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Article
Publication date: 26 November 2020

Ambareen Beebeejaun

The corporate veil or veil of incorporation is a legal concept that separates the legal and juristic personality of a company from its members, directors and other…

Abstract

Purpose

The corporate veil or veil of incorporation is a legal concept that separates the legal and juristic personality of a company from its members, directors and other stakeholders. Indeed, common law has provided for numerous circumstances in which the corporate veil of a company may be lifted, and courts rely on these case law precedents to determine the grounds for lifting the corporate veil. However, there is limited case law regarding environmental torts as a ground for lifting the veil of incorporation and there is no legal provision in Mauritius which recognises environmental crimes as an exception to corporate veil. Consequently, this paper aims to discuss the liability of decision-makers of a company in the case of corporate environmental wrongdoings and thereafter, to present a case for amending Mauritius laws to give recognition to environmental torts as a ground of lifting the corporate veil.

Design/methodology/approach

This paper has adopted the black-letter approach and the comparative research methodology. The laws of Mauritius on corporate veil will be compared to the related laws of the USA and Canada with the view of seeking recommendations for Mauritius, as these countries are known to have an extensive legal framework on environmental crimes as a ground to lift the corporate veil.

Findings

It is concluded that it is high time for Mauritius to adopt a separate manslaughter law that would incorporate crimes committed to the environment by corporate bodies as a ground for lifting the corporate veil and thereby attacking individual stakeholders concerned.

Originality/value

This study is among the first researches conducted in the field of environmental torts as a ground for lifting the corporate veil in Mauritius.

Details

Journal of Financial Crime, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 1359-0790

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Article
Publication date: 4 February 2014

Chrispas Nyombi

The paper examines case law and statutory provisions related to lifting the corporate veil. The aim of the paper is to explore recent case law in order to determine…

Abstract

Purpose

The paper examines case law and statutory provisions related to lifting the corporate veil. The aim of the paper is to explore recent case law in order to determine whether courts have moved away from an overly restrictive approach when dealing with cases relating to the corporate personality. To offer a full account of the exceptions to the corporate personality doctrine, this paper also examines cases where the veil of incorporation is lifted due to a breach of a statutory provision.

Design/methodology/approach

The paper reviews recent case law and statutory provisions relating to lifting the corporate veil. The paper critically reviews the exceptions to the corporate personality doctrine which amount to lifting the corporate veil.

Findings

The paper finds that courts are more willing to lift the corporate veil compared to before. They have moved away from the restrictive approach and this is demonstrated by the tendency to find new exceptions to the corporate personality doctrine such as the interests of justice argument or lifting the veil in tort cases.

Originality/value

The paper offers an up-to-date assessment of the exceptions to the corporate personality doctrine and highlights the growing tendency to finding new ways of lifting the corporate veil.

Details

International Journal of Law and Management, vol. 56 no. 1
Type: Research Article
ISSN: 1754-243X

Keywords

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Article
Publication date: 4 April 2019

Tareq Na’el Al-Tawil

The purpose of this paper is to examine the available judicial precedence using both the United Arab Emirates and UK laws to bring up a much broader understanding of…

Abstract

Purpose

The purpose of this paper is to examine the available judicial precedence using both the United Arab Emirates and UK laws to bring up a much broader understanding of wrongful and fraudulent trading concepts and provide a critical analysis of potential personal liabilities of directors in the UK and UAE jurisdictions for the acts of fraud and mismanagement.

Design/methodology/approach

This paper seeks to understand corporate fraud from the aspect of trading. It will take an in-depth look into wrongful trading and fraudulent trading in the UAE and UK jurisdictions while analyzing the punishment for the same. The study will also look at famous cases for the same while seeking to understand the mitigation measures undertaken in various nations across the world.

Findings

The author studies the contents and provisions of the UK Insolvency Act 1986, truly the concepts of wrongful trading and fraudulent trading are not explicitly mentioned in the UAE Law, but the said terms associated with “lifting of corporate veil” are notionally existent under the UAE Federal Law No2/2015, otherwise known as Companies Law (Articles 84 and 162-1), and under the UAE Bankruptcy Law (Federal Decree Law No. 9 of 2016), which provides legislation governing trading while the company is insolvent.

Originality/value

In the current paper, the author is keen to examine the available judicial precedence to bring up a much broader understanding of the mentioned concepts and provide a critical analysis of potential personal liabilities of directors in the UK and UAE jurisdictions for the acts of fraud and mismanagement.

Details

International Journal of Law and Management, vol. 61 no. 2
Type: Research Article
ISSN: 1754-243X

Keywords

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Article
Publication date: 12 March 2018

Md Sazzad Hossain

The purpose of this paper is to analyse how the liabilities arise in the UK-based parent company for wrongdoings of its overseas subsidiaries, especially under law of tort.

Abstract

Purpose

The purpose of this paper is to analyse how the liabilities arise in the UK-based parent company for wrongdoings of its overseas subsidiaries, especially under law of tort.

Design/methodology/approach

Qualitative methods have been used in this paper, using both primary and secondary data, i.e. Books, case Laws, legislations, international laws and journal articles.

Findings

The English Courts are, now, more broadly accepting the allegations against the UK-based parent companies for the actions of its subsidiaries, especially by improving the access to the remedy in the UK for foreign victims of corporate related harms, though concern remains in the case of criminal liabilities. Additionally, in case of the civil litigations, the early settlement of a dispute is also causing pressure to the victim by liming the wider deterrent effect.

Originality/value

This paper will help the lawyers and academic in the field of international corporate law, especially in the tortious claim of an overseas victim in the UK Court. Moreover, this paper identifies the lack of proper legislative guidance in this field.

Details

International Journal of Law and Management, vol. 60 no. 2
Type: Research Article
ISSN: 1754-243X

Keywords

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Article
Publication date: 13 March 2017

Ernestine Ndzi

This paper aims to examine the Salomon principle of separate legal personality and its impact on the regulation of directors’ remuneration in the UK. The aim of the paper…

Abstract

Purpose

This paper aims to examine the Salomon principle of separate legal personality and its impact on the regulation of directors’ remuneration in the UK. The aim of the paper is to explore the Salomon principle to determine whether it serves as a driving factor for directors’ remuneration levels. The paper will also examine the restrictive approach of the courts to move away from the principle and their reluctance to get involved in directors’ remuneration issues of a company. The paper explains the Salomon principle, describes the nature of the problem on directors’ remuneration and provides an analysis on how the Salomon principle impacts on the directors’ remuneration.

Design/methodology/approach

The paper reviews case law, statutory provisions and academic opinions on the directors’ remuneration and the concept of separate legal entity. The paper critically reviews the impact of the concept of separate entity on directors’ remuneration.

Findings

The paper finds that the courts are reluctant to come away from the concept of separate legal personality as well as reluctant to get involved with directors’ remuneration. This reluctance of the court makes the concept of separate legal personality to act as one of the drivers of directors’ remuneration.

Originality/value

The paper offers a different explanation into why directors’ remuneration continuous to be an issue in the UK. It points out that the concept of separate legal personality is a potential driver of directors’ remuneration in the UK.

Details

International Journal of Law and Management, vol. 59 no. 2
Type: Research Article
ISSN: 1754-243X

Keywords

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Article
Publication date: 1 April 1997

J Carnwath and Joanna Gray

The first Defendant, Scandex Capital Management A/S, (Scandex) was a Danish company, now in liquidation, of which the second Defendant, Mr Bartholomew‐White was managing…

Abstract

The first Defendant, Scandex Capital Management A/S, (Scandex) was a Danish company, now in liquidation, of which the second Defendant, Mr Bartholomew‐White was managing director and in which he held one third of the share capital. Scandex was incorporated in September 1995 and submitted an application for authorisation to do investment business to Finans (the Danish investment business regulatory authority) in late December 1995. There was some confusion as to the exact date that Scandex commenced doing investment business but it was clear that by April 1996 it was: sending letters to individual investors in the UK, offering investment services involving foreign exchange trading for and on behalf of UK investors; had sent mailshots directed at investors into the UK; had made unsolicited calls offering forex trading services; and, had also made misleading statements about, inter alia, the level of commission Scandex was charging its clients. Significant losses were incurred by UK investors as a result of their dealings with Scandex. Scandex had been operating in Denmark on the basis of interim authorisation from Finans under transitional provisions of Danish law implementing the Investment Services Directive (93/22/EEC, hereinafter referred to as ISD), pending Finans' determination of its application for full authorisation to do investment business. When, in late April 1996, SIB enquired on what basis Scandex was cold‐calling and advertising speculative forex dealing services in the UK, Scandex replied that it was doing so under the passporting provisions of the ISD since it was authorised in Denmark and therefore entitled to offer cross‐border investment services. In the event, Scandex' Danish authorisation under the transitional provisions of Danish law came to an end in September 1996 when Finans considered and rejected its application for authorisation. The Danish regulator was concerned about the contents of an audit report it had asked for on Scandex, which prompted the resignation of Scandex' two Danish directors, and also the fact that there was no evidence to show that Scandex had traded in Denmark as opposed to using its office as a launch pad for approaching clients based outside Denmark.

Details

Journal of Financial Regulation and Compliance, vol. 5 no. 4
Type: Research Article
ISSN: 1358-1988

Content available
Article
Publication date: 1 September 2006

Gary Sams

Abstract

Details

Journal of Property Investment & Finance, vol. 24 no. 5
Type: Research Article
ISSN: 1463-578X

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Article
Publication date: 13 November 2009

Muhammad Zubair Abbasi

The purpose of this paper is to analyse the Agency Theory in order to understand the true nature of the corporation by determining the respective roles of shareholders and…

Abstract

Purpose

The purpose of this paper is to analyse the Agency Theory in order to understand the true nature of the corporation by determining the respective roles of shareholders and directors/managers within a corporation.

Design/methodology/approach

The paper compares the economists' depiction of the firm with the legal conception of the corporation. It then analyses the legal concept of ownership and proves that the shareholders are the owners of their shares only and not of the corporation which is a separate legal person. The theories of corporation and relevant case law are also analysed.

Findings

The analysis reveals that currently there are two distinct models of the corporation. The economists view a firm in terms of a nexus of contracts like a partnership where shareholders are the owners of the firm and the directors/managers are their agents. The law, on the other hand, regards the corporation as a separate legal entity with rights and liabilities of a natural person that is not subject to ownership. This doctrine of legal personality is the grund norm of corporate law from which other principles like limited liability, perpetual succession, transferability of shares and independent board are derived. However, both economic and legal models converge upon the purpose of corporation i.e. maximization of shareholders value.

Originality/value

The paper highlights the distinction between economic and legal models of the firm. It points out that from a legal perspective, neither the shareholders are the principals nor the managers are their agents as proposed by the Agency Theory. The economists assume conflict of interests between the shareholders and directors and devise mechanisms to reduce agency costs. Law, on the other hand, determines manifestly the rights and liabilities of each participant in corporate structure. The directors owe their duties to the corporation and manage it without interference from the shareholders. Such arrangement is a product of historical process and qualifies a corporation as a sui generis form of business organization.

Details

International Journal of Law and Management, vol. 51 no. 6
Type: Research Article
ISSN: 1754-243X

Keywords

Content available
Article
Publication date: 4 February 2014

Christopher James Stanley Gale

Abstract

Details

International Journal of Law and Management, vol. 56 no. 1
Type: Research Article
ISSN: 1754-243X

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Article
Publication date: 27 June 2019

Shouvik Kumar Guha, Navajyoti Samanta, Abhik Majumdar, Mandeep Singh and Ananya Bharadwaj

The past few decades have seen a gradual convergence in corporate governance norms the world over, entailing a discernible shift towards shareholder primacy models. It…

Abstract

Purpose

The past few decades have seen a gradual convergence in corporate governance norms the world over, entailing a discernible shift towards shareholder primacy models. It holds particularly true of developing countries, many of which have steadily amended corporate governance norms to enhance the scope of shareholder rights. This is usually justified through the rationale that increasing protection for foreign investors and shareholders would mean greater investment in capital market and overall financial market development. In India, the shift coincides with a series of fundamental economic and financial policy reforms initiated in the 1990s: collectively and loosely referred to as “liberalisation”, this process marks a paradigm-shift from a tightly controlled welfare economy to one considerably more laissez-faire in its orientation. A fallout of which was that the need to attract and sustain foreign investments acquired an unprecedented significance. The purpose of this paper is to help the readers understand in this larger context the corporate law reform initiatives in India, particularly those pertaining to shareholder rights and allied issues.

Design/methodology/approach

This paper empirically tests the hypothesis that enhanced shareholder protection leads to greater levels of investments, and financial developments generally. It then uses regression analysis to detect if the change in corporate governance, making it more shareholder-friendly, has had any effect on growth in financial market. It is divided into two broad parts. The first tracks the evolution of corporate governance norms in India. A robust qualitative and quantitative analysis is used to determine the tilt towards a shareholder primacy regime that Indian corporate governance regime now displays. The second chapter deals with the regression analysis where the outcome variable is financial market growth, and explanatory variable is the change in the governance regime with relevant control variables.

Findings

The authors find that change in shareholder primacy corporate governance has little effect on financial market growth in India. The authors would suggest that instead of changing the law in books, more emphasis should be given to implement those regulations and increase the overall rule of law.

Originality/value

This is the first time that such a wide-scale study has been conducted in India, using Bayesian methods. It ought to be of immense value to professionals and academics both.

Details

Corporate Governance: The International Journal of Business in Society, vol. 19 no. 5
Type: Research Article
ISSN: 1472-0701

Keywords

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