Introduction:
The concept of a company being a separate legal entity from its shareholders is a fundamental principle of corporate law. It means that the company is treated as a separate person in the eyes of the law, and it can own property, enter into contracts, and sue or be sued in its own name. In this essay, we will explore this statement using case laws and critically examine it with reference to the principle of ‘lifting of the corporate veil’ supporting with statutory provisions and judicial interpretations.

Separate Personality from Shareholders:
The concept of separate legal personality was established in the landmark case of Salomon v Salomon & Co Ltd. The case involved Mr. Salomon, who had incorporated his business as a limited liability company. When the company went into liquidation, Mr. Salomon argued that he was entitled to be paid as a secured creditor. However, the court held that the company was a separate legal entity from Mr. Salomon, and as such, he was not entitled to be paid as a secured creditor. This case established the principle that a company has a separate personality from its shareholders.

Lifting of the Corporate Veil:
While the concept of separate legal personality is a fundamental principle of corporate law, there are certain circumstances where the courts may ‘lift the corporate veil’ and look beyond the company to the shareholders. The courts will only do so in exceptional circumstances, where it is necessary to prevent the abuse of the corporate form.

Statutory Provisions:
The Companies Act 2006 provides that a company is a separate legal entity from its shareholders. Section 16 of the Act states that a company has the capacity and powers of an individual and that its members are not liable for the company’s debts.

Judicial Interpretations:
In the case of Gilford Motor Co Ltd v Horne, the court lifted the corporate veil and looked beyond the company to the shareholder. The case involved a former employee of the Gilford Motor Company, who had set up a competing business. The court held that the new company was a mere façade for the former employee’s personal business, and as such, the court lifted the corporate veil and held the former employee liable for breach of contract.

In conclusion, the statement that a company has a separate personality from its shareholders is a fundamental principle of corporate law. While the courts may ‘lift the corporate veil’ in exceptional circumstances, this principle is essential to the functioning of the modern business world. The Companies Act 2006 provides statutory provisions for the separate legal personality of a company, and judicial interpretations have established the circumstances in which the courts may lift the corporate veil.