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18TH SEPTEMBER UPDATE

NOTE
Please do not consider this write-up as notes. This is a brief update about todays class. You
can use it as a ready-reference to recollect what we discussed in class and as a base for
further study and preparation of notes. Please use other books and resources to substantiate
and add to the following discussion. Any claim that anything in the exams was not
mentioned in these updates shall not be entertained.

We had a brief (or I do say a very brief) discussion on the theories as to the nature of
Artificial Legal Person. There are two main theories regarding this: A) Fiction Theory; and B)
Realist Theory. However, before going into the analysis of these theories, we briefly talked
about the reason as to the necessity of having the idea of Artificial Legal Person [I
discussed this in Section A and not in Section B. I would have discussed this in section B
also, but it looked as if everyone was about to fall asleep. So, I decided otherwise].
The following table can be used to understand the two theories and the conflict between
them:

THEORY

FICTION

MAIN FEATURES

ASSOCIATED

SCHOLARS

SCHOLARS

ANALYSIS

Corporations

Kelson,
mere fictions.
Since it is difficult Holland
to determine the

are Savigny, Salmond,

collective will of
the
members/sharehol
ders who form the

amd

company,

the

same cannot be
said

to

be

perceived in the
same

as

other

ALPs. Therefore,
it can be said that
a corporation is a
figment

of

imagination.
REALIST

The scholars belonging to Ihering and Gray.


this school believe that
corporation

is

more

than a fiction,
They believe that the
purpose for which the
company is established
reflects the collective will
of its shareholders.
For

example,

the

memorandum
association

of
that

the

company has to submit at


the time of registration
reflects the aim, objective
and the purpose of the
company

and

in

this

regard same can be said


to be the reflection of the
collective will of the
company.