University Business Law Assignment: Formation and Veil Concepts

This business law assignment explores two critical concepts: the certificate of formation of a company and the legal principles of 'directing mind and will' and piercing the corporate veil. The assignment begins with an overview of corporate formation, establishing the legal basis of a company. The 'directing mind and will' concept, originating in 1957, is explained as the decision-making authority within a company, emphasizing the importance of individual actions and the company's legal responsibilities. The assignment then delves into 'piercing the corporate veil,' examining the legal process of holding shareholders accountable for company debts and the situations in which this may occur. The document concludes by highlighting the need for companies to adhere to regulations, maintain accurate records, and hold shareholder meetings to ensure compliance. It references key legal literature to support the arguments presented.

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BUSINESS LAW
Student’s Name
Course
Professor’s Name
University
City/State
Date

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PART 1
Certificate of Formation of a Company
PART 2
(a)

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Directing MIND and WILL refers to a concept that has been in existent since 1957 and is
denoted as brains that are responsible for making decisions that are corporate. Lord Denning is
the person behind this concept. In addition, the person who makes decisions should also
determine the company’s focus and direction.
Thinking ability makes it possible for individuals to overcome challenges. This is because the
mind knows what the correct thing to be done is. One’s mind should be self-directed so as to
allow one to be free and act as human. In order for a mind to be able to direct, it should have an
ability to adapt, wake as well as style itself to its preferred nature. Also, it should have ability to
make whatever happens the way it should have.
Natural persons are important in actions of a company which is a legal person. Therefore, there is
need for guidelines to company’s attribution of the state of mind and acts of the individuals.
When a company’s essential rights are questionable, there arises attribution questions which can
as well arise when a company is prevented from imposing a judgment or pursuing an act that is
favoring itself due to its misconduct.
However, there are limits in its attribution. For example in case of insolvency of a company, its
shareholders cannot authorize breach of duty even if they are unanimous and also the company’s
assets are not prone to over riddance by the company’s directors as the interests of the creditors.
(b)
PIERCING THE CORPORATE VEIL refers to a decision that is legal to treat a company’s
rights as those of its shareholders. A company, which is a single legal person, is usually
responsible for its debts and profits. A company’s responsibilities and rights are independent

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from individuals who invest in or own them. Therefore, there is a method provided by a
company to individuals to share losses and profits as well as to operate a business
Piercing the corporate veil may occur when courts hold a company’s shareholders, owners and
members personally accountable for the debts of a business. The creditors are allowed to go after
the investments, assets, home and bank accounts to recover their debts. However, the courts do
not hold innocent parties responsible for the debts but rather they impose liability on the specific
individuals who are behind the actions that are fraudulent.
Situations in which courts might pierce corporate veil include: when there lacks a real separation
between the owners of the company and the company itself. Also, where the actions of the
company are wrong and where there is an unjust cost suffered by the creditors of the company.
Larger companies are more prone to suffer compared to smaller ones who obey formalities. Thus
larger companies are likely to experience a piercing of their corporate veil. Therefore, it is
advisable for all companies to observe the set rules that maintain and govern companies. This
can be done by holding meetings with the shareholders to discuss progress, embracing guidelines
and ensuring they are abided by and also maintaining accurate company records.
Bibliography

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Ferran, E., 2011. Corporate Attribution and the Directing Mind and Will.
Bonnett, M., 2002. Education for sustainability as a frame of mind. Environmental Education
Research, 8(1), pp.9-20.
Barber, D.H., 1980. Piercing the Corporate Veil. Willamette L. Rev., 17, p.371.
Vandekerckhove, K., 2007. Piercing the corporate veil. Eur. Company L., 4, p.191.
Choi, S.J., 1997. Company Registration: Toward a Status-Based Antifraud Regime. The
University of Chicago Law Review, 64(2), pp.567-651.
Singh, P.J. and Mansour-Nahra, P., 2006. ISO 9000 in the public sector: a successful case from
Australia. The TQM Magazine, 18(2), pp.131-142.