Separate Legal Entity Analysis
ANALYSIS
The principle of Separate Legal Entity has stood the test of time because it aims at giving the company a certain practical utility. The separate personality of a company as distinct from its shareholders and this was established by the House of Lords in Salomon v Salomon & Co [1897].
This led to the veil of incorporation; that a registered company is a legal person separate from its members . By separating the management from the investment, a company enables the investing public to have a share in the profits without being involved in management of business, In the meanwhile, a company hires the best of employees who handle the whole management of the company.
“The company is at law a different person altogether from subscribers …show more content…
Generally, and broadly speaking the corporate veil may be lifted where the statute itself contemplates lifting the veil or fraud, or improper conduct is intended to be prevented. It is neither necessary nor desirable to enumerate classes of cases where lifting the veil is permissible, since that must necessarily depend on relevant statutory or other provisions, the object sought to be achieved, the impugned conduct, the involvement of element of public interest, the effect on parties who may be effected, etc.
It is also noted that many of the recent developments in veil lifting have involved claims of tortuous liability. Indeed tortuous liability is one of the fault lines created by limited liability. Normal creditors when dealing with the limited liability company have an opportunity to access the risk of doing business. They can opt to secure their lending, charge a premium for that risk or do …show more content…
This also imposes a liability on the corporate body as a whole in civil matters. This makes it easier for plaintiff’s to keep legal proceedings simple, against one party (which has its representatives). The presence of corporate veil offers an extent of protection for the members of the company. They are accountable only in certain cases. Thus, while we have judgements like Lee v. Lee Air Firm which recognize the difference between a company per say and its members, we also have judgements like Subha Mukherjee vs. BCCL which identify the malicious intent behind an act of a company and understand that the malicious factor has been introduced by a member only. Thereby, with respect to the provisions and precedents regarding corporate veil, the law is very well laid and settled. The law intends to protect the personal interests of managers of a company from that of the company itself, at the same time, it has laid down enough examples of cases where this protection is overlooked. This system of corporate veil is well structured and very efficient with respect to the model they want to
The principle of Separate Legal Entity has stood the test of time because it aims at giving the company a certain practical utility. The separate personality of a company as distinct from its shareholders and this was established by the House of Lords in Salomon v Salomon & Co [1897].
This led to the veil of incorporation; that a registered company is a legal person separate from its members . By separating the management from the investment, a company enables the investing public to have a share in the profits without being involved in management of business, In the meanwhile, a company hires the best of employees who handle the whole management of the company.
“The company is at law a different person altogether from subscribers …show more content…
Generally, and broadly speaking the corporate veil may be lifted where the statute itself contemplates lifting the veil or fraud, or improper conduct is intended to be prevented. It is neither necessary nor desirable to enumerate classes of cases where lifting the veil is permissible, since that must necessarily depend on relevant statutory or other provisions, the object sought to be achieved, the impugned conduct, the involvement of element of public interest, the effect on parties who may be effected, etc.
It is also noted that many of the recent developments in veil lifting have involved claims of tortuous liability. Indeed tortuous liability is one of the fault lines created by limited liability. Normal creditors when dealing with the limited liability company have an opportunity to access the risk of doing business. They can opt to secure their lending, charge a premium for that risk or do …show more content…
This also imposes a liability on the corporate body as a whole in civil matters. This makes it easier for plaintiff’s to keep legal proceedings simple, against one party (which has its representatives). The presence of corporate veil offers an extent of protection for the members of the company. They are accountable only in certain cases. Thus, while we have judgements like Lee v. Lee Air Firm which recognize the difference between a company per say and its members, we also have judgements like Subha Mukherjee vs. BCCL which identify the malicious intent behind an act of a company and understand that the malicious factor has been introduced by a member only. Thereby, with respect to the provisions and precedents regarding corporate veil, the law is very well laid and settled. The law intends to protect the personal interests of managers of a company from that of the company itself, at the same time, it has laid down enough examples of cases where this protection is overlooked. This system of corporate veil is well structured and very efficient with respect to the model they want to