Companies as Separate Legal “Persons”
People sometimes mistake the directors or shareholders of a company for the company itself. Such a mistake will have legal consequences when a dispute arises. Those consequences may well include and order that a plaintiff pay the costs of the director or shareholder where the proper defendant is a company. It is important to understand whether any agreement or other activity involves a company or a person or some other type of organisation (such as a private members' club or a limited partnership).
The general rule in relation to companies is that a company is an artificial person, separate and distinct from its directors and shareholders, and neither the directors nor shareholders are personally liable for the defaults of the company (save is special narrowly defined circumstances, which form specific exceptions to the general rule).
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