Perspective and directors

Question 1

What is the corporate veil?

Answer 1

Metaphorical veil drawn between company and its shareholders/directors once incorporated

Question 2

What does it mean to pierce the corporate veil?

Answer 2

The law will withdraw the right of separate legal personality and hold insiders liable when they abuse this protection for their own gain

Question 3

What is the alter ego doctrine

Answer 3

Used to hold directors liable where they have used the company as an agent

Question 4

There are two types of piercing the veil

Answer 4

Common law where you do not need to prove unconscionable abuse but rather misuse/abuse of juristic entity and Companies act where you must prove unconscionable abuse

Question 5

What does the court look at when determining wether to pierce the corporate veil in common law

Answer 5

There must be at least some misuse/abuse of the distinction of the separate entity and this must result in some unfair advantage for owners of company

Question 6

What is the business judgement rule?

Answer 6

Director is not liable where he took diligent steps to be informed on matter, acted in his belief in the best interest of the company and disclosed any interests in the matter beforehand

Question 7

When can a company indemnify a director?

Answer 7

A director can be indemnified for liability unless it resulted from wilful misconduct/breach of trusts/fine and costs to defend legal matters where they are found innocent or case is dropped

Question 8

What must a director do if he is present for a vote on something he has a personal connection to

Answer 8

He must disclose his relationship, he must leave, he cannot vote in the matter. He will be considered for quorum to commence meeting but not quorum to vote.

Question 9

What is quorum to commence a meeting and vote on a matter

Answer 9

commence - 25%
vote- majority