Tutorial 2: The Concept of Separate Legal Personality
1. State the legal principle in company law established by the case Saloman v Saloman. What do you think? Do you think that the decision would be the same today? 2. ‘The Salomon decision was a scandalous one which unleashed a tidal wave of irresponsibility into the business community.’ Discuss.
When does a company become a separate legal entity?
What is the legal effect of incorporation of a company?
5. . Explain the significance of the “veil of incorporation”? 6. List and explain the situations in which the veil will be lifted? 7. Research the following incidents:
Adams v. Cape Industries Plc and Another (1991) 1 All ER. 929 CA •
The BMF scandal / Lorraine Esme Osman
The Bhopal disaster
In reviewing the facts of the above incidents identify how the concept of separate legal identity operates and whether the veil ought to be lifted when justice dictates?
8. Good Health Sdn. Bhd. is a well established pharmaceutical company which is the parent company of a large group of subsidiary companies involved in different aspects of the pharmaceutical industry. Testing Sdn. Bhd. is one these subsidiaries and was set specifically for the purpose of carrying out commercially risky ventures in the search for profitable new drugs. Owing to this aspect of the business, Testing Sdn. Bhd.’s total assets are intentionally capped at approximately RM 50,000.00. Recently, Testing undertook experiments to try and develop a new drug to cure a new strain of deadly influenza. Barry Tablet, the Managing Director of Testing Sdn. Bhd., appeared live on the television to make a personal appeal for volunteers for the experiment. After an intensive media campaign involving Barry Tablet, 100 volunteers were chosen. Unfortunately, the experiment went disastrously wrong resulting in several volunteers losing their eyesight permanently. The experiment was not properly researched and there is...
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