The principle of separate legal personality is a fundamental concept in corporate law, which states that a corporation is a separate legal entity distinct from its shareholders or owners. This means that a corporation can enter into contracts, sue or be sued, and own property in its own name, independent of its shareholders or owners.
Under this principle, the corporation is treated as a legal “person” with its own rights, duties, and liabilities. It is recognized as a separate entity with its own legal existence, separate from the individuals who own or manage it. This means that the corporation can be held responsible for its own debts, obligations, and legal liabilities, without its owners or shareholders being held personally liable.
The principle of separate legal personality provides a number of benefits to corporations, including limited liability protection, increased access to capital, and greater flexibility in managing their affairs. However, it also imposes certain legal and regulatory requirements on corporations, such as the need to maintain proper corporate governance structures, to file annual reports and to comply with various laws and regulations.