"CORPORATE PERSONALITY: JURISPRUDENTIAL APPROACH : Corporate personality, as the name

suggests, is related to the corporate sector of the world and is said to be the most important term in
this field. We know that all laws are basically formed based upon a foundation which has been time
and again established and changed by certain jurists. These jurists are famous for giving their own
interpretation of laws so that future laws will be formulated by accepting a common ideology. In this
research paper, our main goal is to get to know this topic in depth. For this, we need to research the
following questions:

• How this corporate personality has been connected with jurisprudence?

• What theories have been given by the jurists in order to justify the nature of corporate
personality?

• What factors led this world in understanding the true significance of this concept?

In our lawful environment, there are two types of persons that are accepted as lawful people. One of
the type is of natural person that we humans are and the other type is of artificial person. This
artificial person is basically the man made person but have its own existence in this environment.
This artificial person is generally made up for certain purpose and so its existence must have to
revolve around that purpose only. Corporate firms, companies, etc. are the examples of this artificial
person. These artificial persons in the business world are said to be the corporate personality. This is
because they are formulated by the humans with a certain intention to earn profit in a particular
sector. This intention depends upon the objective of the artificial person. Artificial person’s main task
is to fulfil their objectives and not deal in outside matters. It is one of the most important feature of
the corporate firms and companies that they have a separate legal existence and so these corporate
entities have the right to enter into any kind of contract related to their field in its own name. For this
they have their official seal which acts as a official signature of these entities.

The term ‘corporate personality’ defines the personality of corporate entities. Its personality is
different from the natural persons. Corporate personality is a kind of fake individual who have its
own rights and duties just like a natural person but have a lot of differences if we compare it with
natural persons. Such an example can be the humanity. One can expects humanity from a natural
person but in case of corporate personality, there is no such term in their dictionary. Their motive is
to obey the principle of perpetual succession in a particular field and to get profits or to achieve
growth in it. Here the concept of natural law has no role. Corporate personality works on what is best
for it rather than the concept of morality. However, one must get confuse between ethics and
morality but just to be clear these both terms have their separate meanings and may or may not be
connected to each other. Corporate personality has the social duty to work with ethics but it is not
mandatory for them to always play in ethics. Sometimes they may reflect moral behaviour in order to
obey ethical environment but if somehow circumstances change, corporate entities may ignore the
concept of morality completely while still remain in the ambit of the ethics.

LEGISLATIVE PERSPECTIVE

The concept of corporate personality is a well recognised concept in English as well as Indian law.
From our ancient Indian cultures, we can found many references of separate legal personality based
upon which corporate personality has developed and become a prevalent characteristic nowadays.

Like if we take an illustration from Hindu law, we can observe that Karta as a part of Hindu
coparcenary is a dominant/supreme position in a joint Hindu family. He holds the representative
rights of its family members and is successive in nature. However it is not a corporate but have a
separate legal existence. Similarly in the case of Hindu idols, they were also once recognised as a
corporate entity in the ancient times. Not only Hindu idols but Guru Granth Sahib, mosque, etc. we
also considered to have their own separate legal existence. In fact the Union of India and the states
have also been recognised as corporate entities under the constitution of India[1]. The President of
India as also the Governor of the state is a corporation sole like the British Crown. Even the Reserve
Bank of India is an incorporated body having an independent corporate existence. But if we see the
case of Union Public Commission and a Joint Hindu Family, they cannot hold property in their own
names or cannot sue or be sued in their own name which makes them apart from the definition of
the legal persons.

A company incorporated in India[2] is said to be the best example of Corporate Personality. A

corporate or a company certainly have their own rights and duties which they can enjoy because of
their legal personality by the effect of fiction created by law.

Basically Corporate Personality is of two types, that is:

1) Corporate Sole- In corporate sole, there is an incorporated series of successive persons.[3] It

consists of only one member at a time. As per the Salmond’s point of view, when a successive holder
of some public office incorporates so as to become a single, permanent and legal person is said to be
a corporate sole. Sovereign, the Secretary of State for War, Attorney general of India, etc. are some of
the examples of the corporate sole in India. A corporate sole is basically about a position which will
always be there no matter who can hold it and for how many years.

It is kind of a position of double capacity. It means that a person holding the particular position
should have double role in the society. Like if we take the case of king in a country, then he can
exercise his powers without restrictions but at the same time he is also an individual and so he can
confer rights and duties upon himself as an individual also.

2) Corporate Aggregate- In corporate aggregate, there is an incorporated series of co-existing

persons. Unlike corporate sole, there are several members forming a group at a time. For example, a
registered company consisting of all the shareholders, co-operative society consisting of several
members of the society, limited companies, etc. In this corporate type, members forming a group
contribute in the group in light of common interest and works together for the upliftment of the
group. Once this group gets registered, it becomes a separate legal entity in the eyes of law. After
this the particular group gets the right to deal with the members as well as to the outsiders in their
own name for serving the purpose upon which the group was built in its first place. This group then
also gets the right to sue or be sued in case of something wrong happen. However, a partnership firm
is said to be exception in this case since it is an aggregate of individual which is generally not
incorporated. Also the partners in the partnership firm own the property and are equally liable for
debts.[4]

JUDICIAL APPROACH

The concept of corporate personality was first came into notice in the year 1867 in the case of
Richard Oakes Vs. William Turquand and R. P. Harding[5]. However, if we talk about the leading cases
in the matter of corporate personality then there were few landmark cases which comes as a base
for this whole concept. These cases are:

1) Salomon Vs. A Salomon & Co Ltd.[6]

In this case, a businessman named Mr. Aron Salomon, who already has business of manufacturing
leather boots, has incorporated a limited company known as Salomon & Co. Ltd. The minimum
requirement for starting a limited company was to have at least 7 shareholders. So in order to fulfil
this requirement, he decided to give one share each to his family members so as to make them the
shareholders. Then after few years, he sold off his business to the limited company for $39000 out of
which he was having a debt of $10000. In this way he has become company’s principal shareholder
and principal creditor at the same time. After one year, the company went into liquidation. The main
problem which persists here is that the realization of assets was just $6000 whereas debentures held
by Salomon were of $10000 and unsecured creditor were of $7000. So the creditor by stating these
facts has challenged the right of Mr Salomon over his preferential right as a debenture holder. The
main issue which rose here is that whether the company’s formation by Mr. Salomon was done with
the malicious intention to defraud the creditors. The court in this case held that after the
incorporation stage, the company has attained the status of independent legal person. It will not be
considered as an agent of Mr. Salomon. Since Mr. Salomon is a debenture holder in this company,
therefore, he must get the priority in payment over the unsecured creditors at the time of winding
up.[7]

This case law established the concept of separate legal personality which allows a freedom to the
shareholders to trade in different companies without facing any risk of personal insolvency. This
judgement for the first time has bring into notice 2 principles i.e. Artificial person and limited liability.

2) Lee Vs. Lee’s Air Farming Ltd.[8]

In this case, Mr. Lee held 2999 shares out of the 3000 shares of Lee’s Air Farming Ltd. and since he is
a majority shareholder, he makes himself the managing director and the chief pilot on salary. So
basically he was the shareholder, director and employee of the company at the same time. While
working in the course of his employment he was killed in an air crash. His widow then claimed for the
compensation from the company since he was being dead in the course of his employment. She
claimed a sum of £2,430 for herself, for her four infant children and for the funeral expenses.
Company then denied this claim by giving a statement that Mr. Lee was not a worker of the company
rather he was just the shareholder and the controlling director of the company at the time of the
accident. The main issue which rose here is that whether the company is a separate legal entity or
not, or if it is then, whether Mrs. Lee can claim for the compensation or not. This case is basically
concerned about the two concepts i.e. corporate veil and separate legal personality. This case helped
in proving the principles given in the Salomon’s case. The Privy Council in this case held that Mr. Lee
might be the controlled of the company at the time of the accident but in the eyes of law, Mr. Lee
and Lee’s Air Farming Ltd. is to be considered as a separate legal entity. Therefore Mr. Lee can enter
into a contract with the company and could be considered as an employment irrespective of being
the shareholder and the director at the same time. The company would be considered as a separate
legal entity and any director is allowed to enter into a contract with the company and can act as an
employee also for the benefit of the company. So, Mrs. Lee’s claim has been allowed by the Privy
Council and she has been awarded compensation in respect of workmen’s compensation.
RECENT TRENDS AND OBSERVATIONS

Corporate Personality is a concept which has not been evolved on its own. Many jurists have given
their theories based upon which the ‘Legal Personal’ has been defined nowadays. It is their
observation and ideas which led to the emergence of this concept. Recent trends and observations
from these theories have become the foundation for the concept. These theories help in
understanding the nature and scope of corporate personality as created by law. One may believe that
these theories may act as a universal principle but practically speaking this is not the case. Jurists
have adopted the theoretical approach and ignored the practical approach while giving these
theories. These theories are:

1) Fiction Theory-

This theory gives importance more to the natural persons rather than the legal persons. As per this
theory, legal persons are just a kind of fiction and emphasized more on human beings as natural
persons. The existence of a corporation is considered only as an outcome of fiction and metaphor. So
the personality that is attached to these corporations is done purely by legal fiction. The legal person
is created only in the eyes of the law for a specific purpose. The theory is expounded mainly by
Savigny and backed by Salmond, Coke, Blackstone, Kelson and Holland. This theory is mostly adopted
and used by the English Law where the main focus of the courts was not on recognizing a legal
person.

2) Concession Theory-

This theory is basically linked with the philosophy of sovereign state. This theory is almost similar to
the fiction theory except with a difference that it accepts corporation as a legal person if it has been
recognised by the state. According to this theory, juristic personality is a concession granted to the
corporations by the state on its discretion. It is similar to fiction theory in a way that it does not
accept any legal personality except which has been recognised by the creation of law. The same
jurists as of fiction theory has given this theory by saying that a corporate is someone on which legal
entity has been endowed as a legal fiction for particular purpose by the state.

3) Realistic Theory-

This theory is also known as organic theory. The founder of this theory was German jurist Johannes
Althusius and its main propounders were Gierka and Maitland. It talks about the real existence of the
corporation is not dependent upon state’s discretion. It is immaterial whether state recognise any
corporation or not, and so a corporate is a legal person same as that of a natural person. This theory
proposes no distinction between natural person and artificial person. This is not a very practical
theory as it does not apply in the real world. This theory was favoured more by sociologists rather
than legalists.

4) Bracket Theory-

This theory is also known as Symbolist theory and it is associated with the well known German jurist
Rudolf K. Ihering. It states that a corporation is just a group of persons having their rights and duties
and so the law basically puts a bracket to this by considering the whole group as one single unit as
corporate personality. This theory doesn’t differentiate between the corporation and its members.
This theory is however used by many courts in the cases of ‘lifting of corporate veil’. However, the
basic criticism for this theory is that it doesn’t indicate clearly when to put the brackets and when to
lift the corporate mask.
5) Purpose Theory-

The main exponent of this theory was the noted German jurist Brinz. In England, this theory was
developed by Barker[9]. E.I. Bekker, Aloys and Demilius also supported this theory. This theory has a
view that corporations should be treated as the persons only for the specific purpose since the
assumption is that only the living persons has the rights and duties and so they are said to be the
living persons whereas corporations are the non- living entities. Duguit also interpreted this theory
but in his own way. He connected this concept with social solidarity. According to him, if a group is
pursuing a purpose which conforms with social solidarity, then all its activities falling within the
purpose need to be protected by law by conferring its legal personality[10].

CONCLUSION

So far what we understand from this whole research was that a corporate personality is an artificial
person having its own rights and obligations separate from that of its owners and other members.
Basically it a separate legal entity and so it has the power to enter into its own contracts with its own
seal. With the passage of time and with the help of so many precedents this has become a widely
used concept. This in turn helps the shareholders in trading freely into the market without having the
risk of unlimited liability.

Corporate personality is of two types i.e. corporate sole and corporate aggregate. Corporate sole is
basically when a person is playing a double role in the society and is having such a position which on
its own have a separate legal status whereas corporate aggregate is when a certain group of people
combined together along with their resources and manpower and thus, formed an organisation for a
specific purpose having its own legal status in the eyes of law. These both types helps in explaining
and broadening the concept of artificial person and its rights & duties in the society.

Many jurists in this regard have tried to give their own interpretation of this concept and were
successful in giving certain theories which becomes a base for this law. They have given the theories
like fiction theory, concession theory, realistic theory, bracket theory and purpose theory which
different courts as per their own convenience and circumstances have observed and adopted for
reaching at a particular decision. LIFTING THE VEIL OF CORPORATE PERSONALITY

As we know that after incorporation a company becomes a legal person separate and distinct from
its members. It has a corporate personality of its own with rights, duties and liabilities separate from
those of its individual members. Thus, a veil of incorporation exists between the company and its
members and due to this a company is not identified with its members. In order to protect
themselves from the liabilities of the company, its members often take the shelter of the corporate
veil. Sometimes this corporate veil is used as a vehicle of fraud or evasion of tax etc. To prevent
unjust and fraudulent acts, it becomes necessary to lift the veil of the corporation or disregard the
corporate personality to look into the realities behind the legal façade and to hold the individual
member of the company liable for its acts or liabilities.

In State of U.P. V Renusagar Power Co. , the court held that the concept of lifting the corporate veil is
a changing concept. Its frontiers are unlimited. However, it depends primarily on the realities of the
situation.
In The Deputy Commissioner V Cherian Transport Corporation260, the court has held that the
company is a legal person distinct from its members. It is capable of enjoying rights and being subject
to duties which are not the same as those enjoyed or borne by its members. In certain exceptional
cases the court is entitled to lift the veil of corporate entity and to pay regard to the economic
realities behind the legal façade.

The corporate veil has been lifted by the courts and legislatures both in the interests of justice,
equity and good conscience.

In Sugar India Ltd. V Chander Mohan Chadha , the Supreme Court has made it clear that it is not
open to the company to ask for unveiling its own cloak and examine as to who are the directors and
shareholders and who are in reality controlling the affairs of the company

The doctrine of the lifting the veil of corporate personality is a doctrine that advocates going behind
and looking behind the juristic or corporate personality of a body corporate. Undoubtedly, as a
general rule, a company is a person distinct and separate from its members. But, in exceptional
cases, that veil of corporate personality can be lifted; and looking behind the veil, one could see the
corporate personality fading away. Law courts have, in exceptional cases, cracked the shell of
corporate personality and have looked upon a corporation and its members from a different point of
view. Courts have lifted the veil, with the objective of preventing fraud. In such cases the members of
the corporation are considered as persons working for the corporation. In Tata Engineering & Loco-
motive Co. Ltd. V State of Bihar , although the veil was not lifted, however the doctrine of lifting the
veil of the corporation was considered at great length.

EVOLUTION OF CORPORATIONS

UNDER INDIAN LAW

The history of the Indian Company Law began with the joint stock companies Act 1850. The Indian
Companies Act of 1857 followed the English Acts of 1856 and 1857 in almost every particular. The
English act having been repealed by the codifying Act of 1862, the Indian legislature followed suit by
passing the Indian Companies act 1866. Between 1862 and 1882, several amending acts were passed
by the Imperial legislature; so in 1882, the Act of 1866 was repealed, and an act was passed by the
Indian legislature embodying all the changes that had taken place in the meantime in the English
Acts. The Companies (Memorandum of Association) Act was passed in 1895 and this act also
resembles the English Act of the same name.312 Since then the cumulative process of amendment
and consolidation has brought us to the most comprehensive and complicated piece of legislation,
the Companies Act 1956 after repealing the Companies Act of 1913, based on the recommendations
of Bhabha Committee. But even so it is not exhaustive of all the modes of incorporating business
concerns. Organizations for business or commercial purposes can still be incorporated by special Acts
of Parliament. The life Insurance Corporation of India, for example, has been incorporated for
business in Life Insurance under the Life Insurance Corporation Act of 1956. Institutions so created
are better known as “corporations”. Business firms or other institutions incorporated under the
Companies Acts are known as companies. Companies Act is also not exhaustive of the whole of
company law. It only amends and consolidates certain portions of company law. Common law has
still a lot of role to play in this field. The duties of the corporate director and their social
responsibilities, which at present is one of the most developing aspects of company law, are still
largely governed by the principles of common law.
INCORPORATION AND REGISTRATION OF COMPANIES

INCORPORATION OF THE COMPANY

Incorporation is conferred on legal personality only for the purpose of the particular objects stated in
the objects clause of its memorandum, and transactions, not authorized expressly or by necessary
implication must be taken to have forbidden, but this view was not followed during early days and
contrary to it, the view that a company has all powers of a natural person, unless it has been taken
away expressly or by necessary implication was given a big support. In the year 1855 some important
developments took place, one of them was introduction of the principle of limited liability. After the
introduction of this principle, it was possible to make the liability of the members limited. Before this
the liability of the members was unlimited and hence the creditors of the company considered them
protected, but after the development of the concept of limited liability, they found themselves in a
miserable state. This necessitated a device to protect the creditors; this molded the minds of the
pioneers towards the doctrine of ultra vires. In addition to it, the companies were required to have
two important documents, the memorandum and articles.

Incorporation of the companies offers certain advantages to the business community as compared
with all other kinds of business organization and following are the advantages of incorporation.

1. Independent corporate existence

2. Limited Liability

3. Perpetual succession

4. Right to own and acquire Property

5. Transferable Shares

6. Capacity to sue and be sued

7. Pofessional Management

8. Finances

FORMATION OF COMPANY

In the formation of the company, one of the important requirements, the promoters of the company
has to comply with, is the preparation of the documents called the articles of Association and the
Memorandum of Association.

Sec 2(28)332 defines “Memorandum” which means the memorandum of association of a company
as originally framed or as altered from time to time in pursuance of any previous companies law or of
this Act.

Section 13 of the Act states the requirement with respect to memorandum of association.

Section 14 provides that the form of memorandum should be such one of the forms in Table B, C, D
and E, in schedule 1 of the companies Act 1956 as may be applicable to the company. However it is
to be noted that Indian Companies Act fails to clearly define what is memorandum of association.

Hence, for proper understanding of what amounts to memorandum of association, one has to rely
upon the observation made by Palmer333, in this regard. Palmer observed that “it is a document of
great importance in relation to the proposed company. Its importance lies in the fact that it contains
the following fundamental clauses which have often been described as the condition of the
company‟s incorporation. These clauses are as under.

1. Name Clause.

2. Registered Office Clause

3. Objects Clause

4. Liability Clause and

5. Capital Clause.

Here the author has limited the scope of other factors pertaining to “Doctrine of Ultra Vires” and
mainly examine the formalities in connection with the registration procedure. " Make The title of
the project must be accompanied by an abstract in not more than 300 words. The abstract must
indicate – objective, central argument, research question, methodology and significance of the work

Here’s a polished abstract (within 300 words) that aligns with your project title and incorporates the
required elements (objective, central argument, research question, methodology, and significance):

Title: CORPORATE PERSONALITY: JURISPRUDENTIAL APPROACH

Abstract
The concept of corporate personality occupies a central position in company law and jurisprudence,
raising critical questions about the nature and scope of artificial legal persons. This paper aims to
examine the jurisprudential underpinnings of corporate personality, tracing its evolution through
judicial interpretations, legislative recognition, and theoretical debates advanced by jurists. The core
objective is to explore how law attributes personality to corporations, thereby granting them rights,
duties, and liabilities independent from their members.

The central argument advanced is that corporate personality is not merely a technical legal construct
but a jurisprudential development shaped by theories of fiction, concession, realism, bracket, and
purpose, which continue to influence judicial reasoning and legislative policy. The research addresses
three interrelated questions: (i) How is corporate personality connected with jurisprudence? (ii)
What theories have jurists propounded to justify the nature of corporate personality? and (iii) What
factors led to the recognition and evolution of the concept under Indian and English law?

The methodology adopted is doctrinal and analytical, relying on case law analysis (e.g., Salomon v.
Salomon & Co. Ltd., Lee v. Lee’s Air Farming Ltd.), statutory provisions (Companies Acts in India and
England), and scholarly interpretations. Comparative references to ancient Indian legal notions such
as the recognition of Hindu idols and institutions as legal entities further contextualize the inquiry.

The significance of this research lies in its contribution to understanding corporate personality as
both a legal fiction and a socio-economic reality. By engaging with jurisprudential theories and
judicial precedents, the paper highlights how the doctrine of separate legal entity facilitates
economic growth, shields shareholders through limited liability, yet simultaneously necessitates
mechanisms like lifting the corporate veil to prevent misuse. This study thus bridges jurisprudential
theory with practical corporate law, offering a comprehensive perspective on the legal personality of
corporations.

Would you like me to also trim your draft content (the long project body) so that it aligns better with
this abstract structure—like reorganizing into clear sections: Introduction – Jurisprudential Theories –
Legislative Approach – Judicial Approach – Recent Trends – Conclusion?

Here are the points relating only to corporations from the passage you shared:

 Corporation as Legal Person:

o The corporation is the ultimate example of an artificial legal person, without a

physical form, existing only in the “contemplation of law” (as held in Trustees of
Dartmouth College v. Woodward).

o Corporations are created as institutional facts through legal processes such as

incorporation, rather than being pre-existing entities upon which legal personhood is
conferred.

 Creation of Corporations:

o A legislator or jurist can create an unlimited number of corporations as legal persons

to suit the needs of enterprises.

o This demonstrates the flexibility of law in generating legal persons, but does not
mean that anything can be a legal person.

 Corporations as Abstract Legal Persons:

o Like abstract money, corporations do not correspond to physical objects but exist as
free-standing social/legal facts.

o Their creation is akin to “declaring” them into existence (e.g., through

incorporation), rather than attaching legal personhood to an existing physical object.

 Legal Platform Analogy:

o Corporations serve as legal platforms that can hold bundles of rights and duties.

o They are not mere fictions imposed on existing entities but institutional structures
constructed within law.

Would you like me to also contrast corporations with idols and rivers (as the text implicitly does), so
that the corporation’s unique status as a legal person becomes clearer?