1. Characteristics of the Company
Lifting of corporate veil
L L B SECOND YEAR
Student Name:- Ramanand Karwa
Shri Shiwaji Law College,
2. Characteristic’s of the company
Company is an artificial person
created by law. Artificial in the sence, it
has no body or soul like a natural
Company has separate legal entity:-
Every company weather private
ltd. Or public ltd. Must be registered.
On registered a company is conferred
legal personality. It acquires such
rights and powers as human being.
C.L.- Salomon vs Salomon & co. Ltd.
C.L.- Lee VS. Lee’s Air farming
3. Limited Liability of the members:-
Limited liabilities of members
(Share holders) is limited to the
extent of face value of shares. A
shareholder is liable to the extent of
unpaid capital on his shares.
Being an artificial person a
company never dies, nor does its
life depend on the life of its
members. Members may come and
go but the company can go on
forever. It continues to exist even if
all its members are dead. The
existence of company can be
terminated only by law.
4. Common seal:-
Since a company has no
physical existence, it must act through
its agents and all such contracts
entered into by its agents must be
under a seal of the company. The
common seal acts as the official
signature of the company.
The ownership of a company is
vested in several members called
shareholders, who contribute invest
capital by way of purchasing share of
the company. Any shareholder can
easily transfer his shares in an open
market without the consent of other
members. In a private company or a
partnership firm it is not transferable
without the consent of other members.
7. Lifting of corporate veil
(Frauds in company)
Circumstances when corporate veil can be lifted:
1) When corporate personality used as an instrument of
C.L.- P.N.B. financial Ltd. Vs. Shital prasad jain.
2) When company is used as a mere cloak or shame:-
C.L.- Gilfoard motor Co. Ltd. Vs. Horne
8. 3)When corporate personality is used to evade tax or avoid
C.L. - Workmen of associated Rubber industry
Associate Rubber Industry
4)When the statute itself contemplates the lifting of the
C.L. – L.I.C. of india vs. Yes corts Ltd.