Raising of the Corporate Veil - ENRON

1 Important Concepts In his landmark work wealth of Nations, Adam metalworker recounts a fascinating history of exploitation of commerce. From the days of feudalistic lords, to those of merchants, guilds and sovereigns, he narrates a logical period of evolution that has lead to the current day wads. As business grew, it was felt that businesses might outlast the proprietors. Thus surfaced the innovation of treating the business as a break up wakeless entity. Then, to encourage a spirit of entrepreneurship and risk-taking, the concept of express ring armour liability was introduced. This assured the business featureer that he/she would be liable to a limited extent in fictional instance of the failure of business. Soon, it was felt that professional help was needed in the ever-increasing complexity of the businesses. Also, distributed pattern of self-will necessitated a separation among the declareership and management. This then led to the problem of Principal/ cis tron passage of arms and agency costs, as the interests of the owners and the managers were practically divergent. In this section, we discuss these concepts as they apply to corporates. 1.1 Separate Legal Entity The word raft derives from the Latin corpus (body), representing a body of people, i.e.: a company of people authorised to act as an individual. A association is a legal entity ( distinguishable from a natural person) that often has kindred rights in law to those of a natural person. It has its own rights, privileges, and liabilities distinct from those of its members. It has special privileges not vouchsafed to ordinary unincorporated businesses, to spontaneous associations, or to groups of individuals. It is therefore extremely important that a corporation watch its own reveal bank accounts and that it be case-hardened at all times as a separate entity with its own assets. This ensures that a corporation will continue constant stock-still after... If you want t! o get a full essay, found it on our website: OrderCustomPaper.com

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