Question

The principle of the separate legal entity has been considered as the most fundamental principle of modern corporate law. This independence or distinction is not a new concept as it forms the backbone of the corporation’s legal issues. It is argued, however, that the sanctity of the principle of corporate veil principle is only drawn under compelling

Critically analyses the above statement in light of recent development of cases in the commonwealth jurisdiction of Malaysia and United Kingdom.

Answer 1

It is true that the principle of the separate legal entity is considered as the fundamental principle of modern corporate law. This distinction is the actual backbone of the corporation’s legal issues. Although there are arguments that the purity of these legal principles that are hidden under the name of corporate business principle is only for the purpose of attracting attention; I disagree with it.

The above statement can be analysed under the light of recent development of cases in the commonwealth jurisdiction of Malaysia and United Kingdom as follows:

· In commonwealth countries like Malaysia and UK, a leading decision is the reported decision that is used for setting the law. This contradicts the given statement that sanctity of the principle of corporate veil principle is only drawn under compelling.

· With regard to written constitution only one decision is made. Here written constitution servers as backbone for legality of decision. Just like the principle of the separate legal entity serves as backbone for corporation’s legal issues.

Malaysian and United Kingdom commonwealth jurisdiction does not serve a purpose of attracting attention but the recent developments ensure that substantial framework for taking firm decisions.