Abuse of Corporate Form and Its Regulations The business corporations have been the most important factor in the development of the modern capitalistic economy. Corporate institution has various advantage which are not found in case of enterprises by individuals; easiness in concentration of large capital, corporate efforts and distribution of risk of loss. In other to assure them legally, the Company Law provides independent personality to company and dependent upon the kind of company, the privilege of limited liability is given to members of it. However, such devices embrace at the same time the danger of being misused, and it is especially so in case of corporation. Generally a corporation is a separate and distinct entity from those who compose it. This separate entity concept can be a useful tool for those who employ it as a cover or a cloak for improper purposes. Thus every legal system which gives a separate personality to a corporation has some means to solve such an abuse. The corporate device is a privilege to carry on a business with limited liability and separate entity. The privilege is sanctioned only so long as the corporation functions within limits set by the law. The abuse of the corporate form by incorporating inadequately capitalized corporations is much lamented in our country. Those practices should be knocked down once and for all.

Abuse of Corporate Form and Its Regulations The business corporations have been the most important factor in the development of the modern capitalistic economy. Corporate institution has various advantage which are not found in case of enterprises by individuals; easiness in concentration of large capital, corporate efforts and distribution of risk of loss. In other to assure them legally, the Company Law provides independent personality to company and dependent upon the kind of company, the privilege of limited liability is given to members of it. However, such devices embrace at the same time the danger of being misused, and it is especially so in case of corporation. Generally a corporation is a separate and distinct entity from those who compose it. This separate entity concept can be a useful tool for those who employ it as a cover or a cloak for improper purposes. Thus every legal system which gives a separate personality to a corporation has some means to solve such an abuse. The corporate device is a privilege to carry on a business with limited liability and separate entity. The privilege is sanctioned only so long as the corporation functions within limits set by the law. The abuse of the corporate form by incorporating inadequately capitalized corporations is much lamented in our country. Those practices should be knocked down once and for all.

corporation, limited liability, corporation function, privilege.