WHAT IS THE MEANING OF CORPORATE VEIL?
ANSWER:-IN JOINT STOCK COMPANY THERE IS SEPARATION OF OWNERSHIP AND MGMT. COMPANY IS AN ARTIFICIAL ENTITY AND CREATED BY LAW HAS A SEPARATE ENTITY FROM ITS MEMBERS. THAT PRINCIPLE OF SEPARATE ENTITY IS REGARDED AS CURTAIN/A VEIL/SHIELD BETWEEN THE COMPANY AND ITS MEMBERS. PROVIDES PROTECTION TO MEMBERS FROM THE LIABILITY OF THE COMPANY.
THE CONCEPT OF SEPARATE ENTITY AIMS TO PROMOTE THE TRADE AND COMMERCE BUT NOT TO COMMIT ILLEGALITIES OR CHEAT PEOPLES.WHEN THE COMPANY IS INCORPORATED ,COMES INTO EXISTENCE. IT BECOMES THE SEPARATE ENTITY DIFFERENT FROM ITS MEMBERS. IT CAN SUE AND BE SUED IN ITS OWN NAME. THIS RULE WAS FRAMED IN CASE SALOMONvSALOMON&CO
BUT SOMETIMES THIS CONCEPT OF SEPARATE PERSONALITY IS USED TO DEFRAUD OR ILLEGAL ACTIVITIES AND THEN IN THESE SITUATIONS THE CORPORATE VEIL IS LIFTED TO KNOW THE REAL CULPRIT. IT IS KNOWN AS LIFTING THE CORPORATE VEIL.AND IT CAN BE LIFTED FOR THE BENEFIT OF COMPANY TOO
THE CIRCUMSTANCES UNDER WHICH THE COURT MAY LIFT THE CORPORATE VEIL BE LIFTED:-
ANSWER:-IN JOINT STOCK COMPANY THERE IS SEPARATION OF OWNERSHIP AND MGMT. COMPANY IS AN ARTIFICIAL ENTITY AND CREATED BY LAW HAS A SEPARATE ENTITY FROM ITS MEMBERS. THAT PRINCIPLE OF SEPARATE ENTITY IS REGARDED AS CURTAIN/A VEIL/SHIELD BETWEEN THE COMPANY AND ITS MEMBERS. PROVIDES PROTECTION TO MEMBERS FROM THE LIABILITY OF THE COMPANY.
THE CONCEPT OF SEPARATE ENTITY AIMS TO PROMOTE THE TRADE AND COMMERCE BUT NOT TO COMMIT ILLEGALITIES OR CHEAT PEOPLES.WHEN THE COMPANY IS INCORPORATED ,COMES INTO EXISTENCE. IT BECOMES THE SEPARATE ENTITY DIFFERENT FROM ITS MEMBERS. IT CAN SUE AND BE SUED IN ITS OWN NAME. THIS RULE WAS FRAMED IN CASE SALOMONvSALOMON&CO
BUT SOMETIMES THIS CONCEPT OF SEPARATE PERSONALITY IS USED TO DEFRAUD OR ILLEGAL ACTIVITIES AND THEN IN THESE SITUATIONS THE CORPORATE VEIL IS LIFTED TO KNOW THE REAL CULPRIT. IT IS KNOWN AS LIFTING THE CORPORATE VEIL.AND IT CAN BE LIFTED FOR THE BENEFIT OF COMPANY TOO
THE CIRCUMSTANCES UNDER WHICH THE COURT MAY LIFT THE CORPORATE VEIL BE LIFTED:-
- COMMON LAW EXCEPTIONS
- STATUTORY EXCEPTIONS
Q.2 WRITE SHORT NOTE ON ULTRA VIRES?
ANSWER:ULTRA MEANS BEYOND,VIRES MEANS POWERS. THE COMPANIES ACT REQUIRES THAT THE MEMORANDUM OF EVERY COMPANY MUST STATE THE OBJECT OF THE COMPANY. ANY ACT OUTSIDE THE MOA IS ULTRAVIRES THE COMPANY. WHICH MEANS IT MAY BE LEGAL BUT IT IS NOT PERMITTED BY THE MEMORANDUM OF ASSOCIATION. SUCH AN ACT IS VOID AND CAN NOT BE RATIFIED EVEN BY UNANIMOUS RESOLUTION OF ALL THE SHAREHOLDERS.
IT SERVES TWO PURPOSE:-
- IT PROTECTS THE SHAREHOLDERS
- PROTECTS THE CREDITORS
- COMPETENCY OF COMPANY IS DETERMINED BY ITS OWN CHARTER THAT IS MOA
Q.WRITE SHORT NOTE ON COMMON SEAL?
ANSWER:-A COMPANY IS AN ARTIFICIAL PERSON AND IT CAN NOT SIGN ITS NAME ON CONTRACT. SO IT WORKS WITH THE HELP OF SEAL. COMMON SEALS MEANS THE SIGNATURE OF THE COMPANY. EVERY COMPANY MUST HAVE A SEAL WITH ITS NAME ENGRAVED ON IT. W.E,F 29 THE MAY 2015, THE USE OF COMMON SEAL IS NOW OPTIONAL AND NOT MORE MANDATORY. IF THE COMPANY DOES NOT HAVE A COMMON SEAL THEN AUTHORIZATION UNDER SECTION 22(2) SHOULD BE SIGNED BY 2 DIRECTORS OR ONE BY DIRECTOR AND CS WHERE COMPANY HAS APPOINTED COMPANY SECRETARY.
THE DOCUMENTS WHICH REQUIRE COMMON SEAL:-
- POWER OF ATTORNEY TO EXECUTE DEEDS IN OR OUT OF INDIA
- SHARE CERTIFICATE
- SHARE WARRANT
- DOCUMENTS AUTHORISING ANY PERSON IN A TERRITORY OUTSIDE INDIA TO AFFIX COMMON SEAL TO DEED
- OTHER DOCUMENTS NEED NOT REQUIRE COMMON SEAL.
A COMAPNY CAN EMPOWER ANY PERSON TO EXECUTE DEEDS UNDER HIS SEAL. AUTHORITY TO PUT COMMON SEAL CAN BE GIVEN BY RESOLUTION OR BY COMMITEE OF BOARD
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