In Union Bank of India v. Khader International Constructions and Others (2001), the court raised the question of whether the company has the right to sue as a poor person under Order 33, Rule 1 of the Code of Civil Procedure of 1908. The order allows those who need it to take legal action under the Code if they cannot afford to pay legal fees. In this case, the complainant rejected the allegation that the company had sought permission to sue as a poor person. The point of contention is that the appellant, which is a public limited company, is not a “person” within the meaning of Order 33, Rule 1, which applies only to a natural person and not to a legal person. A company is called an artificial person by law. It is called a legal entity because it can enter into a contract, own property in its own name, sue and be sued by others, etc. Essentially, it`s not human, but it works through people. He is called an artificial person because he is invisible and immaterial and exists only in the vision of the law. He can have both rights and obligations. Paragraph 2(1)(f) of the Citizenship Act, 1955 defines a corporation as not a citizen and does not include any corporation or association, whether registered or not. It is therefore clear from the law that a company cannot be a citizen.
In The State Trading Corporation v Commercial Tax Officer (1963), the Court held that the word “citizen” can only refer to a natural person and nothing else. Therefore, a company cannot claim citizenship to invoke fundamental rights under the Indian Constitution. LavSikho has created a telegram group for the exchange of legal knowledge, recommendations and various possibilities. You can click on this link and register: you don`t need to own a large company to benefit from these corporate rights. As UpCounsel explains, corporate personality applies to companies, large and small. The famous case of Salomon v. Salomon and Co. Ltd (1897) recognized the principle of a separate legal entity from a corporation, which states that a corporation has its own existence distinct from its members.
Thus, this concept protects shareholders from personal liability for the injustice and obligations of the company. In other words, unlike the partnership, the liability of its members of the company is limited, which means that if a company commits something wrong, the members of the company cannot be held responsible for those mistakes. The Company does not hold its assets as agents or trustees for its members, and they cannot exercise their rights or be held liable. Therefore, “incorporation” is the act of establishing a legal person as a legal person. Legal persons are defined by law; They have obligations and other actions under the law. In other words, a company is like a natural person, but can only carry out its actions under the law through a specific person. A company is legally established during its life cycle, continues to operate in accordance with the law and is eventually dissolved in accordance with the law. A company as an artificial legal entity does not die naturally. It is created by law, conducts business under it, and is ultimately eliminated by law. The existence of a company usually ends as a result of liquidation. However, to avoid liquidation, companies sometimes resort to strategies such as restructuring, reorganization and mergers. Essentially, a corporation is a voluntary association with limited liability capital divided into transferable shares, a separate legal entity, and a common seal of perpetual succession.
Companies are responsible for the actions of their companies as well as the people they wish to employ; Just as individuals and groups of people are responsible for their own actions. If they are recognized as an artificial person under the law, the government and the courts hold companies accountable and accountable for compliance with laws and government regulations. These regulations come from all levels of government; Federal, state, local and all applicable jurisdictions. A. The company has the status of a legal person from the date of completion of all the formalities required by law. For example, according to the law, they can perform actions of individuals and be associated with a legal relationship. Corporate rights stagnated somewhat in early U.S. history, inheriting the rights they had under British common law, according to the History website. It was only after the ratification of the 14th Amendment in 1868 that things began. Three years after the Civil War, the 14th Amendment was drafted to grant citizenship rights to freed slaves and to guarantee citizenship, due process, and equal protection of the law to anyone born or naturalized in the United States. When a new legal entity is formed, the owners can act as a unit.
The new body takes responsibility for its actions and legally distances itself from individual personal responsibility. Owners are often referred to as stakeholders. Not to be confused with a shareholder who owns part of a company through shares. Stakeholders have only interests other than the performance of the shares. A business can end up by liquidation, and other factors such as the death or retirement of a person have no bearing on the existence of the business. Permanent succession means that the composition of the company may change from time to time, but this does not affect its continuity. Membership in a corporation may change because a shareholder has sold or transferred his or her shares to another person or his or her shares are transferred to his or her legal representative after his or her death or because the shareholder lost his or her termination of membership under other provisions of the Business Corporations Act. Thus, eternal succession refers to the ability of a company to maintain its existence by succeeding new people who put themselves in the shoes of those who cease to be members of the company. An example could be that during the war, all members of a private company were bombed at a shareholders` meeting, but the company survived.
All this does not affect the existence of the company. To understand the definition of an artificial person, you should know that the law considers it necessary to provide an entity.3 min read Prosecuting means taking legal action against (someone) or taking legal action in court. All legal proceedings against the Company will be initiated on its behalf. Similarly, a company can sue anyone on its own behalf. If the company suffers harm, it has the right to sue that person. Therefore, the Company has the right to sue on a case-by-case basis for damages in the event of defamation or defamation. A company is recognized as an artificial person. The word incorporate comes from the Latin corpus, which means body. This essentially means that it is shaped or added to a body and united by legal force. Since companies are recognized as artificial persons, the courts allow them to exercise the fundamental rights of the 14th century. Invoke constitutional amendments such as due process and equal protection. As a result, companies operate with certain rights and are protected by many of the same laws as individuals.
They are free to prosecute, hire lawyers and claim damages if a crime has been committed against them. Based on Solomon v. Salomon and Co. Ltd (1897), the court held that a company has its own independent character and is different from its members, so investors cannot be held responsible for the organization`s protests, even if it holds all the capital of the offer. The company has its own corporate personality and is distinct from its members. When the law treats a company as a separate person, independent of its members and who manages its activities, there are many advantages. First, the company`s obligations and responsibilities are its own, not those of its participants. Second, companies can sue and be sued on their own behalf. In addition, the article clarifies why a company is considered a legally established artificial person. He has no hands, legs, or heart. The existence of a company arises when it is set up and registered under the German Joint Stock Companies Act.
After appearance, he can perform all trading tasks as a human trader. He can open his bank account. A company can buy and sell any asset in its own name. The company receives the loan in its own name. It can sell its own shares on the market. There are several advantages to companies being considered an artificial person. The word “society” comes from Latin (com = with or together; panis = bread) and originally referred to a group of people eating together. In the past, business people used the holiday season to discuss trade issues. Today, business has become more complex and cannot be discussed during the holiday season. Therefore, the organizational form of the company has become increasingly important. A business is often referred to as an association of like-minded people founded to run a business or business. A company is a company and a legal person whose status and personality differ from those of its members and are independent.