The corporate form of business organisation is today a fundamental feature of modern life and modern law. In large part, its ubiquity is due to the principle of separate corporate personality, which is of central importance to company law and entails the complete separation of the company and its members. Indeed, this single idea provides a unique and powerful force for viewing the company as a juridical entity, or ‘thing’, which is capable of suing, and being sued, in its own name, entering into contracts, incurring debt, and owning property. However, the company’s independent legal existence has long generated difficulties for the law and how we think about that law. For over a century, philosophers, political scientists, economists, and, above all, jurists and judges have fervently debated how best to understand the essential nature of the company. The distinct theories advanced not only provide doctrinal explanations, in point of law, of what the company is but also seek to determine questions, of a normative nature, about how the company should be understood. This fascinating and intellectually rich discourse tends to focus, as a historical matter, on philosophical and metaphysical questions that invoke what is commonly regarded as the ‘fiction/artificial entity theory’ and the ‘real entity theory’ or, more recently, on the economic ‘contractarian/nexus of contracts theory’. However, different theories are not readily comparable as they frequently deal with different aspects of corporate personality. Consequently, their influence upon company law has been to generate misunderstanding and conflict.
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- Debating Theories of the Company and Separate Corporate Personality
- Macmillan Education UK
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- Chapter 8