McDaid Development (Ireland) Limited Assignment - 1

McDaid Development (Ireland) Limited - Assignment Example The company shall exist in its own capacity so that it can do business, carry out activities, suffer losses, enjoy profits, hire and fire employees and pay the taxes. All these procedures are done under the company’s capacity and no owner, member or shareholder is liable for those activities. The law has recognized the company as a distinct legal entity because it gives the owners the capacity to enjoy limited liability and the risk for their investment in shares and stock. This principle allows the company to be treated individually, not as a person or machine. The company cannot operate itself and so a group of experts is needed to manage the activities under the policies and rules ethically and responsibly. This concept has its roots in the UK House of Lord case of Salomon v Salomon & Co Ltd. Salomon v Salomon & Co Ltd was a case of 1897. Salomon was a sole proprietor who sold his business to a corporation. He was the main shareholder of that company. However, the company’s debts increased and it eventually had to be liquidated. When the case went to the High Court, it was held that Salomon created the corporation solely in order to transfer his individual business to it. This was the prima face and according to this, Salomon and the company were one entity. The company was the agent of Salomon and he was liable for the debts to the unsecured creditors. The House of Lords overturned this decision and held that Salomon and the company were separate entities and he personally did not owe any of the creditors. Since the company had its legal personality, the debts belonged to the company alone. This concept applied to McDaid Development (Ireland) Ltd as the company was a limited liability company. It had one director, one secretary, and one shareholder. The owner and director could enjoy limited liability as the company had its own property and debts. The chapter 2 of part 10 in the Company Act 2006