Lifting The Corporate Veil In Australia Essay

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Introduction In Briggs, v James Hardie & Co Pty Ltd [1989] , Rogers CJ claimed that the notion whereby the corporate veil should be lifted wherever one company exerts complete domination over another company was too simplistic. He also stated that the law overlooked the fact that holding companies do have complete control over subsidies the majority of the time in reality. It is true that the plaintiff’s proposition was too simplistic; the relationship of complete control between a parent company and a subsidiary should operate merely as the starting point of inquiry when peering behind the corporate veil rather than the sole, deciding factor. ‘Piercing the corporate veil’ is a common law doctrine whereby the courts will set aside the separate legal entity doctrine in certain circumstances and impose liability of the participants behind an entity. The term ‘control’, as it used in this essay, concerns the ‘capacity of an entity to dominate decision-making, directly or indirectly, in relation to the financial and operating policies of another entity so a to enable that entity to operate with it as part of an economic unit in achieving the objectives of the controlling entity’. To apply it as the only material factor would undermine the principles of separate entity theory and limited liability. Instead, there must be a common, unified set of principles governing the removal of the corporate veil, not premised upon mere domination. The current legal treatment of corporate groups by the Australian legal system is not appropriate in light of the complex corporate transactions which have evolved into everyday business practises in the century since Salomon’s Case (Salomon v Salomon & Co [1897]) was decided (insert footnote with HC definition of corporate groups). For the sake of brevity, this essay will look only at lifting the corporate veil where a subsidiary is

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