Corporate Personality

A corporation is an abstraction, it has no mind of its own any more than it has a body of its own; its active and directive will must consequently be sought in the person of somebody who for some purposes maybe called an agent but who is really the directing mind and will of the corporation, the very ego and centre of personality of the corporation. Per Viscount Haldane L.C in Lennards carrying Co.V Asiatic Petroleum Ltd (1915) AC 705 at 713-714. The concept of corporate personality, postulates that an incorporated company is as a matter of law a separate legal entity distinct from the individual(s) who are its shareholders and directors and are in control of its operation. The business, debts and other obligations of the company is the company’s business and not the shareholders or directors.
The doctrine of corporate personality was laid down in Salmon V Salmon and Co. Ltd (18 .97) Ac 22.
In that case, Salmon, a leather merchant and boot manufactures formed a limited company to take over his business. Salmon and six other members of his family subscribed to its memorandum for one share each, two of his sons were appointed directors. The company paid about £39,000 to Salmon for the business, the mode of payment being to give Salmon £10,000 in debentures secured by a floating charge on the company’s asset and £20,000 shares of £1 each, the balance £9000 was paid to Salmon in cash. The business did not prosper and when it was wound up a year later, its liabilities including debenture debt exceeded its asset by £8,000. The liquidator representing the unsecured creditors claimed that the company’s business was in actual fact still Salmons liability for debts incurred in carrying it on and therefore Salmon should be ordered to indemnify the company against its debts, and payment of the debenture debt to him should be suspended, until the company’s other creditors are paid. The trial judge held that all the subscribers of the memorandum (except Salmon) held their shares as mere nominees because Salmon’s motive in forming the company was to use it as  an agent to manage his business for him.
Nigerian courts had at various times upheld the doctrine of corporate personality. This principle was celebrated in the case of Marina Nominees Ltd V. Federal Board of Inland Revenue (1986) 2 NWLR (Pt 20) Pg 61. In that case Aniagolu JSC (as he then was) stated thus:
“….The truth, however, is that it is a company registered under the Companies Act having its full legal status on the principles enunciated in salmon v Salmon and Co. Ltd (Supra), and mu st be subject to all incidents of incorporation.
The doctrine further postulates that only a company can bring an action or any wrong done against it, since it has its own name by virtue of its incorporation. The company is at law a different person altogether from the subscribers to the memorandum.

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