The Inter-Relationship between Business Law and Project Management

The Principles of Corporate Personality and Limited Liability

1. Critically assess and evaluate the inter-relationship between the nature, sources and mechanisms of business law and the environment within which project management organisations operate.

2. Demonstrate a critical awareness of the rationale for, and wider implications of, international agreements and frameworks on project management.

3. Critically evaluate the impact of specific examples of business law and ethics within the context of project management.

4. Critically analyse the impact of the international environment within which business law and project management operates.

This assignment must be completed individually.

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Where the assignment comprises more than one task, all tasks must be submitted in a single document.

Alpha Ltd manufactures bespoke shirts. 35% of the issued voting shares in Alpha Ltd are held by Beta Plc a listed company that heads a group of companies operating a very successful clothing line and distribution business. The remaining shares are owned by the directors of Alpha Ltd. By an agreement with the other shareholders, Beta Plc has the right to appoint a majority of the directors of Alpha Ltd.

Gamma Ltd enters into an agreement with Alpha Ltd to supply the company with Egyptian cotton for use in the manufacture of the shirts. Gamma Ltd has not dealt with Alpha Ltd before but is aware from Alpha’s letterheads that it is a part of Beta’s group of companies. Gamma Ltd is willing to develop business relations with Beta plc and, accordingly, the board of directors agrees to supply the Egyptian cotton to Alpha Ltd at a price which represents a loss to Gamma Ltd.

Over a period of 10 months, 10 deliveries of Egyptian cotton are made but no payment is received. It then emerges that Alpha Ltd ceased trading about 6 months ago and all the deliveries of Egyptian cotton were passed to another company, Delta Ltd. Delta Ltd was incorporated recently and is a wholly owned subsidiary of Beta Plc Gamma Ltd's inquiries also reveal that Alpha Ltd has few assets and that Beta Plc is a substantial secured creditor of Alpha Ltd.

One of the most uncertain and, as a result, disputed issues in English company law is the circumstances in which a court will be justified in disregarding the autonomous legal personality of a registered company. The general rule governing this issue, as laid down in successive companies acts since 1844, is clear: where a company exists by virtue of legal incorporation, properly administered, that company will be regarded as an autonomous legal person in itsown right, capable itself of owning property and bearing rights and obligations, and existingindependently and distinct both from its original incorporators and the controlling mind(s) who may at any time be operating the company's business.

On the basis of these considerations, by referring to relevant legislation and case law, your analysis should consider the following issues:

The principles of corporate personality and limited liability

The doctrine of lifting the corporate veil

The role and duties of company directors (e.g. section 172 Companies Act 2006 - Duty to promote the success of the company)

Personal liability of directors for the company debts

All sources are available either on Kortext or on the VLE or via the online library.

Company Directors Disqualification Act 1986

Insolvency Act 1986

Insolvency rules 1986

Companies Act 2006

UK Corporate Governance Code 2018