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08-Jul-2017 10:04

The ‘corporate veil’ surrounds the company of Murphy & Co Ltd and prevents outsiders challenging the operation of the company.

However, although the principle of separation is central to company law, there are a number of situations when the company and its members can be identified together and treated as the same.

These are the exceptions to the rule in Salomon’s Case, when the corporate veil is lifted and the reality of the situation is examined.

Only the company, and not Macaura, could insure its property against loss or damage.

If a corporation is sued, then the owners will not have their personal belongings at risk unless those belongings were purchased with illegal returns from the corporation.

In a sole proprietorship or partnership, the owners personally liable.

Once a company or corporation is formed, the business which is carried on by the such company or corporation is the business of that company or corporation and is not the business of the citizens who get the company or corporation incorporated and the rights of the incorporated body must be judges on that footing and cannot be judged on the assumption that they are the rights attributed to the business of individual citizens.

The court held that the income-tax authorities were entitled to pierce the veil of corporate entity and to look at the reality of the transaction to examine whether the corporate entity was being used for tax evasion.The plaintiff, who was the major shareholder and managing director of the company, sought to conduct the company’s defence.



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