Dear Sir,
Referring to the question below, I don't understand why the answer is A.
In the context of company law, in which of the following circumstances have judges (i.e. in common law) considered it necessary to lift the veil of incorporation?
1. Where a company is sham, established to help a party evade contractual obligations.
2. To identify the true nationality of a company.
3. Where a disqualified director participates in the management of a company.
A. 1 & 2 only
B. 1 & 3 only
C. 2 & 3 only
D. 1, 2, & 3
Thank you in advance.
Ask the Tutor ACCA LW
Lifting The Veil Of Incorporation
6y ago#1Why would a court need to lift the veil where a disqualified person was acting as a director?
But choice 1 is illustrated by the case Gilford Motor Company v Horne and choice 2 is illustrated by the cases re FG Films and Daimler v Continental Tyre & Rubber Company
OK?
I came across this question from Kaplan. Anyways, thank you.
Why wouldn't the veil be lifted if the director is disqualified?
The solution in my kaplan kit is D which implies that the veil would be lifted if the director is disqualified i.e he is involved in fraudulent and wrongful trading or he becomes bankrupt etc.
Please clear this confusion.
6y ago#4That's not a situation of lifting the veil ... looking behind the veil of incorporation to see the reality of the company's purpose
Where a person, being a person disqualified from holding a company managerial position by reason of a Court's disqualification order, then takes part in management, that's hardly an illustration of lifting the veil
If, however, that person is acting as a shadow director (as in the case of Gilford Motor Company v Horne) then I accept that the Court might lift the veil
(In the case GMCo v H, Mr Horne was not a person disqualified! But, if he had been, and if a complaint had been made to the Court, then the Court may look behind the veil to see whether someone is acting as a shadow director)
But that's not the situation here. This question has no suggestion of a shadow director who is also disqualified. This question is a straight-forward matter of someone acting as a director whilst disqualified so I don't see any veil lifting
OK?
Thank you for the detailed answer.
I, however, have the old kit with me applicable till August 2017. But that doesn't justify why it has D as an answer for the same question.
6y ago#6You're right of course … and the old kit should be the same as the kit to September 2018.
There has been a small change in the syllabus after August 2018 but that, too, should not account for the original answer D nor (what I believe to be wrong) the answer A according to Vicki's original post at the start of this thread
But thanks for your input - it all adds to the mystery that is English Law :-)
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