Skip to content

CSEET · Business Laws and Management · Elements of Company Law

Consider the statements. (I) In Salomon v. Salomon & Co. Ltd., the House of Lords upheld the separate legal personality of the company even though Salomon held nearly all the shares. (II) In Salomon's case, the veil was lifted because one person controlled the company. Which is correct?

Only statement I is correct. In Salomon v. Salomon, the House of Lords held that a validly incorporated company is separate from its members despite near-total control by one person. The veil was not lifted, so the claim that it was is wrong.

  1. AOnly statement I is correctCorrect
  2. BOnly statement II is correct
  3. CBoth I and II are correct
  4. DNeither I nor II is correct

Explanation

Salomon established that a duly incorporated company is a distinct person from its members, even if one person holds almost all shares and controls it. The veil was not lifted there, so statement II is wrong.

Did you get it right without looking?

One question tells you little. A timed set on Elements of Company Law shows your real accuracy, how long you take and where you lose marks.

Practise Elements of Company LawFree diagnostic mock

More Elements of Company Law questions