preview

Courts Do not Look Beyond the Shareholders in the Veil of Incorporation

Decent Essays
The veil of incorporation means that separate legal personality of company operates as a shield which is the courts will not normally look beyond the façade of the company to the shareholders who incorporate it. The screen depart the company from its individual shareholders and directors is commonly referred to as ‘the veil of incorporation’.
The House of Lords in the case of Salomon v A. Salomon & Co [1897] identify the legality of Salomon's 'one-man company', and try to lift this veil, whether to force liability on those veil or other aim. The veil can be lifted by enactment Dimbleby v National Union of Journalists 1984, but this provision are rare and incline to force extra individual liability rather than neglect the corporation's
…show more content…
It deny the case Creasey v Breachwood Motors Ltd which shows that even transfer corporation's assets (some section of a group re-organization of assets) after appear the potential liability would not defend lifting the veil. This was incomplete with the aim of escape that liability. With the similar restrictively, another enactment deny that the veil can be lifted easily to force liability on a man behind an improper business deal. This shows that the courts still willing to lift the veil and the present law is not closer to the Schmittoff's statement but more towards the statement of Samuels because of the principle is restrictive apply.
Agency: Court may be lift the veil on a company is only carry the business as an agent of its shareholder. It means that the deal which entered by the subsidiary could be treat as the deal of the holding company. The House of Lords refuse the opinion that the corporation was act as Salomon's agent, the truth about the corporation is a wholly own subsidiary or a single member is insufficient to act as an agent of its shareholders or member. In previously, the courts have found the relationship among a subsidiary corporation and its parent corporation. In previously, the courts have found the relationship among a subsidiary corporation and its parent corporation. It can be found in the case Smith, Stone & Knight v Birmingham Corporation but Adams v Cape Industries Ltd verify that an
Get Access