Corporation

 McKesson Corporation is largest health-care provider in the United States; as of 2011 it ranked as the third largest company in the state of California; where the company is headquartered. On the Fortune 500 list McKesson is ranked 15 (“Fortune 500,” 2011), McKesson consisted of several Strategic Business Units (SBUs).

McKesson’s SBUs are divided into two primary categories: Distribution Solutions and Technology Solutions. The Distribution Solutions service all 50 states and deliver pharmaceuticals to institutional providers such as hospitals and health care systems; and also distributes to retail pharmacies; physician offices, surgery centers, long-term care facilities, and home care businesses. McKesson Canada, which is a part of McKesson, is a leading distributor in Mexico via its equity holding in Nadro.

McKesson Distribution Solutions consist of the following SBUs (McKesson, n. . ):

• McKesson Medical-Surgical
• McKesson Patient Relationship Solutions
• McKesson Pharmaceutical
• McKesson Pharmacy Systems
• McKesson Specialty Care Solutions
• Moore Medical
• Plasma and BioLogics
• Zee Medical

McKesson Technology

Solutions consists of software, services and consulting to hospitals, automation, imaging centers, physician offices, home health care agencies, and payors. The Technology-Solutions of McKesson Provide an avenue to improve health care safety, manage revenue streams and resources, and reduce the cost and variability of health care. McKesson Technology Solutions consist of the following SBUs (McKesson, n. d. ):

• McKesson Automation
• McKesson Health Solutions
• McKesson Provider Technologies
• RelayHealth

McKesson is one of the most successful companies in its industry in the United States. From a strategic management and planning perspective McKesson believe in unity within its divisions. Although the businesses are separate entities, there are some similarities in reference to management and interface with the parent company.

The focus on this paper will be on McKesson Medical-Surgical, which is a SBU of McKesson Distribution Solutions; and the interface with the parent company; McKesson Corporation. McKesson Medical-Surgical Interface with McKesson Company McKesson as a company believe in unity; especially from a management perspective. This company has consistently acquired other companies; and has successfully managed to bring unity within each SBU based on the management goals of the parent company.

According to Raynor, (2007), “ McKesson has acquired approximately 75 companies since 1995 that have been aligned with or assimilated into our assorted business units. Our size and breadth of products and services fostered variability in HR practices that diluted our efforts to become a more seamless “One McKesson. ” Accordingly McKesson embarked on a series of initiatives to standardize, improve and automate, where possible, its HR processes.

Human Resources and Organization Management Team

McKesson created a team of Human Resource and Organizational Effectiveness (OE) professionals in 2004. The focus of this team was to develop best practices and improved quality via a buy-in from all the business units. If a consensus is not met after voting on an issue, an 80 percent majority vote is required to move on (Raynor, 2007). Performance Management Team McKesson has created a weekly meeting for over a year for the Performance Management Design Team, which met virtually via conference call or web meeting. This team was also designed to focus on more unity within the company. The team was responsible for creating roles and responsibilities for performance management; with emphasis on employee involvement.

New competency model was developed to redefine the rating scale. Peformance was implemented; via a PeopleSoft module and customized to support the newly created program and standardized performance practices (Raynor, 2007). McKesson Supply-Chain Management McKesson experience with its acute-care distribution business; which is also the bread and butter in the more recent years for McKesson; effective supply chain management has created success for various SBUs within the company. Supply chain management has been consistent within McKesson Corporation throughout all the SBUs.

The consistency is the belief in building strong relationships with customers, offering innovative supply chain management products and services; a creating innovative technology solutions. This consistency has also allowed the company to grow by adding new customers and increasing the business with their existing customers (Smith, 2006). Environmental Trends and Current Business Model McKesson Medical-Surgical is a spin-off of what used to be a drug wholesaler; Gil Minor III created what is currently considered a powerhouse medical and surgical box; which is where the market was trending (Smith, 2006).

The company has taken advantage of creating convenience in the medical industry. Instead of selling from a brick and mortar pharmacy, this company has taken advantage of selling via supply chain directly to its customers as well as on-line sales. From a strategic perspective the company has managed to create success in various ways. McKesson business units’ success is based on consistency, innovation, creativity, from one division to another. The company has taken medical supplies and services to a different a level.

They are not the typical CVS or Eckerd Drug store; the company caters more to medical professionals, such as doctors, psychiatrists, but more to medical professions who have connections with hospitals. The company also provides medical supplies and services to most major hospitals as well as other medical institutions. The innovation of the supply chain management, medical technologies, and the acquisitions and expansions has been successful for McKesson. A key element is also their ability to place the customer first.

From a strategic management and planning perspective, below are some of the strategies used by McKesson to build and sustain success in their businesses. McKesson business model relate to various environmental trends; such as new and innovative technologies, with cutting edge improvements. Creation of a cutting-edge supply chain management; which is currently an important trend with many companies that are trying to improve their bottom line and stream line their business(es).

McKesson also provide supplies and services to home health care, and been very successful with acquisitions and expansions. The environmental trends support the current business models and have created success within the company as well as the various divisions. McKesson Business Model Success According to Acur & Bititci (2003), “Today’s globally competitive environment is complex, dynamic and unpredictable. To deal with this level of change, uncertainty and complexity companies need to develop and review their strategies almost continuously to stay ahead of the competition.

Within this dynamic environment strategy management requires considerable resources and effort in terms of managerial time, with increasing pressures for innovation, knowledge sharing and co-operation. ” McKesson has proved that it is on the leading edge of technology in its industry; the company is continuously working toward new innovative ideas to create more efficient; better service; much of the operation has been focus on supporting supplies from a global supply chain management perspective. McKesson is the longest-operating company currently in the healthcare industries.

The Medical-Surgical business unit of McKesson, similar to McKesson as a whole has been efficient with its strategic management and planning as well as successful as a SBU of McKesson. McKesson Annual Report as of Fiscal Year End March 31, 2011 shows the Medical-Surgical Distribution and a service has increase consecutively since 2009. McKesson Business Model Reinventions McKesson has reinvented several models within the last five years which have proven to been successful for the company as a whole and its strategic business units.

Value creation and strategies should be identified at each business unit within an organization to create an integrated approach to strategic management. Strategic objectives should be deployed and implemented. To compete from a global environment; which is constantly changing the operational environment of a business strategy planning and management should be a continuous process, which will provide a closed-loop-control system which will facilitate management of the organization performance as a whole as well as individual business units (Acur, et al, 2003).

McKesson has reinvented their supply-chain planning and management from business unit to business unit. New and innovative technologies; placing the customer first; expansion and acquisition is what McKesson has done repeatedly and been success as whole as well as with its individual business units. Key Resources and Generic Strategy Deployed Within the Business Model One of McKesson’s key resources within the Medical-Surgical Business Units is the uniqueness of its distribution – supply chain.

Unlike some pharmaceutical that companies focus on distribution to Walgreens, CVS, Walmart, and other similar store chains; McKesson focus its supply chain on physician who have practices which are connected to large hospitals. McKesson supply-chain increase efficiencies from an operational perspective with its electronic ordering and purchasing system; with the improved system the company can offer faster and better customer service and deliveries. Another area in which McKesson offer uniqueness from a company and business unit perspective is managing their human resources to help impact the bottom line – from a financial point of view.

According to Raynor (2007), “Performance management is increasingly regarded as a business process with real bottom-line impact, versus an HR program. ” “Instead of being viewed as an HR program, performance management was now discussed in terms of business impact. ” Summary From management perspective sustainability is the ability to meet the needs of the present, yet not compromise the ability to meet future needs (Haugh & Talwar, 2010). McKesson Medical-Surgical Business Unit financial in the last few years has reflected financial sustainability.

McKesson’s supply chain operation from a global perspective, the ability to continuously improve and create new technologies; as well as new ways of doing business in the pharmaceutical industries has placed McKesson above many other pharmaceutical companies. The focus on human resource development with the creation of the Performance Management Design Team places McKesson and its business units above many companies today. All companies have various resources which play an active role in the performance of a company.

However, most companies under-rate the importance of in my opinion their internal customers. Employees play an active part in how a company performs financially. From a psychology perspective a happy person is can think better and perform better than one who is unhappy. Knowing how to manage ones human resource can improve how a company perform; and can increase innovative ideas from employees. All other resources can only be a good as a company’s human resource.

References

1. Acur, N. , & Bititci, U. (2003). Managing strategy through business processes.
2. Production Planning & Control, 14(4), 309. Retrieved from EBSCOhost. Fortune 500: 15. McKesson. (2011). Retrieved from http://money. cnn. com/magazines/fortune/fortune500/2011/snapshots/2219. html
3. Haugh, H. M. , & Talwar, A. (2010). How Do Corporations Embed Sustainability Across the Organization?. Academy of Management Learning & Education, 9(3), 384-396. doi:10. 5465/AMLE. 2010. 53791822
4. Leveraging Business Intelligence for Revenue Improvement. (2008). hfm (Healthcare Financial Management), 62(8), 1-8. Retrieved from EBSCOhost.
5. McKesson. (n. d. ) McKesson About 2BU Our 2BU Company Businesses 2BBusinesses. Retrieved August 20, 2011, from http://www. mckesson. com/en_us/McKesson. com/About%2BUs/Our%2BCompany/Our%2BBusinesses. html
6. Raynor, E. (2007). Developing the Performance Culture at McKesson Medical-Surgical. Organization Development Journal, 25(4), P19-P25. Retrieved from EBSCOhost.
7. Smith, C. (2006). Distributor CEO extends reach from hospital bedside to the home. Healthcare Purchasing News, 30(9), 16-21. Retrieved from EBSCOhost.

Dell Corporation was formed in 1984 and the purpose of Dell was to directly serve their customers and this organization was formed to meet the needs of the customers. At the early days the organization was known as PC’s limited and Michael Dell was a student at that time. AT that time Dell initiated their first computer which was known as Turbo and the ultimate goal of Dell was to produce the personal computer systems. The system that was developed at that time was IBM compatible. Their approach was entirely customized and their differentiating point was to individually assemble the computers individually.

The company grown slowly and gradually and it actually grossed 73 million dollars in the first year and they even went public in the year 1988 and offered a share price of $8. 50 a piece. The company after that specialized in laptops and the first Dell laptop made its debut in 1991. After that they never looked back and in their initial years Dell become the top five computer companies in the world. In the year 1997 Dell shipped its ten millionth systems. They changed their selling strategy and started selling the computers through their website and as a result of which they took over Compaq.

Dell was considered as a leader in the laptop business so they extended their brand and introduced their printers for the public. These printers were targeted for individuals and small businesses. Therefore, the history of Dell is quite rich and they have a long track record of customer satisfaction and their customer base is increasing every year (Printcountry , 2009). Financial performance of the last five years The financial performance of this organization has increased in the previous years and this organization has progressed at a rapid pace.

The financial performance of the last five years suggests that the company have experienced stable growth as far as the financials of the company are concerned. The figure from the last five years indicates that the performance of the organization has gone up and down several times. The year 2006 was quite good for the company because net income of the company increased to about 19. 35% and this was a huge increase in the net income of any organization. However, due to stiff competition the company suffered losses and its net income decreased to about 28. 29%. However in the year 2008 the performance improved and net income increased to 14.

09% but this increase was sabotaged in the next year when the organization suffered losses which changed the figures and net income was decreased to 15. 91%. Other figures and changes are listed in the chart above (MSN, 2009). SWOT Analysis Strengths The direct model approach is considered to be the biggest strength of the company and this direct approach helps the organization to offer direct relationships with the corporate and institutional customers. The online technical support and their onsite product service can be considered as on the strengths of the company. Also learn Dell human resources management

The customer service of Dell is renowned around the world and different organizations have followed Dell’s model of customer service. Their approach of customization is considered to be a novel idea and this idea is loved by many customers. The prices of Dell are very competitive and it offer very competitive rates at every element of the supply chain. The reliability and support systems are above the part and they offer top notch service before and after the sales. The technological orientation of the company is quite and they develop their computer systems with direct distribution channels.

Similarly, Dell believes in the phenomenon of changing the inventory on a faster pace that is the reason why Dell turns over the inventory for an average of every six days. Finally the website of the organization is very interactive and a customized approach is used by the company even in their website.

Weaknesses

The target market of the organization can be considered as their biggest weakness and their core target market is college students and they generate only 3% sales revenue from educational institutions. Dell is not popular among the educational market because students usually purchase computers through their institutions. Learn about 

In certain cases the direct method of Dell and the customized approach created many problems. Dell doesn’t have the distribution channels therefore customer don’t go for retailers and their direct approach in certain cases are creating problems for the organization. Opportunities The demand for personal computers is increasing and organizations are spending more and more on personal computers that is the reason why this can be considered as an opportunity for organization. The demand for laptop has increased and customers are shifting from desktop computers to desktops.

Dell can grow into other segments and this can treated as an opportunity for Dell computers. Other opportunities are provided by the internet in terms corresponding with the customers is concerned and customers can directly interact with the organization and they can purchase online. Threats There are hefty amount of threats in the computer markets that is the reason why Dell also faces certain threats. The technology is changing quite constantly that is the reason why Dell has to change its approach and they have to respond proactively in all the changes.

There are different external threats to Dell and one of the most common threats is the price difference among different brands and the competition between the brands are getting stiffer and closer. Since the prices are getting closer and closer customers are forgetting the concept of brand and they are easily shifting towards other brands. Similarly, the element of technological advancement can be considered as a double edged sword. Key Competitors Analysis The computer industry is filled in with competition and the major competitors of Dell include Apple, Hewlett-Packard (HP), Gateway, Acer, Sony, Asus and etc.

However, IBM, Apple and Hp are considered as the main competitors of Dell. The market share is shared usually between these two three companies and in the year 2006 the market share of Dell was between 18 to 19% of the worldwide personal computer market. However, the share of HP was 15%. Dell is believed to change its strategy and that is the reason why dell offers more competitive offers to its customers in terms of personal computers and other related equipment. However, Dell lost the share in the year 2008 and Hp turned to be the powerhouse at that time (Dell & Fredman, 2006).

Therefore, one can easily say that the competition in this industry is quite stiff and whoever comes up with a different plan succeed in both the short and the long run. Analysis of branding strategies of company and the selected product Alignment of branding strategy of the company and the product The branding strategy of Dell is quite customer centric and the entire focus of the branding strategy is to develop powerful brands which can be developed as the major products of the computer industry.

Similarly, emphasis is laid on the interaction and customization that is the reason why the organization involves a lot in brand activation and brand building activities. For e. g. The Dell city is most viable example of the brand building in which giant and high tech computers are placed and an individual has an opportunity to enter the Dell factory and he/she can easily witness the construction of their own laptop or the desktop computer (Nissim, 2007). That is reason why it can said quite easily that Dell follows a forward looking approach as far as developing a brand is concerned.

The brand that is selected for discussion is Vostro 1520 laptop. This brand is quite a famous one and it is usually targeted to specific target market and this brand is of a customized nature. This brand is among the top notch brands of Dell. The core target market of this brand is business oriented individuals and who are mobile and they don’t comprise on quality. The price of this machine is high and the brands core focus is to ensure the quality. Customers feel privileged with this machine because it is also related with social class of the customers (Dell, 2009).

Importance of social responsibility and credibility in preserving the brand integrity of your organization Public relations are quite an important element for every organization and organization that focuses on corporate social responsibilities are the one that benefits in the long run. One of the most viable strategies for this purpose is brand publicity and it is the use of non paid public messages to deliver persuasive messages (Duncan. T, 2004). The brand integrity is an essential part of every organization and organizations stresses on brand integrity.

Short term and long term benefits can be attained through relating the brand with the social responsibility. The brand integrity of an organization is closely linked with the social responsibility of an organization and the element of competition may drive capitalism but cooperating with the stakeholders and addressing the social and the environmental issues in a proactive manner must affect the organization and it must affect the brand integrity of an organization.

That is the reason why organizations are focusing on branding activities that are linked with social and environmental issues and for that reason organizations like Dell are joining and amalgamating not only with their competitors but they are combining and collaborating with organizations that are linked with social , human and environmental issues (Baue, 2007). Therefore, it can be said quite easily that brand integrity of Dell can easily be preserved and customers would move towards the brand if the company is more into social responsibility.

Dell integrates its brand name with different strategies of CSR like their “Plant a Tree for Me” campaign. Stake holder Relationships in the Brand building process Stakeholders are of utmost importance to every organization and Dell focuses a lot in maintaining healthy and proactive stakeholder relationship. In order to create a healthy brand relationship the organization must focus on the brand and manage its customers accordingly. Proper brand image and brand awareness must be created. Dell focuses a lot in their stakeholders and emphasis is laid on the relationship of stakeholders with the brands.

An element of brand champion is created within the organization and every stakeholder acts as marketing individual and the employees and all the related stakeholders adds value to the brand. Thus the stakeholders are linked with the brand and they are motivated enough to work for the organization. Dell focuses a lot on building brand relationships with the stakeholders. The brand is strengthened when emphasis is laid on the brand building process. Brand awareness and perception of Dell Brand awareness is considered to be an important aspect and customers must be aware of the brand and they must recall the brand when it is necessary.

Besides brand awareness perception is also important. An important point is that how customers perceive the brand in their eyes and how they are attached with the brand. The strategy and advertising depicts that customers view this brand as a powerhouse in the computer industry and the customers are usually aware about the brand and they have positive perceptions about the brand. In the market place this brand is regarded as the top notch brand for laptops and printers.

References

Baue, B. (2007, January 19). From Competition to Cooperation: Companies Collaborate on Social and Environmental Issues. Retrieved May 6, 2009, from Social funds: http://www. socialfunds. com/news/article. cgi/2208. html

Dell. (2009). Vostro 1520 laptop. Retrieved May 6, 2009, from www. dell. com: http://www. dell. com/content/products/productdetails. aspx/laptop-vostro-1520? c=us&cs=04&l=en&s=bsd

Dell, M. , & Fredman, C. (2006). Direct from Dell: Strategies that Revolutionized an Industry . Collins Business .

Duncan. T. (2004). Principles of Advertising and IMC. Mcgraw Hill.

MSN. (2009). Dell Inc: Financial Statement. Retrieved May 6, 2009, from moneycentral. msn. com: http://moneycentral. msn. com/investor/invsub/results/statemnt. aspx? symbol=dell

Nissim, B. (2007). Virtual World Transition: What SL Business Model Works Best? Retrieved May 5, 2009, from Ibranz: http://www. ibranz. com/article15. html

Printcountry . (2009). The History of Dell. Retrieved May 5, 2009, from printerinkcartridges. printcountry. com: http://printerinkcartridges. printcountry. com/printer-company-histories-press-releases/the-history-of-dell/

 A separate legal entity that has an existence at law that is separable from those who form it. It is a separate legal entity in the sense that it has an existence at law, but no material existence.  It is separate and distinct from its shareholders. A properly authorized agent may bind the corporation in contract with third parties.  Shareholders possess limited liability for the debts of the corporation, and creditors may look only to the assets of the corporation to satisfy their claims.

Director – a person elected by the shareholders of a corporation to manage its affairs. They are free to carry functions in accordance to corporation’s objects, but their powers are limited by any restrictions mentioned in articles of corporation. Officers – a person elected or appointed by the directors of a corporation to fill a particular office (such as president, secretary, treasurer, etc. ).

Methods of Incorporation

1. Royal Charter: The issue of the charter was for the purpose of creating a legal existence for the entity, to permit it to either operate as a monopoly or to own land. It was an exercise of king’s prerogative, and issue of charter gave the entity all the rights at law of a natural person.
2. Letters Patent: A government document that creates a corporation as a legal entity. Crown’s representative issues the incorporating document.
3. Special-Act: A corporation created by an Act of Parliament or a legislature for a specific purpose. The corporation has powers specially granted to it by the statute. If the corporation attempts to do something that is not authorized under the statute, the act is ultra vires (beyond the powers of) corporation and a nullity.
4. General-Act: A form of incorporation whereby a corporation may be created by filing specific information required by the statute. The document filed is known as Memorandum of Association. In Ontario, document filed is called articles of incorporation and document issued by government is called certificate of incorporation. Powers are limited to those specified under the act.

Doctrine of constructive notice: Presumption at law that everyone has knowledge of the content of all statutes (related to corporation). For example, third party may not enforce any contract on a corporation, if the corporation’s act was ultra vires, as it is pre-assumed that the third party had knowledge of all statutes. Indoor management rule: A party dealing with a corporation may assume that the officers have the valid and express authority to bind the corporation. Officers may show a document, containing the approval of shareholders before entering the contract.

It begins with the preparation of an application for incorporation that sets out the name of the proposed corporation, the address of the local office and principal place of business, names of incorporators for the application for incorporation, the object of the incorporation, the share capital, any restrictions or rights attached to shares, and any special powers or restrictions that apply to acts of the corporation. The complete application is then submitted to appropriate office in the incorporating jurisdiction, with a fee charged for incorporation. The filing date becomes date of incorporation.

After incorporation, the incorporators perform remaining formalities. They set the various duties of directors and officers. Also provide for banking, borrowing, the issue of shares, or purchase of some existing business. 4. Incorporators may resign as first directors, and shareholders elect permanent BOD. Shareholders’ Agreement: An agreement between shareholders of a private corporation concerning management and future reorganization of the corporation such as buy-out of interests. Corporate Securities Shares: Ownership of a fractional equity interest in a corporation.

Floating Charge: A debt security issued by a corporation in which assets of the corporation, such as stock-in-trade, are pledged as security. Until such time as default occurs, the corporation is free to dispose of the assets. Debentures: A debt security issued by a corporation that may or may not have specific assets of the corporation pledged as security. Fiduciary: A relationship of utmost good faith in which a person, in dealing with property, must act in the best interests of the person for whom he or she acts, rather than in his/her own personal interest.

If a director has a benefit in some dealing of the corporation, he must disclose it at the soonest and should not sit in voting and meetings for the deal. Doctrine of corporate opportunity: The use of corporate information for a personal benefit to the detriment of the corporation. Due diligence: The obligation on the directors of the corporation to ensure that effective systems are in place to comply with legislation, and to monitor the systems to ensure compliance. Outside directors: A director who is not and officer or employee of the corporation.

Business judgment rule: The reluctance of the court to interfere with decisions of BOD. Sarbanes-Oxley Act: A U. S. statute that imposes extensive duties on corporations to ensure accuracy of financial and securities information provided to the public. Its policy targets are: creation of a public company accounting oversight board, auditor independence, corporate responsibility for financial reports, enhanced financial disclosure, conflicts of interest by analysts, and corporate and criminal fraud liability.

Securities Regulation

Security: A document or other thing that stands as evidence of title to or interest in the capitals, assets, property, earnings, profits or royalties of any person or company, including any document commonly known as a security. Purpose and administration of securities regulation . Providing protection to investors from unfair, improper and fraudulent practices . Fostering fair and efficient capital markets and confidence in capital markets Caveat emptor – buyer beware Disclosure – The release to the public of information about the corporation that intends to offer its securities to the public.

Involves true, full and plain disclosure of all material facts relating to securities being issued. Prospectus disclosure – A public document required by law before securities are issued, revealing material facts about the security and it’s issuer, with such a true, full and plain disclosure that a potential investor may make an informed decision as to the riskiness and price of that security. It is required to be filed and accepted by the provincial securities commission. Reporting issuer – The Corporation that has issued its shares to the public by way of a prospectus.

The Employment Relationship

Fourfold test: A test for employment based upon ownership of tools,  control,  chance of profit,  risk of loss. Organization test: Test for employment based upon an examination of the services in relation to the business itself. Duty to accommodate: The obligation of an employer to adjust work for an employee with a recognized disability. Just Cause: The onus of the employer to establish grounds for termination of an employee without notice. Wrongful Dismissal: The failure of an employer to give reasonable notice of termination of a contract of employment.

Constructive Dismissal: Employer termination of a contract of employment by a substantial, unilateral change in terms of conditions of employment.  The transfer of a chattel by the owner to another for some purpose, with the chattel to be later returned or dealt with accordance with owner’s instructions.

Three elements:

• Delivery of goods by the bailor
• Possession of goods by the bailee for a specific period
• Return of goods to the bailor at a later time, or the disposition of the goods according to bailor’s wish.

Bailor – The owner of the chattel who delivers possession of the chattel to another in a bailment. Bailee – The person who takes possession of chattel in the bailment. Sub-bailment – A bailment, which involves two or more bailees wherein one bailee would pass goods to other bailee as per contract. Automobile repairs, etc. Exculpatory Clause – A clause in a contract that limits or exempts a party from any liability for damaged goods. Licence – A right to use property in common with others. Consignment Sale – The delivery of a chattel to another person with instructions of its sale.

Lien – With respect to goods, it is the right to retain the goods until payment is made. Pledge – The transfer of securities by a debtor (bailor) to a creditor (bailee) as security for the payment of a debt. If debtor fails to pay debt, creditor may charge the amount of loss from security and return any surplus to debtor. Pawn – The transfer of possession (but not ownership) of chattels by a debtor to a creditor who is licensed to take and hold goods as security for payment of debts.

The Sale of Goods

Contract of sale of goods: A contract whereby the seller transfers or agrees to transfer the property in goods to the buyer for a money consideration called the price. Two instances: If the ownership is immediately transferred under the contract, it represents a sale.  If transfer of ownership is to take place at a future date, or subject to some condition that must be fulfilled before the transfer takes place, is an agreement to sell. The agreement need not be in writing, if the buyer: Accepts part of goods sold. 5 rules of transfer of title 1. If there is an unconditional contract for the sale of specific goods in a deliverable state, the property in the goods passes to the buyer when the contract is made, and it is immaterial whether the time of delivery or payment is postponed. 2. It is applicable to a contract where the seller must do something to put goods in a deliverable state. If he hasn’t done that, the ownership won’t pass. Once he is done and has noticed the buyer about alterations, title passes.

The goods are in a deliverable state, but the seller must weigh, measure, test or do something to ascertain price. Title won’t pass until act is done and the buyer is notified.  Goods are sold to buyer on the approval of the buyer. Involves trial before making the final approval. Buyer must inform his approval; only then the ownership will pass. If he doesn’t approve in a given time period, the title will pass to buyer once time period is over.  Applies to goods that have not yet been produced. They are in an agreement to sell, not agreement to sale. Deals in future goods. Condition: An essential term of a contract.

If one party fails to fulfill it, other party would be released from contract without any performance. Warranty: In the sale of goods, a minor term in a contract. The breach of the term would allow the injured party to damages, but not rescission of the agreement. Sold by description: If buyer purchases goods seeing a catalogue. Goods must be same as mentioned in catalogue. Merchantable Quality: Goods of a quality standard suitable for re-sale. Cooling off: Cooling off period is for buyer to examine the good in his leisure. If he doesn’t like it, he may return it ending the contract.

This scene establishes the position of Tyrell and illustrates his power. The mammoth size of the Tyrell Corporation implies the complete power of the Tyrell Corporation over society. The building is structured like a Mayan pyramid perhaps representing the similarity between the Mayans and Los Angeles as presented by Ridley Scott in 2019. The Mayans having built mammoth, aesthetically impenetrable cities were forced to flee the cities as vine and jungle took over the city. It was later revealed the Mayans had no agriculture skills and had a lack of understanding of nature. Los Angeles 2019 is not dissimilar. Earth has been drained of its natural resources and left to decay.

The scene inside the Tyrell Corporation opens with a full shot of owl eyes. Deckard inquires, “is it artificial”, Rachael answers “of course”. The reader realizes the true extent of the artificial nature of this society. This confirms that artificial objects have taken over nature – first humans and now animals. The owl is relatively indistinguishable from a ‘real’ owl, raising the persistent question ‘what is natural?’ The owl is also associated with Tyrell; representing his false wisdom.

The viewer is first introduced to Rachael and Deckard in natural light – this is the first time the viewer sees the natural source of light in the film. The sun can be seen as a metaphor for their real love for one another. The artificial surroundings of the Tyrell Corporation and the world below greatly contrast with the sense of the natural world the sun is symbolic of. Natural light quickly disappears as Deckard commences the Voigh-Kampff test demonstrating the artificial nature of the Tyrell Corporation and simultaneously the world below.

This scene establishes the position of the Tyrell Corporation and the characters in the film. The viewer realizes the true extent of Tyrell’s power. Perhaps more importantly the viewer is introduced to the key issue of the film ‘What is natural?’ and illustrates how the natural and artificial are indistinguishable.

Tyrell’s Death – Tyrell, Sebastian and Batty

The scene again begins with a close-up of the artificial owl reinforcing the false wisdom of Tyrell and the question of what is natural or artificial? Tyrell’s room is also very large further emphasizing his power and position. The surroundings are pristine and luxurious; Tyrell’s bed was actually modeled on the bed of Pope John Paul II. This illustrates Tyrell’s affinity to the role of God and his role as creator.

Tyrell is presented as arrogant, smug and extremely patronizing, “you burnt so very, very brightly Roy”. Tyrell is impersonal and cold towards his ‘son’ in his quest for life; he does not offer any sympathy or comfort. This is a subtle way Ridley Scott makes the viewer empathise with Roy. However this is somewhat altered following the brutality of Tyrell’s death.

The method of Tyrell’s death emphasizes his false wisdom and inability to see the consequences of his actions. Roy removes Tyrell’s glasses before crushing his scull allowing Tyrell to finally see the consequences of his actions – although it is too late.

The fact that Roy has killed his creator is significant to the overall themes presented in the film. The killing of Tyrell can be seen as representing how man has killed nature (essentially this is creation killing creator) in our own society and emphasizes the complete destruction of the environment of Los Angeles 2019 as represented by Ridley Scott.

The American corporate world has been rocked by a series of financial frauds committed by the management. These frauds have led to the collapse of the corporations and unheralded investor losses. Greedy executives apply creative accounting techniques that conceal the fraud. However, such financial are hard to conceal for long and at some point they are detected. In the the fraud was a case of financial statement fraud orchestrated by the new management.

Albert Dunlap, famously known as ‘Chainsaw Al’ for his ruthless history in restructuring and downsizing struggling corporations, was hired by Sunbeam as CEO and chairman of the board to carry out a similar program. He surrounded himself with like minded subordinates and commenced his restructuring program by reducing staff and closing plants. Faced by huge and urgent expectations and over-ambitious targets, Dunlap and his team engaged in financial statements fraud.

They were able to commit the fraud since the internal control system was weakened and lacked committed while the employees were submissive. The management reconciled their actions with their job descriptions and felt that they were actually fulfilling their duties in the company. They created ‘cookie jar’ reserves to project an impression that the corporation had achieved drastic improvements in the performance. They also engaged in bill-and-hold transactions in an attempt to boost the quarterly turn over.

As desperation to cover up for revenue short falls set in they also engaged in channel stuffing. The nature of transactions was not provided in the financial reports and was in fact denied in press releases. The financial misrepresentations finally caught up with the management as the share fell in value and they were sacked. The company restated its revenue and turnover which were greatly overstated. A total of $3. 5billion in investor fund, were lost and the company later filed for bankruptcy. Also read Sunbeam corporation case study

Investors also lost confidence in the capital markets. The capital markets regulator, SEC, sued the main culprits for flouting the anti fraud laws. Settlements were reached both monetary and punitive though the dependents did not plead either guilty or innocent. The external auditing partner was co-joined in the suit for leniency. He authorized an unqualified report despite having detected some accounting anomalies. His firm may have pressurized him into giving unqualified in a bid to please the management of one of its biggest customers.

The external auditor also encountered a non vigilant audit committee and board of directors. The frequent financial scandals have prompted the Congress to pass the Sarbanes-Oxley act of 2002. The Sunbeam financial statement fraud has in effect challenged investor and other users of accounting information to be more vigilant and not take financial statements and press releases at face value rather they should take an in-depth analysis before making their decision.

Companies like Kimberly Clark Corporation are actually providing their business with a way of connecting with their customers or consumers at the keyboard on their computers. In this case the group of researchers gathers groups of consumers that purchase their products. After gathering these consumer groups, they teach them on how to participate on panels through services that are carried out by doing instant messaging. While these customers are in the comfort of their own individual spaces, they are more of in a position to answer the questions honestly. This is because they cannot be seen by the team of researchers.

They just answer the questions without necessarily giving their personal details like their names and their contacts. Through this effective data is collected within hours than taking several weeks or even months doing the same thing. (Burns, and Bush, 2001) Conversation groups Rather than just study a consumer group’s reaction to their products, Kimberly Clark Corporation are taking a step forward by getting to know their customers from the entire perspective of human behavior. This is actually a major thrust of research work that is carried out in this Corporation.

The team of researchers in Kimberly Clark Corporation has incorporated conversation sessions as part of their ways of carrying out research on consumer behavior . In this case groups of three to six friends just converge in a host home. In this meeting, there is general discussion of life. This is in relation to the stage that they are in life. When they meet they just discuss their worries about the future, their dreams in life and the thoughts that they have about the future. One of the group members acts as a secretary and records down all the information that is discussed.

This information is later on compared with the human behavior profiles that are normally based on the Maslows Hierarchy of needs. The solutions are used in solving the demographic challenges that are created. Through this the consumer behavior are ascertained by the team of experts. Immersion groups and ethnography This is whereby; instead of bringing the customer to the Company they go to the customer instead. Many research groups that have existed in the past have been studying consumer behavior in malls or such like places. Other Companies like Kimberly Clark Corporation are now going a step further.

Instead of bringing the customer to themselves, they are now going for the customers. There is observation of consumer behavior by simply immersion into the home. This is either done live by the team of researchers walking into homes and observing or by the use cameras. Kimberly Clark has been widely known to be the maker of Huggies diapers for babies. Research shows that this Company has really experienced success by simply aiming at understanding how mothers bathe their babies and how they change them. The team of researchers just places a small handset camera on top of the mother’s head.

This is indicated in the traditional focus groups. The team of researchers from Kimberly made discoveries through this initiative. (Alreck, 1985) They discovered that most mothers just change their baby’s diapers anywhere that they get any open space. They actually often struggle with packaging which normally requires that they use their two hands. This prompted Kimberly Clark Corporation to do something about the whole issue. They decided to redesign the entire packaging of their products so that it becomes easy for the mother to use only one hand when packaging.

This has made Kimberly Clark Corporation to be very popular with its brand of Huggies. Looking at this initiative taken by Kimberly holdings, it is very unique and yet very effective. It is quite inexpensive and through it they are able to know more about consumer behavior so that with the information they are able to improve their products and also to design others that are beneficial to the consumers at large. This shows that a business organization having the right kind of connection with the individual customers enables it to know more about their consumer behavior.

Introduction
In order to render controllers of corporate groups or controlling shareholders individually accountable for the debts of the company, the courts are empowered to lift the veil of incorporation. However, this is drastic and has to be resorted to only under extreme circumstances. As the extant case law clearly indicates, such a course of action is not resorted to as a matter of course. Instances, wherein such activity had been directed against inactive shareholders of public companies, have not come to light. In the main, case law had dealt with instances of deliberate distortion of facts. The legislation of the United Kingdom holds liable any person who intentionally conducts company business, with the object of defrauding creditors, if that company is shut down[1].

The term lifting the veil of incorporation or lifting the corporate veil is used to refer to the practice of viewing the true nature of a company, subsequent to ignoring its distinct existence in law, under certain circumstances. The constituents of a company and its members are not treated differently, according to this doctrine.

The principal distinguishing factor of a company is that it is treated as a separate legal entity that is not only distinct from but also independent of its constituents. This specific property of a company, bestows a number of advantages on a company. Although, a company is deemed to be distinct from its members, the fact remains that it is an association of persons, who not only own the entire property of the company, but also enjoy all the benefits that ensue from its commercial activities. The effect of being considered a separate entity under law has the effect of ignoring these true beneficiaries of the company, after its formation and legal entity status bestowal.

In the normal course of events, this status of a separate legal entity, enjoyed by a company is acceded to. In fact, this doctrine of corporate personality of a company forms the basis of the law of corporation. Nevertheless, such the benefits accruing from the enjoyment of a status of a separate legal entity cannot be utilized for unlawful business purposes[2].

In the course of settling disputes, the courts are at times, compelled to determine the identity of the persons who really control a company. Such instances, transpire when the legal entity of the company is employed for perpetrating acts of a fraudulent nature, indulging in inappropriate behaviour or committing acts that harm public policy[3].

In all such instances, the courts lift the veil of incorporation. Such a measure by the judiciary falls within its discretion and is dependent on the economic, moral and social issues that pertain to the company. As such the courts intervene and dispel the veil of incorporation, whenever, the latter is utilized by a company to conceal its malafide acts[4].

Upon incorporation a company becomes a separate entity. It acquires the corporate personality by donning the corporate veil. A company is a separate entity from the shareholders who had formed it. The law considers an incorporated company as an independent entity. However it is an artificial person and behind the corporate veil, there are the shareholders of the company. Similarly, the assets of the company are not the assets of shareholders and its debts are not those of its shareholders[5].

Salomon v Salomon & Co[6]: Statement of Authority
The principle of corporate veil was established in Salomon v Salomon & Co. That case had demonstrated that a company has a unique identity, which is different from its directors and shareholders. The court held that the acts of the company in its corporate role were not those of its shareholders. Its liabilities were different from the liabilities of its shareholders, although they held the shares of the company[7].

            Salomon had been a sole trader in the boot and leather business. He had formed a limited company, with his family members as shareholders. Subsequently, he had sold his earlier business at an estimated cost of £40,000, which was an over estimation of the assets, by nearly £8000. In the new company, his wife, daughter and four sons held one share each; and Salomon held the remaining shares of the company. This company bought the old business of Salomon and issued shares and debentures for £10,000 and the business was sold on a floating charge of assets. Eventually the company was wound up. At the time of declaring insolvency, the company’s liabilities had included debenture, which had exceeded the cost of its assets by £7,700[8].

      The creditors of the old company claimed that both Salomon and the company were one and same. They contended that the debenture held by Salomon were to be deemed as null and void. They further argued that Salomon could not be his own creditor. One of the creditors Broderip had given loan to Salomon who had issued some debenture as security for that loan. Subsequently, Salomon replaced his old debentures with new ones. Salomon failed to pay interest on the debentures, with the result that Broderip initiated legal action against the company. At that juncture, the company had been liquidated, in order to evade payments to other creditors. Acceptance of Broderip’s claim would have precluded the other creditors from receiving any amount from the company towards their dues from it. The liquidator of the company had insisted that Salomon should refund the creditors, because the assets of the company had been inflated, and because forming a new company would permit evasion of the responsibility to pay back the amount due to its creditors. Hence the liquidator turned down the purchase agreement on the grounds of an intentional fraud by Salomon. The trial court concurred with the argument of the creditors that Salomon and his company was one and the same. They also opined that as such he could not become a creditor to the company and that his debenture should not have any effect. The case was referred to the House of Lords, which held that his debentures were to be deemed to be valid, although there was the involvement of an element of fraud. Their Lordships opined that the company had been formed properly, with the consequence that it had become a separate legal entity in the eyes of law. The company was held to be totally independent of Salomon[9].

The case of Salomon had further established the legal position of family companies in which the majority of shares were controlled by one person. It also demonstrated the availability of incorporation for small as well as large companies. Thus corporate personality tends to limit liability not only to the capital amount of the company, but to mitigate the risks attached to debentures. Although the ruling in this case was controversial, it served to distinguish a limited company from its shareholders and directors. This established the corporate entity of an incorporated company[10].

Lifting the Veil defined
Piercing the corporate veil is a process adopted by the courts, whereby they disregard the corporate personality, with the intention of determining the identity of the persons hiding behind the corporate veil, who had indulged in activities that had affected the corporation. The courts pierce the corporate veil, identify the offender and impose liability on that person. Piercing the corporate veil of a company implies that the courts had ignored the corporate identity of the company and identified the actual person who had acted from behind the corporate veil. The fundamental objective in lifting the corporate veil is to prevent the misuse of the corporate personality by its directors or shareholders. By piercing the corporate veil the courts expose the true nature of a company[11].

            The court in Salomon case had established that an incorporated company attains a legal personality that is distinct from that of its members. However, the courts do not apply this principle to incorporated companies all the time. Under certain circumstances, courts would pierce this corporate veil. The Companies Act 1985 specifies the situations, in which the courts can lift the veil of incorporation.

Examples of Statutory Lifting of the Corporate Veil
1.     During a National Emergency

The courts monitor companies during wartime to determine whether any misuse of the corporate personality had transpired. Accordingly, courts may lift the corporate veil, in order to determine the true composition of a company. National emergencies, like economic crises, warrant the intervention of the courts. Under such circumstances, the courts intervene and lift the veil of incorporation of the company.[12]

Daimler v Continental Tyre and Rubber Co[13]

This was what had happened in Daimler v Continental Tyre and Rubber Co. In that case the court had lifted the corporate veil, during the World War I. It had done this in order to determine the nationality of the company and to ensure whether it belonged to the enemy company, because the shareholders of that company were German nationals. Subsequently, after lifting the veil of incorporation, the court successfully established the fact that the company belonged to the enemy.[14]

2.     In Cases of Fraudulent Abuse of a Company

The courts will show the least reluctance to pierce the corporate veil, if any fraudulent element is detected behind the corporate garb. The courts do not permit recourse to the principle established in Salomon, to promote fraudulent activities. Such cases can be referred to as fraudulent cases.[15]

Gilford Motor Company Ltd v. Horne [1933][16]

In Gilford Motor Company Ltd v. Horne, the defendant, Horne left the plaintiff company to establish his own business. At the time of his leaving the plaintiff company he had agreed to a restrictive covenant, which restricted the defendant from soliciting customers of his former company. Later on, he set up a company that was dealing in the same type of business. The defendant argued that he was bound by the covenant, since the company was a separate person. The Court of Appeal held that the defendant had formed the company as a device to mask his intentions. This established that the primary objective of forming the company was to perpetrate a fraud. The Court ruled that the company was a facade to conceal his fraudulent activities.[17]

            Jones v. Lipman [1962][18]

In Jones v. Lipman, there was a contract between the defendant and the plaintiff with regard to the sale of land. Subsequently, the defendant changed his mind and did not want to complete the sale. The defendant established a company and transferred the property to the company in order to avoid the transaction. Lipman then claimed that he was not the owner of the land and therefore he could not complete the contract. The judge held that the company formed by the defendant served as a mask for him and that the defendant had attempted to avoid recognition by law. Accordingly, the judge granted an order of specific performance.[19]

            Inferences from 1 and 2

            These cases served to demonstrate that courts do not permit the use of the corporate veil as a façade, behind which fraudulent activities are carried out. The courts disapprove any connection between such persons and the company. There could be several reasons for the courts to lift the corporate veil of the company and to identify the fraudulent elements in the company. However, in the absence of a clear and precise policy or principle, such piercing of the corporate veil results in uncertainty, despite the fact that the objective of the courts is to restrict the fraudulent use of the corporate veil.

            The decision of the Court of Appeal in Adams v Cape Industries plc[20] and Jones v Lipman[21] are instrumental in specifying the court’s stance in lifting the corporate veil, in situations where the accused had used the corporate personality for evasion. These are first, when the defendant attempts to evade the limitations imposed on his conduct and secondly, in the event that third parties obtain a right of relief against the defendant. The courts do not lift the corporate veil for future purposes. However, using corporate personality to mitigate future liabilities is permitted[22].

            The courts determine the level of deception in any particular case. In Hilton v Plustile Ltd[23], both the plaintiff and the defendant had agreed to use the corporate personality of the company in an agreement relating to tenancy, in order to circumvent provisions of the Rent Act 1977. The Court of Appeal held that the plaintiff had been aware of the issue, at all times, and was consequently, precluded from invoking a piercing of the corporate veil[24].

            The discussion in Adams case clarifies the effect of deception on third parties. The issue was whether the corporate personality of a company could be used to invoke a piercing of the corporate veil and whether this was justified. The court held that it should be first established that the company had been used as mask to conceal the facts. Therefore, it was essential to determine, whether the motive to commit fraud had been in existence. If the defendant rejected the plaintiff’s legal rights, then the fraud exception would come into force. Further if there was no legal right on the part of the plaintiff, then the defendant’s intention to deceive the plaintiff could become tentative and would not have any future consequences. As such the fraud exception had to be fulfilled, in order to employ the corporate form to evade the legal right[25].

Brief overview of Adams v Cape Industries[26]
The issue in this case was that the holding company had to be permitted, on the basis of the corporate form, to avoid the risk of indirect liabilities for the group’s asbestos trade in the USA. The argument sought to enable the holding company to be in a position to regulate the affairs of the group. However, this argument lacked reason. The courts lifted the veil of incorporation, because the company’s corporate form had been employed in such a way that the liability for the deeds of the group fell on the subsidiary instead of the holding company. This was neither correct nor relevant. Further, a single economic unit operating its business through a group of companies would hinder the trade union in complying with the legal provisions relating to industries.

            The Court of Appeal held that if the corporate form was used for the purpose of evading the legal liability, with respect to future activities of the group, then the liability would fall on some other member of the group but not on the defendant company. Under the provisions of the law, the plaintiff could not bring about a lifting of the corporate veil against the defendant company, because the defendant company was also a member of that group[27]. Thus, the Court dismissed the argument. The argument had aimed at lifting the veil of incorporation of the corporate group, since it had operated as a single economic unit.[28]

            In order to lift the corporate veil, the Court of Appeal held that it had to treat the Cape group, as a single economic entity, treat the subsidiaries as a mere façade or consider them to be agents of the Cape group. The court argued that the activities of the perpetrator may be substantial in other similar cases. In those cases, the existence of an intention to deceive the plaintiff had been present. Moreover, the Court held that there was no such intention in Adams case. This made it necessary to determine, whether the motive for deception was essential for establishing fraudulent exemption. In addition, the other important factor to be ascertained was regarding the nature of the legal right that was not available to the plaintiff.[29]

The position prior to Adams v Cape Industries
The position earlier to Adams in establishing a group of companies as a single economic unit was unclear and uncertain. In this context, there were a number of similar cases, in which the holding company had regulated its subsidiaries, even though the principle of single economic entity had been established. Moreover, the holding company had exerted significant control on the corporate policies of subsidiary companies.[30]

Holdsworth v. Caddies[31]

The appellant company had employed the respondent as its managing director. The House of Lords opined that the appellant company could require the respondent to serve in the former’s subsidiary company. This decision was based on the fact that the subsidiary company was a component of the holding company.[32]

Scottish Co-op v. Meyer[33]

In this case their Lordships held that the relationship among a group of companies was to be considered as a single legal entity. Thus, the subsidiary’s veil of incorporation was to be pierced.[34]

DHN Food Distributors Ltd v. Tower Hamlets[35]

In this case the holding company DHN, was conducting business from the premises of Bronze Ltd, which was its subsidiary. A transport business, solely for DHN was conducted by the remaining company in the group. The Borough Council of Tower Hamlets issued a purchase order on the land from which the business was being conducted. The Court held that Bronze Ltd was to be compensated and that additional compensation for disturbance had to be paid for the disturbance so caused. The Council contended that the latter compensation was unnecessary, as the business was not conducted independently from those premises. The court opined that the three companies were to be considered as a single legal entity.[36]

The position after Adams v Cape Industries
The decision in Adams v Cape has made it very clear that the courts are reluctant to pierce the corporate veil, merely, because a company has the capacity to manipulate the corporate policies of another company. In situations where a holding company controls the policy of its subsidiary, there should be a fascia regarding the incorporation of the latter. As such the courts are averse to any departure from the principles established in Salomon case.[37]

Woolfson v Strathclyde RC[38]

With Woolfson, it became mandatory to establish a fascia. In this case their Lordships did not pierce the corporate veil, despite similarities with the DHN Food case. As such the House of Lords did not consider the Appellate Court’s decision to pierce the corporate veil to be tenable.[39]

Unlike the Adams case, wherein there had been a holding company subsidiary company relationship; the Woolfson case entailed the control over a group of companies by an individual. A person named Woolfson owned 99.9 per cent of the shares in the Campbell Ltd. A lady held one share, while Woolfson held 999 shares in Campbell Ltd. Along with her husband and Woolfson, the three of them associated. However, there was no single controlling authority. This single share owned by the claimant’s wife was sufficient to deprive Woolfson of the right to claim as an owner cum occupier. The House of Lords opined that the different companies involved in this dispute were separately controlled and as a consequence, the veil of incorporation was to be left undisturbed, because the relationship between the companies was a facade.

The Appellate Court made it very clear that an economic connection between companies was by itself insufficient to classify them as a single economic entity. In the Adams case, Cape was an UK based company, which was continued by NAAC in the US. The CPC was a US company, whereas the AMC was a Liechtenstein registered company that had a marketing base in the US. The latter performed the role of Cape’s agents in US markets and the AMC

The Cape, based in the UK, was continued by NAAC in USA; CPC, an American marketing base and Liechtenstein registered company AMC, which acted as Cape’s agents in American market; AMC were the middle-men between Cape and CPC. After the liquidation of NAAC, the Appellate Court had to decide, whether it would be possible to enforce the judgment against Cape in the UK courts.

It was contended by Cape that it ceased to be liable with respect to the NAAC after the latter’s liquidation, because that act effectively nullified its presence in the US. This was accepted by the court, as it was of the opinion that the NAAC was not dependent on Cape, despite its controlling influence on NAAC’s general corporate policy. As such the court held that there was no exercise of absolute control over NAAC by Cape. Hence, it concluded that there was a lack of a façade. It further opined that a façade exists whenever an entity has no corporate independence of its own, it was an agent and nothing more or it had been employed for some illegal or deceitful purpose.[40]

Conclusion

            A company is eligible to obtain total legal protection, only when the courts regard its status to be distinct and separate from that of the individuals who constitute it. The case law on this topic demonstrates that a corporation should perform its business activities, only in its corporate capacity. If an injured party sues for compensation, the courts determine whether the corporation acts as a separate and distinct entity and uphold its corporate status. If the courts find that the company had done so; then it does not hold its principals, such as its directors and shareholders, to be personally liable. In order to obtain and maintain this status, the corporation should adhere to a number of formalities. If the company fails in this very important aspect, the courts would disregard its corporate personality and fix personal liability.

                In general, the court declines to consider a corporation to be legally distinct from its constituents, if it is a group of companies that form an economic unit or if some form of illegality is involved in its constitution. Moreover, the directors of a company cannot seek protection behind the corporate veil if the number of members of that company is less than required by law or the company’s commercial activities transpire in the absence of the registrar’s certificate. Moreover, in accordance with the Insolvency Act 1986, wrongful trading by the directors makes them personally liable.

Perhaps the main benefit of incorporation is that the principals’ liability is restricted to the assets of the company and their personal assets are not made liable. Nevertheless, the courts will pierce the veil of incorporation or make the principals personally liable.

The term piercing the veil of incorporation implies the rescinding of the corporate personality, in order to identify the human factor behind the corporate garb. In general, the courts pierce the corporate veil whenever the humans acting behind it indulge in fraudulent activities.

BIBLIOGRAPHY

1.     Abbot R.K., Company Law, 5th Edition Reprint, 1995, DP Publications, London.

2.     Adams v Cape Industries plc [1990] Ch 433.

3.     Clement Chigbo.  Corporate, Limited Liability And Lifting the Veil Of Incorporation. Retrieved on January 28, 2008  From <http://www.jonesbahamas.com/?c=135&a=9631>

4.     Cushman, Robert Frank, et al. Design – build Contracting Formbook. 1997. Aspen Publishers Online.

5.     Daimler v Continental Tyre and Rubber Co [1916] 2 AC 307.

6.     DHN Food Distributors Ltd v. Tower Hamlets [ 1976 ] 1 WLR 852.

7.     Fournet, Carolina. International Crimes: Theories, Practice and Evolution. Cameron May Ltd. 2006.

8.     Gilford Motor Company Ltd v. Horne [1933] Ch 935.

9.     Gillen, Mark. Chapter 14. The Legal Status of Corporations. Retrieved on January 30, 2008 from <http://209.85.173.104/search?q=cache:SYsdWvdHbNEJ:www.law.uvic.ca/mgillen/315/documents/Ch14-CorporatePersonality.pdf+broderip+v.+salomon&hl=en&ct=clnk&cd=18&gl=us>

10.Godfrey D, Watts E. Lifting the Corporate veil. Retrieved on January 28, 2008 from  <http://www.middletonpotts.co.uk/library/default.asp?p=90&c=162>

11.Gogna, P.P.S. A Textbook of Company Law. S. Chand. ISBN: 8121920086.

12.Goldberg, Louis. An Inquiry Into the Nature of Accounting. Ayer Publishing. 1980.

13.Goulding S., Company Law, Second Edition, 1999, Cavendish Publishing Ltd., London, England.

14.Griffin S., Company Law: Fundamental Principles, 2006, Longman.

15.Hilton v Plustile Ltd [1989] 1 WLR 149.

16.Holdsworth v. Caddies [1955] 1 WLR 352.

17.Jones v. Lipman [1962] 1 WLR 832.

18.Kraakman, Reineier 2004 Oxford University Press.

19.Larson, Aaron. Piercing the Corporate Veil. Expert Law. August 2004. Retrieved on January 28, 2008 from  < http://www.expertlaw.com/library/business/corporate_veil.html >

20.Mead, Larry. Fundamentals of Ethics, Corporate Governance and Business Law. Butterworth – Heinemann. 2006.

21.Owens, Keith. Law for Non – Law Students. Routledge Cavendish. 2001.

22.Puig, Gonzalo Villalta. A Two-Edged Sword: Salomon and the Separate Legal Entity Doctrine. Murdoch University Electronic Journal of Law. Retrieved on January 30, 2008 from   < http://www.murdoch.edu.au/elaw/issues/v7n3/puig73a.html>

23.Sadhu A. Lifting the corporate veil. Retrieved on January 28, 2008 from
< http://www.legalserviceindia.com/articles/corporate.htm>

24.Salomon v Salomon & Co [1897] AC 22.

25.Schneeman, Angela. The Law of Corporations and Other Business Organizations. Thomson Delmar Learning. 2002.

26.Scottish Co-op v. Meyer [1959] AC 324.

27.Woolfson v Strathclyde RC 1978 SLT 159.

[1] Kraakman, Reineier 2004 Oxford University Press P 93 – 94
[2] Cushman, Robert Frank, et al. Design – build Contracting Formbook. 1997. Aspen Publishers Online. P. 29.
[3] Cushman, Robert Frank, et al. Design – build Contracting Formbook. 1997. Aspen Publishers Online. P. 29.
[4] Schneeman, Angela. The Law of Corporations and Other Business Organizations. Thomson Delmar Learning. 2002. P. 168.
[5] Larson, Aaron. Piercing the Corporate Veil. Expert Law. August 2004. Retrieved on January 28, 2008 from <http://www.expertlaw.com/library/business/corporate_veil.html>
[6] [1897] AC 22.
[7] Puig, Gonzalo Villalta. A Two-Edged Sword: Salomon and the Separate Legal Entity Doctrine. Murdoch University Electronic Journal of Law. Retrieved on January 30, 2008 from                                                                       < http://www.murdoch.edu.au/elaw/issues/v7n3/puig73a.html>
[8] Goldberg, Louis. An Inquiry Into the Nature of Accounting. Ayer Publishing. 1980. P.139
[9] Gillen, Mark. Chapter 14. The Legal Status of Corporations. Retrieved on January 30, 2008 from < http://209.85.173.104/search?q=cache:SYsdWvdHbNEJ:www.law.uvic.ca/mgillen/315/documents/Ch14-CorporatePersonality.pdf+broderip+v.+salomon&hl=en&ct=clnk&cd=18&gl=us>
[10] Gogna, P.P.S. A Textbook of Company Law. S. Chand. P. 16. ISBN: 8121920086
[11] Gogna, P.P.S. A Textbook of Company Law. S. Chand. P. 16. ISBN: 8121920086
[12]  Clement Chigbo.  Corporate, Limited Liability And Lifting the Veil Of Incorporation. From
http://www.jonesbahamas.com/?c=135&a=9631
[13] [1916] 2 AC 307
[14] Abbot K.R., Company Law, (5th Edition Reprint, 1995, DP Publications, London) 42
[15] Goulding S., Company Law, ( Second Edition, 1999, Cavendish Publishing Ltd., London) 67
[16] [1933] Ch 935
[17] Goulding S., Company Law, ( Second Edition, 1999, Cavendish Publishing Ltd., London) 67
[18] [1962] 1 WLR 832
[19] Goulding S., Company Law, ( Second Edition, 1999, Cavendish Publishing Ltd., London) 68
[20] [1990] Ch 433.
[21] [1962] 1 WLR 832.
[22] Mead, Larry. Fundamentals of Ethics, Corporate Governance and Business Law. Butterworth – Heinemann. 2006. P. 168
[23] [1989] 1 WLR 149
[24] Owens, Keith. Law for Non – Law Students. Routledge Cavendish. 2001. P. 676
[25] Fournet, Carolina. International Crimes: Theories, Practice and Evolution. Cameron May Ltd. 2006. Pp. 160 – 161
[26] [1990] Ch 433.
[27] Godfrey D, Watts E. Lifting the Corporate veil. Retrieved on January 28, 2008 from < http://www.middletonpotts.co.uk/library/default.asp?p=90&c=162.
[28] Griffin S., Company Law:( Fundamental Principles, 2006, Longman: Pearson Education Limited, Essex, England) 17
[29] Sadhu A. Lifting the corporate veil. Retrieved on January 28, 2008 from

< http://www.legalserviceindia.com/articles/corporate.htm
[30] Griffin S. ( n 20 ) 18
[31] [1955] 1 WLR 352
[32] Griffin S. ( n 20 )17
[33] [1959] AC 324.
[34] Griffin S. ( n 20 ) 17
[35] [ 1976 ] 1 WLR 852.
[36] Griffin S. ( n 20 ) 18
[37] Griffin S. ( n 20 ) 18
[38] 1978 SLT 159.
[39] Griffin S. ( n 20 ) 19
[40] Griffin S. ( n 20 ) 19 – 20