Separate Legal Entities

In law, companies exist independently as separate legal entities.

What is a company in English law?

Companies are what lawyers call 'separate legal entities'. With its own legal identity, a company can own property, enter into contracts and sue (or be sued) in its own right.

They function through their directors and officers, who act as agents for the company. The directors owe certain legal duties to the company. They’re also required to fulfil specific legal obligations, such as maintaining the company 'books' and records to ensure that the company meets its own legal obligations.

Directors and employees are accountable to the company through the board of directors. This is the decision-making body responsible for the strategic and operational direction of the company.

A company's dealings can affect your investment

Some shareholders find it difficult to grasp the concept that company property, assets and money belong to the company and aren’t the property of the shareholders (often also called 'members') — even if the company in question is 100% owned by the shareholders.

Each company in England and Wales is given a unique company number by Companies House and will retain (and be identified by) the same company number throughout its existence — no matter how many times the company changes its name.

You need to do your research and stay abreast of developments in a company, as its dealings can impact your investment as a shareholder.

We can use our expertise to help you stay up to date.