Corporate Veil

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Corporate veil

Introduction

With the contemporary appreciation of the separate entity principle in courts, it has become increasingly difficult to predict the outcome of cases with precision as in the case of Salomon v. Salomon & Co Ltd (1897). Separate corporate personality has been firmly recognized by common law after the verdict given in the case of Salomon v. Salomon & Co Ltd (1897). It was confirmed that a corporation has legal right, personality, and obligations completely divergent from those of its shareholders (Tweedale and Flynn, 2007, p.270). Courts and legislation nevertheless sometimes “pierce the corporate veil” in a bid to hold the shareholders personally accountable for the corporation’s liabilities. Courts might also “lift the corporate veil” in the conflict of laws in order to decide who actually controls the corporation, and as such accurately ascertain the corporation’s contacts and closest links. This paper critically discusses the concept of lifting of the corporate veil with reference to Salomon v. Salomon and Co Ltd. Consequently, a comprehensive analysis of Lord McNaughton’s statement with reference to the case will be made by giving example of other cases. Finally, the paper addresses the notion of shareholder and corporate liabilities.

The doctrine of incorporation and Salomon v. Salomon & Co Ltd case

A conglomerate is born by listing under the 2006 Act. In the procedure, individuals proposing to craft a conglomerate have to send certain permissible documents to the companies’ registrar. If the documents sent are as par requirement, the companies’ registrar issues a certificate of incorporation, and as such, conglomerate becomes a commercial body. The policy of incorporation remains as a joint legal conception, which hypothesizes an incorporated conglomerate is a separate legal unit distinct from people who are in charge of its activities. The conglomerate’s debts as well as other obligations belongs to



References: Brown, K. (2011). Piercing the corporate veil [pdf]. Applebyglobal. Com. Publishing. Avaiable at: [Accessed 01-02-2012] Bukola, A. (2002). A Critical Appraisal of the Doctrine of Corporate Personality under the Nigerian Company Law. Lagos: Mbeyi & Associates Ltd. Carney, J. W, & Candler, H.J. (1999). Limited Liability [pdf]. Emory University Publishing. Available at: < http://encyclo.findlaw.com/5620book.pdf> [Accessed 01-02-2012] Cohen.J. (2006). Veil Piercing-A Necessary Evil: A critical study on the doctrines of limited liability and piercing the corporate veil. Cape Town: University of Cape Town Publications. Graham,T, & Poole, J. (2010). Switching assets from one shadowy hand to another: piercing the veil of company and trust. London: Oxford University Press.Journal of Trusts & Trustees, Vol. 16, No.9, 705-726. Miller, S.E. (2002).Cases Involving Limited Liability Companies and registered limited Liability Partnerships-Part XVII. Texas: Baylor Law School Publications. Payne, J. (1997). Lifting the Corporate Veil: a Reassessment of the Fraud Exception. Cambridge Law Journal, 56(2), 284-290. Rajak, H. (2008). Director and Officer Liability in the Zone of Insolvency: A comparative analysis. Sussex: University of Sussex Publishing Tweedale, G, &Flynn, L. (2007). Piercing the Corporate Veil: Cape industries and Multinational Corporate Liability for a Toxic Hazard, 1950-2004. London: Oxford University Press.

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