Such a corporation is represented by its members and agents. It is based on organic theory of the State which was supported by fascists to uphold supremacy of the State. Realist Theory 3. The personality of a corporation is different from that of its members. According to this theory, a corporation is a social organism whereas man is a physical organism. Majority of the principal jurisprudence theories on corporate personality contended that the legal entity of the corporation is artificial. Next Newer Post Previous Older Post. Now, there are many theories that show and reflect the nature and scope of this corporate personality as created by law. The fiction theory claimed that the entity of corporation as a legal person is merely fictitious and only exist with the intendment of the law. Unincorporated bodies are not treated as legal persons in English Law. However, unlike a natural person, these corporations have a perpetual existence. The reason, as hlaitland pointed out in his famous lecture It is derived from the Greek word “Persona” which means the actor’s mask through which his voice must be sounded. A corporation, also has a real existence independent of the fact whether it is recognised the State or not[v]. Call us at- 8006553304, Â© 2014-2020 Law Times Journal | All Rights Reserved. It consists of a single person who is personified and regarded by law as a legal person. So as per this theory, only the State can endow legal personalities, not the law. Share to Twitter Share to Facebook. The theory was propounded by Savigny and backed by Salmond and Holland. The existence of a group goes beyond the aggregate of the individualities of persons forming the group. t says that any legal personality can take birth from law itself. If it is assumed that the will of the, corporation is attributed to it by the fiction of law, then it leads one to infer that it must always be lawful as the will conferred by law can never be used for unlawful or illegal ends. What is the value of theories of corporate personality in Corporate Governance? It is the theory that compares co-operative relations between people with the co-operative relations between the stages of one person. For example, Achan's family was (at least in some interpretations of the text) collectively punished for a sin that is … The grant of legal personality is clearly within the gift of the state, for it may be refused to natural persons. Words: 3,714; Pages: 13; Preview; Full text; CHAPTER- 1 INTRODUCTION Personality is a very vague and wide term and it has a variety of meanings. It is claimed that while each theory contains elements of truth, none can by itself sufficiently interpret the phenomenon of juristic person. Further, the common law does not commit to any one single theory of corporate personality. Concession Theory . The fascists gave a twist to this theory so as to make the State as the only institution, which integrates all the other institutions and allows none to survive as an autonomous body, making it supremely autonomous. I am interested in Banking and Structured Finance. The will of the corporation is expressed through the acts of its servants and agents. Salmond also supports the view that a corporation has a fictitious existence. Legal personality is conferred only by law. Let us learns about corporate law first. Other such examples of institutes with corporate personalities include banks, universities, corporate bodies, colleges, an association of persons, etc. In Solomon v. Solomon, the court has held that company has a distinct legal existence from its shareholders and therefore a shareholder cannot be responsible for the acts of company. A corporation is not a fictitious or juristic person; it is simply a series of natural persons some of whom have rights which are different and devolve in a different way from of natural persons in general. Realist theory—The realist theory of corporate personality has the support of Gierke, Beseler, … It is entirely at the discretion and disposal of the State to recognise or not to recognise a corporation as a juristic person. This video elaborates about the theories of Corporate Personality on the basis of which legal personality is granted to corporation. Let us learn some more about corporate personality in jurisprudence. Thus, the advocates of fiction theory also accept the view of concession theorists.. There is an interesting conflict between philosophic theories as to the nature of corporate personality and the insurgent demand of economic forces for a further recognition of those form of organisation which seem so essential to modern life. In view of the coronavirus pandemic, we are making, Sources of Law - Concept of Stare Decisis. Nonetheless, there are five principal theories, which are used to explain corporate personality, namely, the fiction theory, realist theory, the purpose theory, the bracket theory and the concession theory. Based on this survey, I offer some observations about the role of such theories in discourse about corporate law and cor-porate activity. Even though there are many theories which attempted to explain the nature of corporate personality, none of them is said to be dominant. Subscribe to: Post Comments (Atom) See Also.. This is one of the more famous and feasible theories of corporate personality. In his opinion, the endeavour of law in its widest sense is to achieve social solidarity. Juristic personality of corporations must contain three essential conditions.eval(ez_write_tag([[580,400],'lawtimesjournal_in-box-3','ezslot_1',134,'0','0'])); 1. The theorists and jurists have often expressed conflicting views regarding the true nature of corporate personality of corporations. It may be stated that Realist theory is closely connected with Institutional theory which marks a shift of emphasis from an individualist to a collectivist outlook[vi]. [xiii] The corporate person is only a procedural form of a large number of individuals which is recognised to determine legal relations among them. Thus, a corporation is an artificial person enjoying in law, having the capacity with rights and duties and holding property. Even though there are many theories which attempted to explain the nature of corporate personality, none of them is said to be dominant. Thus, Savigny, Salmond and Dicey have also advocated this theory. According to this theory, personal identity is not rooted in the identity of a deep and indivisible Self, but in the relatedness between temporally distinct psychological stages. The individuals forming the corpus of the corporation are called is Corporate Personality. Theories of Corporate Personality. Law Times Journal: One-Stop Destination for Indian Legal Fraternity. It therefore, follows that the corporation would always do intra vires acts and never indulge in acts which are ultra vires, This theory was propounded by Gierke, the great German jurist. Hence, the concept of corporate personality is a singular creation of the law. The courts have constantly used one theory or the other in discussing the concept of corporate personality. It does not indicate when can the bracket be removed and lifted for the purpose of taking note of the members constituting the corporation. Theories of Corporate Personality There are various theories of Corporate Personality which have attempted to describe the nature and authority of it. The law only puts a bracket around them for convenience purposes. Such companies and corporations can sue and even be sued upon. Through this double fiction, the personality of the corporation arises which is different from its members. So here we will look at a few of the popular ones. Theories of Corporate Groups: Corporate Identity Reconceived Virginia Harper Ho* I. I ... ground of Corporate Legal Personality, 35 YALE L.J. L. REV. Theories of a corporate personality deal with what is the functioning of the Legal entity. If a given group is pursuing a purpose which conforms to social solidarity, then all its activities falling within the purpose need to the protected by law by conferring it legal personality[x].eval(ez_write_tag([[300,250],'lawtimesjournal_in-large-leaderboard-2','ezslot_12',116,'0','0'])); The Bracket theory, also called as Symbolist theory, is associated with the well-known German jurist Ihring. Hi guys Tho vedio is second part of topic "personality " in jurisprudence -2. The origin of purpose theory is to be traced back to Stiftung of German Law. The term personality is derived from a Latin word ”persona” which means to speak through, it is also a mask used by actors in Greece and Rome to play different roles or disguise themselves.. Theories of Personality. It is claimed that while each theory contains elements of truth but none by itself sufficiently interpret, the phenomenon on juristic personality. In England, this theory was, supported by E.I. [xiv]He implied that unity of a corporation is a convenient way of deciding cases by the courts of law.eval(ez_write_tag([[970,250],'lawtimesjournal_in-leader-1','ezslot_13',117,'0','0'])); There is an inherent weakness in this theory. If it is assumed that the will of the corporation is attributed to it by the fiction of law, then it leads one to infer that it must always be lawful as the will conferred by law can never be used for unlawful or illegal ends. whichDid you know that in the eyes of the law, to be a legal person you do not have to be an actual natural person? 3. Theories of a corporate personality deal with what is the functioning of the Legal entity. Nonetheless, there are five principal theories, which are used to explain corporate personality, namely, the fiction theory, realist theory, the purpose theory, the bracket theory and the concession theory. This group has a will of its own which is different and distinct from the individual wills of the members. According to this theory legal personality is a symbol to facilitate the working of the corporate bodies. It being incorporated by an Act of Parliament can only be dissolved only as provided therein or by another Act of Parliament. For example, like a synonymous word is put within brackets to give an equivalent meaning, a collective form of a group of different individuals is expressed through a corporation and their separate identities are given a unified form. The law does not believe in personification of these estates or funds, but instead it allocates personality in corporate bodies which administer the estate or fund. Even though these are solely theories which attempt to explain the nature of corporate personality, none of them can be said to be dominant. Though it can sued on its own name, however, it doesnât have a mind of its own and it acts through its designated agents. Have a doubt at 3 am? Thus, the advocates of fiction theory also accept the view of concession theorists.. Theory of Corporate Personality 2. The term personality is derived from a Latin word ”persona” which means to speak through, it is also a mask used by actors in Greece and Rome to play different roles or disguise themselves.. Theories of Personality. Originally, the outward form that corporate bodies are fictitious personality was directed at ecclesiastic bodies. In this, we have different theories which are developed to different personalities. According to him, the corporate will is a figment. The fiction, concession, symbolist and purpose theories supported the contention that existence of corporation as a legal person is not real. The concession theory was extensively used to take over the property during the French Revolution. None of them have fully included the functional basis of the law. Corporate personality is a concept in Christian theology that was articulated by H. Wheeler Robinson.As originally formulated, it dealt with areas of the Old Testament where the relationships between individuals and the groups that they were part of were treated. Savigny regarded corporation as an exclusive creation of law having no existence apart from its individual members who form the corporate group and whose acts by fiction, are attributed to the corporate entity. The fiction theory was pronounced by Savigny[i] and further expounded by Salmond, Coke, Blackstone and Holland.eval(ez_write_tag([[728,90],'lawtimesjournal_in-medrectangle-4','ezslot_7',112,'0','0'])); According to the fiction theory, a personality is attached to corporations, institutions, and funds by a pure legal fiction. The main point lies between the Realist theory and Fiction theory. The origin of purpose theory is to be traced back to Stiftung of German Law[ix], i.e. human beings are persons in real sense and thus a bracket is put around them to indicate that they are to be treated as one single unit when they form themselves into a corporation. The Ownership Theory:- Theories of Juristic Personality. have also conferred legal personality. the foundations or the edifice upon which the structure of the juristic person can be built. According to Gierke, every group has real mind, a real will and a real power of action. Fiction Theory The fiction theory holds that corporations are simply legal fictions, created and sustained by an act of the state. Thirdly, the corporation is attributed will/animus by legal fiction.eval(ez_write_tag([[580,400],'lawtimesjournal_in-medrectangle-3','ezslot_6',111,'0','0'])); A corporation is distinct from its individual members. 2. legal personality is no more than an external expression of its real personality in the society. Fiction Theory: Adherents include; Pope Innocent IV, Von Savigny, Blackstone, Edward Coke, Salmond amongst others. John Marshall who is the Chief Justice of the United States Supreme Court fro… Q: Describe some advantages of corporate personality. Professor Gray denies the reality of collective will[vii]. Before a body of persons can have rights and duties in their corporate character, they have to be incorporated according to law. The principle of corporate personality of a company was recognized in the case of Saloman v. Saloman & Co. Revise With the concepts to understand better. In his view, corporate personality is the creation of arbitrary legal rules designed to facilitate proceedings by and against an incorporated body in law court. The theory closely resembles the fiction theory as it also believes that there is no juristic personality of its members. As per the fiction theory, a corporation exists only as an outcome of fiction and metaphor. It pre-supposes that corporation as a legal person has great importance because it is recognised by the State or the law. Hohfeld has supported this theory on the ground that only human beings are persons and juristic personality is mere creation of arbitrary rules of procedure. This theory says that only human beings are properly be called as „persons‟. This paper highlights two principal theories which are generally applied to explain corporate personality and confer the justification for recognition of corporation as a legal personality. According to this theory, the members of a corporation have certain rights and duties which are given to the corporation for the sake of carrying business transaction in a smooth manner. This concept has been recognised both in English and Indian law. Corporation as an exclusive creation of law. Apart from the general parlance meaning of corporations, entities such as banks, universities, colleges, hospitals, religious institutions etc. Fiction Theory. However, it states that the legal entity has been given a corporate personality or a legal existence by the functions of the State. Corporate personality is a concept in Christian theology that was articulated by H. Wheeler Robinson.As originally formulated, it dealt with areas of the Old Testament where the relationships between individuals and the groups that they were part of were treated. Keywords: corporate personality 1. For corporate theories, the highest virtue is integrity. I have completed my schooling from Delhi Public School R.K.Puram and currently in my penultimate year of law school at Hidayatullah National Law University. 1) Corporate sole and 2) Corporate Aggregate. It has the legal-personality of its own and it can sue and be sued in its own name. Majority of the principal jurisprudence theories on corporate personality contended that the legal entity of the corporation is artificial. They are treated as persons merely by a concession on the part of the sovereign. So a corporate entity is as much a person as a natural person. Introduction The word „Company‟ has no technical or legal meaning. The fiction theory, also named natural entity theory or organic theory, describes that the legal person has no actual reality, no mind, no willing, the legal person exists only in law. My Name is Ruchika Jha and I am from Jaipur, Rajasthan. Download & View Theories Of Corporate Personality as PDF for free. THEORIES OF CORPORATE PERSONALITIES. The best example of this is the corporate personality of a company under the Companies Act, 2013. Legal personality is not fictitious, nor it depends upon State’s recognition. It is claimed that while each theory contains elements of truth, none can by itself sufficiently interpret the phenomenon of juristic person. As a result of this, a company can sue and be sued in its own name, hold its own property and crucially – be liable for its own debts. It presupposes that incorporation is a made-up extension of personality resorted to for ensuring smooth functioning of government and facilitating dealings with property. READING: Gower and Davies, 8 th Edition 2008, Chapters 8 and 9 ; Hicks & Goo 6 th Edition Chapter 3 and Chapter 20.12.; 1. Third, this was notjurisprudential discourse. THEORIES OF CORPORATE PERSONALITY A. My argument for corporate personality builds on the Lockean and Humean theory of personal identity over time. Being an artificial person, it has been given life through the legal clauses and thus it has been deemed to have a corporate personality through law. Thus incorporation is done merely for the sake of convenience[xii]. Legitimate dissent is a distinguishable feature of any democracy: Karnataka HC, Promoter and its position under Company Law, The provisions of Sections 212, 217 and 436 of Companies Act, 2013: A Cumulative Analysis, Supreme Court: Conduct of Public bodies has to be fair and not Arbitrary, Kerala HC: âWorld has progressed, you canât remain in 19th Centuryâ¦â¦â to Central Govt, Punjab and Haryana High Court remarked Freedom of Speech doesnât allow a person to make derogatory remarks against any community or gender, Bombay Bar Association and Lawyers wrote to HC; requested to give them option to choose from virtual & physical hearings, Collector to exercise more caution says Bombay Court in view of covid-19, âNullify election if maximum votes polled to NOTAâ- SC to ECI, SC finds seniority justified in Rajasthanâs Tax Assistant posts cry foul after Departmental Promotees, Senior Advocates HS Phoolka, Rajiv Khosla with âDilli Chaloâ farmers, Supreme Court did not close even for a day during lockdown: CJI Bobde, It cannot be presumed that police officer will be biased merely because he is Facebook friend of complainant: Punjab & Haryana HC, Maneka Gandhi vs Union Of India â Case Summary. The whole theory of incorporation is based on the theory of corporate entity but the separate personality of the company and its statutory privileges should be used for legitimate purposes only. Even though there are many theories which attempt to explain the nature of corporate personality, none of them is said to be dominant. In England, … That bracket is the corporation. What survives is only a fictitious creature of law. The theory is linked with the philosophy of sovereign state According to this theory, the only realities are the sovereign and the individual. A - THE FICTION THEORY • According to some jurists, a corporation has a fictitious personality. This concept has been recognised both in English and Indian law. Legal personhood has never been a self-evident classification that applies only to living human beings. Further the authors have analysed in detail the “five theories of corporate personality namely, Fiction, Concession, Realist, Group Personality Theory and Symbolist Theory”. Being a juristic person is also subject to certain rights and liabilities. Several factors make the discourse on corporate personality theories particularly interesting. It pre-supposes that corporation as a legal person has great importance because it is recognised by the State or the law[viii]. Theories of Corporate Personality Advantages and Disadvantages of Corporation. Thus, Savigny, Salmond and Dicey have also advocated this theory. For contractualist theories, the core virtue is justice. The concession /Grant Theory: that the company derives its personality and power from the concession granted to it by the State. Fundamentals of Business Mathematics & Statistics, Fundamentals of Economics and Management – CMA, Schools of Jurisprudence – Analytical Positivism, Purpose of Law – Justice, and Law Approaches of Different School, Purpose of Law – Purpose of the Supreme Court in the Case of Article 147, Schools of Jurisprudence – Concept of Dharma, helps with the development of trade and industry. It is claimed that while each theory contains elements of truth, none can by itself sufficiently interpret the phenomenon of the juristic person.Nonetheless, there are five principal theories, which are used to explain corporate personality… Following are the principle theories of corporate personality: 1) Fiction Theory Fiction Theory was propounded by Von Savigny, Salmond, Coke, Holland, etc. Theories Of Corporate Personality (Essay Sample) Posted on August 15, 2019 by Leia Doyle Leave a Comment. Purpose Theory: The main exponent of this theory is a German jurist called Brinz. ... THEORIES OF CORPORATE PERSONALITY A. Therefore the essence of this theory is that to be a corporate personality, it should have body (head, limbs & organs), collective will and recognition from law. The legal person is created only in the eyes of the law for a specific purpose. A personality of a company is basically the legal recognition of its own individual independent presence in This is similar to the fiction theory. This personality attributed to the company makes it district from the members who constitute it. It has the ability to enjoy rights, fulfill its duties and hold property in its own name. by admin February 22, 2020 October 31, 2020. Juristic personality of corporations must contain three essential conditions. Now, there are many theories that show and reflect the nature and scope of this corporate personality as created by law. But it must be borne in mind that functional basis of the law cannot be ignored. There are six theories as follows: The fiction theory; The realistic theory; The concession theory ; The organism theory; The ownership theory; The symbolist theory or bracket theory; 1. The American jurist Hohfeld has advocated this theory in a different form. in the corporate autonomy of groups and to the resurrection of the Le~riathan.~~ In England, theoretical discussions of the nature of corporate personality were infrequent until Ilaitland's discussion of Gierke's theories. The theories that have been propounded are philosophical, political or analytical. Likewise, the realist theory is also predominantly political rather than legal in its objectives. THE DOCTRINE ESTABLISHED: SALOMON V SALOMON  AC 22 Thus, corporate personality is a mere creature of law and depends entirely upon the law of the State and the same is not universal. Corporate personality 1. The organization is predicated on systems of law governing contract and exchange, property rights, and incorporation. The main difference lies in the fact that the fiction theory denies that corporate personality has any existence beyond what the state chooses to give it, however, the realist theory holds that corporation is a representation of physical realities which the law recognises. The American jurist Hohfeld has advocated this theory in a different form. Fiction Theory 2. Corporate personality is a fiction of law. By the first fiction, the corporation is given a legal entity and through the second fiction, the corporation is bestowed with the will of an individual person. The existence of a corporation is actually in fact and not based on any fiction unlike the previous theory. 3. Corporate personality is the recognized idea with the accordance in law that a company is interpreted and known to be an existing single legal entity on its own as it can stand alone away from division of its body members. 1 Only those who are legally recognized as persons have the capacity to participate in legal relations. It is entirely at the discretion and disposal of the State to recognise or not to recognise a corporation as a juristic person. That the company is a fictional personality distinct from its members-Salomon V Salomon. Theories Of Corporate Personality (Essay Sample) Posted on August 15, 2019 by Leia Doyle Leave a Comment. Further, this theory has been substantiated by Maitland, Beseler, Lasson, Bluntschli, Zitelmann, Miraglia, Sir Frederick Pollock, Geldat Pollock, Jethrow Brown, etc, A corporation, also has a real existence independent of the fact whether it is recognised the State or not, It may be stated that Realist theory is closely connected with Institutional theory which marks a shift of emphasis from an individualist to a collectivist outlook, Professor Gray denies the reality of collective will, The theory is linked with the philosophy of sovereign state According to this theory, the only realities are the sovereign and the individual. 0 comments: Post a comment. This is similar to the fiction theory. However, in the real world with practical problems, they are of little use. Objective Questions with Answers on Law Of Contracts - 19. It just exists in reality. It is purely analytical & analyses a corp. out of existence. A - THE FICTION THEORY • … There are five theories of corporate personality. Parental behavior is crucial to normal and abnormal development. Different Jurists propounded different theories to explain the nature of Corporate personality, but the best-known theories of a Corporate Personality are as follows 1) Fiction Theory: The Fiction theory was propounded by Savigny. A legal person is the subject of legal rights and duties. Connect with a tutor instantly and get your Watch lectures, practise questions and take tests on the go. questions of corporate law. The word fictitious implies something which is not real, which is exactly what the theory implies an imaginary creation of law.