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needs someone to run it on its behalf and has powers to act only in circumstances
allowed by the law. The law has recognised the organ of the company, i.e. the board
of directors and members in general meeting, as the company itself when they acted
within the parameter of the powers conferred by the Memorandum of Association. 12
This is because they are regarded as being the "directing mind and will" of the
company. 13 The company also can act indirectly through its agents who have been
conferred authority to act. 14 The agents who act within the scope of their actual or
apparent authority will bind the company. 15 In making a decision, the court must
consider both the economic reality of the organisation, and the legal recognition of a
corporation as an artificial human being. 16
Corporate personality was originally created for convenience purposes such as to
allow succession, holding of property and to appear in court. 17 Later, the principle
progressed into the idea of protecting shareholders by limiting their liability in
respect of the company‟s debts. 18 This was done through the introduction of the
Limited Liability Act in 1855. 19 Prior to 1855, members of a corporation continued
to be personally liable for a company‟s debts. 20 The legislation imposed on members
12 Gower above n4 at 139.
13 The phrase „directing mind and will‟ of the company is coined by Viscount Haldane LC in
Lennard’s Carrying Co Ltd v Asiatic Petroleum Co Ltd [1915] AC 705; see also Denning LJ in H L
Bolton (Engineering) Co Ltd v TJ Graham & Sons Ltd [1957] 1 QB 159.
14 Farrar „Frankenstein above 11 at 149; Gower above n4 at 165.
15 Ibid.
16 Nicholas James “Separate Legal Personality; Legal Reality and Metaphor” [1993] 5 Bond LR 217
at 218.
17 David Parker “Piercing the veil of incorporation: company law for a modern era” [2006] 19AJCL
35 at 38-39.
18 Schmitthoff above n3 at 9.
19 Ibid.
20 Gower above n4 at 39.
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