Companies and Securities Law: Directing Mind and Piercing Veil Report

This report delves into two critical aspects of company law: 'directing mind and will' and 'piercing the corporate veil.' It begins by establishing the principle of a company as a separate legal entity, referencing the Salomon v. Salomon case. The report then examines the 'directing mind and will' concept, identifying the board of directors as the controlling entity and referencing cases like DPP v Kent and Sussex Contractors Ltd and Lennard’s Carrying Co. Ltd v Asiatic Petroleum Co. Ltd. It explains how the company can be held liable for the actions of its directors. The report then explores 'piercing the corporate veil,' outlining circumstances where the separate legal entity status can be disregarded, particularly in cases of fraud, and referencing Gilford Motor Co. Ltd v Horne. The conclusion reinforces that while the separate entity principle generally holds, directors can be held accountable for illegal acts. The report provides a comprehensive overview of these concepts, highlighting their importance in company law.

Running head: COMPANIES AND SECURITIES LAW
Directing mind and Piercing veil
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1COMPANIES AND SECURITIES LAW
Table of Contents
Introduction:...............................................................................................................................2
Discussion:.................................................................................................................................2
Directing mind and will:............................................................................................................2
Piercing the corporate veil:........................................................................................................3
Conclusion:................................................................................................................................3
Reference:..................................................................................................................................4

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Introduction:
The present case is based on the two phrases of company law that are the “directing
mind and will” and “piercing corporate veil”. Both the terms are important regarding the
company related matters and it is important to find out the real interpretation of the terms. It
has been observed that there is a mentality grows among the company directors to find any
excuse to safe their interest by hiding themselves behind the shadow of the company and
therefore, there is a complicated situation arose. These terms made an initiative to resolve the
problem by way of a defence in favour of a company regarding all cases.
Discussion:
Directing mind and will:
An analysis regarding the directing mind and will reveals that the persons who are
sitting at the top of the company including the board of directors. It is a well principle of law
that a company is a separate legal entity that is proved in the case of Salomon v. Salomon.
Therefore, a company should not be held liable for the acts of any of its employee. However,
this is also true that the company cannot perform its work by itself or without the help of the
others.
The case related to directing mind and will was developed in the year 1944 in the case
of DPP v Kent and Sussex Contractors Ltd, where the court was pleased to observe that the
company can be held liable for any illegal act as the mind of the company is regulated by the
directors who have the knowledge regarding the outcome of it (Lipsitt 2013).
It was held in Lennard’s Carrying Co. Ltd v Asiatic Petroleum Co. Ltd, it was held
that the Board of Directors of the company are the persons who are involving in the action
relating to the directing mind and will (De Wet 2017).
There are certain acts that are not written under the constitution of the company but
are related integrally to the functioning of the company. These actions are regulated by the
board of directors and if there is any breach occurred regarding the same, the company will
be held liable under the version of directing mind and will as held in Tesco Supermarket v
Nattrass (1971) UKHL 1.

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Piercing the corporate veil:
It is a well known principle of law that a company is a separate legal entity and
therefore, for any kind of liability, the company cannot be held liable. It standardise the rights
and liabilities of a corporation. In case of the common law country, there is leaning mentality
regarding the corporate veil observed. However, in certain circumstances, these rules are
pierced (Yadav 2017).
Suppose a company was held liable for certain fraud cases. When the affected party
sue the company as a whole, they will held the company liable for the same. It is a fact that
the company cannot perform their job alone and the directors and other shareholders of the
company regulating the company. When the company is getting registered, a veil regarding
the separate liability cropped up. When certain allegation made against the company, it will
be the duty of the court to analyse the matter and replace the main culprit of the case by
lifting the corporate veil (Flint 2016).
In Gilford Motor Co. Ltd v Horne, it has been observed that the corporate veil of the
corporation can be uplifted where it is required regarding the appropriate cases.
Conclusion:
Therefore, from the case, it has been held that the principle regarding the separate
entity of the company can be upheld in certain situation. The main objective of this report is
to find out the grounds where the director of the company shall be held liable for any illegal
acts.

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Reference:
De Wet, M., 2017. Directing'The Absolute': towards destabilising the victim/perpetrator
binary in Sam Shepard's A lie of the mind (1985) (Doctoral dissertation, University of
Pretoria).
Flint, D., 2016. Incentives, Employers, and the Corporate Veil: Should Domestic
Corporations Be More Accountable for the Actions of Their Overseas Subsidiaries?. Ariz. St.
LJ, 48, p.833.
Lipsitt, L.P., 2013. impression of outside objects, whether agreeable or offensive; but the
mind, possessed of a self-directing power, may turn its attention to whatever it thinks proper.
It should, therefore, be employed in the most useful pursuits, not barely in contemplation but
in such contemplation as may. Early Influences Shaping The Individual, 161, p.207.
Yadav, P.K., 2017. Lifting of Corporate Veil.