Toyin Omoniyi There are two kinds of persons in law: natural persons (human beings) and artificial persons (companies). Once a company is registered, it becomes an artificial person. It enjoys the benefits, rights, duties and liabilities which a natural person enjoys. A natural person is a legal entity from birth but an artificial person becomes a legal entity once it has been incorporated.
When you register your company, you are given a Certificate of Incorporation which is like the company’s birth certificate. As soon as the company is registered, the owners and members of the company begin to enjoy a separate corporate personality different from the company.
This corporate personality detaches the company from the individual. It separates the actions of the company from those of its members or from other companies.
This is one of the major characteristics of a company; its members are exempted from any liability which the company may incur. It enjoys rights, protections, privileges, responsibilities, and liabilities in law separately from its members.
It can also enter into contracts, sue and be sued, incur debts, purchase, sell, lease, mortgage or own properties. It also has obligations such as payment of taxes.
Corporate personality is a prerequisite to legal capacity. The owners of the company can enjoy limited liability and risk based on their investments in the company.
There are however limitations to what a company can do even though it is an artificial person. It cannot marry, vote, hold public office, etc.
The concept of separate corporate personality distinguishes a company from its owners. So if a company is found liable for a particular action, the company as an artificial person will be solely liable. The directors and members of the company will not be liable personally.
However, this concept of corporate personality is not absolute. There are certain circumstances when the law will disregard the corporate entity and focus on the individual members of the company. This is referred to as ‘piercing the veil of incorporation’.
This means that the corporate personality which the company would normally enjoy will be waived aside and the individual natural persons in the company such as the directors, shareholders become liable for the actions of the company.
Where this happens, the members no longer enjoy separate corporate personality. Instead, they are affected directly by the actions of the company and the rights and liabilities of the company are treated as the rights and liabilities of the members.
Therefore, it is advisable that artificial persons obey the rules and regulations governing them so that they can enjoy the benefits that come with separate corporate personality.
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