Piercing the Veil When Corporate Subsidiaries Commit Torts

Carey, Michael R.

doi:10.2139/ssrn.1309302

Cited by 2 publications

(2 citation statements)

References 2 publications

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“…144 Such a corporate structure can certainly allow abuses. But it is way too 144 (November 30, 2008). Available at http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1309302.…”

Section: The Development Of the Firm And Of Its Corporate Legal Strucmentioning

confidence: 99%

The Legal Structure of the Firm

Robé¹

2011

Accounting, Economics, and Law

107

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The notions of "firm" and "corporation" are very often confused in the literature on the theory of the firm. In this paper, the two notions are sharply distinguished: the corporation is a legal entity entitled to operate in the legal system and in particular to own assets, to enter into contracts and to incur liabilities. It is used to legally structure firms for numerous reasons, including the need to locate property rights key for the operation of the firm in the ownership of separate, "fictitious", legal persons. This avoids ex post-contracting bargaining by parties which otherwise would hold residual control rights over key assets used in the firm's operations. The assets partitioning effect of corporate legal personality has also several economizing properties reviewed in the article. The firm is the economic activity developed as a consequence of the cluster of contracts connecting the corporation owning these assets to various holders of resources required in the firm's operations. Numerous consequences deriving from this sharp distinction between corporation and firm are explained in this article, including the need to extend the circle of the beneficiaries of the firm management's fiduciary duties.

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“…144 Such a corporate structure can certainly allow abuses. But it is way too 144 (November 30, 2008). Available at http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1309302.…”

Section: The Development Of the Firm And Of Its Corporate Legal Strucmentioning

confidence: 99%

The Legal Structure of the Firm

Robé¹

2011

Accounting, Economics, and Law

107

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“…In considering an offender's ability to pay a financial penalty, the court has "the power to allow time for payment or to order that the amount be paid in instalments" [78]. The existence of corporate group relationships, viewed in academic literature as a means of curbing liability through the use of subsidiaries which are undercapitalised or subject to intra-group transfers of value (Easterbrook and Fischel, 1985;Anderson, 2011;Ringleb and Ringleb, 1990;Carey, 2008) [79], is relevant to the adjustment of fines insofar as a court considering an offender's financial circumstances may be influenced by any demonstration "that the resources of a linked organisation are available and can properly be taken into account" [80].…”

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confidence: 99%

Environmental liabilities in insolvency – an area ripe for reform?

Mamutse

2016

IJLBE

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Purpose The paper aims to examine the question whether legislative reform is the silver bullet for the problems generated by the failure of a company which is exposed to claims arising from the non-fulfilment of its environmental obligations. The limited capacity of the UK insolvency regime to facilitate the fulfilment of a debtor company’s environmental obligations is often illustrated with reference to some significant judicial decisions. However, no real picture has emerged of the frequency with which these issues arise, based on which firm proposals for reform could be advanced. This paper argues that greater regard should be paid to existing mechanisms which provide a means of enabling insolvency risks to be managed or minimised because these point towards the scope for these issues to be resolved through the environmental protection framework rather than through reliance on company and/or insolvency law. Design/methodology/approach Research was conducted into the statutory and non-statutory regulations (such as statutory guidance) and case law principles, which underpin the treatment of the claims against an insolvent (or potentially insolvent) company resulting from its environmental activities. This included research into policies which have a bearing on this area, developed through governmental and civic consultations and studies. Findings The paper concludes that the likelihood of a case for legislative reform being made out is weak, and the focus should accordingly shift to strengthening the effectiveness of existing law, policy and practice. Originality/value This paper is the first (in the UK context) to challenge the perceived need for reform in this area, engaging with recent examples of such corporate failures and the impact of recent legislative and policy developments.

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Piercing the Veil When Corporate Subsidiaries Commit Torts

Cited by 2 publications

References 2 publications

The Legal Structure of the Firm

The Legal Structure of the Firm

Environmental liabilities in insolvency – an area ripe for reform?

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