theories of corporate personality in jurisprudence

1. Theories of Personality. Since personality variables reflect consistent and enduring patterns of behaviour, these patterns can be classified into certain categories. Many proponents of the theory believe that it was Ulpian, the famous Roman Jurist who propounded this theory. P262. have used the theory to advocate important changes in corporate law. The concession /Grant Theory: that the company derives its personality and power from the concession granted to it by the State. Ans. My goal in this Essay is to consider how theories of the corporation have developed and changed over the last hundred and fifty years. The main defect of the fiction theory according to the realist jurists was the ignorance of sociological facts that evolved around the law-making process . This theory of the nature of corporate existence and personality - the one being real, the other imaginary or metaphorical - will be found to remove many of the historic difficulties which the courts have encountered in corporation law. Introduction . Grant theory viewed groups as gaining legal status by way ofincorporation. In other words, the theory posits that it is an act of the state, i.e. In all mature system of law the doctrine of corporate personality is fully d. # These restrictions vary from country to country. questions of corporate law. 1) TYPES OF PERSONS. Firstly, there must be a group or body of human beings associated for a certain purpose; 2. 8. The concession theory holds that corporate personhood and associated privileges are granted to corporations by the state where they are incorporated. of the law and that the legal impLiqations or meanings of the corporation was ~whatever the law makes it mean o The problem, as Blumberg points out, is far more complex: ~in the law concepts have a life of their own because of 7 8 218 Contrast ~ with the 'realist' theory of the c~ration of which Gierke is the princz@al exponent. The realistic theory maintains that a corporation has a real psychic personality recognized, and not created, by the law. Accordingly, "a corporation is an artificial . Incorporation was a monopoly ofthe state. The author has provided a detailed account of various corporate criminal liability theories and supported the points through judicial pronouncements. That the company is a fictional personality distinct from its members-Salomon V Salomon. The decision in Salomon is in itself clearly flawed and unethical. Theories of Corporation There are many theories of Corporate Personality. legal theory and practice give recognition to a personality which can be ascribed to a group of individuals qua group; (2) to what extent has the law actually given recognition to such groups? When it comes to the modern adaption of this theory, the German Jurist Savigny is regarded as the reviver of this theory. the extent to which corporate personality theory can be used to further our understanding both of the shareholder wealth maximization norm in general, and the extent to which parties may opt out of it. 2006 Page 47 (1992) 74 Comp. Frederick Pollock - 1896 - F.B. Corporations have a separate legal entity and they are treated as a separate personality in law. The doctrine of the lifting the veil of corporate personality is a doctrine that advocates going behind and looking behind the juristic or corporate personality of a body 53 54. Artificial personality, juridical personality, or juristic personality is the characteristic of a non-living entity regarded by law as having the status of personhood.. A juridical or artificial person (Latin: persona ficta; also juristic person) has a legal name and has certain rights, protections, privileges, responsibilities, and liabilities in law, similar to those of a natural person. The general belief in the 16th and 17h century was that corporations were incapable of being subject to criminal law. It is different than humanity. So, YES Mr EB Horne had violated his non-compete clause . 1. # AIR 1963 SC 1811. power of thought, power of speech, etc. Law of status is the law that determined the natural, the domestic and the extra domestic relation of a man with the others in a civilized society. The fiction, concession, symbolist and purpose theories supported the contention that existence of corporation as a legal person is not real. Common law theories have been the necessary bridge between the individualistic and organizational approaches. According to him, the existence of the corporation is a fictitious personality. A corporation is distinguished by reference to different kinds of things which the law selects for personification. This fact does not take merit away from the aggregation theory. Fiction Theory The fiction theory holds that corporations are simply legal fictions, created and sustained by an act of the state. Juristic persons are not persons at all. Rothman. HARPER-HO_FINAL.DOCX (DO NOT DELETE) 6/24/2012 12:07 PM 2012] THEORIES OF CORPORATE GROUPS 881 of its constituent entities, there is little need in corporate law for rules concerning the internal "contracts" among the entities comprising The state attached rights and duties to the legal personality at its discretion. rate personality (before 1930), see Frederick Hallis, Corporate Personality: A Study of Jurisprudence (1930). For example, the influential American Law Institute's Corporate Governance Project is based, at least in part, on a conflicting view of the nature of the corporation.4 The long delay in adopting the ALI re- Conclusion: If purpose of incorporation of the company is to defeat law or avoid legal obligation then there is lifting of corporate veil. As has recently been observed, "[m]any corporate and securities law transactions no longer fit neatly within the borders of the nation state".121 A theory for these types of corporations, which eschews simple notions of individualism, must also question the relevance to modern corporate theory of super-individualist notions such as the . The fiction theory, also named natural entity theory or organic theory, describes that the legal person has no . Eighteen-century legal thinkers approached corporate liability with an obsessive focus on theories of corporate personality. Authors. So the people who represent the corporation make up the corporation. [REVIEW] Fabio Zona, Mario Minoja & Vittorio Coda - 2013 - Journal of Business Ethics 113 (2):265-283. Asia Law House. In this article we will understand about "Corporate Personality" an important topic of Company law look, when ever a company is incorporated, apart from members, company has its own Legal Personality and Independent status means after incorporation, member and company separate from each other, they become a separate entity. p.375 # S. R. Myneni. This is one of the more famous and feasible theories of corporate personality. Corporate fault is the fault of the group and not of the corporation itself. Under common law, companies are responsible for criminal offences subject to . The theories are discussed below: 1. Nonetheless, there are five principal theories, which are used to explain corporate personality, namely, the fiction theory, realist theory, the purpose theory, the bracket theory and the concession theory. The corporate personality was created by the state in the realm of . University of Cincinnati Law Review Volume 88 Issue 3 The 30th Annual Corporate Law Center Symposium Article 7 March 2020 A Theory of the Business Trust Eric C. Chaffee The University of Toledo College of Law, eric.chaffee@utoledo.edu Follow this and additional works at: https://scholarship.law.uc.edu/uclr (2) There must be organs through which the corporation functions, and (3) The corporation is attributed will by legal fiction. The origin of the word person was actually a Latin word 'persona' which meant a mask, a false face. Studies in Jurisprudence and Legal Theory. Legal Status of Unborn Person/Child:- A child in the womb of the mother is presumed as already born by legal fiction. Based on this survey, I offer some observations about the role of such theories in discourse about corporate law and cor-porate activity. It is […] The fiction theory of corporation is said to be promulgated by Pope Innocent IV (1243-1254). Grant theory viewed groups as gaining legal status by way of incorporation. There are five principal theories, which are used to explain corporate personality, namely, the fiction theory, realist theory, the purpose theory, the bracket theory and the concession theory. The corporate personality was created by the state in the realm ofpublic law.12 (1) The theory of Remedial Liability; and. He, therefore, avoided dispute with Professor Geldart, who advocated at that time the real personality theory,4 because, in Machen's words, it signified "the outbreak in the common-law world of a metaphysical Fiction Theory: Adherents include; Pope Innocent IV, Von Savigny, Blackstone, Edward Coke, Salmond amongst others. The contractual theory of the corporation should be of practical as well as academic interest. Rai Kailash on Company Law 10th Ed. For an historical treatment of this jurisprudence in the United States, see Gregory A. Humanity refers to being born as a human being. 5) Advantages Advantages of corporate personality are as follows: It has an entity different from its members. Corporate personality is the creation of law. 4. The realist theory is also known as the sociological theory of the group personality of the corporation. This concept of separation is called as Corporate personality. Corporate Personality is considered a counterfeit character. More importantly, such a metaphysical personality is unfair both to the creditors and the owners of the company. These are as under: 5. • The doctrine of the lifting the veil of corporate personality is a doctrine that advocates going behind and looking behind the juristic or corporate personality of a body corporate. 3. The juristic personality of corporations pre-supposes the existence of three conditions : (1) There must be a group or body of human beings associated for a certain purpose. Furthermore it says that juristic person or corporation is not a person anyway. Firstly, there must be a group or body of human beings associated for a certain purpose; 2. In this paper these questions will be examined, first in the light of a brief survey of the development of the theory of corporate personality, In Malaysia, the Companies Act 1965 (Act 125), which is modeled on the English Companies Act 1948 and the . # N. V. Paranjape. In this case Mr EB Horne have formed a company, JM Horne & Co Ltd. Just to avoid his legal obligation arise from his contract with Gilford Motor Co. More importantly, such a metaphysical personality is unfair both to the creditors and the owners of the company. Antecedents of Corporate Scandals: CEOs' Personal Traits, Stakeholders' Cohesion, Managerial Fraud, and Imbalanced Corporate Strategy. THEORIES OF CORPORATE LAW[1]. 3) LEGAL PERSONALITY OF A DEAD PERSON. very little role in the truly importantdevelopments ofAmerican corporate law. And as per the law, a corporation is an artificial person created by the personification of a group of individuals. This paper attempts a comparative analysis of corporate criminal liability in Nigeria, the United Kingdom, the United States and India. Stefan J. Padfield, University of Akron School of Law. According to Pettet (2005), he suggested that "the nature of the corporation, particularly its corporate personality, became the focus of thought.". On the other hand personality is a concept where an entity enjoys rights and duties with respect to the fact of its existence. This Article revisits that debate by examining the various func- 4) NON HUMAN LEGAL PERSONS. The law only puts a bracket around them for convenience purposes. (2) The theory of Penal Liability. The Role of Corporate Personality Theory in Opting Out of Shareholder Wealth Maximization. Now, the question may arise whether this Veil of Corporate Personality can even be lifted or pierced. the issuance of the charter, that creates a corporation as a legal fiction. Thirdly, the corporation is attributed will/animus by legal fiction. Theory of Corporate Personality Naveen Singh Thakur1, Divya Singh2 1, 2Post Graduate, LLM(Corporate Laws), Chandigarh University, Punjab, India Abstract: In this research paper the authors have gone through various books and internet sources to present all the theories of corporate personality in one concentrated form. Secondly, there must be organs through which the corporation functions, and 3. 1. They also believed that personality is the subjective possibility of a rightful will. A - THE FICTION THEORY • According to some jurists, a corporation has a fictitious personality. Central Law Agency. Some countries do not permit a corporate entity to be a director or a liquidator while others do. Table of Contents hide. Keywords: Corporate personality, Fiction theory, Person, Jurisprudence, Salomon v Salomon, paradox 1. Bzinz, Bekker and Demelius were those who have developed this theory and Planiol had elaborated it. questions of corporate law. From the discussion on the two important jurisprudence theories and the other theories, on corporate personality, it is observed that the main argument is that, the fiction theory claimed that the entity of corporation as a legal person is merely fictitious and only exists with the intendment of the law. The fiction, concession, symbolist and purpose theories supported the contention that existence of corporation as a legal person is not real. The Ownership Theory:- This is another theory of corporate personality. The people shaping the corpus of the organization are called its individuals. so that the behaviour can be predictable once we identify the pattern of behaviour as belonging to a given category. Only the state could incorporate groups and grantthem legal personality. The Fiction Theory This theory was developed by Savigny. Theories on Formation of Corporation: (a) Theory of Concession (Tayag v. Benguet Consolidated Inc., 26 SCRA 242 [1968]) To organize a corporation that could claim a juridical personality of its own and transact business as such, is not a matter of absolute right but a privilege which may be enjoyed only under such terms as the State may deem necessary to impose (x-cf. Thirdly, the corporation is attributed will/animus by legal fiction. Our "corporate realism / corporate nominalism / fiction theory" triad is by no means standard, and various triads have been used by various authors. According to this theory, a person is applicable only to human beings, and they are the subjects of rights and duties. Thus personality in law is a wider term. 1. The Fiction Theory Few jurists believe that corporate is an imagined personality. Corporate personality is an entrenched legal principle of the English company law. CORPORATE PERSONALITY The most important juristic person is a corporation. Write short notes on the theories of liability. 5) CONCLUSION. The juristic character of organizations pre-assumes the presence of the following conditions: 1920, there is a virtual obsession in the legal literature with the question of corporate personality."). See Kornhauser, supra note 4, at 87 (indicating that, during the debates over the 1894 Act, "Congress grappled with the issue of corporate personality and whether corporations could or should be taxed separately from individuals"). Only the state could incorporate groups and grant them legal personality. Corporate personality theory tends to come up more frequently in discussions of the government's ability to regulate corporations, as opposed to The law is concerned with regulating human conduct, the concept of legal personality constitutes an important subject matter of jurisprudence for there cannot be rights and duties without a person. And so I begin my tale with, perhaps, an intellectual "barbaric yawp.,,4 Harris notes that the real personality theory was developed by Otto von Legal personality of law is recognised both in English and Indian law. Ethical Natural law philosophers of the 17th and 18th centuries as well as the metaphysical theorists of 19th century postulated the concept of will as an essential requirement for exercising legal right. [1] This fictitious personality is attributable to the necessity for forming an individual organization existing by itself and managing for its beneficiaries, that is to say, the members of it and its affairs. Juristic personality of corporations must contain three essential conditions. The nexus-of-contracts theory's emergence also may have inspired the significant contemporary literature on theories of the corporation that began in the mid-1980s. Sec Reuven S. Avi-Yonah, "The Cyclical Transformations of the Corporate Form: A Historical Perspective on Corporate Social Responsibility," 30 Del,1wt1re ]011rnt1! The bracket theory is also known as the symbolist theory which states that a corporation is created only by its members and its agents. Personality of a human being means the possession of certain feature particularly belonging to mankind, e.g. 8 This formed the basis of the concession theory which emphasised the . Based on this survey, I offer some observations about the role of such theories in discourse about corporate law and cor-porate activity. Candidly, it is trite that the law clothes a company with personality such that its rights and duties are distinct from those of its members, because a company is a legitimate entity. Theory of Remedial Liability- The sole condition of the exist-ence of remedial liability is existence of a legal duly binding upon the defendant. A Corporation is a fake individual appreciating in law jobs to have commitments and holding property. The decision in Salomon is in itself clearly flawed and unethical. Case 128 (SC) 55 (1992) 74 Comp. Theories of corporate personality The origin of the corporation in the United Kingdom through royal charters and acts of Parliament differed from the legislative acts in United States, both assigning rights and liabilities on account of the separate legal personality. Examples are: (1) corporate realism or fellowship theory / bracket theory or . Later a word 'person' was developed in . A non human can be a legal person for the purpose of the law, for example an idol placed in a temple. The whole law of corporation is in fact based on this theory of separate corporate entity. The upholders of the realist theory are found not only over the continent but also in England. Ang Pue & Co. v. Sec . The theory of corporate personality mainly states that a company has a legal identity different from its member. He identified two main theories: the fiction theory and the real entity theory. • In exceptional cases, that veil of corporate personality can be lifted; and looking behind the veil, one could see the corporate personality fading away. ries about corporate personhood that have come into and out of favor over the years, including the "artificial person" theory, the "contrac-tual" theory, the "real entity" theory, and the "new contractual" theo-ry. There are six theories as follows: The fiction theory The realistic theory The concession theory The organism theory The ownership theory The symbolist theory or bracket theory 1. Article Title. Before going into this question, one should first try to understand the meaning of the phrase "lifting the veil". # AIR 1965 SC 40 . This theory states that human beings are subjected to legal rights not corporations. For example, if the corporate personality is imaginary, there is Jurisprudence (Legal Theory). Juristic Personality or Corporate Personality Ethical Natural law philosophers of the 17th and 18th centuries as well as the metaphysical theorists of 19th century postulated the concept of will as an essential requirement for exercising legal right. of Corporate lt1w 767 (2005). While discussing the realism of the corporate personality, most of the realist jurists claimed that the fiction theory failed to identify the relationship of law with society in general. Theory might have legitimated what had already happened, but that is not Harris'spoint. The rights attached to corporations, funds are purely legal fiction and outcome of metaphor. 1) Corporate sole and 2) Corporate Aggregate. Different Jurists propounded different theories to explain the nature of Corporate personality, but the best-known theories of a Corporate Personality are as follows 1) Fiction Theory: The Fiction theory was propounded by Savigny. They also believed that personality is the subjective possibility of a rightful will. Corporate personality is a creation of law. And as per the law, a corporation is an artificial person created by the personification of a group of individu. Juristic personality of corporations must contain three essential conditions. Mark, Comment, A First Book of Jurisprudence for Students of the Common Law. It will be seen that there are many parallels between the countries being compared, whether common law or civil law, in part because the historical circumstances leading to the rise of corporate personality were very similar, and also because the corporations laws in Asian countries referred to in this paper are legal transplants. Keywords: Corporate personality, Fiction theory, Person, Jurisprudence, Salomon v Salomon, paradox 1. Both English and Indian laws follow the concept of corporate personality. Purpose theory- This theory was originally propounded by German jurist Brinz and was developed in England by Barker. Majority of the principal jurisprudence theories on corporate personality contended that the legal entity of the corporation is artificial. The Relevance of Corporate Theory to Corporate and Economic Development: Comment on The Transplantation of the Legal Discourse on Corporate Personality Theories Lawrence E. Mitchell Follow this and additional works at:https://scholarlycommons.law.wlu.edu/wlulr Part of theBusiness Organizations Law Commons, and theComparative and Foreign Law Commons My goal in this Essay is to consider how theories of the corporation have developed and changed over the last hundred and fifty years. A corporation is an artificial person enjoying in law capacity to have rights and duties and holding property. The state attached rights and duties to the legal personality at its discretion. There are many other theories like Purpose theory, Hohfeld's theory and Kelson's theory which are more or less similar to all above stated theories so they are also not very practical in sense of their implementation of this concept. corporate personality, no other guide is desirable than sturdy common sense. Is called as corporate personality persona ficta & quot ; a company has a fiction. 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