in this video i want to take a look at the question of independent personality of a
legal company of a limited company many people don't understand especially businessmen and women
who run their own small business don't understand that a company has a separate legal personality
from the directors and from the shareholders so the shareholders own the shares in the business
in the company rather and they appoint directors to run the company but the company has a separate
independent legal personality that's very very important as a general principle but there is
a number of very very practical measures very very practical effects arising from that
and i'm going to look at five or six of them here the first one is to do a debt collection if you're
trading with somebody and there is a limited company involved then you need to be careful
and you need to ensure that you are pursuing the correct entity if the limited company
incurred the debt and did the business with you then in those circumstances the correct defendant
will be the limited company not mick or mary or jane or whoever john with whom you did business or
thought you were doing business you may well have done business with and entered into a contract
with and supplied perhaps the limited company but the limited company remember has a separate legal
personality so you need to be absolutely clear about who owes you the money and may well be the
limited company if that's the case that's the case the second practical effect of limited companies
separate legal personality is in court proceedings an individual can go to court and can represent
himself he can defend himself or bring a claim bring a case institute proceedings however
a limited company cannot do that and cannot do that through its directors or its shareholders
a limited company must instruct a legal professional most instructor solicitor to be
represented in court because a director cannot represent a company in court another practical
effect of the separate legal personality of a limited company is in relation to assets
and liabilities limited company may well have property may well have assets and liabilities
on its balance sheets it may have cash it may have property it may have motor vehicles it
may also have liabilities but all of those assets and all of those liabilities are the liabilities
and assets of the limited company so if a director is involved or a shareholder or whoever
and they're looking to get money out of the company for example the money belongs to the
company if the money is in the balance sheet of the company and therefore there's going to be tax
implications for a director or for a shareholder if it's a small company in getting cash out of the
company but the fundamental point is the company has a separate independent legal personality and
if the company owns the money well then it's the company's property the fourth area where
the independent legal personality the separate legal personality of a company may be important
is when the company is an employer an employee may bring a claim to the wrc or
the labor court or in the civil courts against the employer but it's important that if the
employer is the limited company then it's the limited company that is the correct
defendant the correct respondent to an employment claim and employees who are contemplating bringing
proceedings or bringing claims for employment law breaches need to be clear about that there's
no point bringing a claim against a manager or a supervisor or the owner of the company if in fact
the company was the employer because remember a company has a separate legal personality
personal injury claims again if an employee has an accident and is bringing a personal injury claim
through the courts or through the injuries board against the company who he says is liable
for the injury that he has sustained well then the correct defendant in those circumstances
won't necessarily be the directors or the shareholders of the company but will be the
company so again you see the vital importance the practical importance of a limited company
having an independent legal personality it's absolutely vital to recognize that and finally
the question of partnership i always often meet lads and lassies who talk to me about
being in business perhaps in a limited company with somebody and they're in a partnership and
they're now going their own way and so on and so forth but what they fail to understand and
fail to recognize is a partnership is not a limited company and a limited company is not
a partnership they're two separate different legal entities and in a partnership situation
each partner is jointly and severally liable for example for debts whereas in a limited company the
promoters the shareholders the directors are not liable personally it's the company that is liable
for the debts but just in terms of being in the partnership and so on there is an inconsistency
and lack of congruence as is where it's simply untrue that you're in a partnership when you're
in a limited company because you're not you might think you are you may be carrying on
business as if you are but in fact you're not give a limited company and you may have 50
percent of the shareholding but that's a separate issue anyway i hope looking at those few points
that you can see the vital importance of the independent legal personality that a company has
and that it has not just theoretical importance or significance but has very practical
day-to-day value and importance when it comes to say to all of those issues like
debt collection or employment claims property assets liabilities personal injury claims and
so on hope you find this video useful if you do i'd appreciate if you gave it the thumbs up down
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