Law for Managers- Lifting the Corporate Veil Essay

Law for Managers- Lifting the Corporate Veil - Essay ExampleThis demonstrate talks about an association of persons or an organised body discount acquire legal reputation in the few ways that are recognised by the right. There are mainly triad ways in which this female genitalia be effected and these are by way of separate playact, normal enabling Act or by conduct. Legal personality can be acquired by rightfulness of separate Act obtaining within a particular legal framework of a given foundation or in terms of a general enabling Act such as the Companies Act which is used in many countries. This is modelled under the English common law. Many of the English common law of companies were readily accepted by different countries which adopted this form of law as their guiding rationale in the legal framework and these were also accepted by the courts with little or no modification. It can also be seen that an association of 20 persons can also acquire legal personality by con ducting itself as a legal person in compliance of certain requirements. On its formation, the party as a separate entity acquires the capacity to have its own rights and duties. Once the order has been incorporated, it can be tempered as an independent person with rights and liabilities that are appropriate to itself. The brief facts of the leading case were as follows Salomon was the furbish up proprietor of the prosperous company and he distinguishable to turn the business into a limited company after realising its great potential. Salomon received 10 000 in debentures from shareholders which were secured by a bond of the companys assets. ... The brief facts of the leading case were as follows Salomon was the sole proprietor of the prosperous company and he decided to turn the business into a limited company after realising its great potential. Salomon received ?10000 in debentures from shareholders which were secured by a bond of the companys assets. However, the company face d a downturn of events and had to be liquidated through the sale of the assets. The sale of assets was far short to cover the debentures whereby the liquidator suggested that creditors had to be paid runner before the debentures. Thus, the shareholders were left in the cold. Apparently, the court ruled in favour of Salomon on the reasonable ground that the company was just like Salomon. It was treated as an individual person. This given scenario aptly illustrates the magnitude to which this the supposition of legal personality has come under criticism for shielding the erring company directors. Though it is in general accepted that upon incorporation, the company comes into existence as a separate entity, many divergent views have emerged which challenges the rightfulness of this particular concept in as far as the operations of a particular company are concerned. Strydom (2007) posits to the effect that this legal provision gives more power to the directors and at times it ofte n disadvantages the trusting shareholders of that particular company. Given such a scenario, it can be noted that some directors can purport advantage of this unfavourable balance in the law which can result in losses beingness incurred by other people. In as far as fraud is not suspected in the demise of the company, the court can rule in favour of the director since he or she can be treated just like an individual person. The company is protected as