StudentShare solutions
Triangle menu

Company Law - Case Study Example

Not dowloaded yet

Extract of sample
Company Law

These people are called "owners", composed of the incorporators, directors, and the stockholders. Another point to consider is that a corporation, once approved, has a legal personality separate and distinct from its owners. Having a legal personality separate and distinct from its owners gives the corporation a limited liability to shareholders. Limited liability is a legal doctrine which means that if a "plaintiff wins a court judgment against the corporation, he (the plaintiff) cannot satisfy the judgment out of the personal assets of the owners, rather, the plaintiff must collect from the assets of the corporation".2 Limited liability is likened to a "veil" that offers the owners of the business protection for their personal assets, like for instance, if one of the co-owners or employees commits an unlawful action that injures someone, or if someone sues the corporation for non-payment of debt.3
But is the limited liability doctrine absolute The answer is it is not.4 The corporate law protection of limited liability can be lost through 1) piercing of the corporate veil, 2) defective incorporation, 3) improper signing of documents.5 This essay aims to discuss piercing the corporate veil by first explaining the limited liability rule followed by ...
This doctrine is used when the property or assets of the corporation is not enough to support its liabilities.6
"The phrase relies on the metaphor of the 'veil' that represents the veneer of formalities and dignities that protect a corporation, which can be disregarded at will when the situation warrants looking beyond the 'legal fiction' of a corporate person to the reality of other persons or entities who would otherwise be protected by he corporate fiction."7
The formation of this doctrine can be traced beginning from a number of cases formulating the law formulating the law principle of separate and distinct legal personality of corporations. This principle of English law company was firs laid down in the case of Salomon v. Salomon.8 Mr. Salomon formed a company by apportioning one share for each of his family members to comply with the statute at that time which required at least seven members to form a company. Mr. Salomon later became a secured creditor of the company. When the company fell on hard times, it paid Mr. Salomon's debenture. The unsecured creditors claimed all the remaining assets of the company arguing that it worked as an agent for Mr. Solomon. The Court held otherwise. The effect of this rule is that the individual subsidiaries with in a conglomerate will be treated as separate entities and the parent cannot be made liable for the subsidiaries' debts or insolvency.9
Attempts to lift the principle of separate and distinct legal personality of corporations were unsuccessful in a number of cases that followed after the establishment of the said principle. For instance, in Adams v. Cape10 , it was held that the corporate veil cannot be lifted ...Show more


There are no rules, other than the principles of fairness and justice, to dictate when the court should lift the veil of corporation, rendering therefore the parent company liable for the debts of the subsidiaries."
In this period of recession which is experiences in all parts of the world, many are inclined in going into business…
Author : nadereldred
Company Law Case Study essay example
Read Text Preview
Save Your Time for More Important Things
Let us write or edit the case study on your topic
"Company Law Case Study"
with a personal 20% discount.
Grab the best paper

Related Essays

Business law case study questions
The concept of separate legal entity refers to existence of a company and the right that it acquires to sue and be sued in its own name, hold its own property and be liable for any debts accrued (Rose et al 2009). The important phenomenon in respect of separate legal entity is the concept of limited liability that is the liability of shareholders being limited to the extent of unpaid shares.
8 pages (2000 words) Case Study
Tort Law Case Study
ACE Sports, the nurse, the surgeon and City General hospital. These entities had active involvement in this particular incident as all of them including Bobby were primarily involved in this catastrophic event. Also, the nurse and the surgeon had contributed towards the eventual outcome as they were involved in inappropriate treatment and surgery that Bobby underwent (Smith, 2009).
3 pages (750 words) Case Study
Tort Law Master Case Study
Brown which would have been "different from [the damage] suffered by the general public,"2 which would constitute a wrong that is identifiably a crime under torts law. Mr. Brown's case is indeed special because he was allowed to find a document not available to the general public.
4 pages (1000 words) Case Study
Company Law Master Case Study
In accordance with the above provisions Madona can inspect the register of members of Posh Cars Limited containing the names, addresses, and the details of shareholding of all the members of the company at the registered office of the company. In case any regulation has been enacted specifying the maintenance of the register of members by the Secretary of state then the register of members can be expected in such place.
12 pages (3000 words) Case Study
Employment Law Case Study
The lady became very agitated and angry at Tom's "hard sell". She said, "Look if i say I don't need anything, I mean it. I know you have to meet your target, to get your commission and fancy holidays but not at my expense". Upon this, Tom replied: "I don't need to take this rubbish from you.
11 pages (2750 words) Case Study
Business law case study
A novation ordinarily arises when a new individual assumes an obligation to pay what was incurred by the original party to the contract and the original debtor is totally released from the obligation, which is transferred to someone else (Law Encyclopedia).
4 pages (1000 words) Case Study
COMPANY LAW / Case Study
At the beginning of the last year, the Articles of Association provided for payment of 15,000 to non-executive directors. However, through suitable amendments to the Articles, this figure was brought down to 10,000 nine months later. Since other directors have received 15,000 for the last year, Camilla is also demanding that the same amount be paid to her.
6 pages (1500 words) Case Study
Copyright Law Case Study
An important example of this is the peer-to-peer file sharing system of copyrighted music. The Napster and Grokster cases are a good illustration of the legal responsibility of the industries.The copyright industries themselves have responded with new business strategies by providing legal download services.
12 pages (3000 words) Case Study
Commercial law case study
Having recognized that there is a duty of care, the claimant must confirm that the defendant failed to do what the reasonable person,
7 pages (1750 words) Case Study
Company law case study analysis
I carried out a case study about three businessmen with varying capabilities, strengths in terms of finances and expertise. A limited liability
8 pages (2000 words) Case Study
Get a custom paper written
by a pro under your requirements!
Win a special DISCOUNT!
Put in your e-mail and click the button with your lucky finger
Your email
Comments (0)
Rate this paper:
Thank you! Your comment has been sent and will be posted after moderation