ABSTRACT
Some 10 years ago the Supreme Court redefined the doctrine of veil piercing. Before Prest v Petrodel the position was that there existed a doctrine justifying the ‘disregard’ of the company’s separate legal personality. Now the doctrine has been redefined into concealment and evasion, neither of which involve ‘disregarding’ the corporate veil. The article suggests that we did not see the cases for what they were because we had an incomplete understanding of the concept of separate legal personality. The article proposes a modern version of real entity theory to explain companies as vessels that allow organisations or firms to act autonomously. This model relies on scholarship from the wider social sciences that demonstrates that organisations bring about behaviours that would not exist but for the organisational context. Organisations are real in their consequences. The principle of separate legal personality condones, supports, and protects the ability of organisations to act autonomously. This approach differs from a significant strand of literature that draws on the insights of economics. The purpose of this article is to advance a positive theoretical account within a sociological and psychological framework rather than to refute or persuade those who favour an economic account, although mention is made of the properties of the nexus of contracts model. The article further suggests that we do not need a principle of corporate ‘disregard’ but should continue on the path of developing context specific rules addressing questions arising out of corporate abuses.
Micheler, Eva, Separate Legal Personality – An Explanation and a Defence (June 26, 2024), LSE Legal Studies Working Paper No 12/2024.
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