Company Law Topic Notes

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Questions and Answers

What does the principle of separate legal personality indicate about a company?

  • A company acquires a distinct personality that is separate from its owners. (correct)
  • A company cannot own property independently of its managers.
  • A company has contractual limitations consistent with its owners.
  • A company’s identity depends entirely on its shareholders.

What does the veil of incorporation protect shareholders from?

  • Having perpetual existence as a company.
  • Owning property independently.
  • Being able to enter into contracts.
  • Being held liable for the company's debts. (correct)

Under what circumstance can the veil of incorporation be pierced?

  • When there is only one shareholder involved.
  • Whenever a company is profitable.
  • When shareholders properly inform others of their business transactions.
  • When it is used to evade legal liabilities or limitations. (correct)

According to the content, what is a key consequence of a company's perpetual existence?

<p>The company's existence is not affected by changes in ownership. (C)</p> Signup and view all the answers

What did Lord Denning argue regarding groups of companies?

<p>A corporate group can be viewed as a single economic unit in law. (A)</p> Signup and view all the answers

In which case was the notion of lifting the veil discussed in relation to evasion of liability?

<p>Gilford Motor Co v Horn (B)</p> Signup and view all the answers

The agency argument can be used in limited cases to challenge which principle?

<p>The principle of separate corporate personality. (A)</p> Signup and view all the answers

What is a key aspect of a company's contractual capacity as mentioned in the content?

<p>A company can enter contracts independently of its members. (A)</p> Signup and view all the answers

What case established the principle of separate corporate personality?

<p>Salmon v Salomon (A)</p> Signup and view all the answers

Which of the following best describes the concept of separate corporate personality?

<p>A company operates independently of its shareholders and directors. (C)</p> Signup and view all the answers

Which term best describes the legal distinction that allows a company to act on its own behalf?

<p>Corporate personality (D)</p> Signup and view all the answers

What implication arises from the principle of separate legal personality?

<p>Companies can sue and be sued in their own name. (B)</p> Signup and view all the answers

In which type of case would the principle of separate corporate personality be most relevant?

<p>Litigation involving contracts held by the company (A)</p> Signup and view all the answers

What major change in understanding does the separate corporate personality provoke in terms of liability?

<p>Liability is limited to the company's assets. (B)</p> Signup and view all the answers

Which case is NOT related to the concept of separate corporate personality?

<p>Dimo Holdings v Jaeger Development (A)</p> Signup and view all the answers

What does the separate corporate personality principle protect shareholders from?

<p>Liability for corporate debts beyond their investment (C)</p> Signup and view all the answers

What is a principal decision established in Salmon v Salmon?

<p>Separate corporate personality is a clear and principal decision. (A)</p> Signup and view all the answers

Under what circumstances can the corporate veil be pierced according to the established principles?

<p>To prevent the abuse of corporate legal personality. (D)</p> Signup and view all the answers

What does the principle of nomineeship refer to in corporate law?

<p>A spouse can claim assets of the other through a corporate entity. (D)</p> Signup and view all the answers

In Adams v Cape Industries, what was reaffirmed regarding corporate personality?

<p>Liabilities incurred by a company are the responsibility of the company itself. (B)</p> Signup and view all the answers

What aspect did Lord Nueberger highlight in Prest regarding the court's analysis?

<p>The examination of specific facts is necessary. (D)</p> Signup and view all the answers

In the case of Akhmedova v Ackmedova, what was the wife’s contention regarding corporate assets?

<p>The company was merely a vehicle for her husband’s interests. (B)</p> Signup and view all the answers

What was the main legal issue in Urban Development Corp v Jacitiar?

<p>Whether adverse possession can apply to a company. (D)</p> Signup and view all the answers

What does the corporate veil generally protect according to the principles discussed?

<p>The separate legal identity of the corporation. (C)</p> Signup and view all the answers

Flashcards

Separate Legal Personality

A company is treated as a distinct entity from its owners, not liable for their debts or personal actions

Veil of Incorporation

A legal barrier that protects shareholders from personal liability related to the company's actions

Piercing the Veil

When a court disregards the separate legal personality of a company and holds shareholders personally liable

Agency

A legal relationship where one party (the agent) acts on behalf of another (the principal). (Used in some cases to ignore separate legal personality)

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Group of Companies

Multiple companies under common control usually acting as a single economic unit.

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Perpetual Existence

A company continues to exist even if its owners change.

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Contractual Capacity

A company's ability to enter into legally binding agreements.

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Company Ownership of Assets

A company can own and manage its own assets without the assets belonging directly to the owners.

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Separate legal entity

A company is treated as a distinct entity from its owners and managers, separate from them for legal purposes.

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Fiduciary duty

The legal obligation of a person in a position of trust to act in the best interests of another.

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Conflict of interest

A situation where a person's personal interests or relationships could potentially interfere with their ability to fulfill their duties or responsibilities in an unbiased way.

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Section 93 Safe Harbor

A provision allowing disclosure of interest in contracts, limiting liability for certain actions.

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Corporate Personality

The concept that a company is treated as a separate legal entity from its owners and managers.

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Disclosure of Interest

The act of revealing a personal stake or connection related to a transaction or decision.

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Duty to Avoid Conflicts

Obligation for individuals in positions of trust to prevent conflicts between their personal interests and their fiduciary responsibilities.

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Salmon v Salomon

Landmark case establishing the principle of separate legal entity for companies.

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Corporate Veil

The legal concept that separates a company from its owners (shareholders) and creditors.

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Piercing the Corporate Veil

A legal action to hold shareholders personally liable for the company's debts or actions that are fraudulent or create an abuse of company structure.

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Abuse of Separate Legal Personality

Using a company to evade the law or avoid legal responsibilities (e.g., hiding assets from creditors).

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Nominee Company

A company that legally holds assets or rights on behalf of another person or entity.

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Adams v Cape Industries

Case that established legal precedent on piercing the corporate veil

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Gilford Motor Co v Horne

Case where the court examined the relationship between a company's actions and its agents for the concept of piercing the corporate veil.

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Akhmedova v Akhmedov

Case emphasizing the importance of individual case examination in deciding whether to pierce the corporate veil

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Study Notes

Notice of Credit and Plagiarism Disclaimer

  • These notes were compiled using various textbooks and websites
  • Full credit is given to the authors of those sources.
  • Users are advised to paraphrase all material.
  • The author of this document is not liable for any plagiarism by users.

Table of Contents

  • Company law Topic and Lecture notes: 1
  • Topic 1 - Separate Legal Entity- Principle of Corporate Personality: 7
    • Summary: 7
    • Adams v Cape Industries Plc: 8
    • VTB Capital v Nutriteck: 9
    • 1A. Introduction: 9
    • Salomon v Salomon: 10
    • B. The vail of incorporation: 11
      • 1.B.i Consequences of the veil of incorporation: 12
          1. The company has perpetual existence/succession – a life of its own: 12
          1. The company has a contractual capacity: 13
          1. The Doctrine of Sperate ownership of property: 14
      • C. Piecing the Corporate Vail: 14
        • Gilford Moto Company v Horne and Another: 15
        • Commentary: 15
        • Jones v. Lipman [1962] 1 WLR 832: 16
        • Commentary: 16
        • Donovan Crawford v Financial Institutions Services Ltd [2003] UKPC 13: 16
        • NOTE- Agency: 17
    • Smith Stone & Knight Ltd v. Birmingham Corporation [1939] 4 ALL ER 116: 17
    • Topic 3 - Director's duties: 32
      • Summary: 33
      • Who and what is a director: 34
      • 3.1 Introduction: 34
      • 3.2 Definition of Director: 35
      • Who is a director?: 35
      • 3.3 De facto, De jure directors and Shadow Directors: 35
        • A. De facto Directors: 36
        • Re Hydro-dam 1994: 36
        • B. Shadow Directors: 37
        • Secretary of State for Trade and Industry v Devrell 2001: 38
    • 3.4 The board of directors and the duties imposed: 39
      • Section 60 – The Management Mandate: 40
      • Commentary: 40
      • Statutory fiduciary and non-fiduciary duty: 40
      • Section 99 – Director's Duties: 41
      • Commentary on section 99: 42
      • Unanimous shareholder agreement: 43
      • Section 137(2): 43
      • 3.4. A- The non-fiduciary duties of the directors under 99(1)(b): 43

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