According to section 124(1) of the Companies Act 2001, it illustrates that “a company has the legal capacity and powers of an individual to both within and outside the jurisdiction. So to speak, the company, as a legal entity, must freely assume responsibility for all its capital contributions for its legal acts and the obligations of the company's shareholders are limited to its investment in the company. This “separate legal entity” principle was established in Salomon v Salomon & Co Ltd [1987], as the company was considered to have carried on its business as a legal entity and distinct from its members. He demonstrated that corporate debt belongs to the company but not to the shareholders. Shareholders only have the right to participate in the management but not in the sharing of the company's assets. Furthermore, the case of Macaura v Northern Assurance Co Ltd [1925] demonstrates the distinction between shareholders and company assets. This means that even though Mr Macaura owned almost all of the company's shares, he had no insurable interest in the company's assets. The other recent case is Lee v Lee's Air Farming Ltd [1961] which illustrates that the separate legal entities between employees and directors allow Mr Lee to exercise a dual function. As a result, the company can enter into a contract with the controlling member of the company. Compared to companies