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Some years later the company went into liquidation, and Mr Salomon claimed to be entitled to be paid first as a secured debenture holder.
The ‘corporate veil’ surrounds the company of Murphy & Co Ltd and prevents outsiders challenging the operation of the company.In this case, Mr Salomon was the major shareholder, a director, an employee and a creditor of the company he created.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.The plaintiff, who was the major shareholder and managing director of the company, sought to conduct the company’s defence.He sold his business to the newly formed company, A Salomon & Co Ltd, and took his payment by shares and a debenture or debt of £10,000.
Mr Salomon owned 20,000 £1 shares, and his wife and five children owned one share each.
This is how corporations may sue and be sued, and their assets are tracked separately.
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.
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