COMPANY LAW
DAIMLER CO LTD VS CONTINENTAL RUBBER CO LTD ( 1916)
- C. A PRIVATE
COMPNY WAS INCORPORATED IN ENGLAND FOR THE PURPOSE OF SELLING THE MOTOR
TYRES MANUFACTURED IN GERMAN BY GERMAN COMPANY
- THE GERMAN
COMPANY HELD THE BULD OF SHARES IN THE COMPANY C AND ALL THE DIRECTORS
WERE GERMAN RESIDENTS IN GERMANY
- DURING THE
FIRST WORLD WAR,COMPANY COMMENCED AN ACTION TO RECOVER A TRADE DEBT
- THE HOUSE OF
LORD HELD THAT THE COMPANY C WAS AN ENEMY COMPANY FOR THE PURPOSE OF
TRADING BECAUSE ITS EFFECTIVE CONTROL WAS IN THE ENEMY COMPANY
HANDS.ACCORDINGLY THE COMPANY WAS DEBARRED FROM MAINTAINING THE ACTION
- IT WOULD BE
AGAINTS THE PUBLIC POLICY TO ALLOW ALIEN ENEMIES TO TRADE UNDER THE
CORPORATE FAÇADE,
- A COMPANY MAY
ASSUME AN ENEMY CHARACTER WHEN PERSON IN DEFACTO CONTROL OF ITS AFFAIRS
ARE RESIDENT IN ENEMY COUNTRY OR WHEREVER RESIDENTS ARE ACTING UNDER THE
CONTROL OF ENEMIES.
LIFTING THE CORPORATE VEIL
- THE PRINCIPLE
OF SEPARATE ENTITY IS REGARDED AS A CURTAIN, A VEIL OR SHIELD BETWEEN THE
COMPANY AND ITS MEMBERS THUS PROTECTING THE MEMBERS FROM THE LIABILITY OF
THE COMPANY.
- PURPOSE BEHIND
THIS CONCEPT WAS TO ENCOURAGE AND PROMOTE TRADE AND COMMERCE BUT NOT TO
COMMIT ILLEGALITIES OR TO DEFRAUD PEOPLE. THERE ARE CIRCUMSTANCES WHEN THE
COURT WILL LIFT THE CORPORATE VEIL IF IT IS USED TO DEFRAUD PEOPLE.
- IN REALITY THE
BUSINESS OF AN ARTIFICIAL PERSON IS ALWAYS CARRIED ON FOR THE BENEFITS OF
SOME INDIVIUDALS. SINCE AN ARTIFICIAL PERSON IS NOT CAPABLE OF DOING
ANYTHING ILLEGAL OR FRADULENT,THE NOTION OF CORPORATE PERSOANLITY MIGHT
HAVE TO BE ABANDONED
- HERE IN THIS
WHEN PERSONS IN EFFECTIVE CONTROL ARE RESIDENTS IN ANY ENEMY COUNTRY OR
WHERVER THE RESIDENTS ARE ACTING UNDER THE DIRECTIONS AND CONTROL OF
ENEMIES
- IN TIMES OF
WAR,THE COURT WILL LIFT THE VEIL TO SEE WHETHER A COMPANY IS CONTROLLED BY
ENEMY ALIENS.
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