Business Law
Research Paper:
The law laid down in Soloman v. Soloman and Co. is often considered the source on the basis of which the jurisprudence of corporate personality has been written world over.
However, the history of corporate-commercial litigation has witnessed situations where in the Courts have gone beyond the corporate cloak and analyzed the working and the motives of the members or directors of the company: In doing the same, the Courts have evolved the concept of lifting or piercing the corporate veil.
Required
Critically discuss this statement citing the relevant case law.
Over the years the courts have used the concept of lifting the veil against the doctrine of cooperate personality which is key in the case Salomon v. Salomon & co. ltd., the concept of corporate personality has led the courts to specify under what circumstances the veil should be lifted.
Corporate (legal) personality arose from the activities of organizations such as religious orders and local authorities who were granted rights by the government to hold property and sue and be sued. Over time the concept began to be applied to commercial ventures with a public interest element such as rail building ventures and colonial trading businesses. However, modern company law only began in the mid- nineteenth century when a series of Companies Acts were passed which allowed ordinary individuals to form registered companies with limited liability.
The case of Salomon v. Salomon & co. ltd., (1897) A.C. 22., is an early example of the doctrine of separate or corporate personality. This case strengthened the fundamental concept that a company has a legal personality or identity separate from its members. A company is thus a legal 'person '. It has its own rights, duties and assets which are different and distinct from those of its members. In addition, a company can sue and be sued in its own name, hold its own property and crucially be liable for its own debts. It is this
The law laid down in Soloman v. Soloman and Co. is often considered the source on the basis of which the jurisprudence of corporate personality has been written world over.
However, the history of corporate-commercial litigation has witnessed situations where in the Courts have gone beyond the corporate cloak and analyzed the working and the motives of the members or directors of the company: In doing the same, the Courts have evolved the concept of lifting or piercing the corporate veil.
Required
Critically discuss this statement citing the relevant case law.
Over the years the courts have used the concept of lifting the veil against the doctrine of cooperate personality which is key in the case Salomon v. Salomon & co. ltd., the concept of corporate personality has led the courts to specify under what circumstances the veil should be lifted.
Corporate (legal) personality arose from the activities of organizations such as religious orders and local authorities who were granted rights by the government to hold property and sue and be sued. Over time the concept began to be applied to commercial ventures with a public interest element such as rail building ventures and colonial trading businesses. However, modern company law only began in the mid- nineteenth century when a series of Companies Acts were passed which allowed ordinary individuals to form registered companies with limited liability.
The case of Salomon v. Salomon & co. ltd., (1897) A.C. 22., is an early example of the doctrine of separate or corporate personality. This case strengthened the fundamental concept that a company has a legal personality or identity separate from its members. A company is thus a legal 'person '. It has its own rights, duties and assets which are different and distinct from those of its members. In addition, a company can sue and be sued in its own name, hold its own property and crucially be liable for its own debts. It is this
References: David Kelly et al., Business Law (2011), page 152-153 C.F Butler & Associates. 2009. http://www.cfbutlerandassociates.com/liftingtheveilofincorporation2.html Sadhu, A., (n.d.) Lifting the Corporate Veil. [online] Available at http://www.legalserviceindia.com/articles/corporate.htm Ganguly, A, (n.d) Lifting the Corporate Veil. [online] Available at http://www.lawteacher.net/business-law/essays/article-on-lifting-of-the-law-essays.php http://www.quora.com/What-are-possible-reasons-for-piercing-the-corporate-veil-of-an-LLC-involved-in-a-lawsuit http://www.fraudauditing.net/ShellCompanies.pdf http://www.investopedia.com/financial-edge/0110/five-famous-tax-cheats.aspx#axzz2MLvUgJKK