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Lifting the Corporate Veil: Case Studies

This document contains three tutorial questions regarding lifting the corporate veil for a Company Law lecture. The first question involves a holding company that transferred funds to a Cayman Islands subsidiary, which then loaned most of it back to the holding company. The holding company is now in financial difficulties and creditors want to access surplus funds held by the subsidiary. The second question involves a company that purchased and repaired a vessel using funds from its sole shareholder, and then transferred the sale proceeds back to the shareholder after being sued. The third question involves a company where the sole director issued shares to his minor children without their knowledge and used company funds for personal expenses like child support payments. The Official Receiver is now seeking

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Navin Narine
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30 views1 page

Lifting the Corporate Veil: Case Studies

This document contains three tutorial questions regarding lifting the corporate veil for a Company Law lecture. The first question involves a holding company that transferred funds to a Cayman Islands subsidiary, which then loaned most of it back to the holding company. The holding company is now in financial difficulties and creditors want to access surplus funds held by the subsidiary. The second question involves a company that purchased and repaired a vessel using funds from its sole shareholder, and then transferred the sale proceeds back to the shareholder after being sued. The third question involves a company where the sole director issued shares to his minor children without their knowledge and used company funds for personal expenses like child support payments. The Official Receiver is now seeking

Uploaded by

Navin Narine
Copyright
© All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd

THE UNIVERSITY OF TRINIDAD AND TOBAGO

AGORA CAMPUS
INNOVATION, MANUFACTURING MANAGEMENT AND ENTREPRENEURSHIP
MGMT6011 COMPANY LAW

TUTORIAL QUESTIONS

LECTURE FIVE: LIFTING THE CORPORATE VEIL

Tutorial Questions:

1. Pretty Nick Limited (PNL) was the holding company in a group containing subsidiaries in
many countries with a diversified range of interests. In 1997, a new wholly-owned
subsidiary, Pretty Nick International Finance Ltd ('PNIF'), was incorporated in the
Cayman Islands. PNL transferred 200 million US dollars to PNIF who deposited the
amount in the Cayman Islands. PNIF then took a loan for 150 million US dollars in the
Cayman Islands which was in turn re-lent to PNL. The directors of PNIF were appointed
by the directors of PNL. PNL has now gone into financial difficulties and its creditors are
seeking access to any surplus funds being held by PNIF to satisfy debts incurred by
PNL. Please advise PNIF.

2. In 1988, Get Smart Limited, a company incorporated under the Laws of Trinidad and
Tobago with all its shares owned by Big Lemon Limited, purchased and repaired the
vessel Sweet Lime, which was its only asset, with funds provided and managed through
Big Lemon Limited. In March 2005, Biggus Michealas, began an action against Get
Smart Limited, claiming damages for breach of an agreement for the sale of the vessel,
and, in May 2006, the vessel was sold to a third party and the sale moneys were
immediately transferred to Big Lemon Limited. Biggus Michaelas realizes that Get Smart
Limited would have no funds to satisfy any court award and would like your advice on
how to proceed further. Please advise.

3. Mr. Panlall was a chartered accountant with a history of convictions for fraud and
forgery. In 1985 he incorporated a company called WarnDuck Holdings Ltd. Mr. Panlall
was the secretary of WarnDuck. Mr. Panlall issued shares to his minor children,
subscribing for them as ''parent''. The children did not receive any dividends and were
not aware that they owned shares. Subsequent share issues to the children, and
transfers from them were effected by Mr. Panlall without the shareholders' knowledge.
Mr. Panlall who was a divorcee, paid his child maintenance commitments from the
WarnDuck account. In 1999, WarnDuck purchased a property at 15 Mandeo Avenue. In
2004, Mr. Panlall was adjudicated personally bankrupt. The Official Receiver is seeking
to have the property owned by WarnDuck included in the assets of Mr. Panlall. Please
advise Mr. Panlall.

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