Lifting the Veil: Imagination and the Kingdom of God

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When the true legal position of a company and the circumstances under which its entity as a corporate body will be ignored and the corporate veil is lifted, the individual shareholder may be treated as liable for its acts. Ziolkowski, Theodore (Summer 2008). "The Veil as Metaphor and Myth". Religion & Literature. 40 (2). From the juristic point of view, a company is a legal person distinct from its members [Salomon v. Salomon and Co. Ltd. (1897) A.C 22]. This principle may be referred to as the ‘Veil of incorporation’. The courts in general consider themselves bound by this principle. The effect of this Principle is that there is a fictional veil between the company and its members. That is, the company has a corporate personality which is distinct from its members. But, in a number of circumstances, the Court will pierce the corporate veil or will ignore the corporate veil to reach the person behind the veil or to reveal the true form and character of the concerned company. The rationale behind this is probably that the law will not allow the corporate form to be misused or abused. In those circumstances in which the Court feels that the corporate form is being misused it will rip through the corporate veil and expose its true character and nature disregarding the Salomon principal as laid down by the House of Lords. After Adams v. Cape Industries it seemed that there will need to be an express agency agreement for such a relationship to be found. Held that the company was a sham. It had no life of its own, no employees and was a vehicle for the directors’ impropriety.

Proclus said the statue was in the adyton of a temple at Sais, but the inner areas of Egyptian temples were not accessible to anyone but priests, and it is unlikely that a statue of a deity would have been permanently veiled; priests saw the cult image of the god every day when performing temple rites. However, a statue in a temple's courtyards or halls could have borne an inscription similar to the one Plutarch and Proclus related. [2] The first part of the inscription—"I am all that has been and is and shall be"—means the goddess encompasses everything. This claim was commonly made of creator gods such as Ra or Amun in Egyptian religion; if the same was said about Isis, it reflected her increased status in Greco-Roman times, in which she was often said to be the creator of the world. The second part—"no one has ever lifted my mantle"—implies that the goddess was virginal, a claim that was occasionally made of Isis in Greco-Roman times but conflicted with the long-standing belief that she and her husband Osiris conceived their son Horus. [4] Proclus's version suggests that the goddess conceived and gave birth to the sun without the participation of a male deity, which would reflect Egyptian myths about Neith as the mother of the sun god Ra. Another possible explanation, suggested by the Egyptologist Jan Assmann, is that the latter part of the Egyptian inscription said "There is nobody except me", proclaiming that the all-encompassing goddess was unique, and was mistranslated into Greek as "there is nobody who opened [or: uncovered] my face." [2] Isis and Artemis as nature [ edit ] Science unveiling Nature in the frontispiece to Anatome Animalum, 1681 Macey, Jonathan R. (27 March 2014). "The Three Justifications for Piercing the Corporate Veil". Harvard Law School Forum on Corporate Governance and Financial Regulation . Retrieved 9 September 2017. Greer, John Michael (1997). Circles of Power: Ritual Magic in the Western Tradition. Llewelyn Worldwide. ISBN 978-1-56718-313-9. TL Hazen and JW Markham, Corporations and Other Business Enterprises (2003) ISBN 0-314-26476-0 pg. 124–144. While the Salomon rule appears to have been eroded substantially, a reversal in the judiciary’s approach, commencing with the Adams case, is now visible.Section 275- Subject to the provisions of Section 278, this section provides that no person can be a director of more than 15 companies at a time. Section 279 provides for a punishment with fine which may extend to Rs. 50,000 in respect of each of those companies after the first twenty. AVOIDANCE OF WELFARE LEGISLATION- Avoidance of welfare legislation is as common as avoidance of taxation and the approach of the Courts in considering problems arising out of such avoidance is generally the same as avoidance of taxation. It is the duty of the Courts in every case where ingenuity is expended to avoid welfare legislation to get behind the smokescreen and discover the true state of affairs. Gaertner, M.J. (1988). "Reverse Piercing the Corporate Veil: Should Corporation Owners Have It Both Ways". William and Mary Law Review. 30: 667 . Retrieved 9 September 2017. For instance, in Bank of Tokyo v Karoon,23 the Court of Appeal rejected the “single economic unit” theory arguing that “we are concerned not with economics but with law. The distinction between the two is, in law, fundamental and cannot here be abridged”. Further, in the case of VTB Capital Plc v Nutritek International Corporation, 24 the court reiterated the restricted scope of veil piercing as only a limited equitable remedy.

It is possible to lift the veil if there is a relationship of agency. This will require an agreement (either explicit or implicit) that the parties act for each other. Then, provided they have remained within the boundaries of the agency, the principle is bound by the acts of the agent.HOLDING AND SUBSIDIARY COMPANIES- In the eyes of law, the holding company and its subsidiaries are separate legal entities. The company was held to be shown when it was used to try and dodge existing obligations. The corporate veil could be lifted. Fletcher v. Atex, Inc., 68 F. 3d 1451 (2d Cir. 1995)". Google Scholar . Retrieved 9 September 2017. But it was held that, “the company was formed by the assessee purely and simply as a means of avoiding super tax and the company was nothing more than the assessee himself. It did no business, but was created simply as a legal entity to ostensibly receive the dividends and interests and to hand them over to the assessee as pretended loans”. FRAUDULENT TRADING- Under Section 542 of The Indian Companies Act, 1956, if any business of a company is carried on with the intent to defraud creditors of the company or creditors of any other person or for any fraudulent purpose, who was knowingly a party to the carrying on of the business in that manner is liable to imprisonment or fine or both. This applies whether or not the company has been or is in the course of being wound up. This was upheld in Delhi Development Authority v. Skipper Constructions Co. Ltd. (1997).

Sections 307 and 308- Section 307 applies to every director and every deemed director. Not only the name, description and amount of shareholding of each of the persons mentioned but also the nature and extent of interest or right in or over any shares or debentures of such person must be shown in the register of shareholders. Besides the statutory provisions for lifting the corporate veil, courts also do lift the corporate veil to see the real state of affairs. However, even though t he legislature and the courts have in many cases now allowed the corporate veil to be lifted, it should be noted that the principle of veil of incorporation is still the rule and the instances of lifting or piercing the veil are the exceptions to this rule. INTRODUCTION His wife and another employee were the main share holders and the directors of the company. Although it was in their name, he was the main controller of the business and the business solicited customers of the previous company. The Court held that the formation of the new company was a mere cloak or sham to enable him to breach the agreement with the plaintiff.

Lecture 4: Lifting the Veil

Further in Lee v. Lee’s Air Farming Ltd. [iii], it was held that there was a valid contract of service between Lee and the Company, and Lee was therefore a worker within the meaning of the Act. It was a logical consequence of the decision in Salomon’s case that one person may function in the dual capacity both as director and employee of the same company. Kinney Shoe Corp. v. Polan, 939 F. 2d 209 (4th Cir. 1991)". Google Scholar . Retrieved 9 September 2017. WHERE THE COMPANY IS A SHAM- The Courts also lift the veil where a company is a mere cloak or sham (hoax).

Gilford Motor Co. v. Horne [xiv]–This is an instance for prevention of façade or sham. In this case, an employee entered into an agreement that after his employment is terminated he shall not enter into a competing business or he should not solicit their customers by setting up his own business. After the defendant’s service was terminated, he set up a company of the same business.COMPANY AVOIDING LEGAL OBLIGATIONS- Where the use of an incorporated company is being made to avoid legal obligations, the Court may disregard the legal personality of the company and proceed on the assumption as if no company existed. Ibid 30-31 (Lord Halsbury LC). See also, Gas Lighting Improvement Co. Ltd. v Commissioners of Inland Revenue, 1923 AC 723 (Lord Sumner).