Lifting the Veil: Imagination and the Kingdom of God

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Section 5 of the Companies Act defines the individual person committing a wrong or an illegal act to be held liable in respect of offenses as ‘officer who is in default’. This section gives a list of officers who shall be liable to punishment or penalty under the expression ‘officer who is in default’ which includes a managing director or a whole-time director. Piercing the Corporate Veil in American and German Law - Liability of Individuals and Entities: A Comparative View in: Tulsa Journal of Comparative and International Law, from 3-1-1995 The chief advantage of incorporation from which all others follow is the separate entity of the company. In reality, however, the business of the legal person is always carried on by, and for the benefit of, some individuals. In the ultimate analysis, some human beings are the real beneficiaries of the corporate advantages, “for while, by fiction of law, a corporation is a distinct entity, yet in reality it is an association of persons who are in fact the beneficial owners of all the corporate property.” And what the Salomon case decides is that ‘in questions of property and capacity, of acts done and rights acquired or, liabilities assumed thereby…the personalities of the natural persons who are the companies corporators is to be ignored”. The entity of the corporation is entirely separate from that of its shareholders; it bears its own name and has a seal of its own; its assets are distinct and separate from those of its members; it can sue and be sued exclusively for its purpose; liability of the members are limited to the capital invested by them. [ii] The circumstances under which corporate veil may be lifted can be categorized broadly into two following heads:

Section 159 r/w 156- It is the duty of every existing director to intimate his Director Identification Number to the company or all companies wherein he is a director within one month of the receipt of the same from the Central Government. If any director of a company contravenes, such dir The company in less than one year ran into difficulties and liquidation proceedings commenced. The assets of the company were not even sufficient to discharge the debentures (held entirely by Salomon itself) and nothing was left to the insured creditors. The House of Lords unanimously held that the company had been validly constituted, since the Act only required seven members holding at least one share each and that Salomon is separate from Salomon & Co. Ltd. Is reality a fabrication or manifestation of some higher purpose or intelligence, whether artificial or organic? By contrast with the limited and careful statutory directions to ‘lift the veil’ judicial inroads into the principle of separate personality are more numerous. Besides statutory provisions for lifting the corporate veil, courts also do lift the corporate veil to see the real state of affairs. Some cases where the courts did lift the veil are as follows:AGENCY OR TRUST- Where a company is acting as agent for its shareholder, the shareholders will be liable for the acts of the company. It is a question of fact in each case whether the company is acting as an agent for its shareholders. There may be an Express agreement to this effect or an agreement may be implied from the circumstances of each particular case. In the case of F.G.Films ltd, An American company financed the production of a film in India in the name of a British company. The president of the American company held 90 per cent of the capital of the British company. The Board of trade of Great Britain refused to register the film as a British film. Held, the decision was valid in view of the fact that British company acted merely as he nominee of the American Company. To avoid such alleged unjust exclusion, the liquidator, on behalf of the unsecured creditors, alleged that the company was sham, was essentially an agent of Salomon, and therefore, Salomon being the principal, was personally liable for its debt. In other words, the liquidator sought to overlook the separate personality of Salomon Ltd., distinct from its member Salomon, so as to make Salomon personally liable for the company’s debt as if he continued to conduct the business as a sole trader. ISSUE IN SALOMON V SALOMON

However, the theories failed to articulate a real-world approach which courts could directly apply to their cases. Thus, courts struggle with the proof of each prong and rather analyze all given factors. This is known as "totality of circumstances". [43] P.W. Ireland, ‘The Rise of the Limited Liability Company’ (1984) 12 International Journal of the Sociology of Law 239. Entitled to pierce the corporate veil and recognise a receipt as that of the individuals in control if the company was a facade to conceal the true facts thereby avoiding or cancelling any liability of the individuals.WHERE THE COMPANY IS A SHAM- The Courts also lift the veil where a company is a mere cloak or sham (hoax).

Another interpretation of Isis's veil emerged in the late 18th century, in keeping with the Romantic movement that was developing at the time, in which nature constitutes an awe-inspiring mystery rather than prosaic knowledge. [11] This theory of corporate entity is indeed the basic principle on which the whole law of corporations is based. Instances are not few in which the Courts have successfully resisted the temptation to break through the corporate veil. There have been cases in which it is to the advantage of the shareholder to have the corporate structure ignored. Courts have been reluctant to agree to this. [35] The often cited case Macaura v Northern Assurance Co Ltd [36] is an example of that. Mr Macaura was the sole owner of a company he had set up to grow timber. The trees were destroyed by fire but the insurer refused to pay since the policy was with Macaura (not the company) and he was not the owner of the trees. The House of Lords upheld that refusal based on the separate legal personality of the company. Factors that a court may consider when determining whether or not to pierce the corporate veil include the following: [43] 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. INTRODUCTIONSection 127- A director of a company is punishable with imprisonment or fine if a dividend which is declared has not been paid or a warrant which in respect thereof has not been posted within 30 days of the date of declaration. The corporate veil in UK company law is pierced very rarely. After a series of attempts by the Court of Appeal during the late 1960s and early 1970s to establish a theory of economic reality, and a doctrine of control for lifting the veil, the House of Lords reasserted an orthodox approach. According to a 1990 case at the Court of Appeal, Adams v Cape Industries plc, the only true "veil piercing" may take place when a company is set up for fraudulent purposes, or where it is established to avoid an existing obligation. [10] However, cases were rare and their justification in light of the Salomon principle remained doubtful. In VTB Capital, [11] Lord Neuberger sympathised with rejecting the doctrine altogether, but left the issue undecided because it did not matter for the outcome. Soon afterwards, in Prest v Petrodel, [12] a divorce case where the matrimonial home was not held by the husband but by his company, the Supreme Court confirmed the existence of the doctrine in English law, but narrowed it down to practical irrelevance. [13] The "fraud exception" [14] was dismissed. According to the leading judgement by Lord Sumption, piercing the veil is a subsidiary remedy of last resort that only covers the avoidance of existing obligations ("evasion principle", as opposed to the cases of the "concealment principle" that does not give rise to a claim). On closer analysis, this was said obiter because the Court reached the desired outcome (attribution of the family home to the assets of the husband) by applying trust law. Nevertheless, Prest v Petrodel is generally assumed to state the current law in the UK, even though the restriction of "abuse" to evasion only can be questioned and there were statements in Prest v Petrodel that supported a broader approach. [15] It is noteworthy that under English law, piercing the veil can never be used to make shareholders pay for contractual debts of the company because they have not been party to that contract. [16] In the past, the veil was sometimes ignored in the process of interpreting a statute, [17] and as a matter of tort law it is open as a matter of authority that a direct duty of care may be owed by the managers of a parent company to accident victims of a subsidiary. [18] Tort victims and employees [ edit ] Macpherson, Jay (2004). "The Travels of Sethos". Lumen: Selected Proceedings from the Canadian Society for 18th-Century Studies. 23. Several other sources influenced the motif of the veiled Isis. One was a tradition that linked Isis with nature and the goddess Artemis. European art has a long tradition of personifying nature as a motherly figure. Starting in the 16th century, this motif was influenced by the iconography of the goddess Artemis of Ephesus (also known under the name of her Roman equivalent, Diana). The Ephesian Artemis was depicted with round protuberances on her chest that may originally have been jewelry but came to be interpreted as breasts. Isis was sometimes compared with Artemis, and the Roman writer Macrobius, in the fourth century CE, wrote, "Isis is the earth or nature that is under the sun. That is why the goddess's entire body bristles with a multitude of breasts placed close to one another [as in the case of Artemis of Ephesus], because all things are nourished by earth or by nature." Thus, the 16th-century artists represented nature as Isis-Artemis with multiple breasts. [5]

Perpetual Real Estate Services, Inc. v. Michaelson Properties, Inc. 974 F.2d 545 (4th Cir. 1992). [45] The Fourth Circuit held that no piercing could take place merely to prevent "unfairness" or "injustice", where a corporation in a real estate building partnership could not pay its share of a lawsuit bill Reverse veil piercing is when the debt of a shareholder is imputed onto the corporation. Throughout the United States, the general rule is that reverse veil piercing is not allowed. [53] However the California Court of Appeals has allowed reverse veil piercing against a limited liability company (LLC) based largely on the difference in remedies available to creditors when it comes to attaching assets of a debtors' LLC as compared to attaching assets of a corporation. [54] [55] See also [ edit ] H Hansmann, R Kraakman and R Squire, 'Law and the Rise of the Firm' (2006) 119 Harvard Law Review 1333Helena Blavatsky's 1877 book Isis Unveiled, one of the foundational texts for the esoteric belief system of Theosophy, used the metaphor of the veil as its title. Isis is not prominent in the book, but in it Blavatsky said that philosophers try to lift the veil of Isis, or nature, but see only her physical forms. She added, "The soul within escapes their view; and the Divine Mother has no answer for them," implying that Theosophy would reveal truths about nature that science and philosophy could not. [20] Parting of the Veil [ edit ] The doctrine laid down in Salomon v. Salomon and Salomon Co.Ltd, has to be watched very carefully. It has often been supposed to cast a veil over the personality of a limited liability company through which the Courts cannot see. But, that is not true. The Courts can and often do draw aside the veil. They can and often do, pull off the mask. They look to see what really lies behind”. Judicial Provisions Or Grounds For Lifting The Veil- EJ Cohn and C Simitis, Lifting the Veil' in the Company Laws of the European Continent' (1963) 12(1) 'The International and Comparative Law Quarterly 189