1) Company StructuresCompare private limited companies with two other common forms of business structurePrivate Limited Companies 1) Unlike a sole trader or a partnership, in a limited liability company, the liability of the members in respects of the companys debts or wrongdoings is limited only to the extent of the face value of shares taken up by them. Therefore, where a company is limited by shares, the liability of the members on winding up is limited to the amount unpaid on their shares. 2) Separate Corporate Personality the company is a separate legal person in law to its members and Directors, as was established in Solomon v A. Solomon & Co. Limited.3) A company has perpetual succession that is continued or uninterrupted existence until it is legally dissolved. A company being a separate legal person, is unaffected by the death or other departure of any member but continues to be in existences irerespective of the changes in membership. 4) Free & Easy transferability of shares. Subject to the company Constitution shares are transferable by a shareholder to any other person. The transfer is easy as compared to the transfer of interest in a business run by a sole trader or a partnership. 5) Borrowing Capacity a company enjoys better avenues for borrowing of funds. It can issue debentures , secured as well as unsecured. 6) A company is Managed by Directors, appointed by the members of the company. Disadvantages of Private Limited Companies1) Highly regulated and governed by the Companies Acts regarding Annual Returns, AGMs, Audits. 2) Confidentiality due to the requirement of disclosure, Company Accounts and other information is available to be inspected by the public through the CRO etc. 3) Costs involved in incorporation and compliance with the regulations can be quite high. Sole TraderA sole trader is an individual who sets him or herself up in business. The sole trader enjoys complete control and privacy over their own business affairs unlike Companies however, they do not have a separate legal personality and are therefore liable for any losses of the business. The sole trader also enjoys the benefit of EU fundamental freedoms including Freedom of Movement for Workers (within the EU and EEA), the Rights of Establishment and the Freedom to provide services throughout the EU. Advantages of Sole Traders include:-1) Ease of creation of the business, no requirement to Register the business with CRO. Only required to register with Revenue Commissioners. 2) Control over affairs of the business, no requirement for compliance with Articles of Association.3) Whatever profits the business makes, they are the sole traders profits.4) Practically zero disclosure requirements, other than those concerning Revenue. Disadvantages of Sole Trader:-1) Unlimited Liability, sole trader can be sued personally for debt and in tort.2) Complexity of transferring assets, liabilities, rights and obligations etc, in a company these can be transferred via Shares.3) Raising finance can be difficult as sole trader cannot create floating charges and cannot charge their assets.4) Higher Tax Code for Sole Traders (55% marginal income tax rate) compared with 12.5% Corporation Tax for Companies. PartnershipsPartnerships are fundamentally created as a result of an express agreement of the partners generally contained in a partnership agreement, though it may also be an express oral agreement. The set of default rules governing partnerships are found in the Partnership Act, 1890 and include the following provisions:- S.1 defines partnership as a relationship which subsists between person carrying on a business in common with a view to profit. S. 5 Every partner is an agent of the firm and the other partners for the purposes of the business of the partnership. S. 9 Partners are jointly and severally liable for the debts of the Firm while partners. S. 10 The Firm and by extension the Partners are liable for the wrongs of a partner acting in the ordinary course of business of the firm. S. 24 Subject to agreement to the contrary, all Partners share equally in the profits and losses of the firm. All partners are entitled to participate in the management of the business of the Firm. Advantages of a Partnership include:-1) Very little compliance requirements in comparison with a Private Limited Company.2) Partnership Agreement basically a matter of contract and therefore easily drafted to suit the requirements of the Partners needs.3) The Partnership Agreement is a private agreement and not subject to public scrutiny unlike a private limited company so there is a high degree of confidentiality. Disadvantages of a Partnership include:-1) Unlimited personal liability for the debts and wrongdoings of the partnership (S.9 of the Partnership Act, 1890) including those debts incurred before his retirement (S.17 of the Partnership Act, 1890). 2) Subject to agreement between the partners, a partnership is automatically dissolved by the death or bankruptcy of any partner (S. 33 of the Partnership Act, 1890). If on death, there is no general right in law to acquire a deceased partners share. 3) It is not easy to transfer ownership of a Partnership. 4) There are limits on the number of people who can be partners as per S. 376 CA63, there must a minimum of two members and a maximum of twenty. S. 13 of the CAA90 allows a partnership of accountants or solicitors to have in excess of twenty members.

2) Lifting the VeilIn what circumstances and for what reasons might the Courts pierce the Corporate Veil?In certain cases the courts will find it is permissible to disregard the separate legal personality of a company and look behind or lift the veil to allow wrongs to be righted and to hold the company members or directors directly responsible for the wrongful activities of the company. There are four main ways in which the Courts will lift the Corporate Veil:-1) Statutory Authority2) Agency3) Misuse of the Corporate Form/Avoidance of Legal Duty4) Single Economic Entity1) Statutory AuthorityThe Companies Acts allow the Corporate Veil to be lifted under the following provisions:-S. 6 CAA83 The Registrar of Companies issues a Certificate to PLC Companies and the Company must not commence trading without such Certificate. In the event that it does so, then the Company and any Officer of the Company may be found liable to prosecution or to indemnify persons who suffer any loss as a result.S.36 CA63 Should the minimum number of members of a Company be reduced below the number required by Law and the Company continues to carry on its business for more than six months with such a shortfall then all of the members who were aware of the deficit will be severally liable for the debts of the company which incurred after that six month period. The minimum number of members for private companies is 2 or in the case of a single member private company it is 1. S.297 & S.297A CA63 A Director may be found criminally liable for fraudulent trading or civilly liable for fraudulent or reckless trading.Other breaches of law (other than those under the Companies Acts) may also result in the Courts lifting the Veil and finding the Directors or Members personally liable for the wrongdoing of the company. For example in the High Court case of John Ronan and Sons v Clean Build Limited (in liquidation) and Others, Judge Clarke held five former directors and shareholders of a liquidated company personally liable for the costs of remediating a site in Tallaght on which significant quantities of construction waste had been allowed to accumulate.Under the European Communities (Protection of Employees on Transfer of Undertakings) Regulations 2003 (TUPE), employees are offered protection in circumstances where an undertaking is sold or transferred to a new owner, the terms and conditions of the workers of the transferred/sold undertaking are protected so that they enjoy similar terms and conditions to their employment as they had before. In other words, the separate legal personality of the transferor and transferee companies is ignored in order to protect the interests of the employees concerned. 2) AgencyA company is not per se the agent of its members but such relationship may be created between the two. The courts have been prepared, in apparent conflict with Solomons case to infer the existence of a relationship of agency between companies in the same group. Subsidiaries are frequently found to be the agent of the parent company. In Smith, Stone, and Knight v Birmingham Corporation a subsidiary of the plaintiff company was treated like a department and the Plaintiff was entitled to all of the profits of the subsidiary without the declaration of a dividend. Atkinson J set out four criteria for assessing whether a subsidiary was carrying on business as the agent of the Holding Company:-1) Are the profits of the subsidiary treated as profits of the parent?2) Was the person conducting the business of the subsidiary appointed by the parent?3) Was the parent the heads and brains of the trading venture?4) Did the parent govern the adventure?The agency principle is relevant and applies in subsidiary holding company relationships but is not of universal application. However, the principal was reaffirmed in Fyffes v DCC in which Justice Laffoy held in this instance the subsidiary was not in fact the agent of the holding company.

3) Misuse of the Corporate Form/Avoidance of Legal DutyFraud or fraudulent intentions is another situation in which the corporate veil will be lifted by the courts. To do otherwise would result in the use of the corporate personality as a cloak for fraud. The veil will also be lifted by the Court in situations where the corporate personality is being used to evade an existing legal obligation.Re Bugle Press Ltd The courts lifted the Corporate Veil and imposed personal liability in this case. Here the holders of 90% of the shares in a company wished to buy out the holder of the remaining 10% but the minority shareholder refused to sell. The majority shareholders then set up a company to make a takeover bid for Bugle and under legislation, as this was a takeover bid, the Company could then compulsorily acquire the minority shareholding. There had of course been no real takeover of the company and the new company had been formed solely to with a view to expropriating the minority and the transaction was not permitted to proceed.

In Jones v Lipman the defendant who had contracted to sell his house to the plaintiff tried to avoid a claim for specific performance to sell the house. He conveyed the house to a company which he owned and controlled in an effort to evade the Plainitiffs enforceable contract for sale. The Court held that the company in question was the creature of the defendant, a device and a sham, a mask which he holds before his face in attempt to avoid recognition by the eye of equity.In the leading case of Adams v Cape Industries it was decided that the creation of a corporate structure to allow any potential future liabilities to fall to one member of the group of companies was legitimate and lawful and not a misuse of the Corporate Form.4) Single Economic EntityWhere the justice of the case requires the court will regard the entity as a mere constituent of a large legal entity or a single economic entity. This is distinct from implied agency cases for where a number of companies are regarded as single legal entity only one legal person is recognised, where agency recognises the existence of two persons. In DHN Food Distributors Ltd v Tower Hamlet Borough Council, the plaintiff holding company was held by a Land Compensation Tribunal to only be entitled to negligible compensation when the land was compulsorily acquired. Lord Denning held that where the subsidiaries were bound hand and foot to the parent company they should not be treated as separate entities so as to deprive them of the compensation which was justly payable. Concept was also adopted by Costello J in the Irish case of Power Supermarkets Ltd v Crumlin Investments Ltd and Dunnes Stores (Crumlin) Ltd. In which he held ...a Court may, if the justice of the case so requires, treat two or more related companies as a single entity so that the business notionally carried on by one will be regarded as the business of the group or another member of the group if this conforms to the economic and commercial realities of the situation. In this case it was held that a related group Company was bound to observe the restrictive covenant in the Title to premises in a shopping centre even where it was not party to it.

However concept of single economic entity has not been universally accepted as was evidenced in Adams v Cape Industries plc, the Court held that it was not entitled to reject the principles of Salomon v Salomon just because it is required by justice.In Rex Pet Foods Ltd v Lamb Bros (Dublin) Ltd, Rex Pet Foods was a subsidiary of Lamb Bros (Dublin) Limited and the Receiver of Rex tried to argue that business and assets of both companies should be treated as one, based on the following facts: The Defendant acquired a 52% shareholding in Rex Some of the Directors of the defendant became the directors of Rex The Defendant Group became distributors for the goods of Rex Separate Accounts were maintained at all times When Rex had financial problems the Defendant acquired all the remaining shares in Rex and began to take a management role in Rex. Costello J refused to disregard the separate legal personalities of a group of companies under common ownership and control. It was held that the fact that the Defendant occasionally discharged Rexs creditors was not a sufficient basis to declare a single legal entity. Neither was the fact that one company accepted invoices on behalf of another, nor the change in management, nor the conduct of the board meetings. Even the fact that the Defendant was sole distributor of Rexs products was deemed insufficient. In a similar vein, the Supreme Court in Allied Irish Coal Supplies Ltd v Powell Duffryn International Fuels Ltd held that even where a subsidiary was dependent on its parent company for control, finance and operations it did not cease to be a separate legal entity.