AF 3507 Company Law 2017 – 2018 Semester 3

Essay Topic

Larger businesses tend to use an organizational structure to effectively manage business functions and
employees. Shun Tak Holdings Limited (HKSE 242) and Wang On Group Limited (HKSE 242) are examples
of the companies that adopt a corporate group structure. An illustration of the group structure adopted
by Wang On can be found here: https://www.wangon.com/en/corporate-profile/group-structure.php

There has been debate of whether the separate personality theory still keeps pace with the development
of companies in the 21st century. For example, Professor Phillip Lipton wrote:

“Salomon’s Case has for a long time been widely seen as a landmark case that is the keystone of modern
company law. A mythology has developed around the case that has resulted in the Salomon principle
exercising an iron grip on company law. The rigid application of the principle in Salomon’s Case to
corporate groups has enabled corporate groups to structure themselves in ways that limit the tort
liabilities of the group as a whole and so raises important social, economic and ethical questions regarding
the allocation of risk that are not addressed by the application of the Salomon principle. ”

In the essay, briefly examine the Salomon case (both the Court of Appeal decision and House of Lords
decision) and discuss the advantages and disadvantages of the principle of corporate personality as well
as the concept of “lifting the corporate veil”. Based on the discussion above, critically discuss whether the
Salomon principle is still relevant in modern company law. The length of the essay should be 1000 words
excluding bibliography.

Intended Learning Outcomes (ILOs)

After completing this essay exercise you will be able to: (1) use basic tools for legal research (ILO d),
communicate adequately in written English (ILO c), and conduct analysis and critical discussion in relation
to shareholders’ voting rights and their monitoring role (ILOs e).

Structure of the Essay

In order to write your essay you can use multiple resources including legal, economic, accounting,
management and other materials. You can structure your essay as you wish yet include sections entitled
as “Critical Discussion” as this section will have strong weight on your final grade. Also, at the end of the
essay include a section “Bibliography.” In this section you will formally list the resources that you used to
write the essay. These resources will also be cited in the text of the essay following the standard citation