Vijay and Purnima, husband and wife, started an Organic fertilizer company called Vipur Organic Fertilizer Private Limited. The entire share capital of the company is held by Vijay and Purnima in equal proportions. Vijay

i) In a celebrated case law Solomon v Salomon & Co Ltd (1897) A.C.22, it was established that once a company has been validly constituted under the Companies Act, it becomes a legal person distinct from its members. The House of Lords have observed that, inter alia, the company is a different person altogether different from the subscribers to the memorandum. The same principle has been upheld in a number of cases including an earlier case Kondoli Tea Co. Ltd., (1886) ILR 13 Cal.43 et al., ii) The company being a separate legal person distinct from its members is capable of owning, enjoying and disposing of properties in its own name. In other words, no members can claim ownership of any of the assets of the company. iii) In a noted case H.C.Sastri v Dolphin Canpack Pvt Ltd (1998), the Delhi High Court held that neither the shareholder nor a Director has any right in the property and assets of a company which is a separate juristic person distinct from its shareholders The Court held that the shareholder who buys shares in a company does not buy an interest in the property of the company. In other words, the shareholder as an investor becomes entitled to participate in the profits of the company only as and when the company declares any dividend. iv) In the present case, the shareholders of the company Vijay and Purnima have tried to use the cash balance of the company for paying for their personal expenses to be incurred for an international holiday. v) Hence, as the CFO and Company Secretary of the company, you can decline to pay for the personal expenses of the directors from the coffers of the company.