Corporate personality is a creation of law. The legal personality of the corporation is recognized in English and Indian Law. A corporation is an artificial person enjoying the direction of the capacity to have rights and duties and hold property. A corporation is distinguished by reference to different kinds of things which the law selects for personification. The individuals forming the corpus of the corporation are called its members.
The juristic personality of corporations presupposes the existence of three conditions.
1) Firstly, a group or body of human beings must be associated with a particular purpose.
2) Secondly, there must be organs through which the corporation functions, and
3) Thirdly, the corporation is attributed will (animus) by legal fiction.

A corporation that has been incorporated in accordance with the Act is given a corporate personality, which entitles it to use its own name, act in its name, have its own seal, and own assets that are different from those of its members. The members who make up it are not the same ‘person’ as it. Consequently, it has ownership potential. owning property, incurring debts, borrowing funds, keeping money in a bank account, hiring staff, making contracts, and being sued or sued against in the same way as an individual. Its members are its owners, but they may also be its debtors. Even though a shareholder owns nearly the whole share capital, he cannot be held responsible for the company’s actions.

The concept of the corporate personality of a company was recognized in the case of Saloman v. Saloman &Co.Ltd. The
facts of the case are as such: Solomon was a leather merchant. Due to the overwhelming response to his leather business, he decided to convert his business into a Limited Company- Solomon & Co. Ltd. The company consisted of Solomon, his wife and five of his children as members. The company purchased the business of Solomon for £39,000, the purchase consideration was paid in terms of £10,000 debentures conferring a charge over the company’s assets, £20,000 in fully paid £1 share each and the balance in cash. Within a year of incorporation of the company, it ran into a financial crisis and liquidation proceedings
commenced. The assets of the company were not even sufficient to discharge the debentures (held entirely by Solomon
himself). And nothing was left for the unsecured creditors.
The House of Lords held that the company has been validly constituted since the Act only required seven members to hold at least one share each. It said nothing about their being independent, or that there should be anything like balance of power in the constitution of the company. Hence, the business belonged to the company and not to Solomon. Solomon was its agent. The company was not agent of Solomon.

The shareholders are not the agents of the company and so they cannot bind it by their acts. The company does not hold its property as an agent or trustee for its members and they cannot sue to enforce its rights, nor can they be sued in respect of its liabilities. Thus, ‘incorporation’ is the act of forming a legal corporation as a juristic person. A juristic person is in law also conferred with rights and obligations and is dealt with in accordance with law. In other words, the entity acts like a natural person but only through a designated person, whose acts are processed within the ambit of law [Shiromani Gurdwara Prabandhak Committee v. Shri Sam Nath Dass AIR 2000 SCW 139].

The decision of the Calcutta High Court in Re. Kondoli Tea Co. Ltd., (1886) ILR 13 Cal. 43, recognised the principle of the separate legal entity even much earlier than the decision in Salomon v. Salomon & Co. Ltd. case. Certain persons transferred a Tea Estate to a company and claimed exemptions from ad valorem duty on the ground that since they themselves were also the shareholders in the company, it was nothing but a transfer from them in one name to themselves under another name. While rejecting this Calcutta High Court observed: “The company was a separate person, a separate body altogether from the shareholders and the transfer was as much a conveyance, a transfer of the property, as if the shareholders had been totally
different persons.

Conclusion:

From the date of its incorporation, a company becomes in law a different person altogether from the member who composes
it. Thus, an incorporated company has a legal personality distinct from that of its members from the date of its incorporation.

A company is an artificial person according to the law. It is capable of exercising rights, carrying out obligations, and holding property in its own name. As a result, the law was the only source of inspiration for the idea of corporate personality. The corporate personality of a corporation under the 2013 Companies Act is the best illustration of this. According to the legislation, such a corporation has its own legal identity. The members and representatives of such a corporation serve as its representatives. However, unlike a regular person, these corporations remain indefinitely.