Directing Mind and Piercing Corporate Veil

This assignment delves into the legal concepts of 'Directing Mind and Will' and 'Piercing the Corporate Veil'. It explains how the law views a company as a separate legal entity, yet holds its directors and stakeholders accountable for their actions. The assignment examines cases like Lennard's Carrying Co Ltd v Asiatic Petroleum Co Ltd and Sugarloaf Hill Nominees Pty Ltd v Rewards Projects Ltd to illustrate these principles and their implications in practice.

Running Head: LAW OF BUSINESS ORGANIZATION
Law of Business organization

LAW OF BUSINESS ORGANIZATION 1
Directing mind and will
The law considers the company as an artificial person which has distinct rights and duties from
its stakeholders and directors. It is the important rule of the law that a company will have
separate lawful existence but on the other hand the company does all activities through its
stakeholder as, the company cannot do all its activities or dealings by itself. It can take all the
actions by its members thus the company is introduced in corporate field by the work of its
members. All important persons of the company who regulate the activities and who have
control over all the dealings related to company are considered as the key personnels in the
company. These are the directors and the senior persons of the company hence due to huge
influence over the company’s activities, the law considered all the director and senior persons
as the directing mind and will of the company.
Further, the theory of identification came from the very famous case where the court
laid down that the company is known for its worker’s activities (Lennard's Carrying Co Ltd v Asiatic
Petroleum Co Ltd (1915) AC 705).
In the current case, the Supreme Court held liable all the stakeholders of the company
as the client of the company suffered loss due to the investment scheme of the company
(Sugarloaf Hill Nominees Pty Ltd v Rewards Projects Ltd (2011)WASC).

LAW OF BUSINESS ORGANIZATION 2
Piercing of corporate veil
The corporate veil is a legal thought in the corporational law which creates the
boundaries between the company and company’s member and automatically creates a
separate legal entity for the company that too different from its stakeholders. Through
corporate veil all the working person of the company can defend themselves from the liability
in matter of debt and any other duty and also the stakeholder cannot be held liable for anything
more than the shares that they hold in the company thus a stakeholder of the company cannot
be held liable personally but on the other hand this is not an absolute aid if the activities of the
company prejudice any provision of law or the organization is engaged in any illegal activity
then the court has the power to make stakeholders personally liable for even more than his
share contributed in the company.
Further, there are two legal processes which lead to the cessation of the existence of
corporate veil. The first process is lifting the corporate veil in which the court does not consider
limited liability section and made responsible every member for the actions of the company as
has been done by the member of the company Whereas in the second procedure of piercing
corporate veil the court recognizes the power and obligation of the organization as the duty
and right of the member.
Thus the legal process of piercing corporate veil is the most controversial and
prosecuted process in the commercial field as it is the most extensively used theory to
recognize the responsibility of the member of the company (SSRN n.d).

LAW OF BUSINESS ORGANIZATION 3
Reference
Davidson, L., 2014, Piercing the corporate veil, viewed 14 September 2017, from:
file:///C:/Users/Disha%20Goyal_JPR/Downloads/corporate_structures_piercing_veil_october200
4%20(2).pdf
Lennard's Carrying Co Ltd v Asiatic Petroleum Co Ltd (1915) AC 705
SSRN n.d., Lifting of Corporate Veil, viewed 14 September 2017, from:
https://poseidon01.ssrn.com/delivery.php?
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300901410809202508604608308407506808608011810611106410211812611711211411909110
5025100070006017064004&EXT=pdf
Sugarloaf Hill Nominees Pty Ltd v Rewards Projects Ltd (2011)WASC