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Question 1 First and foremost, both of the doctrine of separate legal personality and limited liability are the different things but that can help to

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Question 1 First and foremost, both of the doctrine of separate legal personality and limited liability are the different things but that can help to protect the members of the company. The doctrine of separate legal personality means the legal entity is separate from its members as a result of the corporate veil. Since the company is a legal person separate from its' shareholders, the shareholders will not be liable for the company's debts. Therefore, members will be able to enjoy limited liability. Whereas, limited liability means that the liability of shareholders is limited to the amount unpaid on their shares. Limited liability results in the transfer of entrepreneurship risks from shareholders to creditors. The gains are passed on to shareholders if the company does well. But if the company fails, the losses will be on the creditors. A good example of the doctrine of separate legal personality is the case "Salamon v Salomon". The case concerned claims of certain unsecured creditors in the liquidation process of Salomon Ltd, a company in which Salomon was the majority shareholder ,and accordingly was sought to be made personally liable for the debts. Finally, the House of Lords said as Mr.Salomon is fulfilled the condition of the companies act that required 7 members and then the member is actively participating the business. As a result, the incorporation of the company was valid and correct and the doctrine of separate legal personality is therefore reinstated. As the company is existence so the veil cannot be lifted, the creditors can only claim from the company and not Salomon personally because as member or director he gets to enjoy limited liability

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