Lifting The Veil Of Incorporation In Company Law Malaysia

The veil shall be lifted to prevent the avoidance of recognition by the eyes of equity.

Lifting the veil of incorporation in company law malaysia. Company law lifting of corporate veil 5 piercing of corporate veil piercing the veil is corporate law s most widely used doctrine to decide when a shareholder or shareholders will be held liable for obligations of the corporation. This curtain or veil when is overlooked to understand the true nature and real beneficiaries of company is called lifting of corporate veil. Lifting of the veil by statute malaysia s legislature has seen fit to provide for many situation in the companies act 1965 that allow the courts in dealing with the lifting of the corporate veil. Lifting of corporate veil of company under company law.

It continues to be one of the most litigated and most discussed doctrines in all of corporate law. Ruchika jha march 3 2020. Lifting of the corporate veil means disregarding the corporate personality and looking behind the real person who are in the control of the company. In other words where a fraudulent and dishonest use is made of the legal entity the individuals concerned will not be allowed to take shelter behind the corporate personality.

Imputing rajoo s knowledge to bumitulin the court held that bumitulin had breached section 45 by fraudulently registering the dr neem trade mark with the registrar as bumitulin was aware of jyothy s ip. In adeyemi v lan and baker nig ltd the court held that there is nothing sacrosanct about the veil of incorporation. The incorporation of a company creates a separate person in law. Lifting corporate veil company law 1 1.

Lifting the veil of incorporation under statute section 36 ca 1965. Lifting the veil occurs where the courts or law disregard the corporate personality of the company in deserving circumstances. In turn a protective veil of sorts is cast over the true controllers of the company. If the number of members of a company fall below two and the company carries on business for more than six months that member is personally liable for the company s debts incurred after the six months.

Consequently a company s liabilities are its own not those of its shareholders. Refer to circumstances where the law or the court disregard the corporate entity by looking behind it to determine the reality of a situation. Lifting the corporate veil refers to the possibility of looking behind the company framework or behind the company s separate personality to make the member liable as an exception to the rule that they are normally shielded by the corporate shell. In some situation the lifting of veil makes the reader officers criminally liable for their company s beaches of the act.

That is they are not liable to outsiders at all and are only normally liable to pay the company what they agreed to pay by way of share purchase price or guarantee. Lifting the veil judicial exceptions statutory exceptions company s liability in crime and tort 2.