Separate corporate personality
Once incorporated under the applicable law, a company can hold property, enter contracts and incur obligations in its own name. Its assets and debts are not automatically those of each shareholder. This separation also supports continuity when ownership changes. Limited liability and separate personality are related but distinct: particular statutory obligations, guarantees or personal wrongdoing can create personal liability without treating the company and person as identical. The effect depends on the jurisdiction and legal form.
Worked example
A company buys a machine in its own name. The machine belongs to the company; a shareholder does not automatically own a fraction of that specific asset.
Common mistake
Assuming separate personality makes directors immune from their own legal duties or guarantees that a company lasts forever.
Where it appears in your exams
| Qualification | Exam | Relationship | Period |
|---|---|---|---|
| ACCA | LW (ENG) | Direct | September 2026–June 2027 |