Law of Business Organisation Part 2: Directing Mind & Corporate Veil

This report provides an overview of two key concepts in business law: 'directing mind and will' and 'piercing the corporate veil'. The report defines 'directing mind and will' as the identification of individuals controlling a company's actions and management, referencing the Meridian Global Funds Management Asia Ltd v Securities Commission case. It explains how the company is considered to have the state of mind of those directing its will and mind, illustrated by the El-Ajou v Dollar Land Holdings Plc case. The report then defines 'piercing the corporate veil' as setting aside a company's separate legal entity status to hold those running the business liable for debts or misdeeds, referencing the Salomon & Co Ltd case. It emphasizes that courts pierce the veil only for justice and fairness, with CSR Ltd v Young used as an example. The report includes references to relevant legal literature.

PART BASED ASSIGNMENT 2
Directing Mind and Will
Directing mind and will is a phrase which refers to the identification of such set of natural
person(s), who have the control over the acts of the company, along with its management. The
concept of directing mind and will has evolved through a number of cases, both in civil in
criminal jurisdiction. This concept was contextualized by Lord Hoffman through the case of
Meridian Global Funds Management Asia Ltd v Securities Commission [1995] UKPC 5, which
was a Privy Council decision. Another example of the use of this concept was that of Citizens
United v. Federal Election Commission 558 U.S. 310 (2010) (Ferran, 2012).
The company is, in general fixed with the state of mind of such people or person who are
directing both the will and the mind of the company. As a result of this, the company is deemed
to have the knowledge of any such thing, which an individual who had been involved in its
direction of will and mind, knew of. An example of this can be seen in El-Ajou v Dollar Land
Holdings Plc [1994] 2 All E.R. 685 where the non-executive chairman of the company had
organized the thieves would invest the stolen money into the company. This led to the Court of
Appeals stating that the chairman of the company was the one who was directing the will and
mind of the company with regards to this particular transaction. And this was held even when the
chairman did not ordinarily hold the daily management of the affairs of the company (Hudson,
2017).
Piercing the Corporate Veil
Piercing of the corporate veil of the company refers to setting aside the separate legal entity
status of the company and holding the ones running the business of the company, liable for the

PART BASED ASSIGNMENT 3
debts or the misdeeds conducted through the company, for the sake of avoiding their personal
liabilities. This concept was born through the case of Salomon & Co Ltd [1897] AC 22 and has
been since then used numerous of times, even though, at times, it proves to be controversial. This
was the very first case where the court pierced the veil of the company and made Salomon liable
for the debts of the company (Monaghan, 2015).
In order to pierce the corporate veil, there has to be justifiable grounds before the court to do so.
A corporate veil is pierced only when the court deems it necessary for the purpose of justice and
for being fair, to hold the ones responsible for the conduct of the business, liable personally for
the undertaken actions. CSR Ltd v Young [1998] Aust Tort Reports 81-468 was a case where the
tortious liability of the subsidiary company was in question. In this case, the judges held that the
position of the parent company was identical to its subsidiary company and as a result of this, the
corporate veil was pierced and the parent company was made liable for the tortious acts
undertaken by the subsidiary company (Anderson 2008).

PART BASED ASSIGNMENT 4
References
Anderson, H. (2008) Directors’ Liability for Unpaid Employee Entitlements: Suggestions for
Reform Based on their Liabilities for Unremitted Taxes. Sydney Law Review, 30(470).
Ferran, E. (2012) Corporate Attribution and the Directing Mind and Will. [Online] University of
Cambridge. Available from: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2025884
[Accessed on: 19/09/17]
Hudson, A. (2017) Understanding Company Law. 2nd ed. Oxon: Routledge.
Monaghan, C. (2015) Beginning Business Law. Oxon: Routledge.