How the transparency of the moral personality of a company impact the english law: cases of lifting the veil.

Pages: 14 (3491 mots) Publié le: 6 janvier 2011
How the transparency of the moral personality of a company impact the English law: Cases of lifting the veil.


The predominance of higher interest to explain the lifting of corporate veil 3
The recognition of certain economic realities 7
The transparency of legal personality in the company's relationship with the outside world. 8
Transparency in relations between shareholders 10Conclusion 11
Books 14
Articles 14
Legislation 14
Other Written Sources 15

One of the key rights in modern law is the notion of separate personality of the company. In English law, the principle of a separate personality between the company and its members is called corporate veil, it found his essence in the famous case of Salomon v Salomon & Co Ltd[1]. Mr.Solomon had converted his business into a company and the new shareholders were members of his family, who were only nominee. The House of Lords agreed that the company had a separate legal personality. This judgment is the foundment of companies’ personality and is considered as jurisprudence. This principle is rarely contested; nevertheless legislator had chosen to make some distinctions.

Indeed,in certain circumstances, and in order to take into account a different reality, they are determined to lift the corporate veil[2]. Sometimes there is total transparency, where the legal entity is completely ignored and only the shareholders are taken into account, is for example the case when a parent company is held liable for the debts of its subsidiary, whose the separate personality isconsidered purely apparent. Sometimes, the veil is only lifted to submit other rules or obligations to the company than those which would normally apply.

The authors have sometimes tried to classify the situations in which the corporate veil personality is often raised, but these attempts have only highlighted the heterogeneity of transparency cases. The fact remains that the separation of entitiesis still the foundation of English company law[3]. Examining the various manifestations of transparency, a tendency has emerged.

Created initially as a way to retrain the misuse and abuse of the legal personality concept, it is no longer reserved for borderline cases, and it no longer has that uniqueness from external factors intervention[4]. It is why we can think that English law begins totake into account the economic reality of the market.

The predominance of higher interest to explain the lifting of corporate veil

At first, it seems that only the idea of fraud allows bypassing the corporate veil. First of all, the idea was to prevent that somebody can hide himself behind the screen of the legal personality in order to perform acts or enjoyment of rights who couldn’t havenormally as an individual.

The fact that an individual is trying to raise the capital that his personal wealth isn’t sufficient to provide and in the same time wanting to limit its liability to the amount of his contributions can’t be easily tolerated by the creditor. It is nevertheless admitted in the English law that a one member compagny is answering to a need and the simple fact that all theshares of a company are actually united in the hands of one person is not enough that the abuse is established[5].

However it remains conditons to be fullfilled. For example, you need to consider the minimum legal of shareholders in a company (different according to the type of society). The fact remains that if the number of shareholders falls below the minimum allowed, and the companycontinues its activities beyond a period of six months, creditors, the Department of Trade or a shareholder may ask for dissolution.It is not yet a duty and the creditors of the company may act directly against the shareholders for the payment of their debts without even having to order the winding up[6]. Under Article 31 of the Companies Act of 1948, you have a total transparency of the corporation....
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