The issue in this question refers to an explanation of the doctrine of separate legal entity and the approach the courts have followed in finding for such a corporate personality and the instances where the veil of incorporation has been lifted. An explanation of these key…
o such existence the right of the company to sue and be sued in its own name, hold its own property and liable to any debts that are accrued(Rose et al 2009).
The main provision of this concept is limited liability (that is the liability of the shareholders is restricted only to the unpaid amount of their shares) for shareholders and therefore the debts of the company are restrained to the legal entity of the company. (Ridley 2009)
The concept evolved when small businesses began to avail the use of such corporate form and this was done in the landmark decision of Salomon v Salomon1 where Mr. Salomon, a leather merchant formed a company which included his wife, five children and himself (this was done to fulfill the requirement of shareholders as per the Companies Act prevailing at that time). He appointed himself as the managing director of the company and subsequently purchased the sole trading business. However the valuation placed on the business being purchased was not fair, but this was due to his confidence in the business and not due to any mala fide intentions. The business was valued at 39,000 pounds of which 10000 were paid by issuance of debentures plus 20,000 shares at 1 pound each and 9000 pounds in cash. After a certain period the company went into insolvent liquidation and a liquidator was appointed by the court. The liquidator evaluated that the company was a sham and a mere agent of Mr. Salomon and went on to conclude that he should be held personally liable to the debts of the company. The House of Lords reversing the decision of the Court of Appeal, which was a moralistic approach, stated that the fact that some of the shareholders were holding shares so as to fulfill a technicality was irrelevant and so the procedure which had been laid down by the Companies Act could be used by any person who in reality wanted to carry on what was in reality his own business. The Court further went on to state that if a company had been formed in accordance ...
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(Business Law 'Corporate Personality' Essay Example | Topics and Well Written Essays - 1500 Words)
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This essay seeks to critically analyse the circumstances under which the corporate veil can be lifted as well as analysing the effectiveness of the law in piercing this veil when necessary. The essay starts by outlining the overview of the concept of legal personality through analysing different court cases that have influenced the development of the law and the decisions made by the courts.
The law is considered for the companies all across the United Kingdom. England and Wales have been found to have certain provisions that are not available for all other countries. The primary purpose of the corporate laws is to ensure efficient functioning of their operations and their measurements of ethical principles as well (Slorach & Ellis, 2007, p.42).
As such, they will bear responsibility for any matter pertaining to the business1. Tinky, Lola and Daphne wish to expand Platini into a series of restaurants. Converting their current business into a chain of bistro and restaurants will require considerable funding necessitating a better legal basis for the business.
The business legal system perceives that these businesses are not separate from their owners. By contrast, an incorporated business is an entity separate from its owners and members. The incorporated businesses may be limited or
nd limited liability was confirmed by the ruling in Salomon v Salomon and Company.2 However, there are exceptions to the corporate shield under both statutory and common law. This paper analyses some examples where the corporate veil can be lifted under both common law and
y, I have come to the clear conclusion that section 7 applies where a child or young person enters into a transaction of sale, whether as a principal or on behalf of someone else, whether disclosed or undisclosed and whether or not property passes to him…”.
In order to get
Transfer also terminates ownership. Personal savings, gifts, donations, and loans are the sources of capital (Miller 2012, p. 496).
Partnership is formed by agreement among partners who contribute capital. It
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