COMPANIES ACT 2013
CASES ON COMPANY LAW
FACTS OF THE CASE
1. SALOMAN HAD A
BOOT BUSINESS,HE SOLD THE BUSINESS TO A COMPANY NAMED SALOMAN & COMPANY LTD
WHICH HE FORMED
2. SEVEN MEMBERS
: HIS WIFE,DAUGHTER AND FOUR SONS WHO TOOK ONE SHARE EACH AND SALOMAN HISSELF
WHO TOOK 20,000 SHARES OF UK ONE POUND
3. HIS PURCHASE
CONSIDERATION WAS UK POUND 39,000 AND WAS DISCHARGED IN THE FOLLOWING MANNER:-
1. 9,000 UK
POUND IN CASH
2. FULLY PAID
20,000 SHARES OF UK 1 POUND EACH ISSUED TO SALOMON
3. SECURED
DEBENTURES ISSUED TO SALOMON 10,000 UK POUND
FACTS OF THE CASE
1. AFTER PAYMENT
OF MORTAGAGE DEBT AND INTEREST THEREON ,THERE WERE ONLY 1055 UK POUND
2. LIABILITES
WERE 17,773 UK POUND : SECURED DEBENTURES HELD BY SALOMON 10,000 UK POUND AND
UNSECURED CREDITORS 7,773 UK POUND.
3. ACCORDING TO
SALOMON,HIS DEBENTURES WERE SECURED AND HENCE HE MUST GET UK POUND 1,055 UK
POUND.
4. LIQUIDATOR
CONTENTION WAS THAT SALOMON SHOULD INDEMNIFY THE COMPANY AGAINST WHOLE OF
UNSECURED DEBT
5. HOUSE OF LORD
UNANIMOUSLY HELD THAT SALOMON IS SEPARATE FROM SALOMON AND CO LTD
SALOMAN BEING SECURED CREDITORS AND SO HE GOT PRIORITY OVER UNSECURED
CREDITORS. HENCE THE SECURED DEBNETURES EVEN THOUGH HELD BY SALOMON WERE TO BE
PAID IN PRIORITY TO UNSECURED CREIDTORS. SO UNSECURED CREDITORS GOT NOTHING.
POINTS DECIDED ARE
- COMPANY IS
LEAGAL ENITY SEPARATE AND DISTINCT FROM HE INDIVIDUAL WHO COMPOSE IT
- THE COMPANY IS
NOT IN LAW THE AGENT OF THE SUBSCRIBERS OR TRUSTEE FOR THEM
3. THE MAIN
FEATURE OF THE COMPANY IS ITS INDEPENENT CORPORATE EXISTENCE, A COMPANY FORMED
AND REGISTERED UNDER THE COMPANIES ACT AND IS DISTINCT LEGAL ENTITY.
- SALOMAN CASE
ESTABLISHED BEYOND DOUBT THAT IN LAW A REGISTERED COMPANY IS AN ENTITY
DISTINCT FROM ITS MEMBERS EVEN IF ONE PERSONHOLDS ALL THE SHARES IN THE
COMPANY. NO DIFFERENCE IN THE PRINCIPLE BETWEEN A COMPANY CONSISTING OF
200 SHAREHOLDERS. IN EACH CASE THE COMPANY IS A SEPARATE LEGAL ENTITY.
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