Does the law in ADAMS v CAPE PLC still good law or should further reform prevail? The approach in Adams v Cape plc in lifting the veil of incorporation has always been a debatable issue. Despite the obvious economic connection between companies within the same group, English company law has steadfastly maintained its policy of treating such companies as distinct legal entities. . To lift or not to lift the veil of incorporation is a matter for the court to decide in each and every case. Should the approach in Adams v Cape plc ltd (1990) continue to be used or statutory provisions should come into play? Years ago the English Courts had established the basic principle of separate corporate personality: â€œthe corporation has a separate existence from the shareholderâ€ per Vaughan Williams J in Salomon v Salomon. It is the leading case on the fundamental importance of the separate personality of a company. A distinct legal personality can own and deal with property, sue and be sued in its own name and contract on its own behalf. The emergence of group structures in UK was to curtail tax as the Corporate Structures became more prominent. When we speak of lifting the veil of incorporation it equals to a veil which stands in between the company and its members, employees, employers and shareholders. If the veil of incorporation is removed both bodies would be treated as a single legal entity. Just like in any state of affairs we have a conqueror and a loser, the Court often founds itself into the quandary as whether to lift or not to lift the veil of incorporation to determine where the loss lie, more explicitly who will bear the burden of costs. The Court will either award an injunction; Gilford motor Company Ltd v Horne (1933), specific performance; Jones v Lipman (1962) or damages. An enhanced picture of Group companies consist of a parent A ltd which is the chief company and its two subsidiaries X ltd and Y ltd. If A ltd runs its most perilous business through X ltd and in the event X ltd collapse or goes into liquidation and a person is injured while working, the question which arises is whether the parent company A ltd should be liable for its subsidiaries. In economic reality there is a sole business pertaining work through three different legal personalities. Yet again the question is should the veil be lifted or not. In Re A Company (1985) it was held that irrespective of corporate structure used, the veil will be lifted to achieve justice. The key case regarding parent and Subsidiaries Company is Adams v Cape Plc Ltd (1990). Its judgement has drastically narrowed the ability of the courts to lift the veil. Here the subsidiaries found in the US mined asbestos and when Adam while working in one of Cape Ltd subsidiaries was injured sought relief against the parent company fund in the UK. The Court of Appeal revised this complex area of law and concluded that the veil should be lifted in three conditions.
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