🔴 What is a separate legal entity
A separate legal entity is a “legal person” i.e. a person recognised by law. Separate from persons who govern and/or own the company, the entity has its legal rights and duties.
🔴 A separate legal entity has the following essential characteristics:
🫵🏻 It can buy, sell, and own any type of property under its own name,
🫵🏻 Contract legally binding agreements, and
🫵🏻 Sue in its own name and be sued in its own name.
🔴 As a result of these characteristics, independent legal entities can:
🫵🏻 Owe money (which is created by a contractual relationship) by lending to others, they become creditors
Own assets:
i. Tangible assets: land, buildings, furniture, etc.
ii. Intangible assets: intellectual property rights: designs, trademarks, trade secrets, etc.
🫵🏻 Be responsible for paying taxes (a statutory obligation)
From a legal standpoint, all legal entities that can accomplish what a human can are classified as separate legal entities.
For instance, a company is a group of two or more people who work together to achieve a similar commercial goal. It is a “separate legal entity” with a unique identity from its members. A company can possess property in its own name, sue and be sued in its own name, and enjoy everlasting succession as a legal entity, among other things.
However, because a company is an artificial person, it can only act via its agents, which are the Board of Directors. ‘Incorporation of a company’ is the legal process of establishing a corporate company as a separate legal entity from its members. To start a company, a group of people must get a certificate of Incorporation from the Registrar of Companies (ROC).
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🔴 In this video - #padhakulog
Teacher's Name - CS Payal Popli
Topic - Meaning of Separate Legal Entity #padhakulog
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