Answer to Question #327229 in Law for Vilo

Question

Evergreen Sdn. Bhd operates as a company that supplies various equipment for

outdoor activities. Their business is well bloomed and they decided to expand

their company. Their directors, Eva and Richard decided that they will register a

new subsidiary company known as Babel Sdn. Bhd. They agreed during the board

meeting that Babel Sdn. Bhd will be registered in Indonesia as a foreign company

since they wanted to avoid paying the taxes in Malaysia.

One year later, Evergreen Sdn. Bhd has been investigated by Malaysian official

authorities and acquired the details of the subsidiary company. Based on the

investigation, it shows that Babel Sdn. Bhd was formed by Evergreen Sdn. Bhd

simply to avoid paying taxes in Malaysia. However, Evergreen Sdn. Bhd claimed

that they are not liable since they are separate legal entities and they have different

management.

Based on the situation above, discuss whether Babel Sdn. Bhd are one or separate

legal entities by referring to the veil of incorporation.