BU231 Chapter Notes - Chapter 27: Capital Account, Share Capital, Legal Personality
Document Summary
Chapter 27 nature of a corporation & its formation. Man owned every share of his company, but six when the business went bankrupt creditors claimed that corporation was a sham. Court upheld salomon"s claim as a corporation and recognized the separate legal personality of the one-man company : limitations on the principle of separate corporate existence, exceptions to limited liability. Shareholders of small private companies are often required to provide security or personal guarantees for loans made to their corporations. Cbca provides further exception as shareholders are liable for corporations debt if they"ve received improper distribution of assets (dividends paid out even when no profits made) Owners of corporations are not protected from personal liability, even if the corporation is vicariously liable: lifting the corporate veil corporations. Courts have sometimes been prepared to disregard the separate existence of. In order to identify an individual with a corporation there are three conditions that must be met:
