Mr Salomon owned 20,000 £1 shares, and his wife and five children owned one share each.
Some years later the company went into liquidation, and Mr Salomon claimed to be entitled to be paid first as a secured debenture holder.
For all intents and purposes, all acts taken by these two company types are taken by the owners themselves.
The company becomes a legal person in its own right, distinct from the This was seen in the famous case of Salomon v Salomon & Co Ltd (1897).
The court held that while a human person can represent him or herself in court, a legal person such as a company can only be represented by a solicitor or barrister.The liquidator and the other creditors objected to this, claiming that it was unfair for the person who formed and ran the company to get paid first.However, the House of Lords held that the company was a different legal person from the shareholders, and thus Mr Salomon, as a shareholder and creditor, was totally separate in law from the company A Salomon & Co Ltd.He sold the land and timber to a company he formed and received as consideration all the fully paid shares.The company carried the business of felling and milling timber. Macaura had earlier insured the timber against loss of by fire in his own name. He subsequently sold the plantation to a company of which he was the only shareholder, through the purchase money remained owing to him.