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Companies are known as legal persons as a outcome of they can enter into a separate contract, or they can possess properties in their own name, sue and get sued by the other parties, etc. Shareholders aren’t the company’s brokers and subsequently cannot bind the company by their actions. So many various options an organization possesses in the entire process.
All legal proceedings against the company shall be brought in its name. Therefore, if a director fails to reveal a breach of his duties in the direction of his company, and in consequence, a shareholder enters into an settlement with the director on behalf of the company, the shareholder would not enter into the agreement if he disclosed it. The distinction between a company and its members just isn’t limited to the principles of privity however pervades all contract legislation. Likewise, shareholders can’t be sued on contracts made by his company. To sue means to convey authorized action towards or to bring a swimsuit in court.
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