A Piercing Look At Corporate Personality

Business people are generally aware that a company is a separate legal "person" and, by its creation, limits the personal liability of any individual officer, director or shareholder for its behaviour. However, all should be mindful of the exceptions to this general principle both at common law and by statute.

Corporate Separateness

This legal principle has been around since the 1800s, established in the seminal House of Lords decision, Salomon v. Salomon & Co. Ltd. [1896] UKHL 1 where it held, as all modern corporate law statutes also state, a corporation is an entity separate from its shareholders, who are not ordinarily liable for its debts.

The separate legal identity of corporations is routinely upheld. Separation of the legal personality of a corporation will not be disregarded lightly and "corporate separateness is the rule" (Edgington v Mulek, 2008 BCCA 505 at paras 20-21). This separation is also regularly observed as between parent corporations and