Podcast
Questions and Answers
What is the concept of 'lifting the corporate veil'?
What is the concept of 'lifting the corporate veil'?
- It signifies the legal separation between a company and its shareholders.
- It refers to the process of merging two separate companies into one entity.
- It indicates the liability of a company for its employees' actions.
- It means that the court disregards the existence of the corporation because the owners failed to keep corporate requirements and formalities. (correct)
Under what grounds may the corporate veil be lifted?
Under what grounds may the corporate veil be lifted?
- Avoidance of welfare registration and enemy character.
- Reduction of number of members, fraudulent trading, misdescription of the company, premature trading, failure to refund application money, holding and subsidiary companies.
- Public interest and benefit of revenue.
- Judicial grounds like fraud or improper conduct, avoiding legal obligations, and statutory grounds like reduction of number of members. (correct)
In what situation can a company be assumed as an 'enemy company'?
In what situation can a company be assumed as an 'enemy company'?
- When it fails to refund application money to its shareholders.
- When its controlling persons reside in a country considered as an enemy. (correct)
- When it avoids legal obligations by exploiting statutory grounds.
- When it engages in fraudulent trading practices with other companies.
Under what circumstances can a company be considered a 'sham'?
Under what circumstances can a company be considered a 'sham'?
'For benefit of revenue' is considered a judicial ground for lifting the corporate veil in order to:
'For benefit of revenue' is considered a judicial ground for lifting the corporate veil in order to:
'Public interest' as a ground for lifting the corporate veil aims to:
'Public interest' as a ground for lifting the corporate veil aims to:
In the Salomon vs. Salomon case, what was the key reason for the House of Lords overturning the decision?
In the Salomon vs. Salomon case, what was the key reason for the House of Lords overturning the decision?
In the Macaura case, why did the insurance company refuse to pay for the insured timber that caught fire?
In the Macaura case, why did the insurance company refuse to pay for the insured timber that caught fire?
What was Salomon's initial business before it became a limited liability company (LLC)?
What was Salomon's initial business before it became a limited liability company (LLC)?
How many family members became shareholders in Salomon's LLC?
How many family members became shareholders in Salomon's LLC?
What was the outcome of the lower court's decision regarding Salomon's liability?
What was the outcome of the lower court's decision regarding Salomon's liability?
What did Mr. Macaura insure in his own name, leading to a legal dispute with the insurance company?
What did Mr. Macaura insure in his own name, leading to a legal dispute with the insurance company?
What did Mr. Macaura hold nearly all of?
What did Mr. Macaura hold nearly all of?
What was the business Salomon started before it became a LLC?
What was the business Salomon started before it became a LLC?
How many family members became shareholders in Salomon's LLC?
How many family members became shareholders in Salomon's LLC?
What was the outcome of the lower court's decision regarding Salomon's liability?
What was the outcome of the lower court's decision regarding Salomon's liability?
In the Macaura case, why did the insurance company refuse to pay for the insured timber that caught fire?
In the Macaura case, why did the insurance company refuse to pay for the insured timber that caught fire?
What was the key reason for the House of Lords overturning the decision in the Salomon vs. Salomon case?
What was the key reason for the House of Lords overturning the decision in the Salomon vs. Salomon case?
Under what grounds may the corporate veil be lifted?
Under what grounds may the corporate veil be lifted?
What did Mr. Macaura hold nearly all of?
What did Mr. Macaura hold nearly all of?
What are 4 points that show incorporated companies have a separate legal personality?
What are 4 points that show incorporated companies have a separate legal personality?
What is the concept of 'lifting the corporate veil'?
What is the concept of 'lifting the corporate veil'?
What was Salomon's initial business before it became a limited liability company (LLC)?
What was Salomon's initial business before it became a limited liability company (LLC)?
What situation led to the appeal to the House of Lords in the Salomon vs. Salomon case?
What situation led to the appeal to the House of Lords in the Salomon vs. Salomon case?
What is the judicial ground for lifting the corporate veil known as 'for benefit of revenue'?
What is the judicial ground for lifting the corporate veil known as 'for benefit of revenue'?
Explain the concept of a corporate veil and its principal features according to Salomon's case.
Explain the concept of a corporate veil and its principal features according to Salomon's case.
What are the judicial grounds for lifting the corporate veil and provide examples for each?
What are the judicial grounds for lifting the corporate veil and provide examples for each?
Explain the statutory grounds for lifting the corporate veil and provide examples for each.
Explain the statutory grounds for lifting the corporate veil and provide examples for each.
Under what circumstances can a company be considered a 'sham' and provide an example from the text?
Under what circumstances can a company be considered a 'sham' and provide an example from the text?
What is the concept of a company being employed as an agent and what are the requirements to establish this concept?
What is the concept of a company being employed as an agent and what are the requirements to establish this concept?
What is the significance of the 'public interest' ground for lifting the corporate veil?
What is the significance of the 'public interest' ground for lifting the corporate veil?
Explain the concept of 'for the benefit of revenue' as a judicial ground for lifting the corporate veil.
Explain the concept of 'for the benefit of revenue' as a judicial ground for lifting the corporate veil.
Under what circumstances can a company be assumed as an 'enemy company' according to the text?
Under what circumstances can a company be assumed as an 'enemy company' according to the text?
What is the concept of a company avoiding legal obligations and how does it relate to lifting the corporate veil?
What is the concept of a company avoiding legal obligations and how does it relate to lifting the corporate veil?
What was the outcome of the case where L agreed to sell a house to J, but later created a company and transferred the house to the company, which was controlled and owned by L only?
What was the outcome of the case where L agreed to sell a house to J, but later created a company and transferred the house to the company, which was controlled and owned by L only?
Explain the concept of a subsidiary company acting as an agent of the holding company, as mentioned in the text.
Explain the concept of a subsidiary company acting as an agent of the holding company, as mentioned in the text.
What is the significance of the 'for benefit of revenue' ground as a judicial ground for lifting the corporate veil, as mentioned in the text?
What is the significance of the 'for benefit of revenue' ground as a judicial ground for lifting the corporate veil, as mentioned in the text?
Companies can commit ______ and crimes
Companies can commit ______ and crimes
The principal features of Salomon’s case were that a company is a legal entity separate from its ______
The principal features of Salomon’s case were that a company is a legal entity separate from its ______
Lifting the corporate ______
Lifting the corporate ______
The court has the power to disregard corporate entity if its used to escape from ______ obligations.
The court has the power to disregard corporate entity if its used to escape from ______ obligations.
A company may be assumed as an ______ company when the persons who’s in control of its affairs resides in an enemy country.
A company may be assumed as an ______ company when the persons who’s in control of its affairs resides in an enemy country.
When a company is ______
When a company is ______
If the company is used to avoid legal ______, the court may disregard the company
If the company is used to avoid legal ______, the court may disregard the company
Issue: whether the subsidiary was carrying on the business as the holding’s business or as its ______.
Issue: whether the subsidiary was carrying on the business as the holding’s business or as its ______.
The courts may lift the veil to protect the ______ policy and prevent transactions opposite to the public policy
The courts may lift the veil to protect the ______ policy and prevent transactions opposite to the public policy
A company may act as an ______ of another company, based on the agency principle, the principal will be liable for the act of the company.
A company may act as an ______ of another company, based on the agency principle, the principal will be liable for the act of the company.
The company rejected on the grounds of that he wasn’t a ______, because the same person cannot be the employer and the employee.
The company rejected on the grounds of that he wasn’t a ______, because the same person cannot be the employer and the employee.
The company is responsible for its own debt and not the ______ C- Company can contract with their members, directors and outsiders.
The company is responsible for its own debt and not the ______ C- Company can contract with their members, directors and outsiders.
Salomon Vs. Salomon Case: Salomon started a small business of ______ making.
Salomon Vs. Salomon Case: Salomon started a small business of ______ making.
He asked his lawyer to make it ready, so 7 family members are now the ______.
He asked his lawyer to make it ready, so 7 family members are now the ______.
Mr Macaura holds nearly all the shares of a company that dealt with timber, he insured the timbers in the insurance company BUT he did so in his own ______.
Mr Macaura holds nearly all the shares of a company that dealt with timber, he insured the timbers in the insurance company BUT he did so in his own ______.
The insured timber caught fire, so he asked the insurance company to pay him for that, but the insurance company told him that they’re not liable to pay him because the insurance that he bought was in his ______ and not the company’s name.
The insured timber caught fire, so he asked the insurance company to pay him for that, but the insurance company told him that they’re not liable to pay him because the insurance that he bought was in his ______ and not the company’s name.
Even if he holds all the shares, and that no one has any property in the assets of the company, the insurance company will not ______.
Even if he holds all the shares, and that no one has any property in the assets of the company, the insurance company will not ______.
Earlier stated in Salomon case: Company’s debt is company’s ______.
Earlier stated in Salomon case: Company’s debt is company’s ______.
The house of lords overturned the decision, 'it doesn't matter if he has most of the shares because of the 'separate legal entity' so they had to sue the company and not Salomon ______.
The house of lords overturned the decision, 'it doesn't matter if he has most of the shares because of the 'separate legal entity' so they had to sue the company and not Salomon ______.
4 points that show incorporated companies have a separate legal personality: A- Company’s property is the company’s ______.
4 points that show incorporated companies have a separate legal personality: A- Company’s property is the company’s ______.
What did Mr. Macaura hold nearly all of?
What did Mr. Macaura hold nearly all of?
What was Salomon's initial business before it became a limited liability company (LLC)?
What was Salomon's initial business before it became a limited liability company (LLC)?
How many family members became shareholders in Salomon's LLC?
How many family members became shareholders in Salomon's LLC?
What was the outcome of the lower court's decision regarding Salomon's liability?
What was the outcome of the lower court's decision regarding Salomon's liability?
Study Notes
Lifting the Corporate Veil
- Lifting the corporate veil refers to the act of disregarding the separate legal entity of a company to identify the individuals behind it.
- The corporate veil can be lifted under the following grounds:
- For the benefit of revenue
- Public interest
- To identify the individuals controlling the company
- To prevent fraud or injustice
- To protect public policy
- A company can be considered a 'sham' if it is used to avoid legal obligations or hide the true nature of the business.
Salomon vs. Salomon Case
- Salomon started a small business of boot making before it became a limited liability company (LLC).
- 7 family members became shareholders in Salomon's LLC.
- The lower court initially held Salomon personally liable for the company's debts.
- The House of Lords overturned the decision, recognizing the company as a separate legal entity.
Macaura Case
- Mr. Macaura insured timber in his own name, leading to a legal dispute with the insurance company.
- The insurance company refused to pay for the insured timber that caught fire, citing that the insurance policy was in Macaura's name, not the company's.
- Mr. Macaura held nearly all the shares of the company that dealt with timber.
Incorporated Companies and Separate Legal Personality
- 4 points that show incorporated companies have a separate legal personality:
- Company's property is the company's own.
- Company's debts are the company's own.
- Company can contract with its members, directors, and outsiders.
- Company can sue and be sued in its own name.
Enemy Company
- A company can be assumed as an 'enemy company' if the persons controlling its affairs reside in an enemy country.
Agency Principle
- A company may act as an agent of another company, based on the agency principle, the principal will be liable for the act of the company.
- The court may lift the veil to protect public policy and prevent transactions opposite to public policy.
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Test your knowledge on the famous legal case of Salomon vs. Salomon, which established the principle of corporate personality. Explore the details of the case and its implications.
