Were you aware that you don’t have to be a true natural person in the eyes of the law as a legal person? That’s right. Under the law, artificial legal persons may even be non-natural entities and have rights and duties. Let us learn more about the company’s legal personality. A corporate personality is the most important and Widespread type of legal. Except for the State, this is the only type of juristic person recognized by English law. As previously stated, a corporation is an artificial person with legal rights and responsibilities.
Characteristics of a Corporation are Legally Associated
- In the first place, for some purposes, it is a group or corporation of individuals.
- Secondly, the entity or group should have organs through which it is operating: and
- Thirdly, a company has a will to which legal fiction is attributed.
two types of Corporate legal personality
Corporate sole and individual sole:
Corporate sole refers to a single body that represents any state or object. It is known as “a series of successive individuals”. The king of England or the president of India is always alive, whereas the people who sit on it may die.
Corporate aggregate:
Refers to when the law bestows a single personality on a group of people. Companies, for example, are incorporated under the law of societies or the law of the land. These companies, corporations, and other legal entities are legal entities.
In ancient times, the Karta depicted the entire Hindu family as a legal people. The Roman Society is the same. It has been adopted in the form of the 1956 Indian Act. The advantage of the personality of the company because it represents a single person as a corporation which is helpful.
Corporate Legal Personality Theories
Fiction Theory
As per the theory of fiction, this theory was presented by Salmond, von Savigny, coke, Blackstone, and Holland. A company’s personality is distinct from that of its staff members. Savigny saw the company as an exclusive legal establishment, which does not exist other than its individual members who constitute a group of companies whose activities were assigned to the corporate entity.
As a result, any membership change does not affect the company’s existence It’s important to recognize the aspect of legal concept that’s involved in this process. An enterprise is something other than its shareholders or members in law. The corporation’s assets do not belong solely to its stockholders. The companies sometimes go bankrupt while their members continue to be wealthy.
Gray supported this theory, saying that only human beings are able to think, so it is by fiction that we give “will” to non-humans through people who are able to think and assign their legal personalities.
According to Wolf, these theories have three advantages. It is more analytical, more flexible, and makes it easier to ignore juristic personality when it is desirable.
Criticism
However, this theory has been criticized because it does not adequately respond to corporate civil and penal liability. If the corporation’s will is assumed to be attributed to it by fiction, it is inferred that the will of the corporation must be lawful as it cannot ever be used for illegal or unlawful purposes. Consequently, the company would always carry out intra-vires and never perform ultra-vires acts.
Concession Theory
This theory deals with a state’s sovereignty. It was assumed that a company as a legal entity was extremely important as it is recognized by the state or by law.
The legal entity is nothing more than a concession or the establishment of a state, according to this theory. The fiction theory and the concession theory both assert that a corporation within a state has no legal personality unless it is conceded by the state. The fiction theory’s proponents, such as Savigny, dicey, and Salmond, are found to support it.
Criticism
Because of its overemphasis on state discretion in recognizing corporations that are non-living entities, this theory is frequently referred to as dangerous. This could result in dictatorship and arbitrary restrictions on corporate bodies, especially political ones.
Group Personality Theory or Sociological Theory
Johannes Althusius proposed this theory, which Otto Van Gierke expanded on. According to this school of thought, every collective group possesses a true mind, True will, and true power of action. Whether or not a corporation is recognized by the government, it has a real existence.
bracket Theory or Symbolist Theory
The theory suggested by Rudolf von ihering is that the conception of the person of a company is essential and that we can simplify the task of coordination of legal relations only by means of an economic instrument.
Thus it is emphasized when necessary that the law should see the real state of affairs behind the entity. This also resembles the idea of corporate veil lifting. The group believed the legal personality to be only a symbol for the operation of corporate bodies. Only members of the company are real ‘persons’ with a bracket to show that they must be regarded as a single unit if they become a company themselves.
Criticism
This theory has an inherent flaw, according to critics. It does not specify when the bracket can be removed and lifted in order to take note of the members who constitute the corporation.
Kelson Legal Personality Theory
He said that a company does not differ from an individual’s legal personality. The technical representation of a complex of rights and obligations is legal individuality.
Criticism
There is no distinction, in Keelson’s words, between natural persons and legal persons for legal reasons. The concept of legal personality in legal form should be used for the convenient attribution of rights and duties, therefore the concept of legal personality in its procedural form.
Conclusion
In summary, no theory has been found that covers all aspects of the legal personality problem. Philosophical, political, or analytical theories have been proposed. Notwithstanding, it is crucial to acknowledge that the law cannot be ignored in practice. Common law, therefore, did not commit to a single corporate personality theory. In India, the theories have not gained immense importance in practical corporate governance, but have a strong theoretical position according to the principles of common law.
