University of technology
College of business and Management
School of business Administration
Company Law
Semester 2

Shanel Stone
1306021
Ms. Clarke
Monday 8 – 10
January 25, 2016

Should either John Doe, the operations manager or ABC ltd be held criminally liable for the death of the driver? Who should be held liable for committing a civil act? When a company is incorporated/ registered, it becomes a legal person in law and assumes a corporate personality, in the case of Salomon v. Salomon Co., where Salomon had a leather merchant, he later decided to convert the business into a limited company and for this purpose Salomon & Co. was formed with Salomon, his wife and five of his children as members, and Salomon as Managing Director. He took all the shares of the company except six which was distributed to his family. Part of the payment for the transfer of the business was made in the form of debentures (a secured loan) issued by the company to Salomon. The Company ran into difficulties a year later, a receiver was appointed and the company went into liquidation. Its assets were sufficient to discharge the debentures but nothing was left for the unsecured creditors. The Court of Appeal held that the whole transaction was contrary to the intent of the Companies Act and that the company was a mere sham and was in reality and agent of Salomon, who was the real proprietor of the business. On further appeal, the House of Lords reversed the decision holding that the company was validly formed and that the business belonged to the company and not Mr. Salomon and that the company was in law a different person altogether from subscribers . The company is an artificial person entirely separate from those who have created it and as no fraud has been found to have been perpetuated on creditors, Mr. Salomon could be allowed to claim.
Where companies fail to