Directing Mind and Piercing the Veil

This assignment delves into two crucial aspects of business law: 'Directing Mind and Will' and 'Piercing the Corporate Veil.' It explains how directors are considered the directing mind of a company, holding authority derived from agency relationships. The assignment further explores the concept of piercing the corporate veil, where courts disregard the legal separation between an organization and its stakeholders to hold them liable for illegal activities or injustice. Relevant case studies like Aderemi v Lan and Baker Nigeria Ltd and Sugarloaf Hill Nominees Pty Ltd v Rewards Projects Ltd are discussed to illustrate these principles.

Running Head: LAW of BUSINESS ORGANIZATION
Law of Business organization

LAW OF BUSINESS ORGANIZATION 1
Directing mind and
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LAW OF BUSINESS ORGANIZATION 2
Directing Mind and Will
A company is created through its member and lawfully it hold distinct lawfull entity from
its members. Law considered a company is an artificial being with certain rights are
responsibility. As per the Ferran (2011), the board of directors of the company can be
recognized as company’s directing mind and will. The board of directors gains their rights from
the deal of agency in middle of them and company.
Further an employee of the company can be recognized as the directing mind and will of
the company if actual authority for the interest of the company has been given by directors to
an employee. The power or authority surrogate should be explained or implied by the
administrators. The employee taking action beyond their power will be responsible personally.
In the case of Aderemi v Lan and Baker Nigeria Ltd (2000)7 NWLR Pt. 663 at 51, the
senior authority of the company gain their power to take an action from the board of directors
for the interest of the company and determined them to be the directing mind and will of the
company
In the recent case of Sugarloaf Hill Nominees Pty Ltd v Rewards Projects Ltd (2011)
WASC, the investor lost their assets in the investment scheme of the company , and they suffer
major monetary damages; the court held liable the director of the company for monetary
injury (Wheelwright 2006).

LAW OF BUSINESS ORGANIZATION 3
Piercing the Corporate Veil
The stakeholders of an organization are recognized as its owners but the legally the
identity of an organization is distinguish from its stakeholders. All the deals and important
decisions of organization are regulated by its directors and stakeholders. But the stakeholders
or director cannot be held liable for the responsibility of an organisation; they are responsible
for the share which they contributed in the organization. This shield provided to the
stakeholders is considered as corporate veil. As per Vandekerckhove (2007), if a case is
instituted against an organization, the court can hold the owner of such organisation
responsible for such deal by piercing the corporate veil hence The court of law does not
considered the distinguish lawful existence of the organisation and puts the responsibility on
owner, this doctrine is known as piercing of corporate veil. This theory disbarred the clause of
limited liability and held them responsible for the actions the organization.
Generally, the legal idea of corporate veil is abused by the owner of the organization for
example, they indulge in some illegal deals through the organization and at stage of recognizing
the liability for such performance, the owner of the organization accesses corporate veil like a
protection. Therefore, the legal idea piercing of corporate veil is useful to find the real
wrongdoer as given in the case of Prest v Petrodel Resources Ltd [2013] 2 AC 415. The court of
law have power to pierce a corporate veil for several matters includes scam, illegal dealings or
injustice (McClain 2002).

LAW OF BUSINESS ORGANIZATION 4
References
Ferran, E., 2011. Corporate Attribution and the Directing Mind and Will.
McClain, B.W., 2002. Piercing the Corporate Veil. Ohio Law., 16, p.14.
Vandekerckhove, K., 2007. Piercing the corporate veil. Eur. Company L., 4, p.191.
Wheelwright, K., 2006. Goodbye directing mind and will, hello management failure: a
brief critique of some new models of corporate criminal liability. Australian Journal of
Corporate Law, 19(3), pp.287-303.