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Corporate veil: Difference between revisions
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{{a|devil|}}In a formal legal context, the [[ontology|ontological]] fiction by which a [[corporate personality]] is distinct from the persons owning and running it. | {{a|devil|[[File:Veil.jpg|450px|thumb|center|Beneath the veil, yesterday]]}}In a formal legal context, the [[ontology|ontological]] fiction by which a [[corporate personality]] is distinct from the persons owning and running it. This is all great japes if your taste runs to jurisprudential conundrums. In the dimly-lit salons of [[financial services]], it presents in a different way: between ''what your employees know'' and ''what your systems know''; and in the misshapen grotesque of the [[agency problem]]. Both ultimately come down to the same point: when you judge the relative effect of the personalities that buffet the modern corporation; that propel it and give it an apparent direction — its own, its shareholders, and those of its directors, officers, employees and agents — the personality most weakly in command of the bus is that of ''the legal entity itself''. Every other personality, notwithstanding how crippled it may be by human motivations, proclivities, foibles and flaws, ''animate''. A [[corporation]], ''in and of itself'', is a dematerialised stack of papers in a corporate registry somewhere. It is ''inert''. | ||
This is all great japes if your taste runs to jurisprudential conundrums. | |||
===[[Meatware]] versus bookware=== | ===[[Meatware]] versus bookware=== | ||
Here, the [[legal entity]], sitting primly behind its veil, is [[Short an option|short a rather ugly option]]; one which tries the patience of [[legal eagles]] — who will have to row it back when, as inevitably it will, everything goes Pete Tong — and of [[salespeople]] and other [[risk controller]]s, who will find the [[legal department]]’s craven ''softness'' when challenged utterly confounding. | Here, the [[legal entity]], sitting primly behind its veil, is [[Short an option|short a rather ugly option]]; one which tries the patience of [[legal eagles]] — who will have to row it back when, as inevitably it will, everything goes Pete Tong — and of [[salespeople]] and other [[risk controller]]s, who will find the [[legal department]]’s craven ''softness'' when challenged utterly confounding. | ||
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These things are very different, and the risk between them is asymmetrical: Any accommodation granted by the social organisation to the outside world is, to all intents, binding — either through ostensible authority, but more realistically because the [[commercial imperative]] so dictates — ''whether or not that accommodation makes its way into the firm’s [[books and records]]''. But a benefit — an accommodation granted ''to'' the firm ''by'' the outside world — that does not make it into the firm’s books and records — for that one gets no credit, and nor — when the client in question asks [[who’s queen]]? — should anyone expect it. | These things are very different, and the risk between them is asymmetrical: Any accommodation granted by the social organisation to the outside world is, to all intents, binding — either through ostensible authority, but more realistically because the [[commercial imperative]] so dictates — ''whether or not that accommodation makes its way into the firm’s [[books and records]]''. But a benefit — an accommodation granted ''to'' the firm ''by'' the outside world — that does not make it into the firm’s books and records — for that one gets no credit, and nor — when the client in question asks [[who’s queen]]? — should anyone expect it. | ||
===The [[agency problem]]=== | |||
This is really a special case of the wider existential paradox every corporate body confronts, which we discuss in greater detail [[agency problem|here]]. | |||
{{sa}} | {{sa}} | ||
*[[Agency problem]] | |||
*For some crazy law chat on the historical concept of the [[corporate veil]], see {{casenote|Salomon|Salomon & Co Ltd}} | *For some crazy law chat on the historical concept of the [[corporate veil]], see {{casenote|Salomon|Salomon & Co Ltd}} | ||
*[[Signing authority]] | *[[Signing authority]] | ||
{{Ref}} | {{Ref}} | ||