Commercial Law

Topics: Corporation, Corporations law, Legal entities Pages: 2 (747 words) Published: August 27, 2011
Regards to R v Francis
Keryy Francis has transferred his business into a company to become a separate legal entity (As per Companies ACT 1993 Section 15) The formation of the company is the creation of separate legal entity hence the companies assets are separate from its shareholder / director’s assets and liability The reason behind transferring his business into the company is to avoid himself from being liable for any obligation and protect his assets under the umbrella of the corporate law, therefore his company becomes accepted under the law of “Corporate Veil” which is a legal metaphor that created an invisible barrier between the shareholder / director of the company and the outside world And I believe that Kerry was trying to follow the same concept of Salomon V Salomon’s case to keep him self safe, however Kerry has been convicted of offence under the Misuse Act which means the court should lift corporate veil of his company The court needs to look behind the corporate façade and identify the nature of Kerry’s business; if the court felt that kerry is trying to cover him self behind the company to run illegal deals then the court must lift the corporate veil A similar case to Kerry Francis was Jones v Lipman [1962] 1 All ER 442: Russell Jones said that the defendant company is the creature of the first defendant a device and a sham, a mask which holds before his face in an attempt to avoid recognition by the eye of the equity On the other hand: an opposite case for Re Securitibank Ltd (no.2) [1978] 2 NZLR 136 (CA). The New Zealand court of appeal decided not to lift the corporate veil because there is no evidence of fraud or sham, which is not in Kerry’s case In Conclusion:

Kerry has setup a company to run his illegal business and cover him self under the corporate veil, however the court should look behind the corporate façade and identify the nature of the business and lift the corporate veil on his company and order a forfeiture of Kerry’s vehicle...
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