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Introduction Lee v. Lee’s Air Farming Ltd. (1961) is a landmark case in Company Law that further strengthened the principle of separate legal entity laid down in Salomon v. Salomon & Co. Ltd. (1897) . This case answered an important question: Can the same person be the owner, director, and employee of a company? The answer given by the Privy Council was a clear YES . Background of the Case Mr. Lee was a businessman in New Zealand who started an aerial farming business involving crop dusting through aircraft. He formed a company named Lee’s Air Farming Ltd. The structure of the company was as follows: Mr. Lee held almost all the shares of the company He was the governing director He was also employed as a pilot He received salary for his work as a pilot Thus, Mr. Lee was simultaneously a shareholder, director, and employee of the company. Facts of the Case While performing his duties as a pilot for the company, Mr. Lee met with a fatal accident...

Introduction Salomon v. Salomon & Co. Ltd. (1897) is one of the most important and landmark case laws in company law. This case clearly established the principle that a company is a separate legal person , different from its owners or members. Every student of Company Law—especially under the Companies Act—must understand this case. Background of the Case Mr. Aron Salomon was a leather merchant running a successful sole proprietorship business in England. Later, he decided to convert his business into a limited company. At that time, the law required at least seven persons to form a company. So, Mr. Salomon formed a company with: Himself His wife His five children Each family member took one share, while Mr. Salomon took the remaining shares and controlled the company. The company was named Salomon & Co. Ltd. How the Company Was Structured Mr. Salomon sold his existing business to the company. The purchase price was paid partly in shares and ...