Nobody downloaded yet

Piercing the Corporate Veil - Essay Example

Comments (0) Cite this document
Summary
This study looks into principle of corporate veil. A company is vested with limited liability upon incorporation. This stratagem protects the interests of investors in such companies. A major benefit provided by it relates to the making available of capital for major industrial developments. …
Download full paperFile format: .doc, available for editing
GRAB THE BEST PAPER93.1% of users find it useful
Piercing the Corporate Veil
Read TextPreview

Extract of sample "Piercing the Corporate Veil"

Download file to see previous pages The paper tells that the provision of limited liability to incorporated companies enhanced investments from a large number of small and large investors. It would not be far from the truth to assert that the growth of the modern economy and industrial development can be attributed to this principle of limited liability. Investors are no longer required to harbour apprehensions regarding their investments and from being held accountable for the liabilities of the company in which they had invested. It has been contended by the majority that the proper functioning and growth of stock markets has been affected by limited liability. Moreover, it has simplified the task of evaluating the assets of companies. Furthermore, limited liability has excised the uncertainties, risks, and liabilities experienced by investors in the past. Shareholders can monitor the behaviour of their company to a much greater extent than in the past. Modern economic development requires large – scale capital inflow. The limited liability effectively ensures the availability of capital from investors. The House of Lords established the doctrine of corporate personality in Salomon v Salomon. Under this principle, private investors and shareholders of companies were permitted to organise their business, via the corporate legal form. It also allowed entrepreneurs and institutional investors to monitor their investment strategies. In the absence of the legal form of the company, shareholders and investors were at the risk of being personally held liable to the creditors of the company (Muchlinski, 2010, p. 918). It has been perceived that this doctrine has increased the influence of shareholders and investors in the functioning of the company and in its business strategies. However, the majority of the people have welcomed the doctrine of limited liability, as it eliminates the direct responsibility of shareholders in the management of the company (Muchlinski, 2010, p. 918). The process of globalisation has substantially increased business activity and the operations of multinational corporations (MNC) at the global level. The separation of legal form of the company from its shareholders and investors has brought about several jurisdictional problems and the domination of MNCs in business (Muchlinski, 2010, p. 920). These problems have come to the fore due to different legal systems in the world. In addition, the state regulatory mechanisms that pertain to the MNCs differ from each other. The limited liability concept externalises the risk from group of investors. Ultimately, it transforms global legal order into national and sub-national jurisdictions. Thus, the corporate veil has assumed the garb of a jurisdictional veil, and the MNCs are using this veil to limit risk of liability (Muchlinski, 2010, p. 920). Moreover, Jurisdiction has emerged as an important aspect of international commercial transactions. The MNCs have established a parent – subsidiary culture in international business, which creates ambiguity in determining the appropriate jurisdiction for disputes. The difficulty chiefly arises because the jurisdiction of the parent company and that of its subsidiary are different. Consequently, disputes with a subsidiary cannot be addressed by the legal system of the parent company’s host country, in order to determine liability (Muchlinski, 2010, p. 920). InAdams v Cape Industries, a UK based parent company exported asbestos from its mines in South Africa. It had conducted this export via a sales subsidiary and thereafter through an ...Download file to see next pagesRead More
Cite this document
  • APA
  • MLA
  • CHICAGO
(“Piercing the Corporate Veil Essay Example | Topics and Well Written Essays - 2750 words”, n.d.)
Retrieved de https://studentshare.org/law/1395418-piercing-the-corporate-veil
(Piercing the Corporate Veil Essay Example | Topics and Well Written Essays - 2750 Words)
https://studentshare.org/law/1395418-piercing-the-corporate-veil.
“Piercing the Corporate Veil Essay Example | Topics and Well Written Essays - 2750 Words”, n.d. https://studentshare.org/law/1395418-piercing-the-corporate-veil.
  • Cited: 0 times
Comments (0)
Click to create a comment or rate a document

CHECK THESE SAMPLES OF Piercing the Corporate Veil

Law for Managers- Lifting the Corporate Veil

...?The concept of separate legal personality is of great importance in company law but it has been realised that under certain occasions, it has been used to shield erring directors. Against this background, this essay seeks to critically analyse the circumstances under which the corporate veil can be lifted as well as analysing the effectiveness of the law in piercing this veil when necessary. The essay starts by outlining the overview of the concept of legal personality through analysing different court cases that have influenced the development of the law and the decisions made by the courts. The essay will also consider the wide range of circumstances where the corporate veil can be pierced and this can be both under statute... directors...
11 Pages(2750 words)Essay

Lifting the Corporate Veil

.... The decision of Salomon also formed the beneficial concept that shareholders would be afforded limited liability in the event of insolvency of the company. Despite the passing of more than a century, the dicta of the House of Lords has stood strong as an “unyielding rock”,7 even enjoying codification in section 16(2) of the Companies Act 2006. Yet, as has tended to be the case with such a broad principle, it is not unconditionally applied to every case, and as techniques were developed which took advantage of separate legal personality, so the courts adopted exceptions to the principle under which the corporate veil could be pierced or lifted. Many theorists have attempted to establish...
10 Pages(2500 words)Essay

The Corporate Veil in the UK and US

...corporate governance seem to not be followed or respected. The statutory tools for lifting the corporate veil are criticised as being uncertain, and the courts use them in an unpredictable way,27 though it is said that the courts favour the importance of the corporate veil and do not lift it willingly: they are often reluctant to.28 Lord Diplock has said that the statutory tool for lifting the veil is limited so that “any Parliamentary intention to pierce the corporate veil would be expressed in clear and unequivocal language”, though the absence of the clear language does allow the...
15 Pages(3750 words)Coursework

The Veil - Marjane Satrapi

...?The Veil - Marjane Satrapi The Veil is the first section of Marjane Satrapi's published graphic autobiography, Persepolis. Essentially, it established the direction and thematic framework of her entire narrative as it told the story about how Satrapi - as a young child - was forced to wear veil at her school. It was set in 1980, after the Islamic Revolution installed the strict fundamentalist government in Iran. The significance of this section is the way its depicted scenes were characterized by symbolisms. Motif The entire Persepolis graphic novel is drawn in black and white and the potency of this style is, of course, first displayed in The Veil. Satrapi began her...
3 Pages(750 words)Essay

Tattoos and Body Piercing

...? Tattoos & Body Piercing Since the beginning of civilization, people have been involved in variety of practices and trends that have helped them in expressing themselves in more creative and innovative manners. For this purpose, they have used variety of methods such as decorating their bodies, writing, poetry, sports, music, paintings etc. all these forms of expressions are popular in different proportions in varying geographical locations. However, the trend of decorating the body through tattooing or body piercing has always held a controversial status in societies all around the world. Some people who are against any notions of self-harm treat it as a vengeance and disregard its existence while those...
5 Pages(1250 words)Research Paper

Lifting the Corporate Veil

...from having any effect on or being counted in relation to the legal obligations and obligations of the company.5 The existing statutory exceptions to the lifting of the veil are rather difficult to determine with a great amount of certainty;6 the concept that Salomon is a fundamental principle results in it being set aside with difficulty and even some reluctance on the part of the courts.7 As Lord Diplock claims, the statutory basis of the corporate veil is preserved, so that “any Parliamentary intention to pierce the corporate veil would be expressed in clear and unequivocal language”, however the lack of such clear language could...
6 Pages(1500 words)Coursework

The Veil in Islam

...The veil of Islam In the contemporary society, the modest outfit of Muslim women has massively grown to become a commonplace. In fact, the hijab, which is an Arabic word that is commonly used to describe the Islamic dress code, is normally applied in English language. Over the years, the hijab, one of the most notable aspects of Islam, has been a subject of controversy in many instances. A frequent misconception about the practice of modest dressing is that it is not mandated only for women (Ernst 77). Thus, many people perceive that the requirement is an act of subjugation of Muslim women. Muslim women who strictly adhere to the requirement believe that it is an act of obedience to God and a stride towards freedom. In...
3 Pages(750 words)Research Paper

Abuse of Separate Entity lifting the corporate veil

...Abuse of Separate Entity: Lifting of Corporate Veil 0 Introduction; A company incorporated under the Companies Act has invariably been regarded asa separate entity as distinct from its shareholder. Though several legal pronouncements had reiterated this point, the decision in the case of Salomon V Salomon & Co [1897] AC 22 had been a landmark decision to stress this point. This is the sort of a protection for the available to the shareholders to escape from the liabilities committed by them with third parties on behalf of the company. Hence sometimes the courts would decide to pierce through the veil and fix up the liability on the shareholders or any other person who is...
8 Pages(2000 words)Essay

Extreme body piercing (or modification)

...Body piercing and tattooing have long been in existence mostly as traditional ritual in various cultures in the world. People have been piercing their various body parts as part of tradition or as a way of beautifying themselves with jewellery and other accessories pierced in their various body parts. Tattooing has been a very popular ritual among the various tribes also. Today the focus of piercing has shifted from the traditional ritual practice to a fashion statement. In India, nose rings and earrings have been worn by women for centuries as beauty accessories while the royalties of ancient Egypt have been known to practice ear and naval piercing. It...
2 Pages(500 words)Essay

The Ministers Black Veil

...The Minister’s Black Veil – an analysis The human world has been ridden with sins since the creation began. Right from the day when Adam and Eve had taken the bite of sin and knowledge simultaneously, the evil trait has planted its seed within the soul of man. Each person who says a prayer in the morning might fall to the temptation of sin when darkness covers the earth. Even an individual who might appear pure from the outside might reveal his evil nature when time prompts him. Although faith in God might have done away with the evil, man’s spirit is weak and therefore he finally gives way to the temptation of sin. Milton Stewart’s comment is remarkable in this regard, “Evil will forever reign over good, for the...
6 Pages(1500 words)Essay
sponsored ads
We use cookies to create the best experience for you. Keep on browsing if you are OK with that, or find out how to manage cookies.

Let us find you another Essay on topic Piercing the Corporate Veil for FREE!

Contact Us