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Orgainsation Business Law Essay

1090 words - 4 pages

Assignment One AnswerMaterial facts:Wendy Shockett recently closed her business, ceased to trading, but her business not in receivership and liquidation, and has not been removed from the Companies Register.There are two shareholders in the company. Mile who is Wendy's husband hold two shares. Wendy Shockett, who is the sole director of the company hold rest of the shares.Wendy lodged an application with Work and Income for a means tested benefit after closed her business. The application has been declined because there are two bank accounts that belonging to the company has assets exceeded the statutory limit.There is the corporate veil separates a company from its shareholders. Lift the corporate veil will make shareholder personal liable, which means the assets exceed the statutory limit. She is not entitled to the benefit.Legal IssuesWho own the funds in two bank accounts?Can the corporate veil be lifted?Relevant Statute and case lawS 15 Companies Act 1993 states the company has separate legal personality - a company is a legal entity in its own right separate from its shareholders and continues in existence until it is removed from the New Zealand register.Case: Salomon v Salomon and Co Ltd [1897]Lee v Lee's Air Farming Ltd [1961]R v McCurdy [1983]Re Grasslands Farms Ltd [1975]Coleman v Myers [1977]Re Securitibank Ltd (No.2) [1978]Savill v Chase Holdings (Wellington) LtdChen v Butterfield (1996)Official Assignee v 15 Insoll Avenue Ltd [2001]Preston v International Direct LtdApplications:The business has been closed and ceased to trading, but the business not in receivership and liquidation, the most important thing is the company has not been removed from the Companies Register, which means the company not completely ceased from the market, it still exists. S 15 Companies Act 1993 applies the corporate separate from Wendy Shockett and her husband Mile who are the shareholders.The cases Salomon and Lee's also proved that the company is separate legal entity. It indicates generally the courts have rigidly upheld the principle that in law a registered company is an entity distinct from its members, which means the company separate from the shareholders.In R v McCurdy case the court held that the company property (i.e. the van) can not be forfeited, because the major shareholder and sole director (the convicted person Mr. McCurdy) had no legal or equitable interest in it. This case proves that the Court and 'Work and Income' cannot count the funds in those two company bank accounts as Wendy Shockett and her husband's personal assets.Similarly, Coleman v Myers case also states that 'a share does not constitute an interest in the assets of a company.' Mile - Wendy's husband and herself own all the shares of the company, it doesn't mean they own the shares of the company's accounts. Consequently, the funds in those two company account is not their personal asset.The shareholders have no estate or interest in company property was also emphasized in...

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