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Corporate legal personality—the Salomon principle

A properly formed registered company is a separate legal entity from its shareholders and has distinct rights and liabilities as an autonomous legal person. This principle is colloquially described as the corporate veil or the Salomon principle, being most famously stated by Lord MacNaghten in the case of Salomon v Salomon:

‘The company is at law a different person altogether from the subscribers to the memorandum; and, though it may be that after incorporation the business is precisely the same as it was before, and the same persons are managers, and the same hands receive the profits, the company is not in law the agent of the subscribers or trustee for them. Nor are the subscribers as members liable, in any shape or form, except to the extent and in the manner provided by the Act.’

A company, as a separate legal entity, continues to exist irrespective of changes to its membership. It owns its assets and is responsible for its own liabilities. A company's separate legal personality exists for so long