Essay on Ethics, Reputation And Risk

1068 Words May 30th, 2016 null Page

The issue of whether there is a moral or ethical responsibility of companies came up in the cases relating to James Hardie Industries Limited (JHIL) and James Hardie Industries NV (JHINV). There are no doubt interesting lessons that may be learned from those that were involved in the management of the companies of JHIL as it ultimately paints a story of ethics, reputation and risk.
This essay is a personal reflection in the case regarding JHIL and the transactions that unfolded, analysed thru the lens of the law and morality.

Piercing the corporate veil

The decision in Salomon v Salomon established the concepts of limited liability granted to shareholders, allowing companies to become separate legal entities from their members. In this case Lord Macnaghten said, ‘The company is at law a different person altogether from subscribers to the memorandum…. the company is not in law the agent of the subscribers or trustee for them.’ So another way of putting it would be to look beyond the legal personality of the company to the real controllers, and in this case JHIL and JHINV, to the primary JH company.

In Briggs v James Hardie & Co Pty Ltd Rogers AJA discussed the difficult position of involuntary tort creditors and said this was relevant in determining whether to pierce the corporate veil. As it was identified in Briggs the problems with the application of the Salomon principle is in relation to concerns of tort creditors. Stemming from this was…

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