The following are the instances in which the corporate veil can be lifted.ġ. In those circumstances, the corporate veil cannot give any protection to the directors. Circumstances in which the Court can lift the Corporate VeilĪccording to Palmer, there are seven instances where the corporate veil or the legal personality can be lifted or pierced by the Court. This is known as lifting or piercing the corporate veil. In other words, the Courts, in compelling situations, ignored all the conceptions of the corporate personality and hold the directors and shareholders personally liable. ![]() As such, it has become necessary to lift the corporate veil and to see the realities behind the veil.Ĭonsequently, the Courts, both in India and England, if circumstances demanded so, have lifted corporate veil and identified the company with its members. Therefore, the Courts, began to realize that the Doctrine of Corporate Entity should not be an unmixed blessing as it goes against natural justice. ![]() The experience of the past was very sad and so many investing public and creditors of various companies were badly hit. ![]() This magic corporate personality gave protection to fraudulent directors to conduct the affairs of the company to defraud the public interest. 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. The Courts, in general, consider this principle as a basic one on which the entire Law of Corporation is based.
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