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24.10.2015 at 12:00 am
Cuttings

Salomon v Salomon is Antiquated

Our courts shouldn't apply Salomon v Salomon so strictly.

I've seen injustice done beacuse the courts hold on too dearly to the authorities made in Salomon's wake.

All the more so with companies whose sole shareholders are also its sole directors, and where the companies are just legal vessels as a front, rather than a genuine use of the separate entity principle.

Some reasons:

  1. That case is antiquated. It's 119 years old. It doesn't account for the sophisticated and wrongful acts knowingly perpetrated by directors/shareholders in modern times.

  2. It's unsuited to Malaysia. I know people who avoid doing business with Malaysians whenever they can. Business here is too relationship-based (which is the same anywhere, but our law enforcement is particularly weak), and contracting parties don't always honour their contracts (much less gentlemen's agreements).

  3. Legal fiction is not reality. Businessfolk cheat sometimes. And a defence based on the separate legal personality of companies is a defence based on a fundamental legal fiction, which when applied carelessly, enables cheating.


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