Outline and Critically Discuss the Statutory and Common Law Examples of `Lifting the Veil` on Corporate Personality.
Outline and critically discuss the statutory and common law examples of `lifting the veil` on corporate personality. The corporate veil is a legal concept that separates the company from its shareholders. It separates the personality of the company from the personalities of the shareholders, so that they have separate entities and that the shareholders liability is limited to that they have invested into the company. The corporate veil also protects the shareholders from being personally liable for any of the company’s debts or other obligations, so that the personal assets of its shareholders are protected. However the corporate veil can be lifted if a court determines that a company has not acted in accordance the provisions of corporate legislation or the Companies’ act. A court can also decide to lift the veil if they believe a company is just a sham or in a façade situation, where the company has committed fraud or breached a contract. Therefore if the veil was to be lifted, the company and its shareholders would be treated as the same entity. The companies’ rights and liabilities would be treated as the same as the rights and liabilities of its shareholders. The corporate veil can also be lifted if a court believes a member or members are responsible for the companies’ actions. Therefore if the company where to be sued, the individuals responsible for these activities could be sued as well for damages that they have caused, due to these decisions. The Salomon v A Salomon & Co Ltd case was a landmark in UK company law, and is the corner stone of company law. Mr A Salomon ran his business for 30 years, and decided to turn his business into a public company because his sons wanted to become business partners. Therefore Mr A Salomon, his wife and five eldest children became subscribers, with Salomon having 20,001 of the 20,007 shares and the rest one share each. After strikes and financial difficulties a Mr Edmund Broderip loaned Salomon £5,000 to
Bibliography: http://www.law-essays-uk.com/resources/2-1-essays/adams-v-cape-industries.php Hicks Andrew & Goo S.H., Cases & Materials on Company Law, 5th ed, (2004) Oxford University Press. http://www.lawteacher.net/company-law/cases/ Cases and materials on company law By Andrew Hicks, S. H. Goo 6th edition 2008 p.121 -------------------------------------------- [ 1 ]. www.law-essays-uk.com [ 2 ]. Hicks Andrew & Goo S.H., Cases & Materials on Company Law, 5th ed, (2004) Oxford University Press. [ 3 ]. http://www.lawteacher.net/company-law/cases/ [ 4 ]. Cases and materials on company law By Andrew Hicks, S. H. Goo 6th edition 2008 p.121 [ 5 ]. Cases and materials on company law By Andrew Hicks, S. H. Goo 6th edition 2008 p.121