Characteristics of the Company

Lifting of corporate veil

COMPANY LAW

L L B SECOND YEAR

Student Name:- Ramanand KarwaShri Shiwaji Law College,

Parbhani

Characteristic’s of the company Artificial person:- Company is an artificial

person created by law. Artificial in the sence, it has no body or soul like a natural person.

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

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.

Perpetual Succession:- 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.

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.

Transferable share:- 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.

Company own separate property:-

Profit motive:-

Lifting of corporate veil(Frauds in company)

Lifting of corporate veil(Frauds in company)

Circumstances when corporate veil can be lifted:

1) When corporate personality used as an instrument of fraud:-

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

3)When corporate personality is used to evade tax or avoid welfare legislation:-

C.L. - Workmen of associated Rubber industry vs.

Associate Rubber Industry

4)When the statute itself contemplates the lifting of the veil:-

C.L. – L.I.C. of india vs. Yes corts Ltd.