Lifting the Veil: Imagination and the Kingdom of God

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H Hansmann, R Kraakman and R Squire, 'Law and the Rise of the Firm' (2006) 119 Harvard Law Review 1333

Minton v. Cavaney, 56 Cal.2d 576 (1961). [47] Mr. Minton's daughter drowned in the public swimming pool owned by Mr. Cavaney. Then-Associate Justice Roger J. Traynor (later Chief Justice) of the Supreme Court of California held: "The equitable owners of a corporation, for example, are personally liable...when they provide inadequate capitalization and actively participate in the conduct of corporate affairs." proximate cause": as a reasonably foreseeable result of the wrongful action, harm was caused to the party that is seeking to pierce the corporate veil. Hadot, Pierre (2006) [2004]. The Veil of Isis: An Essay on the History of the Idea of Nature. Translated by Michael Chase. The Belknap Press of Harvard University Press. ISBN 978-0-674-02316-1. After Adams v. Cape Industries it seemed that there will need to be an express agency agreement for such a relationship to be found.

Meaning Of Lifting Or Piercing Of The Corporate Veil-

In the United States, corporate veil piercing is the most litigated issue in corporate law. [39] Although courts are reluctant to hold an active shareholder liable for actions that are legally the responsibility of the corporation, even if the corporation has a single shareholder, they will often do so if the corporation was markedly noncompliant with corporate formalities, to prevent fraud, or to achieve equity in certain cases of undercapitalization. [40] [41] The chief advantage of incorporation from which all others follow is the separate entity of the company. In reality, however, the business of the legal person is always carried on by, and for the benefit of, some individuals. In the ultimate analysis, some human beings are the real beneficiaries of the corporate advantages, “for while, by fiction of law, a corporation is a distinct entity, yet in reality it is an association of persons who are in fact the beneficial owners of all the corporate property.” And what the Salomon case decides is that ‘in questions of property and capacity, of acts done and rights acquired or, liabilities assumed thereby…the personalities of the natural persons who are the companies corporators is to be ignored”. Perpetual Real Estate Services, Inc. v. Michaelson Properties, Inc., 974 F.2d 545 (4th Cir. 1992)". Google Scholar . Retrieved 9 September 2017.

Where the court refused to lift the veil, the Court of Appeal said that although the company had clearly been set up to reduce future liability exposure, the fact that this arrangement was not moral did not matter. The veil cannot be lifted if the arrangement has been done to ensure that future liability will fall on another member of the group. This is fine. But the arrangement cannot defend already existing claims. Gilford Motor Co. v. Horne [xiv]–This is an instance for prevention of façade or sham. In this case, an employee entered into an agreement that after his employment is terminated he shall not enter into a competing business or he should not solicit their customers by setting up his own business. After the defendant’s service was terminated, he set up a company of the same business. It is neither necessary nor desirable to enumerate the classes of cases where lifting the veil is permissible, since that must necessarily depend on the relevant statutory or other provisions, the object sought to be achieved, the impugned conduct, the involvement of the element of public interest, the effect on parties who may be affected, etc.”. This was iterated by the Supreme Court in Life Insurance Corporation of India v. Escorts Ltd. [vi] Sections 993 (fraudulent trading), 1121 (officers in default), 251 (shadow director), 399 and 409 (group reporting) of the Companies Act 2006. Further, section 214 of the Insolvency Act attributes unlimited liability to a director of a company in case of wrongful trading. See also, section 218(6) of the Employment Rights Act, 1996; Part 4- Taxation, International and Other Provisions Act, 2010; and Part 3- Finance Act, 2015. Also, see HM Revenue and Customs, Diverted Profits Tax: Interim Guidance, 30 March 2015. Piercing the corporate veil or lifting the corporate veil is a legal decision to treat the rights or duties of a corporation as the rights or liabilities of its shareholders. Usually a corporation is treated as a separate legal person, which is solely responsible for the debts it incurs and the sole beneficiary of the credit it is owed. Common law countries usually uphold this principle of separate personhood, but in exceptional situations may "pierce" or "lift" the corporate veil.Daimler Co. Ltd. v. Continental Tyre and Rubber Co. (Great Britain) Ltd [xiii]– This is an instance of determination of the enemy character of a company. In this case, there was a German company . It set up a subsidiary company in Britain and entered into a contract with Continental Tyre and Rubber Co. (Great Britain) Ltd. for the supply of tyres. During the time of war, the British company refused to pay as trading with an alien company is prohibited during that time. To find out whether the company was a German or a British company, the Court lifted the veil and found out that since the decision making bodies, the board of directors and the general body of share holders were controlled by Germans, the company was a German company and not a British company and hence it was an enemy company. In The King v Portus; ex parte Federated Clerks Union of Australia [iv], where Latham CJ while deciding whether or not employees of a company owned by the Federal Government were not employed by the Federal Government ruled that the company is a distinct person from its shareholders. The shareholders are not liable to creditors for the debts of the company. The shareholders do not own the property of the company. Court of Appeals said that can lift the veil for a sham/facade company or if there is and agency relationship. But the corporate veil cannot be lifted on the basis of a single economic unit argument or in the interests of justice. Piercing the Corporate Veil in American and German Law - Liability of Individuals and Entities: A Comparative View in: Tulsa Journal of Comparative and International Law, from 3-1-1995 Section 314- The object of this section is to prohibit a director and anyone connected with him, holding any employment carrying remuneration of as such sum as prescribed or more under the company unless the company approves of it by a special resolution.