Corporate Veil

Introduction The main concept in the assignment is ab appear corporate disposition. First of all, we unavoidableness to clarify the meaning and characteristics of gild. In short, alliance means a body of persons combined for a common object. A follow exist at that place must be a group of persons that more than 1 persons. In eyes of law, a comp whatsoever is a fragmentize legal personality from its members. In Section 16(5) CA1965, it stated that a body corporate obligations and liabilities ar its decl be, and non those of its participation it can sue and be sued in its own name the property is not the property of its participants and company can inaugurate into a contract.Whilst, we need to understand the types of Joes company belong to. In section 16(4), it stated that company divided into 4 types that are exceptional by shares, restrict by guarantee, limited by guarantee and shares and the uttermost(a) 1 was unlimited companies. While Joes company belongs to comp any limited by shares, it means that members liability is limited to undischarged amount on the shares taken up by them, it stated in section 18(3) CA 1965. From the complete assignment, we need to identify whether corporate screen can be lifted in the particular situation.So, we need to produce an understanding what is corporate embryonic membrane. Corporate veil it can define as signalizes company from its members, or we can say that legal person (company) separate from its members. Since company is a separate entity with its members, the company has power to hold land, enjoys eternal succession even the death of one of its member, the company leave behind not dissolve. Next, we going to identify in what situation corporate veil will be lifted. Lifting the corporate veil it means that separation between company and its participants does not exist anymore.The dally will lift the corporate veil when controllers behave some unethical behavior, or controllers concern about th eir interest much more than other parties interest. Corporate veil may be lifted either by the woos/case law or by statutory. Under case law it can be divided into 6 different categories, it shows as below i. Fraud It means individual use the separate legal entity to do something forbidden from doing to avoid from legal obligation. ii. sureness It means authority or capacity of one person to stimulate legal relations between a person occupying the position of pattern and third parties. ii. Group of companies Group of companies means that corporate group bodily structure corporate veil is lifted to treat the parent company as liable for the acts of the subsidiary. iv. Single economic entities It means each company in a group of companies is a separate legal entity possessed of separate rights and liabilities v. Tax evasion Company trying to reduce tax by inter transfer their assets between subsidiary vi. Tortious claims It means allows lawsuits by people who claim that they hav e been harmed by wrongful acts, including negligence by government agencies or their employees.Under statutory, i. Section 36 Company deport 1965 By this section where the number of members of a company falls to one and the sole remaining member knowingly carries on business for a period longer than six months, he will be personally liable for the debts incurred after the first six months. ii. Section 121(1) & (2) Company execution 1965 By this section where an officer signs on behalf of the company, a cheque, promissory tone of voice etc, and the companys name is not properly stated therein, he will be personally liable to the holder of that bill etc, if the company does not pay. ii. Section 67 Company portrayal 1965 A company cannot give financial assistance directly or indirectly to any person to purchase its own shares. iv. Section 169 Company Act 1965 theater directors of a holding company are required to produce group accounts in which the assets, liabilities, profit and losses of the group as a whole are reflected. v. Section 140 Income Tax Act 1967 By this section the Director General of Inland Revenue may ignore any doing or disposition which has the effect of avoiding or evading tax. vi.Section 365(2) Company Act 1965 If a dividend is paid when there are no profits available, all(prenominal) directors and manager of the company who willfully paid or permitted the payment of dividend is shamed of an offense. vii. Section 303(3) Company Act 1965 In the level of a knotty up, it appears that an officer of a company who was party to the contracting of a debt had no reasonable expectation that the company would be able to pay the debt, the court may declare that the officer be liable for the payment of the whole or part of the debt. iii. Section 304(1) Company Act 1965 If in the course of a winding up it appears that the business of a company has been carried out on with the intent to defraud creditors or for any fraudulent purpose, the court, on the application of the liquidator, may declare that any persons who were knowing parties to the fraud are liable to make such contributions (if any) to the companys assets as the court thinks proper.