BUSINESS LAW PRESENTATION Essay Example | Topics and Well Written Essays - 1000 words

BUSINESS LAW debut - Essay ExampleAny debts of the company thus be not the responsibility of the shareholders save to the boundary of the value of their investments in the company.The scale of Solomon Vs Solomon (1897 AC 22) laid strong foundation for this principal and has been cited as a landmark case in times of debate and confusion by the courts all over the world. The judiciousness also recognised that the principle was to be of general nature assuming that there was no drool and no performance and if the company was a real one and not a fiction or a myth. Hence one can say that the courts would bring down integrated form in case it was useOver the years the corporate veil has been pierced in the circumstances when the courts restrain gone beyond the artificial judicial status of a corporate to fix responsibility on human beings interface this is commonly known as piecing (lifting) the corporate veil. Based on the decided cases the circumstances at a lower place wh ich the courts have lifted the veil of incorporation can be broadly categorised as follows1. 1. Where a relationship of agency is found to exist - In the case of Smith, Stone and Knight v Birmingham Corporation 1939 All ER 116 the plaintiff company successfully received the compensation for the land on which its subsidiary was located, acquired by the suspect by proving that the subsidiary had acted as its agent at all the times and it should not be treated as a separate legal entity from it. The court looked for six affirmative answers to the questions for deciding the case which were a) preaching of the profits that of the parent b) managers of the subsidiary appointed by the parent c) was the parent the head and brains of the trading menace d) did the parent govern the venture e) the skill and control of parent enabled the profit of the subsidiary f) was the parent de facto unalterable controller of the subsidiaryIn the case of Munton Bros hold v Secretary of State 1983 NI 3 69 the label opined that while courts are loath to treat a company as an agent of individual shareholders, they are not that reluctant to treat a subsidiary of a parent as its agent as in such a case the concept of incorporation is not violated.2. Where the company is being used as a mechanism to avoid legal obligations - Here the decisions as based on whether the legal obligations are present or future. In case present legal obligations are being avoided, the courts have disregarded the corporate identity as in the cases of Cummings v Stewart 1911 1 IR 236 and Mastertrade (Exports) Limited v Phelan 4 December 2001, Unreported, High Court (Murphy J) the legal obligations were sought to be avoided behind the fit out of corporate structure which as pierced by the courts. In the case of Adams v Cape Industries 1990 Ch 433, the courts refused to disregard the corporate identity as it was an inherent right within the corporate law to use the corporate structure such that the future leg al liabilities fall on another company