Company Law for Journal of Legal Insight - myassignmenthelp.com

Question: Discuss about theCompany Law for Journal of Legal Insight. Answer: Directing Mind and Will The phrase directing mind and will is mainly associated with Lord Denning who interpreted the phrase in the case of H.L Bolton Co. Ltd v. T.J. Graham and Sons Ltd. The concept was referred by Denning in the case where he identified managers as the brains that play a significant role in corporate decision-making (Gurunay, p. 105). According to Lord Denning, the state of mind of a manager is the companys state of mind. According to Section 124 of the Corporation Act 2001, a limited business company can be regarded as a separate legal entity which possesses similar characteristics as an individual person. A corporation does not have physical existence, but this does not hinder the company from complying with the common and statute laws. The company can be held liable for breaching a contract. In determining the criminal liability of a company, it is imperative to understand the two types of liability which are primary and secondary. A company incurs primary liability when it is deemed to have done wrong by itself (Archibald, Jull Roach 2003). However, it is also imperative to note that a corporation or a company does not have the capability for physical action or possessing an intention or ideas and knowledge which differ from human beings. To understand better the meaning of the phrase Directing mind and will," Lord Denning's ruling in H.L Bolton Co. Ltd v. T.J. Graham and Sons Ltd. In his ruling, Lord Denning pointed out that the directors and managers of the company were similar to the brain of a human in a corporation which guides it by directing their mind and will. In other words, the companys decisions were directed by the directors and managers, which rendered them guilty as they had also rendered the company guilty. This implies that the phrase simply means that the decisions taken by managers and directors can be considered to be the decisions made by the company since the managers and directors are the "brains of the company, " and the company would act in accordance with their directions. Piercing the Corporate Veil In the Corporation Act 2001, corporations, and LLC are regarded as a legal entity, separate from their owners. The idea to separate owners from the companies was brought by the House of Lords in Salomon V, Salomon. In Salomon v. Salomon Co. Ltd, the House of Lords, affirmed a legal principle that is applicable today that, once a company is incorporated, it is considered as a legal entity that is separate from the legal shareholders and owners (Salomon v Salomon Co. 1897). The concept of separate legal entity has been applied in the Australian Corporate law for over hundreds of years. This legal principle allows companies to act in their own right and not on the basis of their controllers (Ramsay Noakes 2001). Shareholders, on the other hand, cannot be held liable for the debts of a company beyond their capital investment. This is what is referred to as the corporate veil. With time, the legal courts have appreciated the fact that the companys corporate veil can be pierced to deprive the shareholders the protection against the companys liability as offered by the limited liability principle. "Piercing the corporate veil," therefore, refers to a situation where the courts disregard the limited liability principle and hold a shareholder or a director personally liable for the debts or actions of the corporation as if it were the actions of the shareholders or directors. In this case, the court disregards the separateness of the shareholder from the corporation. Such instances arise when the company or the shareholder request a court to do so due to some circumstance that may necessitate such an action. List of References Archibald, T., Jull, K. and Roach, K., 2003. The changed face of corporate criminal liability. Crim. LQ, 48, p.367. Corporation Act 2001 Gurunay, P. The directing mind and will test in corporate criminal liability. International journal of legal insight. Vol 1 (3). H.L Bolton Co. Ltd v. T.J. Graham and Sons Ltd. 1957 Ramsay, I. and Noakes, D.B., 2001. Piercing the corporate veil in Australia. Salomon v Salomon Co. 1897. AC 22 (Salomon).