The Corporate Veil Doctrine And Limited Liability

A fraternity formed and registered under the Companies Ordinance (Cap 32) has a legal status of legal person. Shareholders are not wanton liable to external parties simply because they controlled the federations activities and and so caused liability to be incurred. As early as in 1855, the British Parliament granted moderate liability to lieu companies in the Limited Liability Act of 1855. Salomon v Salomon Co Ltd , where the House of Lords decided that if a one-man owner is in person wealthy, the companys creditors could not claim against the owner-shareholder, affirmed the handiness of particular(a) liability to one-man companies. The full implications of Salomon were appreciated by the legal community. No doubt the judiciary recognized the life-threatening economic function of limited liability in the mobilisation of capital. Without such protection, entrepreneurs will hesitate to invest in young business for fear of losing their entire person fortunes. Unques tionably the limited liability company has been a major instrument in making possible the industrial and commercial developments which have occurred throughout the world.

The abuse of the separate legal entity privilege resulting in the exteriorization of corporate business cost is, however, an inevitable and unforeseen consequences of incorporation that goes beyond the needs of company law, which also concerns the protection of creditors interests. In Hong Kong, under both the Companies Ordinance and at common law, a court may pierce the corporate veil, or look behind the separate personality of the company, an d make the members of the company personally! liable in exceptional circumstances. This notes seeks to discuss firstly, the dynamic Hong Kong law regulating the use of limited liability and secondly, and how the resilient regulation could be strengthened to fill in the loopholes of the stimulate regulation. Limited liabiltiy and piercing the corporate veil It is necessary to hump betwixt separate...If you want to get a full essay, locate it on our website: BestEssayCheap.com

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