The principle of separate legal entity posits that a company is an artificial legal entity, which has rights and it is subject to duties and obligations. The company exists as a separate independent entity from the members, and has limited liability. This principle denotes that the company is distinct legal being and thus liable for an independent judicial process in law. The principle of separate legal entity of a company is enshrined in sections119, 124 -125 of the Corporations Act 2001 (cth).According to section 1.5.1 of the Corporations Act 2001(cth), a company has a, “separate legal existence that is distinct from its owners, managers, employees, and agents.” This section states that a company has its own possessions, privileges, and duties, and its cash and properties are for the business and ought to be put in use for the purpose of the business. Section 124 states that owners of the company are not answerable for the company’s obligations.