CORPORATE LAW QUIZ 3

Ayesha Fakhar SP20-BBA-033

HP
Q1: Please examine in detail that what principle has held in case
Salomon v Salomon & Co. Ltd.?
Answer:
The proposition that was set in the Salomon v Salomon & Co.Ltd case was
CORPORATE VEIL. Adding on to this, it was the case that laid down the
principle of Corporate veil. Moreover, the section 15 of the Companies Act
1993 (“Act”) states that a firm or a company has a legitimate personality in its
own right hence it is separate from its shareholders. Furthermore, it shows
that an organization is basically viewed as a lawful individual separate from its
directors, shareholders, employees and agents. This implicit as a dissimilar
lawful substance, an organization can be sued in its own name and own
resources independently from its investors. Furthermore, the corporate veil is
drawn from the Salomon principle what isolates the freedoms and obligations
of the organization from the privileges and obligations of the investors and
chiefs. Basically, the corporate veil is a figurative veil with the organization on
one side of it and its chiefs and investors on the other and obligation doesn't
pass through. The corporate veil doesn't give security to its investors and
chiefs for their own direct or permit organizations to be utilized for hoax
exchanges. Appropriately, the courts might lift or puncture the corporate veil.
The corporate veil can be lifted by the courts on the off chance that its
presence would make a significant unfairness.
Moreover, if we look this is the cycle that used to look behind the corporate
façade and recognize the real essence of an exchange. In addition, the Courts
might penetrate the corporate veil and eliminate the assurance of the Salomon
principle to deny misrepresentation. Furthermore, this was clear in Gilford
Motor Co Ltd v Horne where a directing boss made an arrangement to try not
to attract with his past director's clients anyway kept on doing as such through
an as of late molded association. Adding on to this, the courts entered the
corporate cover to uncover the deception trades occurring behind the façade
of the association. Generally, the courts are reluctant to penetrate the
corporate cloak to defend banks without a hint of deception. Anyway, where
absurd trading occurs by bosses, s 135 of the Act believes the cover to be
penetrated. By virtue of duty aversion or unapproved charge avoidance, the
courts could look past the Salomon standard, cut the corporate cover and
declare the association a sham. The courts will simply lift or enter the cloak
where a vile situation may be going on behind the corporate façade
considering current real factors of each case. The corporate cloak is
fundamental for the certifiable use of the corporate plan and the security of
financial backers and bosses and consequently, by its real presence, progresses
the landmark for confronting business challenges.
Q2: What type of nature an action be brought by a shareholder for availing a
remedy under the Companies Act 2017?
Answer:
The ownership of securities beneficially owned under the companies act 2017,
and held or controlled by any officer or substantial shareholder directly or
indirectly, either by him or her, the wife or husband of an officer of a company,
not being herself or himself an officer of the company or the minor son or
daughter of an officer where ―son includes step-son and ―daughter‖ includes
step-daughter; and ―minor‖ means a person under the age of eighteen years;
(d) in case of a company, where such officer or substantial shareholder is a
shareholder, but to the extent of his proportionate shareholding in the
company: Provided that ―control‖ in relation to securities means the power to
exercise a controlling influence over the voting power attached thereto:
Provided further that in case the substantial shareholder is a non-natural
person, only those securities will be treated beneficially owned by it, which are
held in its name
The main purpose of this Act was that the substantial shareholder‖,
corresponding to an organization, implies an individual who has an interest in
portions of an organization (a) the ostensible worth of which is equivalent to or
more than 10% of the gave share capital of the organization; or (b) which
empowers the individual to exercise or control the activity of 10% or a greater
amount of the democratic power at a comprehensive gathering of the
organization.