Theories of Corporate Personality
Corporate personality is the recognized idea with the accordance in law that a company is interpreted and known to be an existing single legal entity on its own as it can stand alone away from division of its body members. A personality of a company is basically the legal recognition of its own individual independent presence in distinction from the company’s members like CEO’s, directors, board of officers, creators and even in shareholders. Commonly known as the veil of incorporation.
In terms of theories that corresponds to this fact there are currently 5 principal developed theories; fiction theory, Symbolist theory, Purpose theory, Concession theory and realist theory. These theories were developed in order to explain the existence of corporate personality. To begin with, fiction theory comes up because Pope Innocent IV proposed that legal personalities aside from human beings is part of imagination or fiction. This concept was agreed by many known jurists in their time like Von Savigny and co, as they had experienced the situation of the famous case of Salomon v A Salomon Co Ltd that adopted the idea of fiction theory. Their basis of adopting of the theory was the important notation from Lord Halsbury about whether the synthetic conception of the parliament had been guided by the constitution. In their findings, the company had presented its requirements and fulfilled all the government asked for the Companies Act, and so the company had become and considered in this scenario a person by the law with an sovereign and separate from it respective members.
Next it the theory that can be also called as ‘bracket theory’, which is the Symbolist theory. This theory was raised by Jhering and further studied and conceptualized by Marquis de Vareilles-Sommieres. The idea of this theory is that humans are only the ones with person classification and has the rights, although the personification concept for the company is only through the simplification of task that are related to economic discussions and legal coordination. Also, gives a highlight with the law that it should look clearly on the matters of the state.
The Purpose theory in the other hand is popularly known as theory of Zwecker Mogen and its proponents are Bekker, Brinz and Demilius. This theory discuss that humans have beings are the only ones who both have the rights and can be considered to be person. That the personification or juristic person of one company is not a person but only considered as subject less property just like an ideology that on one can claim an ownership. The property owned by the juristic proponent cannot be part or owned by anybody, but this may be implemented and legally bounded by certain criteria.
Concession theory is concluded to be the next-generation or the alter version of the fiction theory because both have similar point of view with the idea that there are no legal personality except that the fiction theory assumes its basis from the law. Concession theory imposes that the state is much like humans that can give order or within its legal personality from the rest of the group as well as its rights and order, which means that juristic person or the personification is under the jurisdiction is only a concession or creation upon by the state.
Lastly, The realist theory which argues that a legal person is a genuine personality in an extra juridical and prejudicial sense of the word, which only applies to human beings. It also convinced that the subject of rights are those with will and life of its own, comparing to companies that doesn’t hold the defined ‘life’ or ‘alive state’ and so, through the law the company is subjected to rights. In this perspective, the company is viewed as social organism and the humans are the physical organism.
In general, all of these theories of corporate theories embodies the idea that company or organization can be personified, and considered to be ‘person’ only through some considered points like the rights it held but, definitely a far from the definition of person concept of human being.