6b The Veil of Incorporation Flashcards

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1
Q

What is the veil of incorporation?

A

The term that refers to the fact that a company is a separate legal entity from its directors and shareholders.

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2
Q

What are the consequences of being a separate entity?

A
  • Enter contracts into their own name.
  • Has perpetual succession.
  • Company is liable for its own debts.
  • Company is subject to Companies Act 2006.
  • Company owns its own property.
  • Management is separate from d ownership.
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3
Q

Should a company fail, what is the liability of members limited to?

A
  • Amount unpaid on their share capital.
  • Any amount they have agreed to contribute (limited by guarentee).
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4
Q

When will the veil of incorporation be lifted?

A
  • Groups of companies - subs are acting as agents of the parent.
  • Sham companies - company made for improper purpose.
  • Quasi-partnerships - registered as a company but run as a partnership.
  • Company Directors Disqualification Act 1986 - disqualified directors still managing company.
  • Insolvency Act 1986 - wrongful/fraudulent trading.
  • Companies Act 2006 - public company trading without trading certificate.
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