This website uses cookies to ensure you have the best experience. Learn more

Veil Piercing Essay

1554 words - 7 pages

in this essay one is required to discuss whether section 163 (4) of the Companies Act, No 71 of 2008 codified the common law approach in piercing the corporate veil i.e. to what extent did the 2008 Act brought some certainty regarding to the grounds in which the courts will disregard the juristic existence of a company. To achieve this I’m going to first explore the position of common law in this field of law.
As a point of departure, the company is equal in law to a natural person. This is one of the cornerstones of South African company law, and has been since 1897 handed down in the Salomon case namely that a company is a legal entity distinct from its shareholders. It allows a company ...view middle of the document...

It is important to note than when the courts pierce the corporate veil, they would be doing so only to determine the rights, liabilities and obligations of the parties in the instance before it and, for all other purposes, the company’s separate existence and personality remains unaffected .
Trite law that the disregarding of the separate personality of the company is not to be done casually, as stated in Cape Pacific Ltd “It is undoubtedly a salutary principle that our courts should not lightly disregard a company’s separate personality, but should strive to give effect to and uphold it”
In the 1980 case, Lategan v Boyes the court gave a judicial affirmation of the veil piercing doctrine and said that there is no doubt that our courts would brush aside the veil of corporate identity time and again where fraudulent use is made of the fiction of legal personality . In addition to this the case of Amlin said that fraud, dishonesty or improper conduct could provide grounds for piercing the corporate veil. The court went further to say that veil could also be lifted where there is a façade i.e. where the company is a mere façade concealing the true state of affairs
In Clarkson Co v Zhelka the court ruled out that if a company is formed for the express purpose of doing a wrongful or unlawful act, or, if when formed, those in control expressly direct a wrongful thing to be done, the individuals as well as the company are responsible to those to whom liability is legally owed.
The case of Robinson v Randfontein illustrates that abuse of legal personality by directors to circumvent their fiduciary duties for personal aggrandisement can as well be a further instance of piercing the corporate veil.
More to the above, piercing can be accepted where the personality of the company is being used to avoid contractual obligations this was enunciated in the case of Gilford Motor Company .
Deciphering when the courts will and will not pierce the corporate veil seems to be the most confused issue surrounding the doctrine, mostly because there seems to be very little consistency in the application of this doctrine by the Courts.
In Lategan v Boyes , Loux J stated that fraud is the essential requirement for piercing the corporate veil and that a fraud committed by the company need always be present before the courts can pierce the veil. This was jettisoned in Botha v van Niekerk , where Flemming J stated that the statement in Lategan regarding fraud was incorrect. Flemming J formulated a test for veil piercing which was somewhat wider than the categorisation approach. The court held that there could be personal liability if it could be proved that the applicant had suffered an unconscionable injustice
More so the Cape Pacific case Smallberg J rejected the notion in Botha v Van Niekerk . The former case discarded by holding that the unconscionable injustice test is too rigid and that the needy of more flexible approach is necessary, under which...

Other Papers Like Veil Piercing

Lifting of the Veil Essay

956 words - 4 pages LIFTING THE VEIL OF INCORPORATION It is the legal façade created when a company is incorporated. Co-operation law enforces the principle but there are some exceptions to this rule i.e. where company is looked at not as a whole but as an individual member and although the company has subsidiaries the court ignores this and looks at the financial situation of the parent company. It may be called piercing the co-operate shell. A. STATUTORY

The Heart of Darkness Essay

789 words - 4 pages separated from his own culture for quite some time. He had once been considered an honorable man, but the jungle changed him greatly. Here isolated from the rest of his own society, he discovered the evil side and became corrupted by his power and isolation. Marlow realizes that only very near the time of death, does a person grasp the big picture. He describes Kurtz's last moments "as though a veil had been rent." Kurtz's last "supreme moment

Law 531 Week 5 Knowledge Check

917 words - 4 pages ? • Statutory exemptions • Implied exemptions • State action exemptions • Organization exemptions 10. When is a court likely to apply the piercing the corporate veil doctrine? • When a corporation is not generating adequate profits because of a drop in sales • When a shareholder has been found to be misusing corporate assets • When shareholders are not adequately participating in the management of the corporation

Legal Issues for Business

2529 words - 11 pages only answerable to the point of their investment. It is important to remember all transactions must be at arm’s length, to avoid piercing the corporate veil. • Income taxes: It is a fact that, corporations allows owners to take in hand, all the business matters of profit and losses and which can be of their interest as well and it is usually observed that owners not only take over all such financial matters but also take advantage of position and

A Study Of The Life And Career Of Lord Alfred Tennyson And Selected Criticisms Of His Works

1904 words - 8 pages redress? / Behind the veil, behind the veil." Among its other passages is a symbolic voyage ending in a vision of Hallam as the poet's muse. Some critics have seen in the work ideas, that anticipated Darwin's theory of natural selection. "Who trusted God was love indeed / And love Creation's final law - / Tho' Nature, red in tooth and claw / With ravine, shriek'd against his creed - ", the poet wrote. He was born in the same year as

Cash Flow

1732 words - 7 pages account, house, etc. to make up the difference. On the other hand, if a corporation runs out of funds, its owners are usually not liable. Please note that under certain circumstances, an individual stockholder may be liable for corporate debts. This is sometimes referred to as "piercing the corporate veil." Some of these circumstances include: * If a stockholder personally guarantees a debt. * If personal funds are intermingled with

Film Term Paper. About Apocalypse Now

4788 words - 20 pages ),' meaning that Kurtz went insane and allowed himselfto be worshipped as a god. It appears that while Kurtz had been isolatedfrom his culture, he had become corrupted by this violent native culture,and allowed his evil side to control him.Marlow realizes that only very near the time of death, does a person graspthe big picture. He describes Kurtzís last moments 'as though a veil hadbeen rent (Conrad, 239).' Kurtzís last 'supreme moment of

Shelley's Hymn To Intellectual Beauty And Mont Blanc

2024 words - 9 pages . "Poetry," Shelley states in his Defense, "lifts the veil from the hidden beauty of the world, and makes familiar objects be as if they were not familiar" (961).[1] In "Hymn to Intellectual Beauty" and in "Mont Blanc," Shelley offers an intriguing, though perplexing, look at the functioning of the human mind under the influence of nature, inspiration, and poetic creativity. Composed during a tour of the vale of Chamonix between June 22 and

Severe Mercy in King Lear

3267 words - 14 pages Severe Mercy in King Lear        The best thing about King Lear is that the deeper you dig, the more meat you find. It seems straightforward enough, except that every now and then something leaps out of the dialogue that severs the veil of coherent reality to strike sharp blows at the eternal Within. Even with a minimum of thought, few, I think, when considering King Lear, could emerge unshaken. There are shining archetypes of pain and

Limited Liability Company

4405 words - 18 pages , they are generally liable for their own actions, but only if they act on their own and not on behalf of the company. He or she may also be liable if they personally guarantee a debt or obligation to a third party. Under the "piercing-the-corporate-veil" theory an individual member may become personally liable, if the LLC is undercapitalized, fails to follow corporate formalities, or engages in fraud.Advantages of a Limited Liability CompanySome

Freedom And Responsibility

2141 words - 9 pages Built within the Constitution of the United States are specifically defined freedoms that are guaranteed to all citizens. Conversely, with every constitutional freedom there comes a corresponding responsibility. On September 25, 1789, the state legislature’s twelve proposed amendments were transmitted by congress, the first two dealing with congressional representation and congressional pay. The following numbers three through twelve were

Related Essays

Piercing The Veil Essay

875 words - 4 pages lawsuit, if you suspect there is an ongoing abuse of corporate privileges, you may apply a legal theory known as the "alter ego doctrine" -- or "piercing the corporate veil" -- to reach past the corporation and attach liability to the principals. When to Apply the Alter Ego Doctrine Corporations are recognized by the law as "persons." They have a life of their own, and must be kept separate and apart from the humans who own and run them. To

Buffalo Creek Disaster Paper

758 words - 4 pages uncontrollable way. The judge felt that Pittston could be held liable and therefore could be tried as the defendant in this case as a result of this. Piercing the corporate veil is a tricky and rare thing in corporate law. There has to be a sufficient and significant cause to go after the shareholder’s; the American legal system is designed to protect corporations in these instances. In Pittston’s case, it was found that the Buffalo Creek Mining Company was

"The Call To Mysticism" By Tim Holmes In The Exhibit Calld "Art In The Age Of Terror"

639 words - 3 pages . The approximate size of the painting is fifty-eight by thirty inches.I arrived at the art museum and started circling the different rooms. Then I saw it, those piercing eyes that see right through you and a long black veil that covered her whole body except her one arm. Her eyes were drawn to perfection, as if she were speaking a story but could hear no voice. Her body was draped with thick, black, vertical lines that began from her head and

Individual Discusion Essay

459 words - 2 pages piercing the corporate veil. Courts can apply this doctrine in cases in which the corporation has not kept separation between itself and the shareholders. By not keeping meeting records, Tom may have violated this separation. I predict that the court will side with the plaintiff and see Tom’s recordkeeping as an intentional act to hide behind the corporate veil. In the case of Northeast Iowa Ethanol, LLC v. Drizin (Cheeseman, 2010, p. 296) the courts