discussion on Saloman v A Saloman & Co Ltd

The 19th Century case of Saloman Vs. Saloman & Co. (1897) A.C. 22 H.L

Saloman’s case is very important in Modern Company Law. It recognised the principle that the Company is a legal person and is quite distinct from the shareholders and the directors.

Facts of the Case -

Saloman was a leather merchant with a degree of success in business. He decided to convert his sole-proprietorship business into a limited company and proceeded to form Saloman & Co. Limited.

There were 7 shareholders in all. They being - himself, his wife and 5 children. The Company purchased the business of the sole-proprietorship for 39,000 Sterling Pounds. This sum was raised in the following manner:-

10,000 by debenture
20,000 in fully paid shares of 1 pound each....