The aim of this assignment is to examine the principles of separate legal personality and the circumstances under which a company’s corporate veil can be lifted, including statutory and judicial decisions in which the court disregards the company’s status and pursues a natural person, by examining two jurisdictions: the United States and the United Kingdom.

Principles of separate legal personality

Separate legal personality and the corporate veil. Aim Examine the principles of separate legal personality and the circumstances under which a company’s corporate veil can be lifted, including statutory and judicial decisions in which the court disregards the company’s status and pursues a natural person, by examining two jurisdictions: the United States and the United Kingdom. Intro Because corporate identity is granted by statute, the court is hesitant to pierce the veil. The fundamental relevance of corporate identity was not recognized until the case of Salomon v A Salomon & Co Ltd 1 . It was recognized in this instance that a corporation might properly be formed to protect its members and directors from liability.

Principles of separate legal personality

It implied that a firm controlled by a single person was legitimate. This was before single-member firms could be properly formed, and simply owning a share does not establish an agency or trusteeship relationship. The ability to set up a company shield can be exploited. As a result, both parliament and the courts have the authority to disregard a company’s corporate personality and hold those behind it responsible. Furthermore, it is possible to set aside corporate personality via contract. Known as piercing or lifting of the veil refers to the lifting of the corporate veil, which protects business members and directors from liability.

Principles of separate legal personality

A modern approach to piercing the veil In the case of Petrodel Resources LTD v Prest, Lord Sumptions 2 found that “the only occasions the veil could pierce is in regard to the “evasion principle,” which happens when a person is under an existing legal obligation or liability, or subject to an existing legal restriction, which he intentionally evades or whose enforcement he deliberately frustrates by interposing a company under his control.” From this, it is evident that three conditions must be met for the veil to be breached and liability imposed on a person (x):

Principles of separate legal personality

1. an existing legal obligation, penalty, or restriction placed on x 2. x must interpose a corporation to escape or frustrate the responsibility, liability, or restriction in question, and 3. the firm being inserted must be under x control. Plan Look at: ● Gramophone & Typewriter Ltd v Stanley [1908] ● Smith, Stone and Knight Ltd v Birmingham Corporation [1939] 4 All ER 116 (QB) ● Gilford Motor Co Ltd v Horne [1933] Ch 935 (CA) ● Lakatamia Shipping Co Ltd v Su [2014] ● Wood v Baker [2015] ● Chandler v Cape plc [2012] EWCA Civ 525 Methodology The research will take a doctrinal approach.

Principles of separate legal personality

A doctrinal approach will allow it to comprehend and analyse legal sources such as relevant legislation and case law. As a result, it will be possible to obtain a new or improved grasp of the law, as well as assist in identifying flaws in a statute or the court’s approach. Because the doctrinal approach can be combined with other ways, it will be possible to utilise a critical evaluation approach to criticise the law and assess how the law should be but with the assumption that the law can still be logically interpreted and applied (an inside-out approach), as well as an outside-in approach to look at the law and economics theoretical perspective of the corporation veil law. https://youtu.be/1eZz2MqKmn8

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