The famous case of Salmon v Salmon laid down the principle of separate legal personality which delineated the aspect of legal personality as separate to that of owners or shareholders. The gist of separate legal personality meant that the company is an artificial person capable of conducting its affairs in its own image which includes liabilities. The modern company law has enunciated the concept as the corporate veil. The government has an important role especially in regulating the market forces and protecting the players.
The concept of legal personality has been advance by governments through legislations. First, the government attempt to control the modern capitalistic markets and protect the investors. As opposed to the past centuries, investors lost their money when companies become insolvent. Moreover, it was difficult to protect an investor’s interest in cases where an individual owner died. Second, the government has enacted insolvency laws to shield investor and creditors from losing their money. Such initiatives have created a friendly environment and created stability within the market. Third, the government favours continuity of business. The artificial nature of companies ensures that it continues even after the death of its promoters, owners and shareholders, therefore the continuity nature will have zero effect on the corporate taxes levied by the government.
The concept of separate legal personality has attracted divergent views from different quarters. Whereas some appreciate the concept of the corporate veil others have expressed reservations. The reservations have made the courts to make exceptions to the rule and thus the creation of the concept lifting the corporate veil. The proponents of this doctrine have cited fraud committed by natural persons in a company who need to take personal responsibility.
In a conclusion, the separate legal personality sustained by government policies seem fair and should only be limited when it threatens the market forces and when injurious to the public.