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Discussion on Corporate Law

   

Added on  2020-05-16

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Running Head: CORPORATE LAWCorporate lawName of the Student:Name of the University:Author Note
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1CORPORATE LAWTable of ContentsIntroduction................................................................................................................................2Discussion..................................................................................................................................2Judicial provisions for lifting the corporate veil....................................................................3Statutory Provisions for liftingthe corporate veil...................................................................8Piercing of Corporate veil in cases of negligence and tort.....................................................9Lifting the corporate veil in the United States.....................................................................10Conclusion................................................................................................................................11Bibliography:............................................................................................................................12
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2CORPORATE LAWIntroductionIt is to be stated that a company has a distinct legal entity from its members as held inthe case [Salomon v. Salomon and Co. Ltd. (1897) A.C 22]. Thus this provision of thecompany having a distinct legal entity can be defined as the veil of Incorporation. The courtsconsider this principle while deciding the liabilities of the company. According to thisprinciple it can be stated that avail exist between the company and its members. It can be saidthat a company has a district legal identity and the liabilities of the company are surely thecompanies and are not shared by the members of the company. However in exceptional circumstances the courts have needed to Pierce this corporateveil in order to reach the person, reveal his true character and assess the liability incurred byhim which are not to be borne by the company (Lam, 2015). The legal and logical Principlebehind piercing the corporate veil is that the law forbids the misuse of the corporate veil. Itcan be said that in circumstances when the courts feel that the corporate veil is being misusedit will pierce through the same to reveal the true nature of the person responsible for thebreach of duty disregarding the principal as stated in the Solomon vs Solomon case. It is to bementioned that that the corporate veil can be lifted by Judiciary as well as statutoryprovisions. Statutory provisions for lifting the corporate veil include fraudulent conduct ofbusiness, misrepresentation of name and reduction in membership. Judicial provisions forlifting the corporate veil include single economic entity, fraud and protection of revenueDiscussionIt is to be it is to be to be mentioned that in the English law the provision ofincorporation of a company by registration was introduced in the Year 1844 first. In 1855 the principle of limited liability was first introduced.
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3CORPORATE LAWHowever, the doctrine laid down in the aforementioned case has been analyzed by thecourts very carefully. It has been held that the on many instances members of the companyrefrain from coming out and prefer to avoid the liabilities incurred by them by staying behindthe corporate veil (Mucha 2017).Campbell v Gordon[2016] UKSC 38 is a Scottish case dealing with the provisions oflifting the corporate veil. In this case the Supreme Court had taken into consideration whethera company’s director could be held personally liable to pay damages to an injured employeewhen the company had failed to pay adequate insurance cover to the employee. It is to bementioned that it was held by 3:2 majority of the court, that the Employers Liability Act 1969cannot be interpreted in any way in order to allow the aggrieved party to claim damages fromthe director. It is to be stated that the decision of the court in this case answered all thequestions about the former remarkable case Richardson v Pitt-Stanley[1995] QB 123.It is to be mentioned that courts in general do not tend primarily the principle ofseparate identity as held in the Solomon skills as discussed above. However, in modern timescourts have realised those fraudulent and mysterious activities can be done by promoters andmembers of Companies hiding behind the corporate veil. It is to be stated that in the generalinterest of the public and the members the courts are required to furnish the persons whomisuse and abuse the principle of corporate veil (Chen, Frankenreiter and Yeh 2015).Judicial provisions for lifting the corporate veilFraud - it is to be mentioned that courts generally tend to remove the corporate veil when itfeels that any fraudulent or mysterious activity is being carried on behind the corporate veil.Two Landmark cases where the corporate veil has been lifted by the courts in order toidentify fraudulent activities are: Gilford Motor Company Limited vs Horne and Jones vslipman. In the first case, Horne was employed in the of Gilford motor company. It was stated
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