Lifting the Veil- Prest V Petrodel Essay Example | Topics and Well Written Essays - 1750 words

Lifting the Veil- Prest V Petrodel - Essay Example Whenever a company is formed as a separate entity, it acquires the capacity and authority to have its own rights and duties (Gibson, 1988). It can be observed that once the company has been incorporated, it can then be viewed as a separate or independent person with legal rights and liabilities. The popular case of Salomon v Salomon& Co [1897] AC 22 (Hl) illustrates this point. Salomon was the sole owner of the organization and he decides to turn the business venture into a limited company having realised that it had great potential. Salomon got ?10  000 in debentures from the shareholders which were acquired through a bond of the company’s assets. Unfortunately, the deal did not materialise given that the company was later liquidated and the assets were sold and the shareholders were left out. The court upheld that the company was just like Salomon since it was treated just like an individual person. Essentially, it can be seen that the concept of corporate personality is m ainly concerned with maintaining the identity of a company through establishing what is known as corporate veil (Gibson, 1988). However, in certain instances, the court ignores the existence of the legal person in what is termed â€Å"piercing the corporate veil† (Cillers et al, 2004). ... Some people tend to use the aspect of corporate veil to suppress other people since it can also act as a shield to protect their properties. Whenever, a company is viewed as a separate entity, it ceases to belong to an individual but it can stand on its own. However, under certain circumstances, it can be seen that this status can be pierced by the court where necessary. The Supreme Court (12,June 2013) case of Prest (Appellant) v Petrodel Resources Limited & Others (Respondents) [2013] UKSC 34 On appeal from: [2012] EWCA Civ 1395, outlines the proceedings for financial remedies following a divorce between Michael and Yasmin Prest. The appellant argues that she should get remedies from the sale of companies belonging to the Petrodel Group which apparently were wholly owned and controlled by Michael Prest, her husband. The Supreme Court case outline also states that â€Å"Under Section 24(1)(a) of the Matrimonial Causes Act 1973 (â€Å"the 1973 Act†), the court may order that â€Å"a party to the marriage shall transfer to the other party†¦such property as may be so specified, being property to which the first-mentioned party is entitled, either in possession or reversion.† In the judgement of this case, it was unanimously agreed that appeal by Yasmin Prest was valid given that the seven disputed properties were â€Å"property to which the [husband] is entitled, either in possession or reversion† hence, they belonged to him. In this case, the respondents argued that the properties belonged to the company not the husband. However, in passing judgement, â€Å"the Court confirmed that there is a principle of English law which enables a court in very limited circumstances to pierce the corporate veil† such as the