The principle in Salomon’s Case that a company is a legally different person from those who control it represents the current law in Ireland.
For example, if I form a company called ‘Murphy & Co Ltd’ in which I own one hundred per cent of the shares and am a director and employee, legally speaking the company and myself are two distinct people.
The liquidator and the other creditors objected to this, claiming that it was unfair for the person who formed and ran the company to get paid first.
However, the House of Lords held that the company was a different legal person from the shareholders, and thus Mr Salomon, as a shareholder and creditor, was totally separate in law from the company A Salomon & Co Ltd.
The court held that while a human person can represent him or herself in court, a legal person such as a company can only be represented by a solicitor or barrister.
It is quite common in Ireland for one person to have such a variety of roles and still be a different legal entity from the company. Lee formed his crop spraying business into a limited company in which he was director, shareholder and employee. Lee was self-employed and thus not covered by the legislation. Lee and the company he had formed were separate entities, and it was possible for Mr. The following case is similar to Salomon and Lee, but the principle of separate personality worked to the disadvantage of the plaintiff.
When he was killed in a flying accident, his widow sought social welfare compensation from the State, arguing that Mr. The defendant company was involved in legal proceedings but did not have enough money for legal representation.
Mr Salomon owned 20,000 £1 shares, and his wife and five children owned one share each.
Some years later the company went into liquidation, and Mr Salomon claimed to be entitled to be paid first as a secured debenture holder.
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.