Question

Which of the following was one of the issues that was resolved by the decision in Salomon v.
Salomon Ltd., [1897] A.C. 22 (H.L.)? Under Canadian System)
a. whether incorporation can be undertaken to limit risk of business bankruptcy
b. whether shareholders are prohibited from becoming highly protected creditors of the company
c. whether companies with few shareholders could be recognized as separate legal entities
d. whether shareholders are totally responsible for their own as well as the entity’s obligations

Answer 1

Salomon v. Salomon Ltd. case was one of the milestone cases in the history of law. The issue in the case was of the responsibilities of the shareholders in the entity. The case was registered to resolve whether shareholders are completely responsible for their own obligation as well as the obligation of the entity. Therefore, the correct option is (d). All other options are wrong.