text: Lord Macnaghten said that “The Company is an not the same person when it comes at law from its stakeholders, and though it may be that, after inc, the business is exactly the same as it was before, and the same persons are managing, the same hands receiving the profitability, the Company, is, not in law, the agent of the stakeholders or the trustee for them. Nor are the subscribers as employees, liable in any shape or form, except to the extent and in the manner provided in the Act.”
  One notable statutory exception to the case is that in case a fraud is established in the process of carrying out a business dealing in case of a one-person company, under the Insolvency Rules, the court can ask any erring party to compensate for the damages, to the extent that the court deems fit. On the judicial front, it is also a possibility that the individuals are constituted as principals and the company as an agent.
  This case presented the need to reform the Company Laws. The concept of “Lifting the Corporate Veil” was introduced after this case, wherein no person could commit fraud under the veil of a Company, and thereby avoid liability of repayment towards the fraud so committed. However, a certain amount of proximity is required to be there for lifting this corporate veil. The decision in the case alerted the English Bureaucracy. It was considered a necessity to form another Act or Statute to take care of future repercussions. A new Act called “Preferential Payments in Bankruptcy Amendments Act, 1897” was enacted and passed by the law-making agencies. Under the new Act, certain classes of creditors, or the preferred classes, take priority over the claims of a secured creditor which will be under a floating charge. However, the Act was replaced by another Act called the “Insolvency Act 1986” because the floating charge got converted to a fixed charge. Under the new Act, the priorities of the preferred creditors were promoted ahead of the floating charge holders.