Tutorial 4: The Lifting of the Veil of Incorporation

1. Explain the significance of the veil of incorporation?

To ensure the members of the company are kept separate (directors and
shareholders separated from the company).

2. List and explain the situations in which the veil will be lifted?
Statutary and judicial decisions. Statutary would be under section 36 and 121. Under
judicial it will be under case to case fraud,
3. Research the following incidents:
Adams v. Cape Industries Plc and Another (1991) 1 All ER. 929 CA
The BMF scandal / Lorraine Esme Osman
The Bhopal disaster

In reviewing the facts of the above incidents identify how the concept of separate
legal identity operates and whether the veil ought to be lifted when justice dictates?

4. Good Health Sdn. Bhd. is a well established pharmaceutical company which is the
parent company of a large group of subsidiary companies involved in different
aspects of the pharmaceutical industry.
Testing Sdn. Bhd. is one these subsidiaries and was set specifically for the purpose
of carrying out commercially risky ventures in the search for profitable new drugs.
Owing to this aspect of the business, Testing Sdn. Bhd.s total assets are
intentionally capped at approximately RM 50,000.00.
Recently, Testing undertook experiments to try and develop a new drug to cure a
new strain of deadly influenza. Barry Tablet, the Managing Director of Testing Sdn.
Bhd., appeared live on the television to make a personal appeal for volunteers for
the experiment. After an intensive media campaign involving Barry Tablet, 100
volunteers were chosen.
Unfortunately, the experiment went disastrously wrong resulting in several volunteers
losing their eyesight permanently. The experiment was not properly researched and
there is clear evidence of negligence. Testing now faces claims of millions of ringgit.
Discuss Testing Sdn. Bhd.s liability and advise Barry if he can be held personally
liable and further, if claims can be brought against Good Health Sdn. Bhd.

First paragraph single economic entity or group of companies? If not stated then you have to make
assumptions whether good health is a single economic entity or group of companies. You must state
the best and worst case scenario possibilities. Talk on both iffs.
Second paragraph
Liability of testing
Liability of barry
Liabitlity of good health