Corporate Governance and Entity Compliance
Personality, Duties and Approvals
A company is a separate legal person: it owns assets, contracts and sues in its own name, and shareholders' liability is limited to unpaid capital. A branch is not a separate entity - the parent is liable for its obligations. Courts pierce the veil only in narrow cases (fraud, sham, statutory routes); mere group control or shared management is not enough.
Directors owe duties to the company, not to individual shareholders or the parent. Typical duties: act within powers and for proper purposes, exercise care, skill and diligence, exercise independent judgment, avoid conflicts, disclose interests in transactions, and not accept benefits from third parties. The US business judgment rule presumes informed, disinterested decisions; many common-law regimes apply a partly objective standard. Civil-law systems often layer on two-tier boards, employee representation and mandatory consultation.
Approvals matter. Most regimes require disclosure of a director's interest, recusal from voting, and approval by disinterested directors or shareholders, with minutes recorded. Written resolutions, quorum and notice rules are statutory, not optional. A parent that directs a subsidiary's affairs can become a shadow or de facto director and incur liability.
Entity compliance is continuous: annual filings, registers of members and beneficial owners, audited accounts where required, registered office, and tax registrations.
Rule of thumb: for any conflicted transaction - disclose, recuse, approve by disinterested body, minute it.
Worked example: a nominee director appointed by an investor must vote in the company's best interests; following the appointing shareholder's instruction blindly can breach duty.