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23-Mar-2019 23:44

He sold the land and timber to a company he formed and received as consideration all the fully paid shares.The company carried the business of felling and milling timber. Macaura had earlier insured the timber against loss of by fire in his own name. He subsequently sold the plantation to a company of which he was the only shareholder, through the purchase money remained owing to him.If a corporation is sued, then the owners will not have their personal belongings at risk unless those belongings were purchased with illegal returns from the corporation.In a sole proprietorship or partnership, the owners personally liable.The ‘corporate veil’ surrounds the company of Murphy & Co Ltd and prevents outsiders challenging the operation of the company.However, although the principle of separation is central to company law, there are a number of situations when the company and its members can be identified together and treated as the same.

Some years later the company went into liquidation, and Mr Salomon claimed to be entitled to be paid first as a secured debenture holder.The plaintiff, who was the major shareholder and managing director of the company, sought to conduct the company’s defence.



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