to a sole trading business or partnership, as the business would change in these forms of organisation * The company becomes a party to the contracts that it enters into as opposed to the owner

The idea of a separate legal personality was forcefully recognised in the case of Saloman v Saloman & Co Ltd (1897). This case involved Saloman, an owner of a boot business which he sold to a company he formed called Saloman & Co Ltd. The company paid Saloman £30,000,...

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