Corporate
personality
Corporate personality refers to the legal concept that a
corporation or company is recognized as a separate legal entity,
distinct from its shareholders, directors, and employees. This
means that the corporation has its own legal rights and
obligations, independent of the individuals who own or manage it.
Features of Corporate Personality:
• Separate Legal Entity:
• The corporation exists independently of its shareholders and can
own property, enter into contracts, sue and be sued in its own
name.
• Limited Liability:
• Shareholders of a corporation have limited liability, meaning they
are only responsible for the debts and obligations of the company
up to the amount of their investment. Their personal assets are
generally protected from the corporation’s liabilities.
• Perpetual Succession: A corporation continues to exist
even if the ownership or management changes. It is
unaffected by the death, insanity, or bankruptcy of
shareholders or directors.
• Ability to Own Property: A corporation can own, buy,
sell, and transfer property in its own name. The property
owned by the corporation belongs to the entity itself, not
its shareholders.
• Capacity to Enter Contracts: The corporation can enter
into contracts in its own name, independent of its
members.
• Suing and Being Sued: As a legal entity, a corporation
can initiate legal proceedings or have legal proceedings
initiated against it.
Importance of Corporate Personality:
• Facilitates Business Operations: By treating a corporation as
a separate legal entity, it simplifies business operations, as the
corporation itself can engage in transactions and legal actions.
• Encourages Investment: Limited liability encourages
investment, as investors are assured that their personal assets
are not at risk beyond their investment in the corporation.
• Ensures Continuity: The perpetual succession of corporations
ensures that businesses can continue to operate over long
periods, regardless of changes in ownership or management.
