The principle of corporate personality is the fact stated by the law that a company is

recognized as a legal entity distinct from its members. A company with

such personality is an independent legal existence separate from its shareholders,
directors, officers and creators. When a company receives a certificate of
incorporation it has a ‘separate legal personality and it becomes a legal person in its
own right. The legal rights and obligations are wholly separate from its owners,
own entitlements and duties. Property acquired by the company belongs to it and not
to its members. This is famously known as the veil of incorporation.

The law has extended the concept of persona to a juristic persona which means a
company is also given the capacity to have legal rights and also incur legal
obligations apart from its members. This means a company is a right and duty
bearing unity or entity which is capable of acquiring legal rights and also subject to
legal duties and responsibilities just like a natural person. A company enjoys
separate existence in the eyes of law which is almost comparable to that of a private
individual.

The corporate personality of a company is acquired on registration of a company,

this means a company can be sued in its own name and the property of the company
is not of the shareholders or members and its debts are also not the debts of the
shareholders. As a separate legal person, a company will not be affected by changes
such as death, transfer of shares or resignation of any members but will continue to
exist despite the number of times the changes of membership occur. Even if all the
members die, it will not influence the privileges, immunities, estates and possessions
of a company.
This principle was endorsed emphatically in the case of Salomon v. Salomon and
Company Limited. One of the consequences of forming and incorporating
a registered limited liability company is that the members create a body which is
recognized as having an independent legal personality
Site case,facts and held

The Salomon principle provides that a company is essentially regarded as a legal

person separate from its directors, shareholders, employees and agents. This means
as a separate legal entity, a company can be sued in its own name and own assets
separately from its shareholders. However, there are certain circumstances when the
courts will deny the people who run the company the advantage of hiding behind the
corporate veil. In these instances the veil of incorporation is said to be pierced or lifted.
The Courts may pierce the corporate veil and remove the protection of
the Salomon principle to prohibit fraud. Uplifting or piercing the corporate veil is
the process whereby the law disregards the operation of corporate status and
imposing personal liability to the individuals who are responsible for the activities
of the company.

There are several instances where the law is prepared to disregard the corporate
personality. Section 318 being the most important and vivid in showing that the veil
of corporate personality is not inviolate, it provides that the directors and
shareholders of the company are to be held responsible for fraudulent conduct of
business, if it appears that any business of the company was carried out either
recklessly with gross negligence or with intend to defraud any person or for any
fraudulent purpose. In the case of Mayhew vs Alcock 1991. Some of the more
familiar common law exceptions include the following: