Question
Bruce and Lee are the two directors and shareholders of a small proprietary company called Martial Arts Pty Ltd. The directors have approached their bank,
Bruce and Lee are the two directors and shareholders of a small proprietary company called Martial Arts Pty Ltd. The directors have approached their bank, Friendly Bank Ltd, for a loan of $100,000 in the name of the company. In addition to the security for the loan that the company provided to the bank, the bank manager requests that Bruce and Lee sign personal guarantees in their own names for the company's loan.
- (a) Do Bruce and Lee need to sign the guarantee documents?
- (b) If they decide to sign the guarantee documents, explain the effect on the concept of limited liability.
- (c) If they decide to sign the guarantee documents, is this an example of 'lifting the corporate veil'?
Cases: [see prescribed textbook for the legal principles]
Salomon v Salomon [1897] AC 22
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Constitutional Law And Politics Volume 2 Civil Rights And Civil Liberties
Authors: David M. O Brien, Gordon Silverstein
11th Edition
039369674X, 978-0393696745
