What is the meaning of life?
The Cambridge dictionary defines life as the time from someone’s birth until their death. Life can also be defined as a particular way of living and the experiences that you have. Rick Warren in his book “A Purpose Driven Life” gives life a broader interpretation. He is alive to the fact that we are all God’s creation and hence are bound to leave lives that are meaningful as per the biblical provisions. This is entirely concerned with purpose; to Warren purpose is to leave a life in a Godly way. This calls for righteousness, faithfulness, devotion to religious virtues and at peace with neighbours. Who is your neighbour then, this is any one around you whether familiar or not. According to the Cambridge dictionary, Purpose is the aim that someone wants to achieve, or that something is intended to achieve. It is also defined as an aim or meaning in your life because there is something you want to achieve. With this humble background we arrive to the true meaning of life. I carried out research on at least 30 people in my neighbourhood, 18 of who were women, 10 were men and 2 were children. Majority of the women took life to be living happily in marriage and having steady families, meaning that without this their lives are empty which is true. The men on the contrary took life to be success achieved through acquisition of wealth, driving posh cars, building expensive houses and having a descent job which is also true. The children on the other hand understand life in a different way, to them life is waking up have breakfast and play with friends. To them life is all about living in joy and happiness which is also true. With this I discovered that the meaning of life varies from one generation to another, to the none believers life is all about war and peace. The alcoholic will always take life to be having at least a glass of whisky every day. Contemporary sources offer different interpretations of what life is. Famous writers like Ben Carson have built the meaning of life on the success that one has achieved. In agreement with Rick Warren, this success has to be achieved on purpose. Have a dream, Martin Luther King Jr had a dream that the oppression of the blacks in the USA would one day come to an end. He formed the civil rights movement where he expressed the views of the minority group hence becoming a voice of the voiceless. Nelson Mandela was imprisoned for 27 years but the spirit of having an end to apartheid did not die out and was realized in 1994, he became the first black president of the country and ruled for one term. He is the world’s most admired man, this is all attributed to the goals he set and the achievements he has accomplished. What is your dream my friend? Have you ever dreamt of living a legacy? These are questions that need to be answered, note that it is never too late and you can make a difference. What have you left that people will remember about you? Life is all about answering these simple questions and emulating the lives of those that have already left a legacy. Have a role model that you will always emulate, this should always be in a positive way that will impact change in the society but not adopting the bad behaviours. Remember that you do not need a lot of money to impact change in the society but wealth of the mind. And so let us always work hard to make a difference and be admired by others. We are born with the capability to do what ever the rest can do, so let us not underestimate our potential by always looking for the hard tasks. It takes courage to always be the best and take the front line, do not worry friend life is all about success as the Lord Father wants us to prosper in life. How then are you going to make your life meaningful from now? First, have a dream to always be the best, have courage to take on hard tasks, leave your life on purpose and always have a goal, set the bar too high for whatever you are doing, do every thing to your very best as if there is no tomorrow. Note that if you do not shape your life, circumstances will shape it for you and this comes at a bitter cost. Let us not be satisfied with what we have for this will always make us lazy. No person can do something big in his life if he does not believe in him/herself. We know we win and at the end of the day we win, it all comes with trust for self and pride. Let us be remembered for the works and only the good works that we have done in our lives. Some of the re known people for the works they have done begun from scratch at tender ages so let not wealth be a limiting factor for your innovative ideas. Tim Berners invented internet at the age of 34 starting from nothing to some thing, Larry Page & Sergey Bin at 23 years invented Google, Mark Zukerberg at 20 years invented facebook, Harley Chin at 30 years invented YouTube. With all these being human, starting from scratch to Billions of money why not you, me and them. We all can make a difference if we set minds to the desired dreams and goals. Remember that there is nothing like luck since luck favours a prepared mind so then set your goals to be lucky one day. Let us not be comfortable for the little we have and always behave as if we have not done enough, do more. I would like to end by categorically stating that successful people always look for opportunities to help others while the unsuccessful people are always asking, what is in it for me. If you can not do everything, do something and do not do nothing. With this let us then go and transform our communities for our time to succeed has come and we will be remembered for what we have done now.     

Substituted application

THE REPUBLIC OF UGANDA
IN THE CHIEF MAGISTRATE’S COURT OF NAKAWA AT NAKAWA
MISCELLANEOUS APPLICATION NO.________ OF 2012
[ARISING FROM CIVIL SUIT NO.213 OF 2012]

PRIME BANK LIMITED________________PLAINTIFF/APPLICANT

Versus
ANTHONY KASESE _________________ DEFENDANT/RESPONDENT

CHAMBER SUMMONS (EXPARTE)
(Under O.5 r1(2), O.5 r18, 19 & 32 and O.51 r6 CPR)

LET ALL PARTIES CONCERNED attend Court on the __________ day of ______________ 2012 at _________________ o’clock in the fore/afternoon or soon thereafter as Counsel for the Applicant can be heard on an application for Orders that:

The time within which to serve summons to file defence on the Respondent/ Defendant be extended.

Leave be granted to the Applicant to serve the extended summons unto the Respondent/Defendant by way of substituted service.

Costs of this application be provided for.

The grounds upon which the application is premised are set out in the affidavit of Richard Oyana and shall be read and relied upon at the hearing, but briefly are that:

The Respondent’s whereabouts are unknown.

That all efforts to serve the Respondent personally have been fruitless.

That the interests of justice dictate that this application be granted.

GIVEN under my hand and Seal of this Court this ______ day of ____________, 2012.

___________________
MAGISTRATE
Drawn & filed by:
Sebalu & Lule Advocates
EADB Building, Plot 4 Nile Avenue
P.O. Box 2255, Kampala

AKM/bc

THE REPUBLIC OF UGANDA
IN THE CHIEF MAGISTRATE’S COURT OF NAKAWA AT NAKAWA
MISCELLANEOUS APPLICATION NO.________ OF 2012
[ARISING FROM CIVIL SUIT NO.213 OF 2012]

PRIME BANK LIMITED________________PLAINTIFF/APPLICANT

Versus
ANTHONY KASESE _________________ DEFENDANT/RESPONDENT

AFFIDAVIT IN SUPPORT

I, OYANA RICHARD of M/s Sebalu & Lule Advocates, P.O. Box 2255, Kampala do make oath and state as follows:-

That I am an adult male Ugandan of sound mind and an authorized process server of this Honourable Court and make oath in that capacity.

That on the 16th day of April, 2012, I received Summons in Summary Suit from this Honourable Court to serve upon the Defendant herein Anthony Kasese.

That on the 18th day of April, 2012, I proceeded to Security Group Uganda Limited offices, Nakasero, Kampala, to effect service of the summons unto the Defendant.

That on reaching the said address, I inquired from the Reception whether I could access Mr. Kasese Anthony to serve him the Plaint and Summons.

That the officers at the reception told me that Mr. Anthony Kasese was no longer working with the Company since he had left the Company along time ago.

That I inquired from the said Security personnel at the reception to direct me to the Defendant’s new address, however they said they did not know his whereabouts and neither did any of them know his home or new workplace.

That I perused through the Defendant’s loan facility letter from the Plaintiff Bank and got a mobile cell phone contact/number (0772349402) through which I communicated and advised the Defendant on my intentions to serve him with the Plaint and Summons in Summary Suit.

That the Defendant told me that he was very far from Kampala and that I serve the summons on Security Group Uganda Ltd.

That I asked the Defendant to advise me whether I could serve the summons on his Advocate or any person attached to him authorized by law, however he insisted he did not have anybody to receive the documents for him.

That I requested the Defendant to let me know of the date of his return, however he told me he was not sure of the same.

That all efforts initiated to find the Defendant to serve the summons unto him have been fruitless.

That the summons in summary suit is now expired before I could serve the Defendant, necessitating service of the same on the Defendant by way of substituted service by advertising the same in a newspaper of wide circulation. See Plaint and expired summons attached hereto and marked “A” and “B” respectively.

That I swear this Affidavit in support of the Applicant’s application for substituted service of the summons in summary suit.

That whatever is stated hereinabove is true and correct to the best of my knowledge and belief.

Sworn at Kampala by the said
OYANA RICHARD this ___________________
day of ______________ 2012    DEPONENT

BEFORE ME,

__________________________
COMMISSIONER FOR OATH

Drawn &filed by:
Sebalu & Lule Advocates
Plot 4 Nile Avenue, EADB Building
P.O. Box 2255, Kampala
RO/bc

THE REPUBLIC OF UGANDA
IN THE CHIEF MAGISTRATE’S COURT OF NAKAWA AT NAKAWA
MISCELLANEOUS APPLICATION NO.________ OF 2012
[ARISING FROM CIVIL SUIT NO.213 OF 2012]

PRIME BANK LIMITED________________PLAINTIFF/APPLICANT

Versus
ANTHONY KASESE _________________ DEFENDANT/RESPONDENT

SUMMARY OF EVIDENCE

As per the affidavit in support.

LIST OF AUTHORITIES

The Civil Procedure Rules
Others with leave of Court.

LIST OF DOCUMENTS

The expired summons.
Others with leave of Court.

Dated at Kampala this _____________ day of ____________________ 2012.

_________________________
COUNSEL FOR APPLICANT

Drawn & filed by:
Sebalu & Lule Advocates
EADB Building, Plot 4 Nile Avenue
P.O. Box 2255
Kampala

AKM/bc

Celebrating Golden Jubilee: Tuesday the 9th day of October 2012 Uganda celebrated 50 years of Independence the theme Song for the celebrations Yoga Yoga left many Ugandans hopeful and expectant as they started the journey to the next 50 years of  Self-Rule. As the Golden Jubilee celebrations come to a climax His Excellency the President of the Republic of Uganda on his Jubilee address said I Quote “Uganda will in the next 50 years turn into a “first World Country’’ due to the Oil & Gas revenues which revenues will primarily fuel Uganda’s economic and social transformation.
As a 4th Year Law student nearing to your completion for the award of a Bachelor of Laws Degree at Uganda Christian University and who has successfully undergone vigorous training in a number of areas since your first year in law school to mention but a few, environmental law, land transactions, international Law and some reasonable knowledge now in Oil & Gas law, do you agree or disagree that Uganda will benefit from the discovery of its Oil & Gas? Why?
Introduction
The first oil confirmations were made in 2006, Ugandans had high hopes. Oil wealth, they assumed, could help to revive the nation's economy. But it hasn't worked out that way. Tullow Oil Company is one of the major companies that have actively been involved in the oil extraction in Uganda in Hoima. The recent discovery of a massive new oil field in the Albertine region of the country is raising the stakes. All citizens are supposed to benefit from the sale of these resources, but this is not always the case. Four oil fields namely Mputa, Waraga, Nzizi and Kingfisher have been discovered and a minimum of three hundred (300) million barrels of oil is estimated to be in place in the Kaiso Tonya area, which covers less than 5% of the entire prospective belt. The Petroleum supply Act 2003 provides that petroleum is any naturally occurring hydrocarbon or mixture of naturally occurring hydrocarbons, whether in gaseous, liquid, or solid state. It goes further to provide that petroleum products are organic compounds, pure or blended, which are derived from the refining and processing of petroleum, including, but not limited to, the gas oil or automotive, industrial or marine diesels.
Looking at the National Oil and Gas Policy for Uganda, I agree with the President that Uganda will benefit from the discovery of oil resources on condition that the following policies are put into practice;
First, the policy goal is to use the country’s Oil and Gas resources to contribute to early achievement of poverty eradication and create lasting value to society. Formulation of the policy was carried out through an extensive consultative process which involved the review of policies of many petroleum producing countries, discussions with institutions of government, local authorities and cultural institutions especially those in oil rich regions, civil society organizations and academia. Implementation henceforth required putting in place new legislation for oil gas administration and management of petroleum revenues.
The policy seeks to put in place a framework that will create a conducive environment for efficient management of:
Continued promotion and exploration of the country’s oil and gas potential;
Evaluation of the discovered oil and gas reserves;
Exploitation and utilization of these reserves;
Revenues accruing from the country’s oil and gas resources
Uganda’s Poverty Eradication Plan (PEAP) focuses on promoting private sector led economic growth in such a way that growth leads to reduction of absolute poverty in the country to levels below 10% by the year 2015. The development of an oil and gas sub sector in the country will contribute significantly to the early achievement of the above goal by enhancing the country’s capacity to invest in productive sectors of the economy, development of new economic and social infrastructure, increasing power generation capacity and the general enhancement of energy security through production and refining oil. Oil and gas activities will have a positive impact on the country’s plan for modernization of agriculture (PMA) through the enhancement of areas with higher multiplier effects, like provision of energy services and infrastructure for rural agro-processing industries, together with the increased use of modern and mechanized agriculture through the provision of more affordable inputs like fuels and fertilizers. Oil and gas operations will provide opportunities for both forward linkages in the country’s industrialization drive. On one hand, oil and gas activities will provide raw materials which will be used as inputs during the manufacturing process. On the other hand, oil and gas activities will act as a market for industrial products, both directly and indirectly. Promotion of the country’s petroleum potential together with implementing and regulating the initial exploration efforts have been ably undertaken by the Ministry of Energy and Mineral Development through the Petroleum Exploration and Production Department, (PEPD) and good results have been achieved. The policy emphasizes the deliberate implementation of National participation in oil and gas activities in order to expand employment opportunities, acquire diversified skills and enable application of the skills learnt from the oil industry into other sectors of the economy.
This provides the country with opportunities for the mitigation of shocks from international oil and gas prices together with generation of revenues that can support development of other sectors of the economy, thereby contributing to both poverty reduction and the achievement of sustainable development. A lot has indeed been done to ensure the efficient utilization of the country’s resources. The 1995 Constitution of the Republic of Uganda empowers the parliament to make laws regulating the exploration and exploitation of minerals and petroleum management. This mandate led to enactment of several laws like the Petroleum supply Act 2003, the Petroleum (Exploration and Production) Act, Cap 150, the Petroleum (Exploration and Production) (Conduct of Exploration Operations) Regulations, 1993 hence providing a legal and regulatory framework under which the Ministry of Energy and Mineral Development through the Petroleum Exploration and Production Department (PEPD), has promoted and regulated the exploration of oil and gas in the country. Further to this, government’s strategy of promoting petroleum exploration in the country through capacity building has not fallen on hard ground. Five out of the current nine exploration areas, identified to have good potential for petroleum production in the country have been licensed to international oil companies. The licensed oil companies are already making significant investments in the country and some have advanced the exploration effort to the identification of specific petroleum prospects in the respective exploration areas licensed to them. Drilling of these prospects has recently led to the discovery of more petroleum in the Waraga, Nzizi and Mputa prospects in the Kaiso-Tonya area of Exploration Area 2 hence boosting the country’s oil production potential. Three hundred (300) million barrels of oil are now estimated to be in place in the Kaiso Tonya area where the Waraga, Nzizi and Mputa discoveries were made. The Kaiso-Tonya area covers less than 50% of the Albertine Graben, the area with the potential for petroleum production in the country. Plans are under way to produce 4,000 barrels of oil per day (BOPD) from the reserves identified to-date. This production will feed an early Production Scheme (EPS) scheduled to start producing kerosene, diesel and heavy fuel oil during 2009.
The heavy fuel oil will be used to generate 50-100MW of electricity to alleviate power shortages in the country. Kerosene and diesel will be distributed directly into the existing market.  
However, on the other side Uganda may not as a country benefit from its discovery of oil if the Policy is not put into practice and the entire production and exploration is handled as it is now;
Non-Ugandans may not realize that our country makes a lot of money from oil. The recent discovery of a massive new oil field in the Albertine region of the country is raising the stakes. All citizens according to the National Oil and Gas Policy for Uganda are supposed to benefit from the sale of these resources, but this is not always the case.  Ugandans are growing more dissatisfied with the way oil deals are being carried out. Many people in civil society organizations and the media are decrying the absence of a proper oil policy, particularly the lack of transparency about oil-related transactions and how the resulting money is put to use. The Access to Information Act 2005 provides that every citizen has a right of access to information and records in the possession of the state or any public body, except where the release of the information is likely to prejudice the security or sovereignty of the state or interfere with the right to privacy of any other person. Nobody foresaw that the discovery of oil in Uganda might be monopolized by President Museveni's right-hand men. But that's what has happened. A number of senior government officials, right up to the prime minister, have been accused of pocketing millions of dollars in bribes from the oil companies. This has then in the long run led to the issuing of illegal licenses. The Petroleum Supply Act 2003 provides that no person shall carry out the construction or major modification, of an installation or facility of the supply chain without having obtained a petroleum construction permit under this Act. It further states in Section 18 (3) that in the processing of an application, evaluation, approval or rejection, all applicants shall be treated equally without any discrimination or preferences, and the Commissioner may not require or impose any terms or conditions which are not specified or authorized by or under this Act. This has never been the case in our country and it is alleged that in the on going case in England this specific provision of the law was violated. Ugandans are not happy with the situation. The most frequent sentiment I've been hearing from people in Kampala boils down to this: "We have plenty of oil, but fuel prices are still going up. Why?" Some say that the President's reluctance to pursue corrupt individuals in the oil sector shows that he is using the oil sector to reward his followers. No wonder they keep on making this annoying statement that “When we were going to the bush where were you?” The Justice Minster Hon. Kahinda Otafiire likes using the statement, “You should leave the issues of generals to the generals.” Perhaps even the discovery of oil has now become a generals’ issue. If we do not wake up, the discovery of oil will never benefit the country but only a few individuals who have decided to rob the country. When the first oil discoveries were made in 2006, Ugandans had high hopes. Oil wealth, they assumed, could help to revive the nation's economy. But it hasn't worked out that way. You could argue that the flow of black gold has actually made things worse by aggravating conflicts of interest and political instability. I would attribute this to the inadequate institutions and poor resource governance that characterize Uganda. There are many reports that the discovery of oil has actually led to people losing access to the resources on which they depend on for their livelihoods and food security. Recently, one of my journalist friends visited Hoima, an area where Tullow Oil Company is carrying out oil exploration. What he found there can be described as the complete absence of corporate social responsibility on the part of Tullow. He concluded that the locals, and in particular those whose existence depends on local lakes and rivers, have suffered a lot. He documented how many people have been driven off their land. Some have received compensation, others have not. Yet the Petroleum (Exploration and Production) Act Cap 150 provides for adequate compensation of lessees, lawful occupiers of any land due to the exploration or development operations, and shall, on demand being made by the owner of any crops, trees, buildings or works damaged during the course of such operations, pay compensation for the damage. Most of the affected individuals live in villages. They are poor, but rather than benefiting from the discovery of oil near their homes, their livelihoods are ruined. Where others see business opportunities, these villagers end up as the losers.
In Kampala as well as in northern Uganda, many Ugandans are skeptical whether they will ever see any benefit from the oil resources. Civil society groups have condemned the manner in which transactions are being carried out. They argue, among other things, that the deals often result in environmental problems whose costs are not paid by those who cause them. A BBC report quotes a Tullow manager's response: "In our view, not only the legislation, but our practice as a company ensures that there are no issues with respect to environmental management." It is a constitutional requirement as provided for that every Ugandan has a right to a clean and healthy environment. The Petroleum Supply Act 2003 provides that environmental impact assessment and audits, other requirements for environmental protection shall be made in the supply chain. This has not been done and the report has never been published hence exposing Ugandans to a lot of hazards that might accrue from exploration and production. There are many aspects of the oil industry that have been left unexplained. Laws regulating the industry are weak and poorly enforced; the details of deals in the sector are often kept secret; the government and the oil companies have failed to disclose signed Production Sharing Agreement (PSAs); and, perhaps most worrisome of all, there are many allegations of oil companies bribing ministers and other government officials. Hence violating the Petroleum Supply Act 2003 where it is a requirement for the commissioner to publish the data contained from oil deals as long it is not regarded to be confidential. Failure to publish these reports has in the long run led to suspicion from the Ugandans as to whether they are entitled to the proceeds from our oil production and exploration making our future bleak. During the heated parliamentary debate in October 2011, documents were revealed alleging that Tullow Oil bribed Prime Minister Amama Mbabazi, Foreign Minister Sam Kutesa, and former Energy Minister Hilary Onek. Onek, who was accused of receiving about 17million Euros ($23m; £15m), strongly denied the allegation. Meanwhile there are cases of oil companies continuing to operate on expired licenses. There are also cases where licenses have been issued without competitive bidding. On October 11, 2011 the Parliament of Uganda passed a number of resolutions designed to clean up the sector.
The parliamentarians demanded a stop to all deals until new laws can be passed, a review of existing contracts, removal of all ministers suspected of receiving bribes from oil companies pending full investigation, and so on. Yet the government ignored Parliament's resolutions and moved ahead with signing new Production Sharing Agreements with Tullow Oil, failed to introduce new oil bills, and has allowed the implicated ministers to stay in office and to preside over the signing of new oil contracts. Many Ugandans understandably remain puzzled about who is really profiting from our oil resources.
Conclusion
All in all, Uganda in the next fifty years will become a first world country due to oil production only if proper procedures for the exploitation of the resource, strict laws put in place and the National Oil and Gas Policy of Uganda is put into action.

BIBLIOGRAPHY
STATUTES & LEGISLATION
1. The 1995 Constitution of the Republic of Uganda
2. The Petroleum supply Act 2003
3. The Petroleum (Exploration and Production) Act, Cap 150
4. The Access to Information Act 2005
REPORTS & POLICIES
1. The National Oil and Gas Policy for Uganda
ON LINE SOURCES
1. http://transitions.foreignpolicy.com/posts/2012/02/10/Ugandas_oil_scandal#24.10.2012 

QUESTION

With reference to relevant authorities, discuss the concept of lifting the veil of incorporation in company law.

A negative consequence of incorporation is that the legal personality of the company may be disregarded in certain circumstances by a device known as lifting the veil or mask of incorporation. In such a situation the law looks at the people behind the company rather than the cloak of incorporation.[1] In Dunlop Nigerian Industries Ltd V Forward Nigerian Enterprises Ltd and Farore;[2] it was held that in particular circumstances e.g.; where the device of incorporation is used for some illegal or improper purpose, the court may disregard the principle that a company is an independent legal entity and lift the veil of corporate identity so that if it is proved that a person used a company he controls as a cloak for an improper transaction he may be made personally liable to a third party. Salomon’s case[3] is regarded as one where the courts refused to lift the veil of incorporation. Note that the legal technique of lifting the veil is recognized in two classes namely;

Statutory lifting of the veil  

(i) Members severally liable for debts where a business is carried on with fewer than the required number of members.

Under S.32 of the Companies Act, If at any time the number of members of a company is reduced, in the case of a private company, below two, or, in the case of any other company, below seven, and it carries on business for more than six months while the number is so reduced, every person who is a member of the company during the time that it so carries on business after those six months and is cognizant of the fact that it is carrying on business with fewer than two members, or seven members, as the case may be, is severally liable for the payment of the whole debts of the company contracted during that time, and may be severally sued for the payment of those debts.[4]

(ii) Where the company is not mentioned in the bill of exchange.

Under S. 109(2) of the Companies Act If a company does not paint or affix its name in the manner directed by this Act, the company and every officer of the company who is in default are liable to a fine not exceeding one hundred shillings, and if a company does not keep its name painted or affixed in the manner so directed, the company and every officer of the company who is in default are liable to a default fine.[5]

(iii) Holding and subsidiary companies.

Under S.150 (1) Where at the end of its financial year a company has subsidiaries, accounts or statements (in this Act referred to as “group accounts”) dealing as hereafter mentioned with the state of affairs and profit or loss of the company and the subsidiaries shall, subject to subsection (2), be laid before the company in general meeting when the company’s own balance sheet and profit and loss account are so laid.[6] Holding and subsidiary companies are regarded as one for accounting purposes, and the separate nature of the subsidiary company is ignored.[7]

(iv) Reckless or fraudulent trading.

Under S.327[8] it is stated that if during the winding up of a company it appears that any business of the company has been conducted recklessly or fraudulently, those responsible for such business may be held liable without limitation of liability for any of the company’s debts or liabilities.[9]

(v) Investigation into related companies.

Under S. 167 if an inspector appointed under section 165 or 166 to investigate the affairs of a company thinks it necessary for the purposes of his or her investigation to investigate also the affairs of any other body corporate which is or has at any relevant time been the company’s subsidiary or holding company or a subsidiary of its holding company or a holding company of its subsidiary, he or she shall have power to do so, and shall report on the affairs of the other body corporate so far as he or she thinks the results of his or her investigation of that body corporate are relevant to the investigation of the affairs of the first-mentioned company.[10] In Otong V Mogall it was held that the related company may be a corporate body with a subsidiary or holding relationship to the company under primary investigation.[11]

(vi) Taxation.

In Smith, Stone & Knight V Birmingham Corporation[12] it was held that the veil of incorporation may be lifted to ascertain where the control and management of the company is. This in the Ugandan context is done to ascertain whether it is a Ugandan Company for Income Tax purposes.[13]

Lifting the veil under case law

(a) Where the company acts as agent of the shareholders.

Where the shareholders of a company use the company as agent, they will be liable for the debts of the company.[14] In Re F.G (films) Ltd an American company provided all the funds for producing a film, which it sought to register as a British film on the ground that the film was produced by arrangement with a British company of which the American Company owned GBP90 of the GBP100 Capital. It was held that the British company was no more than a nominee or agent of the American Company which was the maker of the film.[15]

(b) Where the company has been deemed Trustee for Shareholders.

Although uncommon, the courts are prepared in some cases to hold that the company holds property in trust from the shareholders.[16] In Abbey Malvern Wells Ltd V Ministry of Local Government & Planning; all the shares of the company were held on charitable trusts. The articles of association provided that the relevant trustees would be the governing body of the company. It was held that the company held all its property on charitable trusts.[17] In Littlewoods Stores V IRC; Littlewoods which was the holding company bought a capital asset and vested it in a property holding company, which was its wholly-owned subsidiary. It the tried to get a tax advantage by arguing that the subsidiary was a separate legal personality. It was held that the tax advantage could not be allowed and the veil of incorporation was lifted on the ground that the subsidiary held the property on trust for the holding company.[18]

(c) Where there has been fraud or improper conduct.

The veil of incorporation can be lifted where the corporate personality is used as a mask for fraud or illegality.[19] In Gilford Motor Company V Horne; the defendant was the plaintiff’s former employee. He agreed not to solicit its customers when he left the employment. He then formed a company which solicited the customers. Both the company and the defendant were held liable for breach of covenant not to solicit. The company the defendant formed was described as a mere cloak sham for the purpose of enabling him to commit a breach of covenant.[20] Further still in Jones V Lipman; the court ordered specific performance of the contract against both the defendant and company and the company was referred to as

“the creature of the first defendant, a device and a sham, a mask which he holds before his face in attempt to avoid recognition by the eyes of equity.”[21] Emphasis supplied

In Bank of America National Trust & Savings Association V Niger International Development Corporation Ltd; consequent upon the defendant company’s failure to pay a judgment debt obtained against it by the plaintiff, its vehicle was attached pursuant to be plaintiff’s writ. Another company, which had practically the same members as the defendant company and directors belonging to the same family inter pleaded and claimed to have bought the vehicle from the defendant, bona fide and without knowledge of any court action and fro valuable consideration. Dosunmu J. held that where an alienation with intent to defraud the grantor’s creditors is made to company by an individual or another company and the grantor in either case is practically identical with the grantee company, the latter must be taken to have had full notice of the true nature of the transaction and cannot avail itself of the protection extended to a bona fide purchaser without notice, although the alienation is for valuable consideration.[22] In Wallersteiner V Moir; in a suit against Dr. Wallersteiner, he filed a defence out of time to claims against him as director for misfeasance connected with contravening the Companies Act. It was held that the various companies through which Dr. Wallersteiner operated were his puppets. Lord Denning M.R;

“I am of the opinion that the court should pull aside the corporate veil and treat these concerns as being his creatures for whose doings he should be, and is, responsible.”[23]

(d) Cases of associated companies.

There are situations where the courts are prepared to treat a subsidiary company as an agent of the holding company and as conducting the latter’s business for it. In other situations the veil is lifted in tax vases in the interest of revenue. Others have nothing to do with revenue.[24] In Firestone Tyre & Rubber Company V Llewellin; it was held that although the English subsidiary was a separate legal entity, which was selling its own goods, the sales were the means by which the American parent company carried on its European business. In effect the parent company was trading in the United Kingdom through the agency of its subsidiary.[25] In the Roberta a parent company was held liable on a bill of lading signed on behalf of a wholly owned subsidiary.[26] In Smith, Stone & Knight V Birmingham Corporation, a parent company was held to be entitled to compensation on the compulsory acquisition of land owned by a wholly owned subsidiary.[27] Roskill C.J in the Albazero case, stated that “modern commerce is hampered and not helped by too rigid an adherence to the basic principle… where the group is in truth the party interested and injured, the law should not be too astute not to recognize the realities of the position.”[28] However, it is difficult to predict the criteria by which the courts would lift the veil in respect of associated companies. Ebbw Vale Case, where the court refused to lift the veil of incorporation because there was no express agency contract between the two affected companies.[29] The cases considered are difficult to reconcile with this case.

(e) Ratifying corporate Acts.

Normally, in law a company is bound only by resolution of its organs such as the board of directors or a duly constituted general meeting, or duly authorized agents. The issue therefore arises as to whether a resolution which is passed by members without a properly convened meeting of the board or members binds the company.[30] In Re George Newman Ltd, Lindley L.J indicated thus;

“Individual assents given separately may preclude those who have given them form complaining of what they have sanctioned, but for the purpose of binding a company in its corporate capacity, individual’s assents given separately are not equivalent to the assents of a meeting.”[31] The law looks at collective actions of directors or members in order to determine the acts of the company.[32]

(f) Determination of residence.

The court may look behind the veil of facade of the company and its place of registration in order to determine its residence. This is normally the place of its central management and control.[33] In Unit Construction Company Ltd V Bullock; three wholly owned subsidiaries of a company in the United Kingdom were registered in Kenya. The boards of the three subsidiaries were distinct from the board of parent company. Under the articles of association, directors’ meetings could not be held in the UK. It was held by the House of Lords reversing the court of appeal that for purposes of Kenyan law, the companies might also be resident in Kenya was irrelevant.[34] In De Beers Consolidated Mines V Howe; it was stated that a company resides for purposes of income tax where its real business is carried on. The real business is carried on where the central management and control actually abides.[35]

Conclusion     

In conclusion, liability under corporate undertakings is specifically on the corporate body. However there is an exception to this as seen in the veil of incorporation.

BIBLIOGRAPHY

TEXTS

1. Douglas Smith, Company Law, Butterworth Heinemann, 1999

2. David J. Bakibinga, Company Law in Uganda, Fountain Publishers

STATUTES

1. The Companies Act Cap 110

2. Income Tax Act of 1997

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[1]. David J. Bakibinga, Company Law in Uganda, Fountain Publishers at pg. 8 

[2]. [1986] 2 NWLR 48

[3]. (1897) AC 22

[4]. Cap 110

[5]. Cap 110

[6]. Cap 110

[7]. David J. Bakibinga, Company Law in Uganda, Fountain Publishers at pg. 9

[8]. Companies Act Cap 110

[9]. Douglas Smith, Company Law, Butterworth Heinemann, 1999 at pg.25

[10]. Companies Act Cap 110

[11]. (1978) 4 FRCR 80

[12]. (1939) 16 ILT 371, (1939) 4 ALLER 116

[13]. Income Tax Act 1997

[14]. David J. Bakibinga at pg. 9

[15]. [1953] 1 WLR 483

[16]. David J. Bakibinga at pg. 9

[17]. (1951) Ch 728

[18]. [1969] 1 WLR 1241 CA

[19]. David J. Bakibinga at pg. 10

[20]. [1933] Ch.935

[21]. [1962] WLR 832

[22]. [ 1969] NCLR 268

[23]. [1974] 1 WLR 991-1013

[24]. David J. Bakibinga at pg.11

[25]. [1957] 1 WLR 464

[26]. [1937] LIL Rep.

[27]. (1939) 4 ALLER 116

[28]. [1975] 3 WLR 491

[29]. [1953] 1 WLR 483

[30]. David J. Bakibinga at pg.12

[31]. [1895] 1 Ch 674 C.A

[32]. David J. Bakibinga at pg.12

[33]. David J. Bakibinga at pg.12

[34]. [1960] A.C 351 H.L

[35]. [1906] A.C 455