Chapter 27, Case 2

Chapter 27, Case 2 - Kevin Spence 4476793 Chapter 27: Case...

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Kevin Spence 4476793 Chapter 27: Case 2 In the case Macbeth vs. Ross and Burnam Woods there are some legal issues that can be applied. This case is very similar to the Salomon case. In the Salomon case, Aron Salomon carried on a successful shoe manufacturing business as a sole proprietor. Later on Salomon decided to incorporate his business, and he became the majority shareholder. He held 20,001 out of a total of 20,007, while his family members held the remaining six shares. Salomon then sold his business to the newly formed corporation. Soon afterwards there was a downturn in the market and this drove the corporation into liquidation. The liquidator argued that the corporation was a fraud and that Salomon was actually the true owner of the business, so he therefore should be the one liable for all of the debts owed by the corporation. The case was then taken to the House of Lords and was decided in favour of Salomon for the reason being that Salomon did not create the corporation for fraudulent purposes, all the transactions were properly disclosed, and all
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This note was uploaded on 09/13/2011 for the course ADM 3360 taught by Professor Levasseur,sylvie during the Winter '09 term at University of Ottawa.

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Chapter 27, Case 2 - Kevin Spence 4476793 Chapter 27: Case...

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