Exam (elaborations)
LLB Notes Company Law - Lifting the Corporate Veil
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LLB Notes Company Law - Lifting the Corporate Veil
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Lifting the Corporate VeilWho can lift the veil? - ANS Only the courts can lift the veil.
When? - ANS Can occur if director's abuse the principle of limited liability.
Statutory Basis - ANS s47 - failure to state the company's name correctly.
Correct name must appear on cheques etc.
Signatory will be personally liable if the company defaults.
SB - Fraudulent/Reckless Trading - ANS S610 - Court can declare a person
responsible for debts.
Privilege of limited liability cannot be used as a cloak to operate a fraudulent system.
SB - Proper Books of Account - ANS S609 - if proper books are not kept and this
contributed to the financial position, the director may be personally liable.
SB - Civil Penalties - ANS S210 - declaration of solvency is falsely made/without
reasonable grounds.
Director may be found liable.
S859 - ANS If a breach of a disqualification or restriction order is placed on directors,
director may be personally liable.
Enforcement of Judgment - ANS S53 - Veil may be lifted to enforce legal judgments
against officers, where the company has wilfully disobeyed the judgment.
Criminal Responsibility - ANS Statutes include provisions which make officers
criminally liable when the company commits an offence.
DPP v Rosberry Construction Ltd.
Misuse of the Corporate Form - ANS Evading existing legal obligations.
Cummins v Stewart - ANS Defendant had licence agreement which required him to
pay royalties.
Attempted to avoid this by transferring the licence to a separate company.
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