Case Law Review: Vtb Capital Plc V. Nutritek International Corp & Ors
CASE LAW REVIEW: VTB CAPITAL PLC v. NUTRITEK INTERNATIONAL CORP & ORS
INTRODUCTION
The concept of forming of corporations by registration and restricted liability of stake holders of corporations dates back to mid nineteenth century. The concept in its very basic sense means that a company is a separate legal entity, in other words, it is a juristic person.
The company can buy and sell property, can sue and can be sued; these are some of the basic legal implications of separate legal entity.
A very direct consequence which arises with the concept of separate legal identity of a corporation is the misuse of it by people. In reality a company is nothing but an association of persons, who are its beneficiaries, governed by the directors and shareholders of the company. It is nothing but a sum of its members. Thus a lot of times situations arise, when these beneficiaries try to misuse this veil and in such situations the corporate veil of separate legal entity of the company has to be removed and the members of the company are made liable directly. Lifting of corporate veil is one of the most highly debated topics in the business world. The concept of incorporation was introduced only to promote high risk involving but at the same time more profitable businesses among common people as company means limited liability(in its most common form), thus people can limit the risk by forming companies. So if we look at the main purpose behind formation of companies we can easily understand why lifting of corporate veil is such a debatable issue. If the conditions for lifting of corporate veil are made too lenient then the whole purpose behind the concept is defeated and also if the conditions are kept very rigid and narrow then there is a very high risk of misuse of the corporate veil, which would be against the public interest at large. Which is why time and again the issue keeps coming up to the judiciary. The researcher has dealt with the judicial trend on the issue
INTRODUCTION
The concept of forming of corporations by registration and restricted liability of stake holders of corporations dates back to mid nineteenth century. The concept in its very basic sense means that a company is a separate legal entity, in other words, it is a juristic person.
The company can buy and sell property, can sue and can be sued; these are some of the basic legal implications of separate legal entity.
A very direct consequence which arises with the concept of separate legal identity of a corporation is the misuse of it by people. In reality a company is nothing but an association of persons, who are its beneficiaries, governed by the directors and shareholders of the company. It is nothing but a sum of its members. Thus a lot of times situations arise, when these beneficiaries try to misuse this veil and in such situations the corporate veil of separate legal entity of the company has to be removed and the members of the company are made liable directly. Lifting of corporate veil is one of the most highly debated topics in the business world. The concept of incorporation was introduced only to promote high risk involving but at the same time more profitable businesses among common people as company means limited liability(in its most common form), thus people can limit the risk by forming companies. So if we look at the main purpose behind formation of companies we can easily understand why lifting of corporate veil is such a debatable issue. If the conditions for lifting of corporate veil are made too lenient then the whole purpose behind the concept is defeated and also if the conditions are kept very rigid and narrow then there is a very high risk of misuse of the corporate veil, which would be against the public interest at large. Which is why time and again the issue keeps coming up to the judiciary. The researcher has dealt with the judicial trend on the issue