Analysis of Directing Mind and Piercing the Corporate Veil in Law

This report examines two critical concepts in 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, as affirmed in Salomon v. Salomon, but acknowledges that companies act through individuals. The report explores the "directing mind and will" doctrine, which holds companies liable for the actions of their directors, particularly as established in DPP v Kent and Sussex Contractors Ltd and Lennard’s Carrying Co. Ltd v Asiatic Petroleum Co. Ltd, and clarifies that actions integral to company functioning, though not explicitly in the constitution, are regulated by the board of directors, as seen in Tesco Supermarket v Nattrass. The report then addresses "piercing the corporate veil," where the separate legal entity of the company is disregarded in specific circumstances, such as fraud, as illustrated in Gilford Motor Co. Ltd v Horne, to hold the real culprits accountable. The report concludes by summarizing the principles where company directors can be held liable for illegal acts.

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

2COMPANIES AND SECURITIES LAW
Introduction:
The two phrases “directing mind and will” and “piercing corporate veil” are related to
each other as both the terms are using for identifying the separate legal entity of the company.
Sometimes it has been observed that the directors of the company are misusing their power
and made an excuse regarding the company’s structure. This report will discuss about the two
topics to understand the real defence regarding the same.
Discussion:
Directing mind and will:
It is a no doubt to state that a company is a separate legal entity that is proved in the
case of Salomon v. Salomon. It has been held that 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 the conception 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 all the acts 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.

3COMPANIES AND SECURITIES LAW
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.

4COMPANIES AND SECURITIES LAW
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.