Corporate Personality Meaning
The concept of corporate personality is the idea that makes the corporate a legal person in the eyes of the law. In simple words a corporate personality gives a legal recognition to the company, such recognition can be like artificial or a fictious person for the enforcement of its rights and obligation. And such institution or organization is considered as corporate body.
The concept of corporate personality was established from the case of Solomon v. Solomon (1897) judgement. In which it was held that a company can individually act as a legal personality and is independent of its shareholders and members. It means that it can sue and it can be sued. The separate legal personality is known as the corporate personality.
In order to give recognition to the company of any corporate personality three conditions needs to be fulfilled:
- There should be an organization by various person made for a specific purpose or goal.
- There should be management and sales and business in the name of that organization.
- It shall have a will as per legal fiction.
Once all these conditions are fulfilled the company can enjoy all the legal rights given to it. That means it can either sue or it can be sued.
Features of corporate personality
Artificial personhood
This makes the companies or institutions top have their separate entity. This enables them to engage in the day-to-day activities and financial transactions in their own name. It enables them to open a bank account in their name and have all rights related to it. It enables them to lend money and enables to profit on its name.
Rights and obligations
A company when obtained a legal status it has rights and has duties like a legal person. This enables the company to have its own rights and obligations.
Independent operations
A status of corporate personality enables a company to be independent from its shareholders. This is the separation between the company and its members.
Collective will
It is important for a company to also have natural person. As for the better working of a company it is very important for a company to have persons who are well qualified and can hold that position. The will of the natural person helps in creating the will of the company. Their collective will decide the key decisions of the company and how the company would act.
Such decision then would be accompanied with a common seal and such seal will represent the will of the company. This common seal will be considered as the physical symbol of the will of the company.
Types of corporate personality
Corporate Aggregate
It is the type of corporate personality which is formed by many shareholders and members. Such company comprises of many shareholders and many members and employees. This is nothing but a group of people who is working towards a common goal is termed as corporate personalities. The common seal represents the collective will of such company.
Example can be all private and public companies or a multi-national company.
In the landmark case of Tata Engineering and Locomotive Company Ltd. v. Province of Bihar (1964), it was held that even if a corporate body is fictious, it is a person in law. It will consist of all the rights that a legal person has.
Corporation Sole
The corporation sole is a company by a single entity. The corporation sole is headed by a one natural person. The corporation sole consists only of a single individual who has the head and representative in a corporate position. It is more by a virtue of position given by an authority and the Head. It is mostly seen in corporation and by the executive position.
An example can be The President and The Prime Minister of a nation who acts as the Head of that nation. In most cases corporation sole is given or entitled by such post because of the office it holds.
The Supreme Court in the case of S. Govinda Menon vs The Union of India & Anr (1967), it was held that the nature of a corporate sole is not much different from a general corporation.
