The courts have pierced the corporate veil when it feels that fraud is or could be perpetrated behind the veil the courts will not allow the solomon principal to be used as an engine of fraud the two classic cases of the fraud exception are gilford motor company ltd v. Kong courts should apply the doctrine more assertively to address externalization of corporate business costs, which is the inevitable con- corporate veil doctrine in the us9 similar to thompson's surveys, the survey in this paper will investigate whether the claimant's success 4  2 hkc 539, hkhc. Should courts and legislatures articulate rules for piercing the veil, fiduciary responsibility and securities regulation for the limited liability company’ (1998) 51 oklahoma law review 427 stephen m bainbridge, ‘abolishing veil piercing’ (2001) 26 journal of corporation law. The courts, in general, consider this principle as a basic one on which the entire law of corporation is based therefore, the courts in many cases, were reluctant to break through the corporate veil and refused to identify a company with its members even a company was found as a mere fraud.
Doctrine of lifting of corporate veil • in the eyes of law, a company is a legal person with a separate entity distinct from its members of shareholders in essence it means that there is a veil or curtain separating the legal entity of the company from its members or shareholders. The phrase piercing the corporate veil is a metaphor to describe the cases in which a court refuses to recognize separate existence of a corporation despite compliance with all the formalities for the creation of a de jure corporation. In its recent judgment in balwant rai saluja, a three-judge bench of the supreme court has considered a number of important questions relating to when, if ever, it is appropriate to lift the corporate veil. The courts do not lift the veil to impose personal liability on the shareholders for the debts of the company’ 22 ‘what has plagued the english corporate veil doctrine and partly contributed to its lukewarm reception by the english courts is its lack of an.
Lam, chun leung piercing the corporate veil (2015) 480 showed that the power of the court to pierce corporate veil should be exercised to courts’ power to lift the corporate veil does not exist for the purpose of reversing such avoidance so as to create legal obligations. To lift the corporate veil or look behind it, on the other hand, should mean to have regard to the shareholding in a company for some legal hat the courts should consider in applying the separate legal entity concept and company and securities law journal law. Whether court should lift corporate veil if it is used to perpetrate fraud in “juggi lal kamlapat vs commissioner of income tax, up” [air 1969 sc 932] the apex court had gone on to. Lifting of the corporate veil abstract from the juristic point of view, a company is a legal person distinct from its members [salomon v salomon and co ltd (1897) ac 22] this principle may be referred to as the ‘veil of incorporation’ where the company is a sham- the courts also lift the veil where a company is a mere cloak or.
The courts are entitled to pierce the veil of incorporation and as such should continue to look at the realities of the situation when deciding whether or not it is prudent to lift the veil, and hold those are in reality responsible for the actions of the company to account. The courts pierce the veil merely because the interests of justice so require3 the corporate veil should be pierced so that the defendants could be that it could lift the corporate veil as far as the property was concerned and that any judgment against the. But for clarity as to ‘lifting of the corporate veil’, an understanding of the corporate personality of a company is required, along with study of the provisions of indian law that pave the way for courts to pierce the corporate veil.
High courts of guangdong, guangxi, and ningxia provinces have pierced the corporate veil see zhang xianchu, supra note 8, at 135-37 the high court of tianjin municipality has also. Abstract ‘lifting of corporate veil’ or disregarding of the corporate personality is a common buzz in the modern corporate arena the english courts have been often asked to disregard the separate legal personality of a company and its shareholders. Corporate law2 accordingly, canadian courts are generally reluctant to pierce the corporate veil and usually adhere to the salomon principle however, in exceptional cases, canadian courts have expressed a willingness to depart from the.
Piercing the corporate veil or lifting the corporate veil is a legal decision to treat the rights or duties of a corporation as the rights or liabilities of its shareholders usually a corporation is treated as a separate legal person , which is solely responsible for the debts it incurs and the sole beneficiary of the credit it is owed. Corporate veil may be lifted where a statute itself contemplates lifting the veil, or fraud or improper conduct is intended to be prevented, or a taxing statute or a. It agreed that the corporate veil of a corporation can be pierced if there are “special circumstancesindicating that [the corporation] is a mere façade concealing the true facts.
It should noted that piercing the corporate veil may be invoked by virtue oflegislation orwhere no provisions ofthe legislation authorising the lifting ofthe corporate veil, the courts may do so in terms ofcommon law principles 8. Effects of piercing the corporate veil if a court pierces a company's corporate veil, the owners, shareholders, or members of a corporation or llc can be held personally liable for corporate debts this means creditors can go after the owners' home, bank account, investments, and other assets to satisfy the corporate debt. When one intends to lift the corporate veil, the federal court in takako sakao v ng pek yuen  6 mlj 751 has conclusively decided that special circumstances must be proved. The corporate veil because a clear abuse of the corporate form ‘9 another definition of lifting the veil isthat it ‘a tactic used by the judiciary in a flexible way to counter fraud, sharp practice, oppression and ii”° friedman says that courts.
In this blogpost, harsha jeswani, student, national law institute university, bhopal writes about the grounds on which the courts lifts the corporate veil introduction the landmark judgment of salomon v salomon and co ltd recognised the principle of separate legal entity of company which says that a company has a separate existence from its members. The veil11 us courts are not only more willing to pierce the veil in favour of creditors they also apply a doctrine of equitable subordination, which postpones internal creditors to external creditors 12 there is no equivalent in british commonwealth. The courts have been more that prepared to pierce the corporate veil when it fells that fraud is or could be perpetrated behind the veil the courts will not allow the solomon principal to be used as an engine of fraud.