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In certain circumstances the veil of incorporation has been lifted both judicially and by statute to reveal the reality of who owns and controls the company. The exceptions to the general principle are namely the agency and piercing the corporate veil.
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By incorporation, a company acquires separate legal personality, that is, the company is recognized as a person separate from its members, a principle established in Salomon v Salomon & Co Ltd (1897) and with that in time came the modern phenomenon of the corporate group with subsidiary companies owned by corporate shareholders. One of the principles of separate legal personality is that the company itself, rather than its members or directors is liable on its contracts. This problem question involves a parent company, H plc, which carried on a removal business using three subsidiaries: P Ltd, S Ltd and T Ltd. In certain circumstances the veil of incorporation has been lifted both judicially and by statute to reveal the reality of who owns and controls the company. The exceptions to the general principle are namely the agency and piercing the corporate veil. Firstly, we will consider the case of M, a...
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