Garret runs a soil testing business. He decides to form a company to take over the business. He is the majority shareholder and one of the directors. Garret sells his business to the company at an inflated price and lends the company RM90,000 to help meet the purchase cost. As security for the loan, Garret arranges a loan over a vacant block of land, which he transferred to the company as part of the business sale. In the first year of operation, the business makes a small profit, but by the end of 2019, it is clear that the business is going down. Garret becomes desperate and works even harder. Finally, while working late into the night, Garret badly injures his hand and needs micro-surgery. However, his efforts to keep the business afloat are in vain, and the company is forced into liquidation. On realisation of the assets, it is found that the company has approximately RM95,000 to go towards meeting creditors' claims of RM210,000. If Garret is the only secured creditor, will he get his RM90,000 back? Can Garret claim workers' compensation? Answer by steps:1.Issue2.Law (use sec 20, below attachment)3.Application4.Conclusion

Effects of incorporation of a company pursuant to Sec 20 Use this Sec . The doctrine of separate legal entity is derived from . Sec 20 - Co. is a body corporate and shall - the case of Salomon v Salomon & Co (1897) where (a) have legal personality separate from that of its the court has established a principle that a company members and (Principle seperate legal entity) and its members are separate persons (b) continue in existence until it is removed from the . This principle is also known as the veil of incorporation. register Doctrine of Separate Legal Entity Facts * The company is said to have a separate legal entity which means that the company can stand on its own . Salomon (S) owned a shoe repair business; he decided to turn this and have to settle its own debt and liabilities. business into a limited company. He created a company called Salomon & Co Lid (S&C); and given the requirements put forth in . The officers in the company cannot be made liable to the Companies Act 1862 which require the presence of at least seven shareholders. He made himself, his wife and his five settle the company's debt and liabilities. children, all owning one share each. . Who is the officer? Refer section 2 (1)