Friedman explained: “Every law exists for the inherent liberty of every individual; Therefore, the original concept of personality must coincide with the concept of man. Salmond clarified that a human being is the only natural person, while legal persons regulate any object other than a human being to whom the law attributes personality. States, companies and institutions cannot have the rights of a person, but they are treated as if they were persons.[15] According to this theory, the rights and duties associated with society as an artificial person depend entirely on what the law attributes to it through fiction. As long as businesses exist, there have been discussions about how businesses should be run and who should control them. For many years, the business landscape consisted primarily of retailers who owned and controlled their business. All this changed with the beginning of the Industrial Revolution, an unprecedented period of social upheaval and economic change, especially with the advent of the modern capitalist economy.[8] Meanwhile, there was a huge increase in middle-class wealth, as well as many technological improvements, such as train travel, that required massive investment to operate. This was done primarily through unincorporated associations, although it was possible for a corporation to be formed (i.e. with a separate legal entity from its owners), it was rarely extended to many businesses because the protections and privileges they granted were well protected by the state. The result was that these companies had many shareholders, often spread across most of the country, which would have made any attempt at litigation extremely difficult, so the Joint Stock Companies Act 1844 introduced the formation of companies, although until the Limited Liability Act 1855, which granted the possibility of limited liability for companies, Shareholders could still be held liable for the company`s debts.[9] This encouraged new investments and increased both the number and the geographical distance between shareholders and their companies. It was around the time of the 1929 stock market crash in the United States and the Great Depression that academic commentators began to discuss ownership unbundling, which was the responsibility of shareholders, and control, which was in the hands of managers. [10] This theory is also known as the “parenthesthesis theory”.
It was founded by Ihering and later developed mainly by the Marquis de Vareilles-Sommiéres. Fundamentally, this theory is similar to fiction theory in that it recognizes that only humans have the interests and rights of a legal person.[22] According to Ihering, the concept of legal personality is essential and is only an economical means of facilitating the coordination of legal relations[23]. Therefore, when necessary, it is emphasized that the law should look behind the entity to discover the true state of affairs. This is clearly consistent with the principle of disclosure. According to this theory, rights are not attributes inherent in the human will, and an individual is not a subject of law because he has a will.[24] On the contrary, the will is at the service of the law, and it is the interest of man that protects the law. From the outset, it was deemed necessary to continue an individual`s official function beyond his or her life or mandate. Ordinary lawyers have thus created a second “person” who, although acting under the same name as the flesh-and-blood individual, enjoys a long-term legal existence [5]. It is the only one in the company, which is a personification of official quality. The unity of legal relations is thus guaranteed continuity that it would not otherwise have. “The living official comes and goes,” Salmond said in a now classic passage, “but these descendants of the law remain the same forever.” According to Maitland, the idea originated with a piece of land known as the pastor`s life, which was transferred to a pastor in his official capacity.[6] Difficulties arose in the transfer of the seisin to a pastor for the benefit of the Church. The sole of the company was invented so that the seisin could be estimated there. Maitland went on to show that lawyers still did not use the services of this child of their imagination, because some old rules were getting in the way.[7] In order to clarify the concept of modern legal personality, we must indicate its different dimensions.
The dimensions of modern legal personality explain the nature, perspective and categories of modern legal personality. Some of these theories are: According to this theory, the personality of a company differs from that of its members. A change of member therefore has no influence on the existence of the company. It is important to clearly identify the legal fictional element involved in this process. A legal corporation is different from its shareholders or members. The company can go bankrupt, but its members can stay rich. While there is no doubt that the Salomon case played an important role in company law, the decision in this case did little to give rise to the principle of separation of legal persons. The legal person of beings other than man was recognized well before 1897, when the Salomon case was decided. The concession theory is generally considered to be a derivative of fiction theory, as both theories assert that the enterprise has no legal personality within the state unless it is recognized by the state. However, it is clear that the theory of concession is indifferent to the question of the reality of a society insofar as it focuses only on the source from which the legal power of the company comes. This theory is also known as the theory of opportunism. Similar to fiction and concession theories, it explains that only humans can be a person and have rights.
Other human entities are considered artificial persons and simply function as a legal means to protect or achieve a real purpose.[19] Since companies are not human beings, they can only be considered as legal or artificial persons. According to this theory, the legal person is not a person at all, but simply as a “subjectless” good intended for a specific purpose and that there is a good but no owner. The legal person is not built around a group of people, but is based on object and purpose.[20] The ownership of the legal entity does not belong to anyone, but it can be dedicated and legally bound by certain objects. This theory has established the existence of many corporations or non-profit organizations, such as trade unions, which have been recognized as legal entities for certain purposes and have a continuous fund. It is also closely linked to the legal system, which treats the institution and the Foundation as legal persons. [21] The fictitious theory of the corporation is said to have been promulgated by Pope Innocent IV (1243-1254). This theory is supported by many famous jurists, including Savigny and Salmond. According to this theory, the legal personality of entities other than humans is the result of fiction. Therefore, a company that is not a human being cannot be a real person and cannot have a personality of its own. Originally, the external form according to which societies are a fictitious personality was directed against ecclesiastical bodies.
It was decided that, since the company had met the requirements of the Companies Act, it would become a legal entity independent and separate from its members. [14] In all respects, all human beings are persons, and legally speaking, a being who has rights, duties and responsibilities is a person. The notion of a legal entity is always a topic of discussion. Legal rights or responsibilities of companies such as companies that cannot be described by a single person. A modern legal personality is an artificial creation by law. Let`s discuss the legal theory involved. Lawyers, especially lawyers, have always dealt with the issue of the recognition of companies as legal persons. In jurisprudence, the distinct legal personality of society is based on theories that focus on the philosophical explanation of the existence of personality in beings other than human individuals.
[3] With respect to English company law case-law, it can be seen that, in most cases, the court has adopted the theory of fiction.
