Explain the concept of the separate legal entity of a company from its owner

Expert Solution

Seperate Legal Entity

It is one of the most distinctive feature of a company in comparison with another forms of business organisations. That is when you register a company it becomes a seperate legal individuality with powers and characters that are similar to human beings.

A company can raise loans, advance money, enter into contracts and incur liabilities in it's own name. That is , the company has a separate existence from that of it's members.

Members of a company can also enter into contract with the company. This can prove that the company has a distinct personality from persons who forms it.

A property can be owned, enjoyed and disposed by a company in it's own name. Even if the shareholders are the person's contributing the assets to the company, the company is the one and only rightful user of such assets. The shareholders never own, separately or privately, company's property. This explains the concept of separate legal entity of a company from it's owner.

ekkarill92 answered 2 years ago

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