Company As A Company Case Study

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CONCEPT OF THE COMPANY AS A SEPARATE LEGAL ENTITY A company is an artificial legal person. There are two or more persons to achieve the general business goal. As a separate legal entity, the entity was separate from the company shareholders. Hence, the liabilities or debts of the company were unrelated to the company shareholders. The shareholders were just responsible to the unpaid amount on their shares. There are two types of companies which are Private Companies and Public Companies. Private Companies is a registered company. There is always a word “Sendirian Berhad” end with its company name under section 22(3). A Private Limited Company has a maximum 50 number of members. Under section 15, it restricts the right of transfer of its…show more content…
He has a covenant with the plaintiff’s company which stated to not compete with the plaintiff. After he left Gilford Motor, he created a company - JM Horne and Co Ltd and sold spare parts of Gilford Motor cars, and made his wife as a director and shareholder. The company was formed to avoid bearing the consequences of the agreement and at the same time having business competition with plaintiff. Farwell J who was the Trial judge, managed to know that the company was being formed in this way to avoid being liable for the breach of the agreement. In reality, Mr Horne was using the company as a channel to carry his business. This has resulted in Gilford Motor brought an action to court alleging that the company was used as a tool of fraud to conceal Mr Horne's illegal…show more content…
According to the case Smith, Stone & Knight Ltd v Birmingham Corporation [1939], the parties are having problem for the compensation to be paid for the acquisition of land. Birmingham Corporation,a local council has compulsorily purchase a land which is owned by Smith Stone. However, the land was rented out on yearly tenancy to Birmingham Waste which is the subsidiary company of Smith Stone. The local council claimed that Birmingham Waste has no right to claim compensation as a tenant. However, Birmingham Waste are said to be acted as an agent and a separate department for Smith Stone as they do not have no separate book of account and not even any staff. The dispute arises when Smith Stone wanted to claim compensation for disturbance to the business on the acquired land.
The court held that there are implied agency relationship between the holding and subsidiary companies and therefore the Smith Stone are said to own the business carried by Birmingham Waste. Smith Stone is entitled to claim compensation for disturbance caused by the local council to the subsidiary

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