LEGAL PRINCIPLE: COMPANY LAW — Corporate Personality — Distinction Between Natural and Artificial Person
PRINCIPLE STATEMENT
A natural person is distinct from an artificial person (company). The company is in law a person distinct from the person who formed it with his family members. The Salomon principle affirms corporate legal personality separate from its members.
RATIO DECIDENDI (SOURCE)
Per Niki Tobi, JSC, in Okolo & Anor v. UBN Ltd (2004) NLC-1611998(SC) at pp. 20–21; Paras E–A.
"The 1st plaintiff is a natural person while the 2nd plaintiff is in law an artificial person. The dichotomy is important... In the often cited English case of Salomon v. Salomon and Co. (1887) AC 22, the House of Lords held that the company is in law a person distinct from Salomon who formed the company with his wife and five children."
EXPLANATION / SCOPE
A company (artificial person) is legally distinct from natural persons who form or own it. The Salomon principle establishes separate corporate personality. The principle applies to company law. The rule prevents piercing the corporate veil without justification. The company can sue and be sued in its own name. Members are not personally liable for corporate obligations.
