Company Law Case

2891 Words12 Pages
Question 1

The main parties involved in this issue are Wong Siu Long (“SL”) and Wong Siu Foong (“SF”), who are siblings. Both of them are involved in the running of their family business, Weng Fatt Jewellers Pte Ltd (“WFJ”), which manufactures and sells contemporary fine jewellery. In WFJ, SL handled the core business while SF was in charge of designing and ensuring the quality of the jewellery. In 2000, SF effectively retired from the business, but SF still had a significant influence on the company. Furthermore, SF held 25% of share capital when WFJ was duly incorporated. Later, SF was appointed as a director of the company. Subsequently, SL insisted that the following provision be included in the articles of association of WFJ,
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Due to the financial crisis, FW’s assets were devalued and were transferred to its parent company. Assuming that FW does not have enough resources to pay WFJ for the damages, Samuel (WFJ’s managing director) should be concerned about the restructuring of the group because it will affect the amount that it can claim from the FW or the group. Therefore, the bigger issue is whether WFJ can claim the damages from FW’s parent company. In Salomon v A Salomon & Co Pte Ltd [1897], it was held that the veil of incorporation creates a separate legal personality and a company should be treated like an independent person. In Gramaphone and Typewriter Ltd v Stanley [1908], it was held that the business run by the subsidiary was not the holding company’s business. In the eyes of the law, FW is a separate entity from its parent company. Therefore, the parent company is not liable for FW’s liabilities. However at times, incorporation is used to circumvent the law or hide the true state of affairs from the court.4 Hence, there are exceptions to the doctrine of separate legal entity. This allows the court to pierce the veil of incorporation and look to the
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Walter Woon on Company Law, para. 4.50 Walter Woon on Company Law, para. 8.15 Walter Woon on Company Law, para. 7.116 Walter Woon on Company Law, para 2.70

controllers of the company. WFJ is able to raise the following several arguments to
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