Corporate Group Structures - Essay Example

The discussion will commence with a brief overview of the background of company law, specifically the concept of a company as a separate, autonomous corporate individual. Then the most significant cases in the current state of corporate group structure and liability will be considered: These are a triumvirate of cases involving Cape Industries Plc. Subsequently, analysis of these decisions and their application and interpretation in the last decade will be examined as well as criticism of these three cases will be entertained.

This portion of the discussion will expand beyond issues of case law and take an holistic approach to corporate group structure by considering issues such as corporate social responsibility (CSR) and the ethical implications of corporate group structures. Aron Salomon incorporated his boot-making business in 1892. Salomon Co. quickly became insolvent. A series of court cases and appeals took the case to the House of Lords ruling that Salomon Co. and Aron Salomon were not one and the same, “"The very object of the creation of the company and the transfer to it of the business is, that whereas the liability of the partners for debts incurred was without limit, the liability of the members for the debts incurred by the company shall be limited,” concluded the House of Lords.

4 No individuals could be held liable for the debts of Salomon Co., a separate, legal, corporate entity. This case was based on the Companies Act 1862 that clearly established the corporation as a separate legal entity. Salomon v Salomon Co. established that this was the legal situation even if one individual was a majority owner and principally responsible for the direction of the corporation also. According to Villalta Puig Gonzalo, “The case firmly established that upon incorporation, a new and separate artificial entity comes into existence.. a corporation is a distinct person with its own personality separate