Veil Lifting/pericing

Question 1

what is agency and how is it used when circumventing the corporate veil?

Answer 1

• Rs: Principal liable for acts of their agent.
• Agent acts for principle principal bound by acts of agent
• If company acting as agent of members= liable
• Is not veil piercing: has to rely on 2 distinct entities
• usually rejected- need to see clear agency intention

Question 2

What case created the concept of the ‘mere facade’ and what does it mean?

Answer 2

• Adams v Cape

* mere facade: courts can circumvent corporate veil if the company is used only as a mere facade

Question 3

What are some concerns when circumventing the corporate veil

Answer 3

Judicial concern not to create commercial uncertainty and undermine benefits of incorporation

Question 4

What was Salomon concern with in agency?

Answer 4

• Salomon: HoL rejected agency argument arising from company acting ‘for’ members
• Every company carries on business on behalf of members= not enough

Question 5

What are some examples of things taken into consideration for the topic of agency, and what case is this from?

Answer 5

[Smith, Stone and Knight Ltd]
• Subsidiary carrying on business as agent= parent can get compensation for compulsory purchase
• Considered various factors (who as really carrying on business)
1. Were the profits treated as profits of parent company
2. Were people conducting business appointed by parent
3. Was co head & brains of trading venture
4. Did Co govern venture (decide what should be done & what capital involved)
5. Did Co make profits via skill & direction
6. Was co in effectual and constant control
HOWEVER: this is not definitive list (doesn’t match a Salomon)

Question 6

What is another case that defines what sort of standard the court needs to see between involvement of a “principle” and “agent”, where the size of the company was specifically called into consideration?

Answer 6

• Company acting in England acting as agent of US parent company
• Subsidiary had no : staff, premises, capital.all financing from US parent, firm made for tax reasons
• Held: was agent

Question 7

What is the most recent and (arguably) important case in terms of agency?

Answer 7

[Yukong Line Ltd v Rendsburg Investments]
• Usually ned clear agreement to show agency intended/
• not just from smith, stone, knight factors