Armed Forces’ Programme

AFP - XXIV
1

Business & Corporate Law

(BCL)

Prof. Parul Gupta

PhD (Faculty of Law-JMI, New Delhi), LL.M., PGDBM

Dr. Parul Gupta

 SESSION 11
2

Legal Status of a Company

Definition of a company
Its’ nature & essential characteristics of a
company
Lifting of corporate veil

Dr. Parul Gupta

 Definition of Company
3

Section 2(20)

“Company is the organisation which is formed and

registered under this law or any previous law”

“A company is meant an association of many

persons who contribute money or money’s worth
to a common stock and employ it in some trade or
business, and who share the profit and loss (as the
case may be) arising there from."

Dr. Parul Gupta

 Essential Features of A Company
4

1. Incorporated association

2. Artificial legal person

A Company can not be given the status of a citizen
under the constitution of India

3. Separate Legal Entity

Case : Lee v Lee’s Air Farming Ltd
Discussion Point
Is the argument of unsecured creditors valid?
Dr. Parul Gupta
 Essential Features of A Company
5

4. Perpetual existence
 
5. Common seal
Now Optional
6. Limited liability
Case: Re Yee Yut Ee
Discussion Point
Was Yee personally liable for the company’s
acts?

Dr. Parul Gupta

 Essential Features of A Company
6

7. Transferable shares

8. Separate property
Case : Macaura v Northern Assurance Co Ltd
Discussion Point
Were the insurers liable on the contract?

9. Delegated Management
Case 18.5: Foss v Harbottle
Discussion Point
Examine the legal position of claimants to sue the company directors.

Dr. Parul Gupta

 Lifting Of Corporate Veil
7

Although a corporation is a distinct entity, yet

in reality it is an association of persons who
are in fact the beneficial owners of all the
corporate property.  

Lifting of the corporate veil means

disregarding the corporate personality and
looking behind the real person who are
controlling the company’s affairs.

Dr. Parul Gupta

 8

Dr. Parul Gupta