Ropoff Company Ltd., a private limited company, has been under inquiry on alleged fraudulent financial transactions. The officers of the company under suspicion have denied any association with the company. At the inquiry it was suggested that the corporate veil be lifted and the realities of the company in question be looked into. Explain the instances when the veil of incorporation may be lifted.

This problem is based on the concept of piercing the corporate shell or simply put lifting the veil of incorporation or modifying the rule in Salomon‟s case. Both parliament and courts of law have recognized circumstances in which the veil of incorporation may be lifted and regard had to the individual members of the company and its subsidiaries are treated as one of regard it had to the economic realities of the group. These circumstances are exceptions to the rule in Salomon‟s case.

• Legislative or parliamentary or statutory exceptions
o Reduction in number of members: section 33 of the Companies Act.
o Non-publication or misdescription of the Companies name: section 109 (4) of the Act.
Group accounts: section 150-152 of the Companies Act.
o Investigation of companies affairs: section 167 of the Act.
o Investigation of company membership: section 173 of the Act.
o Fraudulent trading: section 323 (1) (a) of the Act.
• Common law or judicial exceptions
o Agency trustee or nominee:
 Inre F. G. Films Ltd.
 Smith Stone and Knight V. Birmingham Corporation
 Firestone Tyre and Rubber Co V. Llewellin
o Group enterprises:
Harold Holdsworth and Co V. Caddies

o Determination of residence:
Debeers Consolidated Mines Ltd V. Howe o Ratification Corporate acts
Inre Express Engineering
Bamford and Another V. Bamford and Others o Determination of Character:
Daimler Ltd V. Continental Tyre and Robber Co.
Ltd. o Fraud and Improper Conduct
Gilford Motor Co V. Horne & Another Inre Buggle Press Ltd. Jones V. Lipman and Another

Leave a Reply

Your email address will not be published. Required fields are marked *