The Minister for Foreign Affairs appealed the Court of Appeal`s judgment to the House of Lords. The House of Lords allowed the appeal, ruling that although the company is an artificial entity separate from its shareholders, if the shareholders or responsible agents of the company come from a hostile country, the company will assume a hostile character. There is a possibility of misunderstandings between an accounting unit and a legal entity. For accounting purposes, the term “entity” can refer to a variety of things. From an accounting point of view, a legal entity or group of companies can be grouped together within a larger group in any form suitable for companies, provided that it complies with regulatory requirements. Similarly, a single company can be divided into any number of accounting units to track the profitability of its many business units. This does not apply to legal persons and it is therefore important to distinguish between the two concepts correctly. A company that is a corporation is not a citizen under the Citizenship Act 1955 or the Constitution of India. Therefore, in the current business environment, the concept of separate legal entity must exist, otherwise there will be many embezzlement that can lead to legal disputes. Courts can lift the veil if they consider that a group of enterprises is not a group of individuals, but a single economic entity working for the benefit of its owners. What is the name of the legal entity that owns or hosts the website? Who “owns” the company? It cannot be the company acting without knowing the full name of the company.
However, since your business is a separate entity, this does not necessarily protect your personal assets in the event of a lawsuit against your business. There are two types of businesses that are separate entities, but not separate legal entities: This basic principle was first developed in the English case of Salomon vs. Salomon & Co. Ltd.  A.C. 22. In this case, Salmon transformed his shoe business as sole proprietor into a limited liability company, with his wife and children as shareholders and directors. After the liquidation of the company, some creditors claimed to claim the company`s debts from Salomon, but the court ruled that after the conversion to a limited liability company, the company was separated from its owner and therefore Salomon could not be held personally liable for the company`s debts.
A company has legal personality as a legal person. But although it is a legal entity, a company is not called a citizen under the Indian Constitution. The Citizenship Act also does not recognize an artificial person such as a business as a Canadian citizen. As a result, a company is deprived of the fundamental rights guaranteed by the Indian Constitution and the Citizenship Act. The law for companies in India is the Companies Act, 2013, which was first enacted in 1913. Later, significant changes were introduced in 1960, 1962, 1963, 1964, 1965, 1966, 1967, 1969, 1974, 1977, 1985, 1988 and 1991. In 2008, the Companies Bill was introduced, which is now the Companies Act, 2013, which is still in force today. Therefore, the notion of rationalizing the corporate veil is just as important as the doctrine of separate legal entities. There are times when the idea of a separate entity can be considered arbitrary, and courts can rule against the concept of a separate legal entity for a variety of reasons. In order to confront the person behind the veil and reveal the authenticity of the company, the court also makes decisions hostile to the notion of a separate legal entity. In determining whether or not to ignore the doctrine of the separate legal entity, the authors classified the proceedings into various distinct classes.
Although there is no universal agreement on the number or type of classes, some cases can be classified into separate classes. On this last point, if the subsidiary has created a mismanagement model that results in legal liability, such as shell companies, the parent company can be held liable for the subsidiary`s obligations. A sole proprietorship is not an independent legal entity. The sole proprietorship is run by a natural person who is also the owner of the business. Entrepreneurial and individual debts and legal liabilities are grouped together. The article was written by Tejaswini Kaushal, a student at Dr. Ram Manohar Lohiya National University of Law in Lucknow. This article examines in detail the concept of a separate legal entity in the context of the business, its legal implications, and the benefits that flow from it. An entity may refer to a group of legal entities acting as such or a single legal entity operating independently of other legal entities. It all depends on how the term “business” is defined. The separate legal entity of the company has its advantages. Human ingenuity began to use the veil of corporate personality as a shield against fraud.
The corporate veil can be used to deceive shareholders, creditors and even the government. The courts have been forced to break or lift the corporate veil to discover the true beneficiary behind the company. In the legal sense, a company is an association of natural and artificial persons and is constituted under the existing law of a country. The courts have found it necessary to disregard the independent personality of a company in the following situations: A trademark or trade name is essentially an alias for a legal company. The only real connection to a business, such as trademarks, is the use of the suffix with the company name. In anticipation of starting a business, some businessmen sign contracts before it is created. Since the company does not exist as a separate legal entity, it cannot enter into contracts. Because if the company did not exist at that time, the contracts concluded in its name are not enforceable against it. The fact that the company exists at a later date after the conclusion of the contract does not make the contract legitimate. The concept of independent legal personality has several legal implications for companies and confirms the position that the company, its directors and shareholders are different entities.