ACCA LW · Chapter 8 · Question 1 of 11
What principle was established by Salomon v A Salomon & Co Ltd?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: C) A registered company is a legal person separate from its members, even where one person controls it
Explanation
The House of Lords held that a properly registered company is a separate legal entity, so Mr Salomon was not liable for its debts and his secured debentures were valid even though he held almost all the shares. The decision is the foundation of the 'veil of incorporation'. Companies can now be formed by a single member.
More Legal personality, company formation and constitution MCQs
- Q3A former managing director, bound by a restrictive covenant not to solicit his former employer's customers, set up a company to solicit…
- Q4Which of the following is an example of the veil of incorporation being lifted by STATUTE rather than by the courts at common law?
- Q5Under s51 Companies Act 2006, who is liable on a contract made on behalf of a company before it has been incorporated?
- Q6Which of the following is a key difference between a public and a private limited company under the Companies Act 2006?
- Q7A company has just been incorporated and registered as a public company. Before it can do business or exercise any borrowing powers, what…