Business Law – The Corporate Veil

It is seen that a company, as a person, has a legal identity of its own. An obvious consequence is that the company in question may become liable for the actions of the company.

●      Usually, the owners of the company are free from any liability.

●      It is assumed that the owners of the company are protected from liabilities by the company under a ‘veil of incorporation’.

●      However, there are certain circumstances when the court of law removes the veil so that the members of the corporation are not protected anymore by the veil.

●      However, there is no specific list of circumstances when the court of law is supposed to remove the veil.

●      However, the veil has been removed in the past under the following circumstances −

ü  Where the formation of the company was intended for a fraudulent purpose.

ü  Where the company was considered as an enemy at the time of war.

ü  Where several groups of companies were regarded as one.

ü  Where a company was treated as a partnership with an intent to wind up.

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