Advantages And Disadvantages Of Piercing The Corporate Veil

This essay will explain the concepts of separate personality and limited liability and their significance in company law. The principle of separate personality is defined in the Companies Act 2006(CA) ; “subscribers to the memorandum, together with such other persons as may from time to time become members of the company are a body corporate by the name contained in memorandum.” This essentially means that a company is a separate legal personality to its members and therefore can itself be sued and enter into contracts. This theory was birthed into company law through the case of Salomon v Salomon and Co LTD 1872. This case involved a company entering liquidation and the unsecured creditors not being able to claim assets to compensate them. The issue in this case was whether Mr Salomon owed the money or the company did. In the end, the House of Lords held that the company was not an agent of Mr Salomon and so the debts were that of the company thus creating the “corporate Veil” .

Your honors and may it please the court, I alongside co-counsel,represent small businesswoman Paula Keene. I will explain why it is important to uphold West Virginia Statute 31d-6-622 to maintain the corporate veil and to show that Ms. Keene is not personally responsible for corporate debts accrued by Main Event. My co-counsel will explain why punitive damages should not be awarded against Ms. Keene. Your honor, I respectfully request 2 minutes for rebuttal.

In many misfeasance cases against directors, those breaches maybe relatively uncontroversial. This draws into focus the question of whether the director has any common law or statutory defence, including the Duomatic principle and ratification by shareholders (CA 2006 S.239), available to a claim against him for restitution to the company. S.239(6)(a) preserves the Duomatic rule that if an informal unanimous consent is reached among voting shareholders, it is unnecessary to pass such ratification resolution through general meeting or written resolution. The first part will examine the scope and requirements of this rule to illustrate the validity of such assent. S.239(7) leaves the door open for rules of law, which refers to common law principles, to continue guiding ratification. It will be assessed how these rules impose limitations on the general ratification power conferred by s.239.

All companies, including those operating in the multimedia industry are controlled and monitored by the Australian Securities and Investments Commission (ASIC). There are two type of companies, private companies and public companies. Each company has a management team called a board of directors. Usually, each director oversees and makes decisions for a section of a company, for instance a finance department. As companies have more shareholders/owners than unincorporated businesses, they are more accessible to capital to expand and upgrade, although there are strict legal requirements to protect shareholders.

While they have arrangement and discharging control over the directors of the enterprise, shareholders in expansive organizations, for example, the criminogenic Shell, Exxon, Occidental Petroleum, Union Carbide, Dow Chemical, Ford Motors, La Roche-Hoffman, BHP, A.H. Robins, General Electric, Johns-Manville, James Hardie, all enterprises whose disregard and willful dismissal of surely understood norms of conduct has brought about shocking mischief, have minimal impetus to guarantee that these supervisors carry on legitimately. This happens because financial specialists who don't lawfully own the property of the company used to do any harm, they have no individual legitimate obligation regarding any such damages brought about by the misapplication of that property. The rich shareholders who are continually telling the riches less and poor people to be responsible and in charge of the route, in which they act and live, are, in law, unreliable for the (regularly detestable) behavior of their companies. It deteriorates the

The legal decision to treat the rights or duties of a corporation as the rights or liabilities of its directors is called piercing the corporate veil or lifting the corporate veil. A corporation is treated as a separate legal person for the sole responsible of debts incurred. Corporations are

Section 184 of the Corporate Act, imposes criminal liabilities on directors, which covers situations where directors are reckless, intentionally dishonest and cause detriment to the company. Directors have a responsibility to their company and shareholders, which is to honestly believe that they are acting in the best interest of the company and for a proper purpose at all time. In s 184(1) of the Corporations Act, directors must always act in good faith and for the best interests of the company. The good faith and interest provisions are civil obligations as well under s 181 of the Act. However, a director or officer will be committing a criminal offence if he or

Rule of Law: As provided in the corporate law, corporations are legal entities that are liable for their own liabilities, and hence shareholders cannot be personally held liable for any liability in the corporation. Whether a corporation de jure or corporation de facto, individual shareholders may not take the identity of an organization per se; and hence this limits the liabilities of individual shareholders against creditors of the

Choosing a Corporation/Company Structure - the business structure of a company/ corporation is highly recommended, it has the flexibility to gain more capital, or credit capability and assets used as security. Based on the Corporation Act 2001 (Cth) AC 22, a corporation is another legal entity with their own legal rights, duties and responsibilities separate to the individual or owner of the company (Harris, Hargovan & Adams, 2013, pp 229). The risk and consequences are one of the principal considerations of choosing a company structure (Harris, Hargovan & Adams, pp 50). Based on the “Corporate Veil” Liability is owned by a separate legal entity and not to the extent of the owner, for instance, the debt of the company is not a personal liability, but the company. This is further explained in the case below.

The concept of a company being a separate legal entity is the most striking illustration in separating the company from its owners. A paramount principle of corporate law is that no shareholder or member of a company is made liable for the obligations incurred by such incorporations A company is different from its members in the eyes of law. In continuations to this the opposite also holds true in the sense that neither can the company be held liable for the acts of its members. It is a fundamental distinction that a company is distinct from its members.

There is no clear framework of the rules that would cover the contingencies of a ruling to pierce the corporate veil Idoport Pty Ltd v National Australia Bank Ltd. The corporate Veil usually protects owners and shareholders from being held liable for corporate duties. Yet again a decision made by the court to lift that veil and would place the liability on shareholders, owners, administrators, executives and officers of the company without ownership interest. The purpose of this essay is to conduct an analysis on the concept of lifting the corporate veil and to review the different views on its fairness and equitability to present a better understanding of the notion, the methods used was throughout researching the numerous scholars views on the subject, case law and statutes examples, and the evidence provided by the empirical study of Ramsay & Noakes. When we discuss the lifting the corporate veil the first case that pops out is the case of Salomon V A. Salomon & Co Ltd, since the decisions of applying the corporate veil were first formed as a consequence of this case. The idea covers all of company law and distinguishes that a company is a separate legal entity from its members and directors. Furthermore, spencer (2012); have indicated that one of the core principles that followed the decision in Salomon v Salomon was the wide acceptance one man company’s. However In order to form a

Privacy in the workplace exists only to a certain extent essentially because the organization has the right to search and seizure their property and the employees which utilize it. Therefore, I believe employees generally are limited to the amount of privacy they have on the job. Generally, much of the equipment, devices, and resources utilized at work are the property of the employer and therefore they have the right to monitor what employees are doing. In essence, employers have every right to invade employee privacy while the employees are utilizing the organization's equipment and resources. Further, employee privacy is limited because essentially employees are trying to safeguard the organization from litigation and the erosion of the organization’s reputation.

The Principle of Separate Corporate Personality The principle of separate corporate personality has been firmly established in the common law since the decision in the case of Salomon v Salomon & Co Ltd[1], whereby a corporation has a separate legal personality, rights and obligations totally distinct from those of its shareholders. Legislation and courts nevertheless sometimes "pierce the corporate veil" so as to hold the shareholders personally liable for the liabilities of the corporation. Courts may also "lift the corporate veil", in the conflict of laws in order to determine who actually controls the corporation, and thus to ascertain the corporation's true contacts, and closest and most real

The decision of Salomon v. Salomon which brought about the doctrine of separate legal personality is one which has evolved over time. Over a century and still counting, the principle illustrated in Salomon, courts have are still reluctant in placing limitations on corporate personality and rejecting other approaches which pose as a greater challenge to the doctrine . From time immemorial, judicial history, lawyers and judges have reiterated that the doctrine of corporation is an intangible legal entity, without the body and soul. In Athanasian terms, the orthodox doctrine of corporation as a legal person, separate and distinct from the personality of the members who compose it, has been defined and propagated .

Corporation origin from the Latin word Corpus which means body. It is formed by a group of people and has separate rights and liability from those individual. In any means, corporation exists independently from its owner and this principle is called the doctrine of separate personality. Doctrine of separate personality is the basic and fundamental principle in a Company Law. This principle outline the legal relationship between company and its members. Company’s assets belong to the company not the shareholders as assets are the equity for creditors. Company must use up all its assets to pay off the creditors if it became insolvent. The same applies to the corporation’s debts. For limited liabilities company, the shareholder liability is limited which means that the shareholder is restricted to the number of shares they paid and not personally liable for the corporation’s debts. If the company does not have enough equity to pay off debts, the creditors cannot come after the shareholders. However, limited liability company can be very powerful when in hands who do fraud and on defeating creditors’ claims. Courts then can ignore the doctrine for exception cases and lifting the corporate veil. Lifting the corporate veil is a situation where courts put aside limited liability and hold a corporation’s shareholders or directors personally liable for the corporation’s debts.