Separate Legal Entity Doctrine Australia

At a broader level, company law has been developed by and for men, as business activities are dominated by men and a male perspective promotes individualism, self-interest and competition, while feminine values of relationality and interdependence have been proposed as undermining the applicability of the doctrine of separate legal personality. [54] Women involved in business are often more personally involved, and the concept of a separate entity acting as opposed to women themselves is incompatible with the way women work in general. There was a strong call for company law reform to include a more feminist perspective and a more feminist understanding of business and commercial activities, which is generally in line with previous EU and CSR perspectives discussed above. [55] As mentioned above, the presence of corporate groups in both Australian and international business activities has simplistically and clearly underscored the continued application of the principle of separate legal personality and the veil of formation developed since Solomon. This is an unresolved area of law that is the subject of much discussion and debate, both in the courts and in academia. [39] The “corporate veil” or “veil of constitution” is never explicitly mentioned in the Corporations Act, 2001 (Cth), nor is the terminology of “piercing” or “lifting the corporate veil.” However, some aspects of the Companies Act relate to arguments for asking the court to break the corporate veil by applying the personal liability of directors, officers or shareholders for the acts, liabilities or transactions of the corporation as a separate legal entity. A main example is the violation of the duties of the director. [28] Otherwise, the legal arguments in which remedies under general law may require the penetration of the corporate veil can generally be grouped under four headings. [29] They should also ensure that both parties ensure that the group contractor is the group entity that is actually able to perform the contract or that genuinely needs the corresponding rights that are guaranteed. [10] See Gas Lightning Improvement Co Ltd v IRC [1923] AC 723; Macaura v. Northern Assurance Co Ltd [1925] AC 619; Lee v. Lee`s Air Farming Ltd [1961] AC 12; Tunstall v.

Steigman [1962] 2 All ER 417; Henry Brown & Sons v. Smith [1964] 2 Lloyds List 476; Lonrho Ltd v Shell Petroleum Co Ltd [1980] 1 WLR 627; Ascot Investments Pty Ltd v. Harper (1981) 51 ALJR 233; and Alan Bond and Ors v. Australian Broadcasting Tribunal (1989) 89 ALR 185. It was assumed that this principle also applied to separate companies within a group. See Walker/Wimborne (1976) 137 CLR 1; Industrial Equity Ltd v. Blackburn (1977) 137 CLR 567; and Pioneer Concrete Services Ltd v. Yelnah Pty Ltd (1987) 5 CCLA 467. High Court decisions such as Walker v Wimborne [1] and Industrial Equity Ltd v Blackburn [2] have a strict application of the separate entity doctrine and have shown that they are not prepared to break the corporate veil in the case of corporate groups. As for the traditional theories of enterprise that underlie these doctrines, they can be divided into three types: (1) concession theories, which include the enterprise as an artificial creation of the state; (2) aggregate theories that view society as a legal abbreviation for multiple contracts between its members; and (3) the theory of natural entities, which considers the form of enterprise as a natural creation of economic activities of individuals organized according to the competitiveness and efficiency of enterprises. [26] It can be concluded that, although the doctrine of separate legal personality and the veil of incorporation are fundamental doctrines in the Western, liberal and capitalist legal system, there are many different angles from which it can theoretically be criticized. The application of these doctrines and the reluctance of the courts to establish a clear, principled approach to when the corporate veil should be broken or lifted, when, under the guise of deference to Parliament and separation of powers, consistent with the understanding of legal realism, there is ample scope to protect the status quo on the basis of implicit political considerations.

Community and feminist theories objectively problematize the actual application of entrepreneurial legal principles in their unequal effects on women. Islamic jurisprudence shows that the Western view of how business activities should be organized is only relative to their cultural foundations and, as an important element of international trade and business activities, other cultural conceptions of how businesses should be organized and the responsibility attributed should be taken into account. Companies and directors have important legal and reporting obligations that they must comply with. Islam`s philosophy of business activity is similar to the communal perspective and CSR theories in that it places greater value on the protection and prosperity of society as a whole, as opposed to the emphasis on individuality and competition that underpins our Western understanding of business. [59] The group of companies may hold its assets in a single unit, but the operating entity with which you are dealing has no or minimal assets. Or there may be confusion as to which entity within the group is the right one and where the relevant rights and obligations lie. You can enter into a contract with a subsidiary within a group, but it is not the group company that actually owns the asset you wish to trade, or it does not have the practical ability to provide the relevant services you need. Alternatively, the same mistakes can be made within the group, for example by obtaining the appropriate licences in the name of the asset holding company if they are to be held by the operating group. In company law, the doctrine of autonomous legal personality is fundamental for legal persons and has been understood since the late Middle Ages,[13] although the current legal situation has evolved considerably since the end of the 19th century – both in general law and in legal terms. The case of Salomon v. A Salomon & Co Ltd[14] is regarded as a landmark case that lays the foundation for our contemporary understanding of separate legal personality and its place within the broader framework of company law.

This case concerned a company with a sole director, Salomon, which was also the main shareholder (with several members of his family nominally holding shares, mainly to meet the requirements of the Companies Act in force at the time). In the end, on appeal to the House of Lords, its Lordships decided that the only requirement for a company to become a legally registered company (with the benefits of incorporation and registration) was compliance with legal requirements. Many companies in Australia are run as a group structure consisting of several companies over which a parent company has control. If the above principle is applied to groups, each member company of a corporate group is an independent legal entity. Therefore, not all group companies should be liable for the actions of other group companies. The false or façade arguments were used in the same way as the fraud argument. [36] Similar to Solomon v. However, A Salomon & Co Ltd,[37] in which the court heard arguments at first instance that the company had been illegally incorporated as a deception or façade in order to obtain the benefits of incorporation for a retail business, cautioned Justice Windeyer not to go too far in this argument. Let`s go back to the norm that, as long as the legal requirements for legitimate registration are met, it is not for the court to add additional requirements or expectations.