A legal entity is not a person but is recognized as a person under the law. This includes things, property, institutions, groups, etc. The law treats them as legally binding persons or entities, just like natural persons. Legal personality requires personalization first, but personalization generally does not mean that a person has been granted legal personality. We speak of banks (judges) and cabinets (ministers) as individuals, but not as corporations. Legal personality arises when the law goes beyond a collection of people or things and recognizes a single entity that represents a collection of people or things but is different from them. There is a clear distinction between the people who make up a group corporate).


Corporate Personality is a legal term. The corporate identity hypothesis basically states that corporations have a distinct legal identity with their members. The concept of corporate identity is used in both British and Indian law. A company’s creditors sue the company to get their money back. You cannot sue individual members. Similarly, the Company is not liable for the individual obligations of its partners/partners and the Company’s assets are used only for the benefit of the Company. He has certain rights and obligations, such as the right to own property, the right to enter into contracts, the right to sue on behalf of the company, and the right to sue.


In corporate identity theory, individuals and collective entities are legally treated as natural persons. These theories may include metaphysical developments about the existence or practical applications of such entities. They have political implications as they try to address the consequences. existence of such a legal entity.

Fiction Theory: Savigny proclaimed the Fiction Theory, which was elaborated by Thurmond, Coke, Blackstone, and Holland. According to fiction theory, pure legal fiction gives organizations, institutions, and finances character. The character of a company differs from the character of its constituents. In the first fiction, the corporation is given corporate status, and in the second the corporation is blessed against her one person’s will. As a result of this double illusion, the company develops a different personality than its members.

Realist Theory: Advocated by Gierke, a prominent German jurist. According to him, all organizations have real consciousness, real will, and a real capacity for action. The existence of a group is more than the sum of the individual personalities that make up the group. According to this theory, each group, whether political or social, has its own character. Companies have substance, whether or not they are authorized.

Bracket Theory: Symbolist theory, also called Bracket Theory, is associated with the famous German jurist Ihring. This theory tells, legal personality is a symbol that helps companies work more efficiently. According to this view, members of society have certain rights and duties, which are entrusted to society to facilitate transactions. It is usually not practical or easy to refer to many members of a company.

Concession Theory: According to this view, the sovereign and the individual are the only realities. They are considered individuals only by sovereign concession. Only a law can confer legal personality. We assume that the company as a legal entity is of great importance as it is recognized by the state or by law. According to this theory, corporations are state concessions to corporations. Approval or disapproval is entirely at the discretion and discretion of the country. This is similar to fiction theory in that it claims that none of its members have legal personality.

Purpose Theory: The German jurist Brinz is the main proponent of this theory. The term is based on the assumption that a company can be recognized as an individual for some reason. It is based on the premise that only living human beings can be subject to rights and obligations. To address this, the theory argues that a firm’s personality is necessary for it to be viable and to have rights and obligations. The foundation or building on which a corporate building can be built can be traced to foundations under German law. If an association pursues the goal of social solidarity, all actions falling under this goal be protected by law by giving the association a legal personality.

Organism Theory: According to this theory, corporations resemble organisms, with (member shaped limbs), heads (superior authorities), and other organs. In addition, individuals have a head, body, and feet that serve to satisfy their desires and fulfill their functions. According to theory, corporations have their own will and body, as well as legal rights and obligations. You don’t have to be human to have legal rights. A body with a will and life of its own can haven’t only legal duties and obligations but also legal rights.

Ownership Theory: This theory was developed by Bzinz, Bekker, and Demelius and extended by Planiol. According to this idea, people, not companies, should have legal rights. It also states that a legal entity or company is never a person. It is a property without a subject that is a legal invention, and this fictitious identity exists only for the purpose of owning common property. Such a personality is just a kind of property. Because of their possessions, these individuals can enter into contracts and take legal action just like real humans. This ownership theory makes sense when it comes to real estate and money owned by corporations. In addition, people may only have certain rights and obligations. 


This article highlights the meaning of corporate personality and its inclinations. There are basically two types of companies Corporation Aggregate and Corporation Sole. A corporate collection is a relationship of many people or collections. It can be imperceptible, godlike, and based only on intent and law. The death or debt of an individual does not affect the organization. In this article, briefly reviewed five corporate hypotheses:  Fiction Theory, Realist Theory, Bracket Theory, Concession Theory, Purpose Theory, Organism Theory, and Ownership Theory.

Author’s Name: Stuti Kushwaha (University of Lucknow)

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