What Is Separate Legal Entity?

We the people of Massachusetts protect it, and to furnish the individuals who compose it with the power of enjoying, in safety and tranquillity. Whenever these great objects are not obtained the people have a right to alter the government, and to take measures necessary for their safety, prosperity, and happiness. It is the duty of the people, therefore, in framing a constitution of government, to provide for an equitable mode of making laws, as well as for an impartial interpretation and a faithful execution of them that every man may, at all times, find his security in them.

671 [2d Dept. 2010], internal citations omitted). "Additionally, the corporate veil will be pierced to achieve equity, even absent fraud, [w]hen a corporation has been so dominated by an individual or another corporation and its separate entity so ignored that it primarily transacts the dominator 's business instead of its own and can be called the other 's alter ego '" (Id. at 671-672, internal citations omitted). "[A] party seeking to pierce the corporate veil must establish that (1) the owners exercised complete domination of the corporation in respect to the transaction attacked; and (2) that such domination was used to commit a fraud or wrong against the plaintiff which resulted in the plaintiff 's injury" (Superior Transcribing Serv., LLC v Paul, 72 AD3d 675, 676 [2d Dept. 2010], internal citations omitted).

Although courts are reluctant to hold an active shareholder liable for actions that are legally the responsibility of the corporation, even if the corporation has a single shareholder, they will often do so if the corporation was markedly noncompliant, or if holding only the corporation liable would be singularly unfair to the plaintiff. The ruling is based on common law precedents. In the US, different theories, most important "alter ego" or "instrumentality rule", attempted to create a piercing standard. Generally, the plaintiff has to prove that the incorporation was merely a formality and that the corporation neglected corporate formalities and protocols, such as voting to approve major corporate actions in the context of a duly authorized corporate meeting. This is quite often the case when a corporation facing legal liability transfers its assets and business to another corporation with the same management and shareholders. It also happens with single person corporations that are managed in a haphazard manner. As such, the veil can be pierced in both civil cases and where regulatory proceedings are taken against a shell corporation.

1. The concept of selective incorporation according to We the People, was a “progression by which different securities in the Bill of Rights were incorporated into the Fourteenth Amendment. In 1937 the “courts were still unwilling to defend civil freedoms beyond the First Amendment. The first case that established selective incorporation was Palko v. Connecticut. The courts determined that “the provisions of the Bill of Rights should be selectively combined and useful as a constraint on the states by the Fourteenth Amendment “(Ginsberg et al. 117). Gideon v. Wainwright “established the right to counsel during criminal courts”. The Miranda v. Arizona likewise established the right to counsel and remain silent” The incorporation that gained a lot of nationwide attention is McDonald v. Chicago where the “right to bear arms was granted” (Ginsberg et al. 118). This incorporation has paved the way for several national cities to pass gun laws.

A very direct consequence which arises with the concept of separate legal identity of a corporation is the misuse of it by people. In reality a company is nothing but an association of persons, who are its beneficiaries, governed by the

Constitutional provisions mandating general incorporation laws became widespread in the north in the 1840s and spread through the rest of the country in the 1870s, one of the most famous general incorporation laws, the New York Free Banking law of 1838. The New York case provides a fascinating example of how states solved the problem of corruption and corporations. General incorporation laws made corporate charters available to everyone who met minimum requirements through an administrative procedure. In contrast, special incorporation required an act of the state legislature. Special and general incorporation will be discussed in detail later. Special and general incorporation are representative of the more general process of special and general

Woodward, S., Bird, H. & Sievers, S. (2005). Corporations Law in Principle 7th ed. Pyrmont, NSW: Lawbook Co.

“...No state shall make or enforce any law which shall abridge the privileges or immunities of citizens of the United States; nor shall any state deprive any person of life, liberty, or property, without due process of law; nor deny to any person within its jurisdiction the equal protection on the laws (US Const. amend. XIV, sec. 1)”. Selective incorporation is a constitutional doctrine that guarantees that states cannot enforce laws that deprive American citizens of their constitutional rights given in the Bill of Rights. The Fourteenth Amendment passed in 1868, still upholds a controversial role. Although the initial intention of the Fourteenth Amendment was to implement equality for newly freed slaves, its power expanded to justifying the application of federal rights granted by the Bill of Rights to state governments. On a case by case basis, the Supreme Court decides on which aspects of the Bill of Rights it will apply to the states. The idea of selective incorporation has influenced American federalism tremendously due to multiple variances in opposing and supporting outlooks. Numerous cases of violated rights will be the topic of discussion, and how selective incorporation has brought justice among them all. Demonstrated in this paper will be how Selective Incorporation has made a significant difference in America, and reflect on how it came about.

This is a New York Court of Appeals decision in 1926 adjudicated by the legendary Justice Cardozo. In this seminal case on ‘piercing the corporate veil’, the Court of Appeals finds in favor of the Defendant, Third Avenue Railway Company. The Court holds that Third Avenue, the parent company of Forty-second Street Company, which operated a rail line upon which the Plaintiff was injured, was not liable for the torts of the subsidiary. Even though the defendant owned all the stock of the subsidiary and controlled its Board of Directors, the degree of domination over the subsidiary was not considered

A corporation is a legal entity designed to shield its owners from liability claims brought against it, as long as they maintain a separation from the entity (Legal-Dictionary.com, 2015). The co-mingling of Drizins’ personal funds into

The legal decision to treat the rights or duties of a corporation as the rights or liabilities of its directors is called piercing the corporate veil or lifting the corporate veil. A corporation is treated as a separate legal person for the sole responsible of debts incurred. Corporations are

The Corporate personhood, a universal legal model, grants corporations genuine rights and responsibilities similar to those of individual citizens. This concept proved useful in American jurisprudence in that it simplified one’s interactions with huge conglomerates. Citing the Fourteenth Amendment of the constitution, the term corporate personhood served to consider corporations similar to individuals. In that vane, corporate entities like individuals could join contracts as a single unit, corporate entities like individuals could be named in civil lawsuits as a single group and corporate entities like individuals could make decisions that would hold the enterprise responsible as a single entity even though the decisions were

In case of a company, by incorporation it gains a corporate personality which is separate or distinct from the members who compose it. The property of the company belongs to it and not its members; it may sue or be sued in its own name ; it may enter into contracts with third parties independently and even the members themselves can enter into contract with the company According to Section 34(2) of the Companies Act , upon issue of the certificate of incorporation , the subscribers to the memorandum and other persons , who may from time , be the members of the company, shall be a body corporate, which is capable of exercising all the functions of an incorporated company and having perpetual succession and a common seal. Thus the company becomes a body corporate which is capable immediately of functioning as an incorporated individual. With the incorporation, the entity of the company becomes institutionalized. This principle of the independent corporate existence and the principle of corporate personality of a company were recognized in the case of Saloman v. Saloman & Co . In this case Salomon was a boot and shoe manufacturer. He incorporated a company named Salomon & Co Ltd, for the purpose of taking over and carrying on his business. The seven subscribers to the memorandum were Salomon, his wife, his daughter and four sons and they remained the only members of the company. The company went into liquidation within a year. The unsecured

A federal state is one that brings together a number of different political communities with a common government for common purposes, and separate “state” or “provincial” or “cantonal” governments for the particular purposes of each community. The United States of America, Canada, Australia and Switzerland are all federal states. Federalism combines unity with diversity. It provides, as Sir John A. Macdonald, Canada’s first Prime Minister, said,

Corporation origin from the Latin word Corpus which means body. It is formed by a group of people and has separate rights and liability from those individual. In any means, corporation exists independently from its owner and this principle is called the doctrine of separate personality. Doctrine of separate personality is the basic and fundamental principle in a Company Law. This principle outline the legal relationship between company and its members. Company’s assets belong to the company not the shareholders as assets are the equity for creditors. Company must use up all its assets to pay off the creditors if it became insolvent. The same applies to the corporation’s debts. For limited liabilities company, the shareholder liability is limited which means that the shareholder is restricted to the number of shares they paid and not personally liable for the corporation’s debts. If the company does not have enough equity to pay off debts, the creditors cannot come after the shareholders. However, limited liability company can be very powerful when in hands who do fraud and on defeating creditors’ claims. Courts then can ignore the doctrine for exception cases and lifting the corporate veil. Lifting the corporate veil is a situation where courts put aside limited liability and hold a corporation’s shareholders or directors personally liable for the corporation’s debts.