Law of Business Organization: Directing Mind, Corporate Veil Analysis

This essay examines key concepts in the law of business organization, specifically focusing on the 'directing mind' and the 'corporate veil'. The essay explains the principle of separate legal entity and how the 'directing mind', usually the directors and board members, represents the company in legal actions. It references key cases like DPP v. Kent and Sussex Contractors Ltd, Lennard's Carrying Co Ltd v Asiatic Petroleum Co Ltd, Tesco Supermarkets Ltd v Nattrass, and Sugarloaf Hill Nominees Pty Ltd v Rewards Projects Ltd to illustrate the identification principle. Furthermore, the essay explores the concept of 'piercing the corporate veil', the legal process where courts disregard the separation between a company and its stakeholders, holding the stakeholders personally liable for the company's obligations, especially in cases of illegal activities or contraventions of corporate law. The essay concludes by highlighting the ongoing debate and challenges associated with applying these legal principles in corporate law.

Running Head: LAW OF BUSINESS ORGANIZATION
Law of Business Organization

LAW OF BUSINESS ORGANIZATION 1
Directing mind and will
It is a basic rule of corporation act that a company will have a separate legal entity from its
member and as artificial person company will have rights and duty as the natural person will
have even though it is created by its sole stakeholder and controller of the company. On the other
hand company is identified in corporate world from the activities of those person who are the
directing mind and will of the company which are director and board of member of the company
so it can only act by their member. These people are considered as a key member of the
company.
In the leading case the court held liable the officers of the company for the offences
made by the company as theses officers had a necessary information and intention to cheat (DPP
v. Kent and Sussex Contractors Ltd (1944) KB 146).
The identification principle originate from the leading in which it was held that the
company is introduced by the activities of its members who are considered as the directing mind
of the company (Lennard's Carrying Co Ltd v Asiatic Petroleum Co Ltd (1915) AC 705).
Further this principle of the identification explained in one of the very famous case in the
history where Lord Reid linked the directing mind and will to natural persons who can be taken
as embodiment of the company (Tesco Supermarkets Ltd v Nattrass (1971) UKHL).
In the Recent case the Western Australia Supreme Court gave the decision and held
liable the directors of the company as the client of the company lost their belongings in the
investment scheme(Sugarloaf Hill Nominees Pty Ltd v Rewards Projects Ltd (2011)WASC).

LAW OF BUSINESS ORGANIZATION 2
Piercing a Corporate veil
Corporate veil is legal idea that detached the existence of the company from its
stakeholders, and defend these stakeholders from the liability more than their share in the
company in the case of amount due on company and for other duties but such right is not
absolute remedy as a court can considered company’s stakeholder personally liable for any
obligation of the company if the activities related to company are contravene the provision of
corporate law or if the company is indulge in any illegal activity.
Further lifting a corporate veil and perching a corporate veil are two legal processes.
lifting a corporate the court set clause of limited liability and held liable each of the member of
the company for all the activities of the company as were done by the done theses stakeholders
of the company which contravene the provision of the law in that case court will not considered
the separate lawful existence of the organization. On the other hand piercing a corporate veil is
different legal process in which the court considers the powers and responsibility of the
corporation like a powers and responsibility of the stakeholder’s of such corporation.
Hence piercing corporate veil is a most extensively used doctrine to determine the
liability of the stakeholders in the case of any obligation this doctrine is the most prosecuted
and most debated method in a corporate world. As per present commentator the present law
neither creates reliable or defensible results nor giving justice to the people (SSRN n.d).

LAW OF BUSINESS ORGANIZATION 3
References
DPP v. Kent and Sussex Contractors Ltd (1944) KB 146
Lennard's Carrying Co Ltd v Asiatic Petroleum Co Ltd (1915) AC 705
SSRN n.d., Lifting of Corporate Veil. Available from: https://poseidon01.ssrn.com/delivery.php?
ID=65208712206802507007008110610301402702404401404303607109411102208109309102
600509512612300901606103305909609807009108806911510510602706908206311602501311
300901410809202508604608308407506808608011810611106410211812611711211411909110
5025100070006017064004&EXT=pdf. [14 September 2017].
Sugarloaf Hill Nominees Pty Ltd v Rewards Projects Ltd (2011)WASC
Tesco Supermarkets Ltd v Nattrass (1971) UKHL