a two-edged sword salomon and the separate legal entity doctrine

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1、ATwo-EdgedSword:SalomonandtheSeparateLegalEntityDoctrineAuthor:GonzaloVillaltaPuigCorporationLaw–AustraliaVolume7,Number3(September2000)http://www.murdoch.edu.au/elaw/issues/v7n3/puig73a_text.htmlSubjects:Contents·Introduction·SalomonvSalomon·Discussion·Conclusion·NotesIssue:Category:I

2、ntroduction1.ThedecisionoftheHouseofLordsinSalomonvSalomon&CoLtd[1]evincestheaccuracyofGooley'sobservationthattheseparatelegalentitydoctrinewasa"two-edgedsword".[2]Atagenerallevel,itwasagooddecision.Byestablishingthatcorporationsareseparatelegalentities,Salomon'scaseendowedthecompanywi

3、thalltherequisiteattributeswithwhichtobecomethepowerhouseofcapitalism.Ataparticularlevel,however,itwasabaddecision.Byextendingthebenefitsofincorporationtosmallprivateenterprises,Salomon'scasehas7promotedfraudandtheevasionoflegalobligations.Nonetheless,thisarticlewillarguethattheoverall

4、balanceispositive.SalomonvSalomon1.Atitsmostgenerallevel,thedecisionoftheHouseofLordsinSalomonvSalomon&CoLtdwasagooddecision.Salomon'scaseisuniversallyrecognisedasauthorityfortheprinciplethatacorporationisaseparatelegalentity.[3]2.Thecasefirmlyestablishedthatuponincorporation,anewandse

5、parateartificialentitycomesintoexistence.Atlaw,acorporationisadistinctpersonwithitsownpersonalityseparatefromandindependentofthepersonswhoformedit,whoinvestmoneyinit,andwhodirectandmanageitsoperations.[4]Itfollowsthattherightsanddutiesofacorporationarenottherightsanddutiesofitsdirector

6、sormemberswhoare,mostofthetime,obscuredbyacorporateveilsurroundingthecompany.[5]3.Therecognitionthatacorporationisaseparatelegalentityinitsownrightisthefoundationofmoderncorporatelaw:MacLaineWatson&CoLtdvDepartmentofTradeandIndustry.[6]Indeed"[e]verysystemoflawthathasattainedacertainde

7、greeofmaturityseemscompelledbytheeverincreasingcomplexityofhumanaffairstocreatepersonswhoarenotmen...".[7]Consistentwiththisobservation,Arnoldstatesthat"[o]neoftheessentialandcentralnotionswhichgiveourindustrialfeudalismlogicalsymmetryisthepersonificationofgreatindustrialenterprise."