Lecture 2 - Corporate characteristics y Overview...

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Corporate  characteristics Overview – Effect of incorporation – Limited liability & the  veil of  incorporation – Lifting the veil
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Effect of incorporation separate legal entity – Salomon s case  – Sunrise Sdn Bhd v First Profile (M)  Sdn Bhd [1996] – Lee v Lee s Air Farming  – Macaura v Northern Assurance  perpetual succession able to sue and be sued ownership of property distinction between management &  ownership transferability of shares limited liability
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Limited liability advantages for  members/shareholders transfers risk of insolvency facilitates delegation of  management to directors encourages risk taking essential for efficient market for  shares
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Limited liability effect on creditors creditors with superior  bargaining power
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Unformatted text preview: ❖ trade creditors – compensated for risk? – diversification of risk & insurance – reduction in monitoring costs ❖ company employees ❖ tort creditors Lifting the veil ❖ By statute ❖ At common law ❖ Examples -❖ fraud & evasion ❖ insolvent trading – liability of directors for debts of insolvent coy – ss 303(3) & 304(2) Lifting the veil ❖ company groups – consolidated group accounts ◆ s 169 – the cases ◆ Australia – Walker v Wimborne (pg359) ◆ England – Smith, Stone & Knight ◆ Malaysia – People ’ s Insurance Co (M) Sdn Bhd – Hotel Jaya Puri Lifting the veil ❖ tort creditors – Briggs v James Hardie & Co ❖ employee creditors – s 292(1)...
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  • Spring '14
  • Sdn Bhd

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