Company Law: Analysis of UK Court Decisions on Lifting Corporate Veil

This case study examines the circumstances under which UK courts lift the corporate veil, focusing on key legal precedents. The assignment begins by outlining the general principle established in Salomon v A Salomon & Co Ltd, where a company is treated as a separate legal entity from its owners. However, the study then explores the exceptions to this principle, detailing instances where courts disregard the corporate structure. These include situations where the corporate veil is used to perpetrate fraud or evade legal obligations, as seen in cases such as Gilford Motor Co Ltd v Horne and Creasey v Breachwood Motors Ltd. Furthermore, the analysis includes Re Darby, ex parte Brougham, which highlights situations involving fraudulent activities. Finally, the study addresses situations where the company's managers have a conflict of interest, potentially exposing the company to liability, as illustrated by Adams v Cape Industries plc. The study utilizes only UK case laws to provide a comprehensive understanding of the topic.

Running head: COMPANY LAW
Company Law
Name of Student
Name of University
Author Note

1COMPANY LAW
There have been certain situations where the courts are compelled to violate the principle of not
looking through the corporate veil as established in the case of Salomon v A Salomon & Co Ltd [1897]
AC 221, where the company needs to have a separate identity as that of its mangers. This arises when the
managers has been using this immunity of the corporate veil for the purpose of covering their
wrongdoings and exposing the company to liability for their wrongdoings. This can be best explained
with the case of Gilford Motor Co Ltd v Horne [1933] Ch 9352. The courts are also empowered with the
lifting of corporate veil for the purpose of holding the individuals acting behind the name of the company
for the sole purpose of evading a legal obligation as has been made clear with the case of Creasey v
Breachwood Motors Ltd [1993] BCLC 4803. The courts are also empowered to lift the corporate veil
holding the managers of the company when it has been satisfied that the company has been instituted for
the main contention of effecting a fraud or any fraudulent endeavor as has been seen from the case of Re
Darby, ex parte Brougham [1911] 1 KB 954. Moreover, when the individuals acting under the scope of
the company have indulged into an activity where they were having a conflict of interest with any action
they have taken and have been exposing the company to be held liable for their misdeed5. This can further
be illustrated with the case of Adams v Cape Industries plc [1990] Ch 4336.
1 Salomon v A Salomon & Co Ltd [1897] AC 22
2 Gilford Motor Co Ltd v Horne [1933] Ch 935
3 Creasey v Breachwood Motors Ltd [1993] BCLC 480
4 Re Darby, ex parte Brougham [1911] 1 KB 95
5 Tang, Cheng-Han, Jiangyu Wan, and Christian Hofmann. "Piercing the Corporate Veil: Historical, Theoretical &
Comparative Perspectives." Berkeley Business Law Journal 16.1 (2019): 140.
6 Re Darby, ex parte Brougham [1911] 1 KB 95

2COMPANY LAW
Reference List
Creasey v Breachwood Motors Ltd [1993] BCLC 480
Gilford Motor Co Ltd v Horne [1933] Ch 935
Re Darby, ex parte Brougham [1911] 1 KB 95
Re Darby, ex parte Brougham [1911] 1 KB 95
Salomon v A Salomon & Co Ltd [1897] AC 22
Tang, Cheng-Han, Jiangyu Wan, and Christian Hofmann. "Piercing the Corporate Veil: Historical,
Theoretical & Comparative Perspectives." Berkeley Business Law Journal 16.1 (2019): 140.