ABSTRACT
A striking feature o f many corporate groups with affiliates engaged in related businesses is the centralised control or co-ordination o f the activities o f the various affiliates.1 In some groups with affiliates engaged in related businesses a deeper form o f integration actually occurs - deeper than the mere centralisation or co-ordination o f the group’s activities. In such groups, the separate legal units operate as closely inter-related fragments o f a single unitary business. The legal personality does not correspond to the actual enterprise, but merely to a fragment o f it.2 Economically, however, the various companies constitute a “firm”. No law limits the freedom o f an entrepreneur to organise the enterprise through a number o f economically integrated legal units.3 Apart from the obvious protection o f the “limited liability” factor, such fragmentation may be dictated by tax, political, accountancy or administrative considerations. The law’s laissez faire attitude to such fragmentation contributes to the perpetuation o f the great divide between the legal organisation o f the enterprise and economic reality.
