Protecting The Offshore Corporate Veil

By Margaret Boswell.

The aftermath of the Enron scandal is not the first occasion that attempts have been made to set aside corporate structures, and it will not be the last. But leaving aside instances of outright fraud and willful manipulation, the use of special purpose vehicles in complex financing structures is a perfectly legitimate use of a fundamental principle of corporate law.

The fundamental principle is that a company is, from the date of its incorporation, a separate legal entity distinct from its members and its directors. If we were in any doubt before 1897, the case of Aron Salomon, Hide Factor and Export Boot Manufacturer, decided the matter.