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Good day Sir,
Have been studying this topic in BPP Study Text. It says that “In Adams v Cape Industries plc 1990, three reasons were put forward for identifying the companies as one, and lifting the veil of incorporation. They are:
The subsidiary is acting as agent for the holding company.
The group is to be treated as a single economic entity because of statutory provision.
The corporate structure is being used as a facade (or sham) to conceal the truth.and then the case is explained in detail. What i’ve understood that in this case, the holding company was NOT considered culprit, only the subsidiaries. Plus, i cannot understand how the above 3 reasons link to the situation in this case.
I’d be so thankful if you can elaborate those 3 reasons, either using this case or any other example.
Thanks in advance.
If it were accepted that the subsidiary was acting as agent for the parent, then the acts of the agent would lead to liability for the parent
Treatment as a single economic entity because of statutory provision would undermine the entire concept of separate legal personality
Corporate structure may be seen as a sham in some circumstances but in Adams v Cape Industries the Court accepted that it was a sincere, non-contrived, no hidden agenda group structure and was not therefore a sham (like Gilford Motor Company v Horne!)
OK?
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