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“Piercing the corporate veil” is an expression rather indiscriminately used to describe a number of things. Properly speaking, it means disregarding the separate personality of the company.”Discuss.

Please find the following handout below for your guidance:

1. Purpose of limited liability company; (Dignam & Lowry)

2. The Nature and Purpose of Company:

– F. Easterbrook & D. Fischel “Limited Liability and the Corporation” (1985)

– H. Hansmann, R. Kraakman & R. Squire, “Law and the Rise of the Firm” (2006) 110 Harvard Law Review 1333

– Posner “Economic Analysis of Law”

– H. Manne “Our Two Corporation Systems “Law and Economics” (1967)

3. Criticisms of the nature of the company:

– Infringes a moral principle as to personal responsibility for debt

Schluter, M., “Risk, reward and responsibility: limited liability and company reform”, (2000) Cambridge Papers Vol. 9(2)

– Encourages undue risk-taking at creditors’ expense

Freedman, J., “Limited liability: large company theory and small firms” (2000)

– Enables shareholders to evade tort liabilities

H. Hansmann & R. Kraakman, “Towards Unlimited Shareholder Liability for Corporate Torts” (1991) Yale Law Journal Vol. 100, p. 1879

– Is inappropriate for small businesses

Hicks, A., “Limiting the Rise of Limited Liability” (1997) in R. Baldwin (ed.) “Law, Uncertainty and Legal Processes” (London: Kluwer Law International), Ch. 6

4. Principle of the Corporate Law:

Petrodel Resources Ltd v. Prest [2013] UKSC 34

Per Lord Sumption:

“Piercing the corporate veil” is an expression rather indiscriminately used to describe a number of things. Properly speaking, it means disregarding the separate personality of the company.”

See also Ottolenghi “From Peeping Behind the Corporate Veil to Ignoring it Completely” (1990)

A timeline: Dignam & Lowry, op. cit., pp. 35 – 37:

Classical veil lifting, 1897 – 1966

The interventionist years, 1966 – 1989

Back to basics, 1989 – present

(i) The “evasion principle”

Petrodel Resources Ltd v. Prest [2013] UKSC 34

5. Agency?

6. Tourt Liability

7. Salamon Case

Please use OSCOLA for the references’s style

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