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Corporations and legal personality

Sham Companies

A sham company is not a company at all. It is a company which has been
registered for an illegitimate purpose, for example, to evade a legal obligation or to
hide the national identity of a business.

Illustration 4 – The veil of incorporation

Gilford Motor Co Ltd v Horne 1933

Facts:

H formed a company to run a business in competition with G. H had a personal
contract with G restraining competition

Held:

The veil was lifted to restrain the company from competition, as H had set it up
to evade his own legal obligations.

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