Successfully reported this slideshow.
We use your LinkedIn profile and activity data to personalize ads and to show you more relevant ads. You can change your ad preferences anytime.

Doctrine of separate_legal_entity company law

23,951 views

Published on

doctrine of separate legal entity for company law

Published in: Career
  • Be the first to comment

Doctrine of separate_legal_entity company law

  1. 1. The effect of incorporation Doctrine of separate legal entity – the company and its members are two separate/ distinct entities Salomon lwn. A Salomon co. & Ltd Lee lwn Lee’s Air Farming Ltd. 1 GLUP3064 - Separate legal entity
  2. 2. Characteristics of a company S 16(5) CA 1965 Power of a corporation Can sue and be sued Perpetual succession Can hold property under its own name Liability of a member 2 GLUP3064 - Separate legal entity
  3. 3. Characteristics of a company 1. Power of a corporation  As from the date of incorporation, a company acquires a legal entity. It becomes a legal person. It is distinct from its own members. 3 GLUP3064 - Separate legal entity
  4. 4. Characteristics of a company 2. Can sue and be sued  A company can sue and be sued under its own name  Foss lwn Harbottle 4 GLUP3064 - Separate legal entity
  5. 5. Characteristics of a company 3. Perpetual Succession  A company will still continue to exist even though all its members died.  Re Noel Tedman Holdings Pty Ltd. 5 GLUP3064 - Separate legal entity
  6. 6. Characteristics of a company 4. Power to hold property  A company may hold property under its own name.  Macaura lwn Northern Assurance Co Ltd. 6 GLUP3064 - Separate legal entity
  7. 7. Characteristics of a company 5. Liability of members  A member would not be personally liable for the company’s debt. The member’s liability depends on the type of company being incorporated. 7 GLUP3064 - Separate legal entity
  8. 8. LIFTING OF THE CORPORATE VEIL The corporate veil refers to the doctrine of separate legal entity. All the company’s liabilities is separated from the members’ liabilities. The Court would not lift the veil in order to find out who actually is liable on the company’s debt. 8 GLUP3064 - Separate legal entity
  9. 9. LIFTING OF THE CORPORATE VEIL The Court would however lift the corporate veil in order to find out who the wrongdoer is or the person liable for the company’s debt under TWO circumstances. 9 GLUP3064 - Separate legal entity
  10. 10. LIFTING OF THE CORPORATE VEIL 2 SITUATIONS: Statutory exception 10 GLUP3064 - Separate legal entity Judicial exception
  11. 11. LIFTING OF THE CORPORATE VEIL Statutory exception 1. S 36 CA 1965 - Statutory prohibition on carrying a business with members less than two. 11 GLUP3064 - Separate legal entity
  12. 12. LIFTING OF THE CORPORATE VEIL Statutory exception 2. S 121(2)(c) - an officer signing an incomplete document on behalf of the company would be liable on the mistake so made. 12 GLUP3064 - Separate legal entity
  13. 13. LIFTING OF THE CORPORATE VEIL Statutory exception 3. SS 303(3) + 304(2) - the officer making loan on behalf of the company and believing that the company is incapable of settling the debt; the officer would then be liable on the loan so made. 13 GLUP3064 - Separate legal entity
  14. 14. LIFTING OF THE CORPORATE VEIL Statutory exception 4. S 304(1) - For a company carrying on the business in the form of fraudulent trading, the Court upon application by creditor/ contributor/ liquidator may order the officer concerned be made liable for the company’s debt. 14 GLUP3064 - Separate legal entity
  15. 15. LIFTING OF THE CORPORATE VEIL Statutory exception 5. S 365(2)(b) - director would be made liable on the dividend paid not from profit. 15 GLUP3064 - Separate legal entity
  16. 16. LIFTING OF THE CORPORATE VEIL Judicial Exception 1. The company has been used to manipulate or evade liability. - Gilford Motor Co. lwn Horne - Jones lwn Lipman - Re Darby 16 GLUP3064 - Separate legal entity
  17. 17. LIFTING OF THE CORPORATE VEIL Judicial Exception 2. The company has been agent or ‘alter ego’ to its members. - Aspatra S/B lwn Bank Bumiputra Malaysia Bhd. 17 GLUP3064 - Separate legal entity
  18. 18. LIFTING OF THE CORPORATE VEIL Judicial Exception 3. When the company has been used as mask to cover a wrongful act. - Re FG(Films) Ltd. 18 GLUP3064 - Separate legal entity
  19. 19. LIFTING OF THE CORPORATE VEIL Judicial Exception 4. When the Court acts on analogy and equity - Orri lwn Moundreas 19 GLUP3064 - Separate legal entity
  20. 20. LIFTING OF THE CORPORATE VEIL Judicial Exception 5. When it involves group of companies - Hotel Jaya Puri Bhd. lwn National Union of Hotel, Bar & Restaurant Workers 20 GLUP3064 - Separate legal entity

×