Company and Distinct

Legal Entity
Prest v Petrodel Resources Limited

Group Number – E11

Amanisha Das | Ishit Gaba | Jonathan Koshy Alex

Pranjal Khandelwal | Shweta Singh | Vatsal Agarwal

Legal Aspects of Business

CORPORATE VEIL: DISTINCT ENTITY

A distinct entity is born on the issuance of the

certificate of registration Lifting of the corporate veil

Salomon v A Salomon & Co Ltd

Adams v Cape Industries plc

Members of
the company
“A limited principle permitting the piercing
of the corporate veil in case of … evasion
Distinct from of legal obligations.”
Holding
Company
(in case of a
subsidiary)

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CASE OVERVIEW

Divorce Mr. Michael Mrs. Yasmin

(2011) Prest Prest

Petrodel Resource Limited (PRL) Main operating company

Registered in the name of PRL Nigeria

Petrodel Resource Nigeria Limited Majority shares registered under PRL Nevis
CORPORATE
STRUCTURE
PETRODEL

Petrodel Resource Nevis Limited Oral evidence of shares with PRL Nigeria

Vermont Petroleum Limited Shares held by PRL Isle of Man & PRL Nigeria

Petrodel Upstream Limited Single share held by PRL Nevis

Elysium Diem Limited Shares held by Mr. Prest & PRL Isle of Man

Isle of Man United Kingdom Nigeria Nevis 2

JUDGEMENTS
FAMILY COURT
COURT OF APPEAL

Mr. Prest

Mrs Prest Family Court

Matrimonial Causes Act
1973, section 24(1)(a):
empowers the court to order one Challenges the case
party to the marriage to transfer to in Court of Appeal
the other “property to which the
first mentioned party is entitled,
either in possession or reversion ”.
Matrimonial home £ 17.5 million
No basis to pierce
the corporate veil

Matrimonial causes Act, 1973

Corporate Veil Supreme

Mrs Prest Court

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SUPREME COURT JUDGEMENT
Three basis for ordering transfer of properties to Mrs Prest

1. Piercing the Corporate Veil 2. The Matrimonial Causes Act 1973

▪ Only to prevent the abuse of the corporate’s separate legal ▪ Allowed transfer to the other “...property to which
personality in wrongdoing, not “when it is just and necessary” the first party is entitled, either in possession or
concealment and
▪ Wrongdoings – concealment and evasion
evasion reversion... ”
▪ Legal interest vested in companies long before marriage ▪ Properties belonged to the companies
broke up ▪ No power to pierce the corporate veil
▪ No relevant impropriety for corporate law to be pierced
under general law

3. Trust & Beneficial Ownership

▪ If “..assets legally vested in a company are beneficially owned by its controller.. ”

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TRUST AND BENEFICIAL OWNERSHIP
Relationship of Trust
B C
Initial Owner Trustee
B transfers the property to C on the condition that C will
hold & manage the property for the benefit of D
Prest family did not pay any rent
Mr. Prest to PRL for the matrimonial home
Beneficiary
Mr. Prest had bought few properties
before the incorporation of PRL which
was later transferred to PRL for 1
• Matrimonial home was in the name of PRL, but
Mr. Prest was the beneficial owner
D
Beneficiary • PRL acquired properties before it began
commercial operations and began to
generate funds of its own
• A company may act as an agent of another
by holding property for another in trust
PRL
• The Supreme Court concluded that the
beneficial interest in the properties vested in
Mr. Prest
Trustee
• Court restored the order to transfer the
properties to the wife
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KEY LEARNINGS
Lifting the
Corporate Veil

Principle of
Concealment
Separate
and Evasion
Legal Entity
Principles

Companies Trust and

subject to other Beneficial
legal principles ownership

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THANK YOU